<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-52571
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 18, 1994)
$100,000,000
[EAGLE LOGO]
BANK OF BOSTON CORPORATION
FLOATING RATE NOTES DUE JUNE 1996
------------------------
Interest on the Floating Rate Notes Due June 1996 (the "Notes") is payable
quarterly by Bank of Boston Corporation (the "Corporation") on March 20, June
20, September 20 and December 20 of each year, commencing September 20, 1994
(each, an "Interest Payment Date"). The Notes will mature on June 20, 1996 and
are not subject to redemption prior to maturity.
The per annum rate of interest payable with respect to the Notes will be
equal to 27 basis points (.27%) above LIBOR (as defined herein) and will be
reset on each Interest Payment Date (each such date an "Interest Reset Date").
The interest rate for the period from and including June 20, 1994 to but
excluding September 20, 1994, the initial Interest Reset Date, will be
determined as described herein on the basis of LIBOR as of June 16, 1994. See
"Description of the Notes."
The Notes will be represented by one or more permanent global certificates
registered in the name of a nominee of The Depository Trust Company, as
Depositary (the "Depositary"). The Notes will be available for purchase in
book-entry form only in denominations of $1,000 and integral multiples thereof.
Beneficial interests in the global certificates will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. Except as described under "Description of the Notes -- Book
Entry System," owners of beneficial interests in the global certificates will
not be entitled to receive Notes in definitive form. Settlement for the Notes
will be made in immediately available funds. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity and secondary
market trading activity in the Notes will settle in immediately available funds.
See "Description of the Notes -- Book-Entry System."
------------------------
THE NOTES ARE UNSECURED OBLIGATIONS OF THE CORPORATION, ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND
OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
================================================================================================
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) CORPORATION(1)(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note........................... 100% .25% 99.75%
- -----------------------------------------------------------------------------------------------
Total.............................. $100,000,000 $250,000 $99,750,000
================================================================================================
<FN>
(1) Plus accrued interest, if any, from June 20, 1994.
(2) The Corporation has agreed to indemnify the several Underwriters against
certain liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting expenses payable by the Corporation estimated at $140,000.
</TABLE>
------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that the Notes will be
delivered in book-entry form only through the facilities of The Depository Trust
Company on or about June 20, 1994.
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
------------------------
The date of this Prospectus Supplement is June 15, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the Notes
for general corporate purposes which may include one or more of the following:
investments in and advances to the Corporation's subsidiaries; financing future
acquisitions of financial institutions, as well as banking and other assets; and
the redemption of certain of the Corporation's outstanding debt securities. The
precise amount and timing of the application of proceeds used for such corporate
purposes will depend on the funding requirements and the availability of other
funds to the Corporation and its subsidiaries.
S-2
<PAGE> 3
SUMMARY FINANCIAL DATA
The summary below should be read in conjunction with the Consolidated
Financial Statements of the Corporation and the related Notes thereto,
Consolidated Statistical Information and Management's Financial Review which
appear in the Corporation's Annual Report to Stockholders for the year ended
December 31, 1993, and are incorporated by reference into the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993. The summary
below should also be read in conjunction with the financial information
contained in the Corporation's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. Interim unaudited data for the three months ended
March 31, 1994 and 1993 reflect, in the opinion of management of the
Corporation, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the three months
ended March 31, 1994 are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net interest revenue(1)....................... $340.7 $324.2 $1,344.9 $1,254.6 $1,114.8 $1,222.9 $1,388.4
Provision for credit losses(2)(3)............. 45.0 22.5 70.1 180.6 518.7 764.3 773.7
------- ------- -------- -------- -------- -------- --------
Net interest revenue after provision for
credit losses............................... 295.7 301.7 1,274.8 1,074.0 596.1 458.6 614.7
Noninterest income(1)(4)(7)................... 235.1 174.4 745.5 758.8 762.9 764.1 1,019.2
Noninterest expense(3)(5)..................... 346.7 375.7 1,530.8 1,474.1 1,537.9 1,732.0 1,410.8
------- ------- -------- -------- -------- -------- --------
Income (Loss) before income taxes,
extraordinary items & cumulative effect of
changes in accounting principles............ 184.1 100.4 489.5 358.7 (178.9) (509.3) 223.1
Provision for (Benefit from) income taxes..... 81.4 40.9 214.7 152.8 (58.0) 2.6 85.0
------- ------- -------- -------- -------- -------- --------
Income (Loss) before extraordinary items &
cumulative effect of changes in accounting
principles.................................. 102.7 59.5 274.8 205.9 (120.9) (511.9) 138.1
Extraordinary items, net of tax(6)............ (6.6) 73.0 7.8 43.7
------- ------- -------- -------- -------- -------- --------
Income (Loss) before cumulative effect of
changes in accounting principles............ 96.1 59.5 274.8 278.9 (113.1) (468.2)
Cumulative effect of changes in accounting
principles, net(7).......................... 24.2 24.2
------- ------- -------- -------- -------- -------- --------
Net income (loss)......................... $ 96.1 $ 83.7 $ 299.0 $ 278.9 $(113.1) $(468.2) $ 138.1
======= ======= ======== ======== ======== ======== ========
Per common share:
Income (Loss) before extraordinary items &
cumulative effect of changes in accounting
principles:
Primary................................... $ .88 $ .49 $ 2.28 $ 1.82 $ (1.42) $ (5.67) $ 1.37
Fully diluted............................. .85 .48 2.22 1.78 (1.42) (5.67) 1.37
Net income (loss):
Primary................................... .82 .72 2.51 2.54 (1.33) (5.20) 1.37
Fully diluted............................. .79 .70 2.44 2.45 (1.33) (5.20) 1.37
Book value.................................. 22.91 20.85 22.71 20.21 18.00 19.64 25.85
Cash dividends declared..................... .22 .10 .40 .10 .10 .82 1.24
Average number of common shares (in
thousands):
Primary................................... 106,198 104,962 105,336 101,977 94,730 92,634 90,435
Fully diluted............................. 110,817 110,079 110,258 107,157 94,730 92,634 90,777
AVERAGE BALANCE SHEET DATA:
Loans and lease financing(3).................. $28,615 $25,224 $26,586 $25,330 $26,167 $28,949 $32,061
Total earning assets.......................... 36,502 32,676 34,299 33,229 34,563 40,323 40,135
Total assets.................................. 41,214 36,451 38,367 36,855 37,915 43,770 43,674
Deposits...................................... 28,615 28,162 28,539 29,028 29,861 33,505 29,440
Notes payable................................. 2,194 1,669 1,743 1,197 1,552 2,098 2,254
Stockholders' equity.......................... 2,942 2,593 2,719 2,226 1,944 2,431 2,606
</TABLE>
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<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------ ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ------ ------ ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Net interest margin(1)(8)(9).................. 3.80% 4.05% 3.94% 3.81% 3.29% 3.12% 3.60%
Return on average total assets(9)............. .95 .93 .78 .76 (.30) (1.07) .32
Return on average common equity(9)(10)........ 14.47 14.26 11.78 13.37 (7.28) (21.68) 5.18
Common equity to total assets................. 5.7 6.0 5.9 5.7 4.5 4.7 5.0
Average total stockholders' equity to average
total assets................................ 7.1 7.1 7.1 6.0 5.1 5.6 6.0
Regulatory capital ratios:
Risk-based capital ratios:
Tier 1.................................... 7.4 7.5 7.2 7.1 5.2 5.3 NA
Total..................................... 12.7 12.0 12.4 12.0 9.3 9.4 NA
Leverage ratio.............................. 6.9 6.9 6.8 6.6 4.6 4.5 NA
Net credit losses to average loans and lease
financing(2)(3)(9).......................... .46 1.22 .84 1.22 1.87 2.50 1.65
Reserve for credit losses to loans and lease
financing(3)................................ 2.33 3.44 2.68 3.63 4.14 3.90 3.20
Reserve for credit losses to nonaccrual loans
and lease financing(3)...................... 166.56 131.07 139.69 118.51 69.48 56.26 59.34
Nonaccrual loans and OREO as a percent of
related asset categories.................... 1.6 3.2 2.3 3.7 7.2 7.8 6.0
Earnings to fixed charges(8)(11):
Excluding interest on deposits.............. 2.23x 2.29x 2.21x 1.96x .54x .60x 1.11x
Including interest on deposits.............. 1.47 1.29 1.34 1.20 .92 .89 1.04
- ---------------
<FN>
(1) During the first quarter of 1994, the Corporation reclassified translation gains and losses associated with Brazilian local
currency earning assets and interest bearing liabilities from noninterest income to interest income and interest expense,
respectively. The reclassification of these translation gains and losses, which had no effect on the Corporation's total
revenue (the sum of net interest revenue and noninterest income), provides a better presentation of consolidated interest
income, interest expense and related yields; net interest revenue and related margin; and noninterest income. The
reclassification has resulted in the inclusion of $2,225 million of translation losses relating to local currency earning
assets within interest income and $2,096 million of translation gains related to local currency interest bearing liabilities
within interest expense in the first quarter of 1994, resulting in a reclassification from noninterest income of $129 million
of net translation losses. Prior periods have been reclassified for comparative purposes.
(2) A portion of the increase in the provision for credit losses in the first quarter of 1994 reflected the transfer of $378
million of certain lower quality real estate exposures to an accelerated disposition portfolio in March 1994. At the point of
transfer, and after an additional review of each exposure, the Corporation took a chargeoff of $119 million. Until liquidated,
the assets will be carried at the lower of the newly established carrying value or estimated disposition value. The remaining
net carrying value of the portfolio was $259 million as of March 31, 1994. The ratio of net credit losses to average loans and
lease financing for the three months ended March 31, 1994 excludes the chargeoff of $119 million related to this transfer.
(3) During 1993, in response to guidance issued by banking regulators, the Corporation reclassified its in-substance repossessions
("ISRs") from other real estate owned ("OREO") to loans. In addition, valuation adjustments to write down the loans to the fair
value of the underlying collateral are treated as credit losses rather than OREO expense. All prior period amounts were
reclassified for comparative purposes. Accordingly, valuation adjustments related to ISRs were reclassified from OREO expense,
a component of noninterest expense, to the provision for credit losses for each period, with corresponding amounts recorded as
credit losses. The reclassifications of these valuation adjustments amounted to $1.3 million for the three months ended March
31, 1993. For each of the years in the five-year period ended December 31, 1993, such reclassifications amounted to $6 million,
$37 million, $54 million, $36 million and $4 million, respectively.
(4) Includes a $43 million gain on the settlement of pension obligations in 1990 and, in 1989, a $190 million gain on the sale of
the domestic credit card portfolio and a $52 million gain on the settlement of pension obligations.
(5) Includes merger and restructuring charges of $85 million in 1993, primarily in connection with the Corporation's mergers with
Society for Savings Bancorp, Inc. ("Bancorp") and Multibank Financial Corp., completed in July 1993, as well as other expense
reduction initiatives of the Corporation. Also includes restructuring charges of $54 million in 1991 and $139 million in 1990.
These charges include $7 million in 1991 and $89 million in 1990 in connection with the adoption by Bancorp of a
restructuring plan to downsize the balance sheet of their banking subsidiary through sales of certain loans and investments,
the discontinuance of certain business lines and the reduction of certain borrowings. The remaining charges of $47 million in
1991 and $50 million in 1990 were recorded in connection with the Corporation's plans for additional consolidating and
downsizing of various domestic and international operations and facilities and staff reductions.
(6) For the three months ended March 31, 1994, resulted from a prepayment penalty and other costs associated with the call for
prepayment by a nonbanking subsidiary of the Corporation of certain senior debt, and the redemption by the Corporation of
certain of its subordinated debt. For the year ended December 31, 1992, resulted from the recognition of prior year tax
benefit carryforwards. For the years ended December 31, 1991 and 1990, resulted from gains on early extinguishment of debt.
</TABLE>
S-4
<PAGE> 5
(7) Includes a cumulative one-time benefit of $77 million resulting from the
adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," and a cumulative charge of $53 million, net
of taxes, relating to a change in accounting methodology pertaining to the
valuation of purchased mortgage servicing rights. In connection with this
accounting change, in the first quarter of 1993, the Corporation recorded a
$17 million charge to mortgage servicing fees, included as a component of
noninterest income, as a result of applying the new accounting method to
the accelerated rate of prepayments that occurred in that period.
(8) Net interest margin and ratios of earnings to fixed charges for the three
months ended March 31, 1994 and March 31, 1993, and for the years ended
December 31, 1993, 1992 and 1991, reflect the reclassification of Brazilian
translation gains and losses, which is more fully discussed in Note 1
above. Information for the years ended December 31, 1990 and 1989 is
unavailable as of the date of this Prospectus Supplement without
unreasonable effort and expense; accordingly, net interest margin and
ratios of earnings to fixed charges for these periods represent the
historical net interest margin and ratios of earnings to fixed charges of
the Corporation.
(9) Ratios for the three-month periods are annualized.
(10) For purposes of this ratio, preferred stock dividends have been deducted
from net income.
(11) For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income (loss) before extraordinary items plus applicable
income taxes and fixed charges. Fixed charges, excluding interest on
deposits, include interest expense (other than on deposits) and the
proportion deemed representative of the interest factor of rent expense,
net of income from subleases. Fixed charges, including interest on
deposits, include all interest expense and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases.
For the years ended December 31, 1991 and 1990, earnings were
insufficient to cover fixed charges, both excluding and including
interest on deposits. Additional earnings necessary for the years ended
December 31, 1991 and 1990, to bring the ratios of earnings to fixed
charges to one-to-one on both an excluding and including interest on
deposits basis are $178.9 million and $509.3 million, respectively.
NA -- Information for calculating the risk-based capital ratios and leverage
ratio prior to 1990 is unavailable.
S-5
<PAGE> 6
RECENT DEVELOPMENTS
In April 1994, the Corporation's principal subsidiary, The First National
Bank of Boston (the "Bank") received approval from the Office of the Comptroller
of the Currency to merge South Shore Bank, Mechanics Bank and Multibank West
into the Bank. These banking subsidiaries were acquired in connection with the
Corporation's acquisition of Multibank Financial Corp., which was completed in
July 1993. The merger of South Shore Bank into the Bank was effected in May
1994, and the mergers of Mechanics Bank and Multibank West into the Bank were
effected in June 1994.
In May 1994, the Corporation completed its acquisition of BankWorcester
Corporation ("BankWorcester"), the holding company for Worcester County
Institution for Savings ("WCiS"), and WCiS was merged into the Bank. At March
31, 1994, BankWorcester had approximately $1.5 billion of assets and
approximately $1.3 billion of deposits and WCiS had 28 branches. In connection
with the acquisition, each outstanding share of BankWorcester common stock, par
value $.10 per share, except for shares held directly or indirectly by the
Corporation or its subsidiaries or held by BankWorcester or its subsidiaries (in
both cases other than in a fiduciary capacity or as a result of debts previously
contracted), and except for any dissenting shares, was converted into the right
to receive $34.00 in cash. The total purchase price for the transaction was $243
million.
DESCRIPTION OF THE NOTES
The following is a brief summary of the terms of the Notes. The summaries
below of the provisions of the Notes do not purport to be complete, should be
read in conjunction with the statements under "Description of Debt Securities --
Senior Securities" and "-- General" in the accompanying Prospectus and are
subject to and are qualified in their entirety by reference to the Senior
Indenture dated as of June 15, 1992 (the "Senior Indenture") between the
Corporation and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee"). The Senior Indenture is an exhibit to the Registration Statement of
which the accompanying Prospectus and this Prospectus Supplement form a part.
Any terms not defined herein are as defined in the Senior Indenture.
GENERAL
The Notes will be issued under the Senior Indenture and will be represented
by one or more permanent global certificates registered in the name of a nominee
of The Depository Trust Company (the "Depositary"). The Notes will be available
for purchase in book-entry form only in denominations of $1,000 and integral
multiples thereof. See "Book-Entry System" below. The Notes will be direct
unsecured obligations of the Corporation ranking on a parity with the other
Senior Indebtedness of the Corporation.
The Notes will be limited to $100,000,000 aggregate principal amount and
will mature on June 20, 1996 (the "Date of Maturity"). The Notes are not subject
to redemption prior to the Date of Maturity.
The Notes will not be entitled to the benefit of a sinking fund or to the
defeasance and covenant defeasance provisions contained in the Senior Indenture.
THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR NONBANK SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
INTEREST
Interest on the Notes will be payable quarterly on March 20, June 20,
September 20 and December 20 of each year, commencing September 20, 1994 (each,
an "Interest Payment Date"), and on the Date of Maturity. Interest payments in
respect of the Notes will equal the amount of interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to the Notes) to but excluding the related Interest
Payment Date or the Date of Maturity, as the case may be. Interest payable prior
to the Date of Maturity will be payable to the person in whose name a Note is
registered at the close of business on the fifteenth day prior to each Interest
Payment Date. Interest payable on the Date of Maturity will be payable to the
person to whom principal is payable.
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<PAGE> 7
If any Interest Payment Date for the Notes (other than the Date of
Maturity) would otherwise be a day that is not a Business Day (as defined
below), such Interest Payment Date will be postponed to the next succeeding day
that is a Business Day, except that, if such Business Day falls in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding Business Day. If the Date of Maturity of the Notes falls on a day that
is not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment will accrue for
the period from and after such Date of Maturity. As used herein, "Business Day"
means any day (other than a Saturday or Sunday) that (i) in The City of New York
or Boston, Massachusetts is not a day on which banking institutions are
authorized or required by law, regulation or executive order to close and (ii)
is also a London Business Day. As used herein, "London Business Day" means any
day on which dealings in United States dollars are transacted in the London
interbank market.
The per annum rate of interest payable with respect to the Notes will be
equal to 27 basis points (.27%) above LIBOR (as defined below) and will be reset
on each Interest Payment Date (each such date an "Interest Reset Date"). The
interest rate for the period from and including June 20, 1994 to but excluding
September 20, 1994, the initial Interest Reset Date, will be determined as
described herein on the basis of LIBOR as of June 16, 1994. If any Interest
Reset Date for the Notes would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding day that is a
Business Day, except that, if such Business Day falls in the next succeeding
calendar month, such Interest Reset Date will be the immediately preceding
Business Day. The interest rate with respect to each Interest Reset Date will be
determined by the Bank, in its capacity as Calculation Agent (the "Calculation
Agent"), on the second London Business Day immediately preceding the applicable
Interest Reset Date (each such date an "Interest Determination Date"). The
interest rate with respect to the Notes will in no event be higher than the
maximum rate permitted by Massachusetts law, as the same may be modified by
United States law of general application. The determination of any interest rate
by the Calculation Agent will be final and binding absent manifest error.
"LIBOR" means, with respect to any Interest Determination Date, the rate
for deposits in United States dollars having a maturity of three months,
commencing on the second London Business Day immediately following such Interest
Determination Date, that appears on the display designated as page "3750" on the
Dow Jones Telerate Service (or such other page as may replace the 3750 page on
that service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
United States dollar deposits) (the "Designated LIBOR Page") as of 11:00 A.M.,
London time, on such Interest Determination Date. If no such rate appears on the
Designated LIBOR Page as specified in the preceding sentence, the Calculation
Agent will request the principal London offices of each of four major reference
banks in the London interbank market, as selected by the Calculation Agent, to
provide the Calculation Agent with its offered quotation for deposits in United
States dollars having a maturity of three months, commencing on the second
London Business Day immediately following such Interest Determination Date, to
prime banks in the London interbank market at approximately 11:00 A.M., London
time, on such Interest Determination Date and in a principal amount that is
representative for a single transaction in United States dollars in such market
at such time. If at least two such quotations are provided, LIBOR determined on
such Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in The City of New York, on such Interest
Determination Date by three major banks in The City of New York (which may
include affiliates of the Underwriters) selected by the Calculation Agent for
loans in United States dollars to leading European banks, having a maturity of
three months and in a principal amount that is representative for a single
transaction in United States dollars in such market at such time; provided,
however, that if the banks so selected by the Calculation Agent are not quoting
as mentioned in this sentence, LIBOR determined as of such Interest
Determination Date will be LIBOR in effect on such Interest Determination Date.
With respect to each Note, accrued interest will be calculated by
multiplying its face amount by an accrued interest factor. Such accrued interest
factor is computed by adding the interest factor calculated for each day in the
period for which interest is being calculated. The interest factor for each such
day will be computed by dividing the interest rate applicable to such day by
360.
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<PAGE> 8
All percentages resulting from any calculation on the Notes will be
rounded, if necessary, to the nearest one hundred thousandth of a percentage
point, with five one millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all
dollar amounts used in or resulting from such calculation on the Notes will be
rounded to the nearest cent (with one-half cent being rounded upward).
BOOK-ENTRY SYSTEM
The Notes will be represented by one or more permanent global certificates
in registered form deposited with or on behalf of the Depositary and registered
in the name of a nominee of the Depositary under the Senior Indenture. So long
as the Depositary or its nominee is the registered owner of the global
certificates, the Depositary or such nominee, as the case may be, will be
considered to be the sole owner or holder of the Notes for all purposes of the
Senior Indenture. Unless and until a global certificate is exchanged in whole or
in part for Notes in definitive form, the global certificate may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any nominee to a successor depositary or any
nominee of such successor. Beneficial interests in the global certificates will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. The Bank through its head
office in Boston, Massachusetts and BancBoston Trust Company of New York through
its office in the Borough of Manhattan in The City of New York (collectively,
the "Paying Agents") will act as the Corporation's Paying Agents with respect to
the Notes. The Corporation may at any time rescind the designation of a Paying
Agent, appoint a successor Paying Agent, or approve a change in the office
through which any Paying Agent acts. Owners of beneficial interests in the
global certificates will not be entitled to receive Notes in definitive form and
will not be considered holders of Notes unless (i) the Depositary notifies the
Corporation in writing that it is no longer willing or able to act as a
depositary or if the Depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) the
Corporation, at its option, notifies the Paying Agents in writing that it elects
to cause the issuance of Notes in definitive form or (iii) any event shall have
happened and be continuing which, after notice or lapse of time, or both, would
constitute an Event of Default with respect to the Notes. In such circumstances,
upon surrender by the Depositary or a successor depositary of the global
certificates, Notes in definitive form will be issued to each person that the
Depositary or such successor identifies as the beneficial owner of the related
Notes in the name of, and cause the same to be delivered to, such person or
persons (or the nominee thereof). Such Notes would be issued in fully registered
form without coupons, in denominations of $1,000 and integral multiples thereof.
Such Notes may not be exchanged subsequently by a holder for Notes in
denominations of less than $1,000.
The Depositary has advised the Corporation as follows: The Depositary is a
limited purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). The Depositary is owned by a number of
its Direct Participants and by the New York Stock Exchange, Inc., The American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the Depositary's book-entry system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to the Depositary and
its Participants are on file with the Securities and Exchange Commission. The
information concerning the Depositary and its book-entry system has been
obtained from sources that the Corporation believes to be reliable; however, the
Corporation takes no responsibility for the accuracy thereof.
S-8
<PAGE> 9
Principal and interest payments on the Notes will be made to the
Depositary's nominee as the registered owner of the global certificates
representing such Notes. Under the terms of the Senior Indenture, the
Corporation and the Paying Agents will treat the persons in whose names the
global certificates are registered as the owners of the Notes for the purpose of
receiving payment of principal and interest on such Notes and for all other
purposes whatsoever. Therefore, neither the Corporation nor the Paying Agents
has any direct responsibility or liability for the payment of principal of or
interest on the Notes to owners of beneficial interests in the global
certificates. The Depositary has advised the Corporation and the Paying Agents
that its current practice is to credit the accounts of the Participants with
payments of principal or interest on the date payable in amounts proportionate
to their respective holdings in principal amount of beneficial interests in the
global certificates as shown in the records of the Depositary, unless the
Depositary has reason to believe that it will not receive payment on such date.
The Depositary's current practice is to credit such accounts, as to interest, in
next-day funds, and, as to principal, in same-day funds. Payments by
Participants and Indirect Participants to owners of beneficial interests in the
global certificates will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility of
the Participants or Indirect Participants.
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and therefore the Depositary will require secondary trading activity
in the Notes to be settled in immediately available funds. Secondary trading in
notes and debentures of corporate issuers is generally settled in clearing-house
or next-day funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
S-9
<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") among the Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation
and Goldman, Sachs & Co. (the "Underwriters"), the Corporation has agreed to
sell to the Underwriters, and the Underwriters have severally agreed to
purchase, the respective principal amounts of the Notes set forth after their
names below. The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes if any are
purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
-----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................ $ 33,400,000
Donaldson, Lufkin & Jenrette Securities Corporation...... 33,300,000
Goldman, Sachs & Co...................................... 33,300,000
-----------
Total....................................... $100,000,000
===========
</TABLE>
The Underwriters have advised the Corporation that they propose initially
to offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .175% of the principal amount. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .1% of the principal amount of the Notes to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Notes are a new issue of securities with no established trading market.
The Corporation has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
The Corporation has agreed to indemnify the several Underwriters against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended.
Certain of the Underwriters engage in transactions with and perform
services for the Corporation in the ordinary course of business.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Corporation by Gary A. Spiess, General Counsel of the Corporation, and for the
Underwriters by Brown & Wood, New York, New York. Brown & Wood will rely as to
all matters of Massachusetts law on the opinion of Mr. Spiess. As of June 13,
1994, Mr. Spiess had a direct or indirect interest in 25,113 shares of the
Corporation's Common Stock and had options to purchase an additional 52,551
shares, of which options to purchase 44,586 shares will be exercisable within 60
days after June 13, 1994.
S-10
<PAGE> 11
PROSPECTUS
- ----------
(EAGLE LOGO)
BANK OF BOSTON CORPORATION
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
------------------------
Bank of Boston Corporation (the "Corporation") intends to issue from time to
time in one or more series up to $1,500,000,000 in aggregate initial offering
price of (i) debt securities, which may be either senior (the "Senior
Securities") or subordinated (the "Subordinated Securities"; and collectively
with the Senior Securities, the "Debt Securities") and warrants to purchase the
Debt Securities (the "Debt Warrants"), (ii) shares of preferred stock (the
"Preferred Stock"), which may be issued in the form of depositary shares
evidenced by depositary receipts (the "Depositary Shares"), and warrants to
purchase shares of the Preferred Stock (the "Preferred Stock Warrants"), and
(iii) shares of common stock, par value $2.25 per share (the "Common Stock") and
warrants to purchase shares of the Common Stock (the "Common Stock Warrants").
The Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Debt
Warrants, Preferred Stock Warrants and Common Stock Warrants (such Debt
Warrants, Preferred Stock Warrants and Common Stock Warrants being referred to
collectively as the "Securities Warrants") offered hereby (collectively, the
"Securities") may be offered, separately or together, in separate series in
amounts, at prices and on terms to be determined at the time of sale and to be
set forth in a supplement to this Prospectus (a "Prospectus Supplement").
------------------------
The Debt Securities of any series may be issued with Securities Warrants,
and, in the case of the Subordinated Securities, may be convertible into or
exchangeable for Capital Securities of the Corporation (as defined herein). The
Senior Securities will rank equally with all other unsubordinated and unsecured
indebtedness of the Corporation. The Subordinated Securities will be subordinate
to all existing and future Senior Indebtedness of the Corporation (as defined
herein). The holders of Subordinated Securities of any series may be obligated
at any time or at maturity to exchange such Subordinated Securities for Capital
Securities. Unless otherwise indicated in the applicable Prospectus Supplement,
the maturity of the Subordinated Securities will be subject to acceleration only
in the event of certain events of bankruptcy, insolvency or reorganization of
the Corporation or the receivership of The First National Bank of Boston. The
specific terms of the Securities in respect of which this Prospectus is being
delivered, such as, where applicable, (i) in the case of Debt Securities, the
specific designation, aggregate principal amount, currency, denomination,
maturity, priority, rate of interest (which may be variable or fixed), time of
payment of interest, terms for optional redemption or repayment by the
Corporation or any holder or for sinking fund payments, terms for conversion or
exchange into Capital Securities (in the case of Subordinated Securities), the
initial public offering price, any stock exchange listings, any special
provisions related to Debt Securities denominated in a foreign currency or
issued as medium-term notes, original issue discount securities or other special
terms, and the designation of the Trustee, Security Registrar and Paying Agent,
(ii) in the case of Preferred Stock, the specific title and stated value, number
of shares or fractional interests therein, any dividend, liquidation,
redemption, voting and other rights, the terms for conversion into Capital
Securities or other preferred stock or for exchange for Capital Securities or
other debt securities, any stock exchange listings, and the initial public
offering price, (iii) in the case of the common stock, the aggregate number of
shares offered, and the initial public offering price and (iv) in the case of
Securities Warrants, where applicable, the duration, offering price, exercise
price and detachability, will be as set forth in the accompanying Prospectus
Supplement. The Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to the Securities covered by the Prospectus Supplement.
------------------------
The Securities may be sold to underwriters for public offering pursuant to
terms of offering established at the time of sale. In addition, the Securities
may be sold by the Corporation directly or through dealers or agents designated
from time to time, which agents may be affiliates of the Corporation. The
Prospectus Supplement will also set forth with respect to the sale of the
Securities in respect of which this Prospectus is being delivered the names of
the underwriters, dealers or agents, if any, any applicable commissions or
discounts, the net proceeds to the Corporation from such sale and any other
terms of the offering. Any underwriters, dealers or agents participating in the
offering may be deemed "underwriters" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act").
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------
THE SECURITIES WILL BE UNSECURED OBLIGATIONS OF THE CORPORATION AND WILL NOT
BE SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF THE CORPORATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, (THE "FDIC"), BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE COMMISSIONER, OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is March 18, 1994.
<PAGE> 12
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION OR ANY UNDERWRITER OR AGENT. THE DELIVERY OF THIS PROSPECTUS OR THE
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
UNLESS OTHERWISE INDICATED, CURRENCY AMOUNTS IN THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT ARE STATED IN U.S. DOLLARS ("$," "DOLLARS," "U.S.
DOLLARS," OR "U.S. $").
AVAILABLE INFORMATION
The Corporation 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"). Such reports, proxy
statements and other information filed by the Corporation can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained by mail from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549 at prescribed rates. Certain securities of the Corporation are listed on
the New York Stock Exchange ("NYSE") and the Boston Stock Exchange ("BSE"), and
such reports, proxy statements and other information concerning the Corporation
also may be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005, and the Boston Stock Exchange
Incorporated, One Boston Place, Boston, Massachusetts 02108.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3 (and exhibits thereto, as amended) which the
Corporation has filed with the Commission under the Securities Act and to which
reference is hereby made. The Registration Statement (and exhibits thereto) may
be inspected at the Public Reference Section of the Commission, at the address
noted above, and copies thereof may be obtained from the Commission at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Commission pursuant to
Sections 12 or 13 of the Exchange Act:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1993.
2. The description of the Corporation's Common Stock, Preferred Stock
and Preferred Stock Purchase Rights contained in the Corporation's
registration statements filed under Section 12 of the Exchange
Act, including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Corporation pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering of the Securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in the accompanying Prospectus Supplement, or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
2
<PAGE> 13
THE CORPORATION WILL PROVIDE UPON REQUEST AND WITHOUT CHARGE TO EACH PERSON
TO WHOM THIS PROSPECTUS IS DELIVERED A COPY OF ANY OR ALL OF THE FOREGOING
DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED THEREIN BY REFERENCE). WRITTEN
REQUESTS SHOULD BE DIRECTED TO INVESTOR RELATIONS, THE FIRST NATIONAL BANK OF
BOSTON, P.O. BOX 2016, 01-16-10, BOSTON, MASSACHUSETTS 02106-2016. TELEPHONE
REQUESTS MAY BE DIRECTED TO INVESTOR RELATIONS AT (617) 434-7858.
THE CORPORATION
The Corporation is a registered bank holding company, organized in 1970
under Massachusetts law, which, through its subsidiaries, is engaged in
providing a wide variety of financial services to individuals, corporate and
institutional customers, governments, and other financial institutions. These
services include retail banking, consumer finance, mortgage origination and
servicing, domestic corporate and investment banking, leasing, international
banking, commercial real estate lending, private banking, trust, correspondent
banking, and securities and payments processing. The Corporation's principal
subsidiary is The First National Bank of Boston (the "Bank"), a national banking
association. Other major banking subsidiaries of the Corporation are Casco
Northern Bank, N.A. ("Casco") in Maine, Bank of Boston Connecticut ("BKB
Connecticut"), Rhode Island Hospital Trust National Bank ("Hospital Trust"),
Bank of Vermont and, in Massachusetts, Multibank West, Mechanics Bank and South
Shore Bank. As of December 31, 1993, approximately 78% of the Corporation's
total loan volume consisted of domestic loans and leases, with the balance
overseas. The Corporation's banking subsidiaries maintain approximately 320
branches in Massachusetts, Rhode Island, Connecticut, Maine and Vermont. The
Corporation, through its subsidiaries, has a presence in approximately 33 states
of the United States and in approximately 23 foreign countries. As of December
31, 1993, the Corporation's subsidiaries employed in the aggregate approximately
18,600 full-time equivalent employees in their domestic and foreign operations.
The executive office of the Corporation and the head office of the Bank are
located at 100 Federal Street, Boston, Massachusetts 02110 (Telephone
617-434-2200).
------------------------
The Corporation's business is generally focused in the areas of retail
banking, corporate banking and international banking. In October of 1993, the
Corporation announced certain organizational and management changes, including
the creation of a new Chairman's Office and the establishment of a twenty-nine
member Corporate Working Committee. The Chairman's Office consists of Chairman
and Chief Executive Officer Ira Stepanian, President and Chief Operating Officer
Charles K. Gifford, Vice Chairman, Chief Financial Officer and Treasurer William
J. Shea and Vice Chairman Edward A. O'Neal. The Corporation's businesses were
previously organized into five major groups and a number of other major
centralized functions. This group structure was replaced by fifteen core
business and ten corporate-wide support areas, each led by an executive with
authority to operate and manage his or her respective area. These twenty-five
executives and the members of the Chairman's Office comprise the Corporate
Working Committee. These core business and corporate-wide support executives
work closely with one another and each is linked to one of the members of the
Chairman's Office.
------------------------
COMPETITION AND INDUSTRY CONSOLIDATION
The Corporation's subsidiaries compete with other major financial
institutions, including commercial banks, investment banks, mutual savings
banks, savings and loan associations, credit unions, consumer finance companies,
money market funds and other non-banking institutions, such as insurance
companies, major retailers, brokerage firms, and investment companies in New
England, throughout the United States, and internationally. One of the principal
methods of competing effectively in the financial services industry is to
improve customer service through the quality and range of services available,
easing access to facilities and pricing.
One outgrowth of the competitive environment discussed above has been a
significant number of consolidations in the banking industry both on a national
and regional level. The Corporation engages on an
3
<PAGE> 14
ongoing basis in reviewing and discussing possible acquisitions of financial
institutions, as well as banking and other assets in order to expand its
business incident to the implementation of its business strategy. The
Corporation intends to continue to explore acquisition opportunities as they
arise in order to take advantage of the continuing consolidation in the banking
industry.
Banks and bank holding companies are extensively regulated under both
federal and state law. Activities in which the Corporation and its subsidiaries
are presently engaged or which they may undertake in the future are subject to
certain statutory and regulatory restrictions. There are also various legal
limitations upon the extent to which banking subsidiaries of the Corporation can
finance or otherwise supply funds to the Corporation or certain of its
affiliates. In addition, there are certain regulatory limitations on the payment
of dividends to the Corporation by certain of its banking subsidiaries. See also
"Supervision and Regulation."
------------------------
<TABLE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The Corporation's ratio of earnings to fixed charges and earnings to
combined fixed charges and preferred stock dividend requirements are set forth
below for the periods indicated:
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1993 1992 1991 1990 1989
----- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits.................. 1.28 x 1.34x .72x .60x 1.11x
Including Interest on Deposits.................. 1.09 1.09 .95 .89 1.04
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits.................. 1.24 1.30 .71 .59 1.10
Including Interest on Deposits.................. 1.08 1.08 .94 .88 1.04
</TABLE>
For the years ended December 31, 1991 and 1990, earnings were insufficient
to cover both fixed charges and combined fixed charges and preferred stock
dividend requirements, both excluding and including interest on deposits.
Additional earnings necessary for the years ended December 31, 1991 and 1990 to
bring the ratios of earnings to fixed charges to one-to-one on both an excluding
and including interest on deposits basis are $178.9 million and $509.3 million,
respectively. Additional earnings necessary for the years ended December 31,
1991 and 1990 to bring the ratios of earnings to combined fixed charges and
preferred stock dividend requirements to one-to-one on both an excluding and
including interest on deposits basis are $192.2 million and $523.1 million,
respectively.
For purposes of computing both the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include interest
expense (other than on deposits) and the proportion deemed representative of the
interest factor of rent expense, net of income from subleases. Fixed charges,
including interest on deposits, include all interest expense and the proportion
deemed representative of the interest factor of rent expense, net of income from
subleases. Pretax earnings required for preferred stock dividends were computed
using tax rates for the applicable year. No tax adjustments were made in loss
years.
SUPERVISION AND REGULATION
The Corporation is subject to the supervision of, and to regular inspection
by, the Federal Reserve Bank of Boston. The Corporation's banking subsidiaries
that are organized as national banking associations, the Bank, Casco and
Hospital Trust are subject to regulation by the Office of the Comptroller of the
Currency (the "OCC") and the FDIC. The Corporation's state chartered banking
subsidiaries, BKB Connecticut, Bank of Vermont, Multibank West, Mechanics Bank
and South Shore Bank, are subject to regulation by the FDIC
4
<PAGE> 15
as well as by their respective state regulators. A summary of certain of these
regulatory provisions is set forth in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1993.
In addition to extensive existing government regulation, federal and state
statutes and regulations can change in unpredictable ways, often with
significant effects on the way in which banks may conduct business. Legislation
which has been enacted in recent years has substantially increased the level of
competition among commercial banks, thrift institutions and non-banking
institutions, including insurance companies, brokerage firms, mutual funds,
investment banks and major retailers. The enactment of banking legislation such
as the Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA") and the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") have affected the banking industry by, among other things, broadening
the regulatory powers of the federal banking agencies in a number of areas.
Under FIRREA, an FDIC-insured bank can be held liable for any loss incurred by,
or reasonably expected to be incurred by, the FDIC in connection with (i) the
default of a commonly controlled FDIC-insured bank or (ii) any assistance
provided by the FDIC to a commonly controlled FDIC-insured bank in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur in the absence
of regulatory assistance. In addition, FIRREA broadened the enforcement powers
of the federal banking agencies, including the power to impose fines and
penalties, over all financial institutions. Further, under FIRREA the failure to
meet capital guidelines could subject a financial institution to a variety of
regulatory actions, including the termination of deposit insurance by the FDIC.
FDICIA also provides for expanded regulation of financial institutions.
Among other things, FDICIA establishes five capital categories for insured
depository institutions, which include "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and
"critically undercapitalized," and imposes significant restrictions on the
operations of a bank that is not adequately capitalized. Under FDICIA, an
undercapitalized bank must submit a capital restoration plan guaranteed by its
parent company. The liability of the parent company under any such guarantee is
limited to the lesser of 5% of the bank's assets at the time it became
undercapitalized, or the amount needed to comply with the plan. FDICIA imposes
progressively more restrictive constraints on the operations, management and
capital distributions of undercapitalized, significantly undercapitalized and
critically undercapitalized institutions. In addition, a bank's primary federal
banking agency is authorized to downgrade the bank's capital category to the
next lower category upon a determination that the bank is in an unsafe or
unsound condition or is engaged in an unsafe or unsound practice. An unsafe or
unsound practice can include receipt by the institution of a rating on its most
recent examination of three or worse (on a scale of 1 (best) to 5(worst)), with
respect to its asset quality, management, earnings or liquidity.
As required by FDICIA, the federal banking agencies have adopted
regulations that set specific capital ratio levels for FDICIA's five capital
categories. Pursuant to the regulations, an institution is well capitalized if
it has a total risk-based capital ratio of at least 10%, a Tier 1 risk-based
capital ratio of at least 6% and a leverage capital ratio of at least 5%. An
institution is adequately capitalized if it has a total risk-based capital ratio
of at least 8%, a Tier 1 risk-based capital ratio of at least 4% and a leverage
capital ratio of at least 4%. Under the regulations, in order to qualify as well
capitalized an institution also is required to be free from any agreement,
order, capital directive or prompt corrective action directive that requires it
to meet and maintain a higher level of capital. Under these regulations, at
December 31, 1993, the Bank would be deemed to be well capitalized, and the
Corporation's other banking subsidiaries would be deemed to be adequately
capitalized or well capitalized. The capital categories of the Corporation's
banking subsidiaries are determined solely for purposes of applying FDICIA's
prompt corrective action provisions and, accordingly, such capital categories
may not constitute an accurate representation of the overall financial condition
or prospects of any of the Corporation's banking subsidiaries.
FDICIA and the regulations issued thereunder also have (i) limited the use
of brokered deposits to well capitalized banks, and adequately capitalized banks
that have received waivers from the FDIC; (ii) established restrictions on the
permissible investments and activities of FDIC-insured state chartered banks and
their subsidiaries; (iii) implemented uniform real estate lending rules; (iv)
prescribed standards to limit the risks posed by credit exposure between banks;
(v) revised risk-based capital rules to include components
5
<PAGE> 16
for measuring the risk posed by interest rate changes; (vi) amended various
consumer banking laws; (vii) increased restrictions on loans to a bank's
insiders; (viii) established standards in a number of areas to assure bank
safety and soundness; (ix) implemented additional requirements for institutions
that have $500 million or more in total assets with respect to annual
independent audits, audit committees, and management reports related to
financial statements, internal controls and compliance with designated laws and
regulations; and (x) replaced the FDIC's flat-rate deposit insurance assessment
system with a risk-based system under which a bank is placed in one of nine risk
categories, principally on the basis of its capital level and an evaluation of
the bank's risk to the Bank Insurance Fund, and its premiums are based on the
probability of loss to the FDIC.
The Corporation continues to analyze the effect of, and address its ongoing
compliance with, the various regulations issued under FDICIA. It is anticipated
that FDICIA, and the regulations enacted thereunder, will continue to result in
more limitations on banking activities generally, and increased costs for the
Corporation and the banking industry because of higher FDIC assessments and
higher costs of compliance, documentation and record keeping.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the
Securities for general corporate purposes which may include one or more of the
following: investments in and advances to the Corporation's subsidiaries;
financing future acquisitions of financial institutions, as well as banking and
other assets; and the redemption of certain of the Corporation's outstanding
debt securities. The precise amounts and timing of the application of proceeds
used for such corporate purposes will depend upon funding requirements and the
availability of other funds to the Corporation and its subsidiaries.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following sets forth certain general terms and provisions of the Debt
Securities to which any Prospectus Supplement may relate. The particular terms
of any Debt Securities and the extent, if any, to which such general provisions
may apply to such Debt Securities will be described in the Prospectus Supplement
relating to such Debt Securities.
The Senior Securities offered hereby are to be issued under an Indenture,
dated as of June 15, 1992, between the Corporation and Norwest Bank Minnesota,
National Association ("Norwest" or the "Trustee"), as Trustee (the "Senior
Indenture") and the Subordinated Securities offered hereby are to be issued
under an Indenture, dated as of June 15, 1992, between the Corporation and
Norwest, as Trustee, as amended by the First Supplemental Indenture dated as of
June 24, 1993 (the "Subordinated Indenture"; and collectively with the Senior
Indenture, the "Indentures"), copies of which are filed as exhibits to the
Registration Statement. The following summaries of certain provisions of the
Indentures do not purport to be complete and such summaries are qualified in
their entirety by reference to all of the provisions of the Indentures,
including the definitions therein of certain terms. Whenever particular
sections, articles or defined terms of the Indentures are referred to, such
provisions or definitions are incorporated herein by reference.
Because the Corporation is a holding company, its rights and the rights of
its creditors, including the Holders of the Debt Securities, to participate in
the assets of any subsidiary, including the Bank, upon the subsidiary's
liquidation or reorganization or otherwise would be subject to the prior claims
of the subsidiary's creditors, except to the extent that the Corporation may
itself be a creditor with recognized claims against the subsidiary. There is no
restriction in the Debt Securities or either Indenture against the incurring of
indebtedness by the Corporation, the Bank or any other subsidiary of the
Corporation.
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and Debt Securities may be issued
thereunder in series up to the aggregate principal amount which may be
authorized from time to time by the Corporation. The Debt Securities will be
unsecured obligations of the Corporation. The Senior Securities will rank on a
parity with all other unsecured and unsubordinated indebtedness of the
Corporation. The Subordinated Securities will be subordinate in right of payment
as
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described below under "Subordination." Unless otherwise set forth in the
Prospectus Supplement, neither the Indentures nor the Debt Securities contain
provisions which would afford Holders of Debt Securities protection in the event
of a takeover, recapitalization or similar restructuring of the Corporation,
which could adversely affect the Debt Securities.
The Debt Securities may be issued in one or more separate series of Senior
Securities and/or one or more separate series of Subordinated Securities.
Reference is made to the Prospectus Supplement relating to the particular series
of Debt Securities offered thereby for the terms of such Debt Securities,
including, where applicable:
(1) the title of such Debt Securities (which shall distinguish such
Debt Securities from all other series of Debt Securities), which may
include medium-term notes;
(2) any limit on the aggregate principal amount or aggregate initial
offering price of the Debt Securities;
(3) the date or dates, or the method by which such date or dates will
be determined or extended, on which the principal of such Debt Securities
will be payable;
(4) the rate or rates at which the Debt Securities will bear
interest, if any, which rate may be zero in the case of certain Debt
Securities issued at an issue price representing a discount from the
principal amount payable at maturity, or the method by which such rate or
rates will be determined, and the date or dates from which such interest,
if any, will accrue or the method by which such date or dates will be
determined;
(5) the date or dates on which such interest, if any, on the Debt
Securities will be payable and the regular record date, if any, for such
Interest Payment Dates or the method by which such date or dates will be
determined;
(6) the place or places where (i) the principal of and premium, if
any, and any interest on the Debt Securities will be payable, (ii)
Registered Debt Securities may be surrendered for registration of transfer,
and (iii) Debt Securities may be surrendered for exchange;
(7) any sinking fund or analogous provisions;
(8) the period or periods within which, the price or prices at which
and the Currency in which, the Debt Securities may, pursuant to any
redemption provision, be redeemed, in whole or in part, and the other
detailed terms and provisions of any such redemption provisions;
(9) if other than denominations of $1,000 and any integral multiples
thereof, the denominations in which any Registered Debt Securities will be
issuable and, if other than a denomination of $5,000, the denominations in
which any Bearer Debt Securities will be issuable;
(10) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent, and the designation of the initial Exchange
Rate Agent, if any;
(11) if other than the principal amount, the portion of the principal
amount (or the method by which such portion will be determined) of Debt
Securities that will be payable upon declaration of acceleration of the
Maturity thereof;
(12) if other than United States dollars, the currency of payment,
including composite currencies, of principal and premium, if any, and
interest, if any, on such Debt Securities, (which may be different for
principal, premium, if any, and interest, if any);
(13) any index, formula or other method used to determine the amount
of payments of principal of and premium, if any, and interest, if any, on
the Debt Securities;
(14) whether the principal of and premium, if any, and interest, if
any, on the Debt Securities are to be payable, at the election of the
Corporation or the Holder, in a Currency other than the Currency in which
the Debt Securities are denominated or stated to be payable and the period
or periods within which
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and the terms, conditions and manner of making such election and
determining the applicable exchange rate;
(15) any terms upon which any Subordinated Securities will be
convertible into or exchangeable for Capital Securities of the Corporation;
(16) whether such Debt Securities are Senior Securities or
Subordinated Securities, or include both;
(17) whether provisions relating to defeasance and covenant defeasance
will be applicable to such series of Debt Securities;
(18) any provisions granting special rights to Holders of Debt
Securities upon the occurrence of specified events;
(19) any modifications, deletions or additions to the Events of
Default, Defaults (in the case of Subordinated Securities) or covenants of
the Corporation with respect to the Debt Securities;
(20) whether the Debt Securities are issuable as Registered Debt
Securities, Bearer Debt Securities (with or without coupons) or both, any
restrictions on the offer, sale or delivery of Bearer Debt Securities, and
whether Bearer or Registered Debt Securities may be exchanged for
Registered or Bearer Debt Securities, respectively, and the circumstances
and place or places where such exchanges may be made;
(21) whether any Debt Securities are issuable initially in temporary
or permanent global form (with or without coupons) and, if so (i) whether
(and the circumstances under which) beneficial owners of interests in
permanent global Debt Securities may exchange their interests for Debt
Securities of like tenor of any authorized form and denomination, and (ii)
the identity of any initial depository for such global Debt Securities;
(22) the date as of which any Bearer Debt Securities and any temporary
global Debt Security will be dated if other than the original issuance date
of the first Debt Security of that series to be issued;
(23) the Person to whom any interest on any Registered Debt Securities
will be payable, if other than the registered Holder, the Person to whom
any interest on any Bearer Debt Securities will be payable if other than
upon presentation and surrender of the coupons appertaining thereto, and
the extent to which and manner that any interest payable on a temporary
global Debt Security will be paid if other than as specified in the
Indentures;
(24) the form and/or terms of certificates, documents or conditions,
if any, for Debt Securities to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Debt Security of such
Series);
(25) if Debt Securities are to be issued upon the exercise of
warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(26) whether and under what circumstances the Corporation will pay
Additional Amounts regarding any tax, assessment or government charge as
contemplated by the applicable Indenture to any Holder who is not a United
States person and, if so, whether and under what terms the Corporation will
have the option to redeem such Debt Securities in lieu of paying such
Additional Amounts (and the terms of such option); and
(27) any other terms, conditions, rights and preferences (or
limitations on such rights or preferences) relating to the Debt Securities
(which terms shall not be inconsistent with the provisions of the
applicable Indenture and the Trust Indenture Act).
The Debt Securities may be issued as Original Issue Discount Debt
Securities to be sold at a substantial discount below their principal amount.
Special U.S. federal income tax and other considerations applicable thereto will
be described in the Prospectus Supplement relating thereto.
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The Debt Securities may also be issued under the Indentures upon exercise
of Debt Warrants issued by the Corporation. See "Description of Securities
Warrants."
REGISTRATION AND TRANSFER
Unless otherwise provided in the Prospectus Supplement, each series of Debt
Securities will be issued only as Registered Securities. If so provided with
respect to a series of Debt Securities, however, Debt Securities of such series
will be issued only as Bearer Securities, or in a combination of both Registered
Securities and Bearer Securities. Debt Securities issued as Bearer Securities
shall have interest coupons attached unless issued as zero coupon securities.
(Sections 201, 301. All Section references herein are to the applicable
Indenture or Indentures.) If Bearer Securities are issued, the United States
federal income tax consequences and other special considerations, procedures and
limitations applicable to such Bearer Securities will be described in the
Prospectus Supplement.
Unless otherwise provided in the Prospectus Supplement, Registered
Securities may be presented for transfer (duly endorsed or accompanied by a
written instrument of transfer, if so required by the Corporation or the
Security Registrar) or exchanged for other Debt Securities of the same series at
the office of BancBoston Trust Company of New York in New York City or the
principal office of the Bank in Boston. Such transfer or exchange shall be made
without service charge, but the Corporation may require payment of any tax or
other governmental charge as described in the applicable Indenture. Any
provisions relating to the exchange of Bearer Securities for other Debt
Securities of the same series (including, if applicable, Registered Securities)
will be described in the Prospectus Supplement. Unless otherwise specified in
the Prospectus Supplement, Registered Securities will not be exchangeable for
Bearer Securities. (Sections 301, 305, 1002.)
Unless otherwise indicated in the Prospectus Supplement, Registered
Securities, other than Registered Securities issued in global form which may be
of any denomination, will be issued without coupons and in denominations of
$1,000 or integral multiples thereof, and Bearer Securities, other than Bearer
Securities issued in global form which may be of any denomination, will be
issued in a denomination of $5,000. (Sections 301, 302.)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depositary or common depositary (the "Common
Depositary") identified in the Prospectus Supplement. Global Securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for the individual
Debt Securities represented thereby, a Global Security may not be transferred
except as a whole by the Common Depositary for such Global Security to its
nominee or another nominee or by a nominee to the Common Depositary or another
nominee or by the Common Depositary or any nominee to a successor Common
Depositary or any nominee of such successor. (Sections 203, 303, 304.)
The specific terms of the depository arrangement with respect to a series
of Debt Securities and certain limitations and restrictions, including special
U.S. federal income tax consequences, relating to a series of Bearer Securities
in the form of one or more Global Securities, will be described in the
Prospectus Supplement.
Principal and interest payments on the Global Securities registered in the
name of the Common Depositary or its nominee will be made to the Common
Depositary or its nominee, as the case may be, as the registered owner of such
Global Securities. Under the terms of the Indentures, the Corporation and the
Paying Agents will treat the persons in whose names the Global Securities are
registered as the owners of such Global Securities for the purpose of receiving
payment of principal and interest on such Global Securities and for all other
purposes whatsoever. Therefore, neither the Corporation nor the Paying Agents
has any direct responsibility or liability for the payment of principal of or
interest on the Global Securities to owners of beneficial interests in the
Global Securities.
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PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the Prospectus Supplement, payment of
principal of and premium, if any, and interest, if any, on Registered Securities
will be made at the office of BancBoston Trust Company of New York in New York
City or at the principal office of the Bank in Boston, except that, at the
option of the Corporation, interest may be paid by mailing a check to the
address of the person entitled thereto as such address appears in the Security
Register. (Sections 301, 307, 1002.)
Unless otherwise indicated in the Prospectus Supplement, payment of
principal of and premium, if any, and interest, if any, on Bearer Securities
will be made, subject to any applicable laws and regulations, at such office
outside the United States as specified in the Prospectus Supplement and as the
Corporation may designate from time to time or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in the Prospectus Supplement, payment of interest on Bearer
Securities will be made only against surrender of the coupon relating to such
Interest Payment Date. No payment with respect to any Bearer Security will be
made at any office or agency of the Corporation in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States. (Sections 301, 307.)
RESTRICTION ON CERTAIN DISTRIBUTIONS
The Corporation has agreed in the Senior Indenture that it will not make
any payment or other distribution in shares of capital stock of the Bank or its
successor, unless the Bank or its successor unconditionally guarantees payment
when due of the principal of and premium, if any, and interest, if any, on the
Senior Securities issued pursuant to the Senior Indenture. (Section 1008.)
RESTRICTIONS ON LIENS
The Senior Indenture also prohibits the Corporation from, directly or
indirectly, creating, assuming, incurring or suffering to exist any Lien upon
any shares of capital stock of the Bank (other than directors' qualifying
shares) or any shares of capital stock of a Subsidiary which owns capital stock
of the Bank, except liens for taxes, assessments, judgments or other
governmental charges or levies that are not yet due or are payable without
penalty or of which the amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which the Corporation shall set
aside on its books adequate reserves with respect thereto. (Section 1009.)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Under each Indenture, the Corporation, without the consent of the Holders
of any of the Outstanding Debt Securities under the applicable Indenture, may
consolidate with or merge into any other corporation or convey, transfer or
lease its properties and assets substantially as an entirety to any Person
provided that: (i) the successor is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the successor corporation expressly assumes, by an indenture supplemental
to the applicable Indenture, the Corporation's obligation for the due and
punctual payment of the principal of and premium, if any, and interest, if any,
on all of the Debt Securities under the applicable Indenture and the performance
of every covenant of the applicable Indenture; (iii) after giving effect to the
transaction, no Event of Default under the Senior Indenture and no Default under
the Subordinated Indenture, and no event which, after notice or lapse of time,
or both, would become an Event of Default or a Default, as the case may be,
shall have happened and be continuing; and (iv) certain other conditions are
met. (Section 801.)
MODIFICATION AND WAIVER
Each Indenture provides that modification or amendments of the Indentures
may be made by the Corporation and the Trustee, with the consent of the Holders
of 66 2/3 percent in principal amount of the Outstanding Debt Securities of each
series affected by such modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby: (a) change the Stated Maturity of
the principal of, or any installment of interest on, any Debt Security; (b)
reduce the principal amount of, or rate of interest, if any, on, or any premium
payable
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upon the redemption or (in the case of Subordinated Securities) exchange of any
Debt Security; (c) change any obligation of the Corporation to pay Additional
Amounts; (d) reduce the amount of principal of any Original Issue Discount
Security that would be due and payable upon a declaration of acceleration of the
Maturity thereof or the amount provable in bankruptcy; (e) adversely affect any
right of repayment at the option of any Holder of any Debt Security; (f) change
the place or Currency of, or (in the case of Subordinated Securities) class of
Capital Securities for, payment of principal of, or any premium or interest on,
any Debt Security; (g) impair the right to institute suit for the enforcement of
any payment on or with respect to any Debt Security on or after the Stated
Maturity thereof (or, in the case of redemption, exchange (in the case of
Subordinated Securities) or repayment at the option of the Holder, on or after
the Redemption Date, Exchange Date (in the case of Subordinated Securities) or
Repayment Date); (h) adversely affect the right to convert any Convertible
Security (in the case of Subordinated Securities); (i) reduce the percentage of
principal amount of Outstanding Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the Indentures, or
for waiver of compliance with certain provisions of the Indentures or for waiver
of certain defaults and their consequences, or reduce the requirements for
quorum or voting by the Holders; or (j) modify certain provisions of the
Indentures except to increase the percentage of Holders required to consent
thereon to amendment or modification thereof or to provide that certain other
Indenture provisions cannot be modified or waived without the consent of the
Holder of each Outstanding Debt Security affected thereby. (Section 902.)
The Holders of 66 2/3 percent in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Corporation with certain terms, conditions, or provisions of the Indentures.
(Section 1011.) The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the applicable
Indentures with respect to Debt Securities of that series and its consequences,
except a default in the payment of principal (including, in the case of
Subordinated Securities, principal to be paid by delivery of Capital Securities)
or premium, if any, or interest, if any, or in respect of a covenant or
provision which under Article 9 of each Indenture cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of such
series affected. (Section 513.)
Each Indenture provides that, in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver thereunder
or are present at a meeting of Holders for quorum purposes, and for making
calculations required under Section 313 of the Trust Indenture Act: (i) the
principal amount of an Original Issue Discount Security that may be counted in
making such determination or calculation and that shall be deemed to be
Outstanding shall be the amount of principal thereof that would be due and
payable as of the time of such determination upon acceleration of the Maturity
thereof; (ii) the principal amount of any Debt Security denominated in a Foreign
Currency that may be counted in making such determination or calculation and
that shall be deemed to be Outstanding for such purpose shall be the Dollar
equivalent, determined as of the date of original issuance of such Debt
Security, of the principal amount of such Debt Security (or, in the case of an
Original Issue Discount Security, the Dollar equivalent, determined as of the
date of original issuance of such Debt Security, of the amount determined as
provided in (i) above); and (iii) the principal amount of any Indexed Debt
Security that may be counted in making such determination or calculation and
that shall be deemed Outstanding for such purpose shall be equal to the
principal face amount of such Indexed Debt Security at original issuance, unless
otherwise provided with respect to such Debt Security. (Section 101.)
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that the Corporation may elect (1) to defease and be
discharged from its obligations with respect to any Debt Securities of or within
a series and any related coupons (except the obligations to pay any Additional
Amounts; to register the transfer of or exchange such Debt Securities and any
related coupons; to replace temporary or mutilated, destroyed, lost or stolen
Debt Securities and any related coupons; to maintain an office or agency in
respect of such Debt Securities and any related coupons; and to hold moneys for
payment in trust) ("defeasance") or (2) with respect to the Senior Indenture, to
be
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released from its obligations with respect to such Debt Securities and any
related coupons under Section 1009 of the Senior Indenture (the restriction
described above under "Restrictions on Liens") or, if provided pursuant to
Section 301 of the applicable Indenture, its obligations with respect to any
other covenant, and any omission to comply with such obligations shall not
constitute a default or an Event of Default under the Senior Indenture or a
Default under the Subordinated Indenture with respect to such Debt Securities
and any related coupons ("covenant defeasance"), in either case by (a)
depositing irrevocably with the Trustee as trust funds in trust (i) an amount in
such Currency or, with respect to the Subordinated Securities, a sum (including
Capital Securities, if any) in such Currency (or class of Capital Securities),
in which such Debt Securities and any related coupons are payable at Stated
Maturity, or (ii) Government Obligations (as defined below), in each case in an
amount which through the scheduled payment of principal of and premium, if any,
and interest, if any, in respect thereof in accordance with their terms will
provide, not later than one business day before the due date of any payment,
money in an amount or (iii) a combination of such Currency and Government
Obligations, sufficient to pay the principal (including in the case of
Subordinated Securities, principal to be paid by the delivery of Capital
Securities) of and premium, if any, and interest, if any, on the Debt Securities
of such series and any related coupons on the Stated Maturity of such principal
or installment of principal or interest and any mandatory sinking fund or
similar payments applicable to such Debt Securities and (b) satisfying certain
other conditions precedent specified in the Indentures. Such deposit and
termination is conditioned among other things upon the Corporation's delivery of
an Opinion of Counsel that the Holders of the Debt Securities of such series and
any related coupons will have no U.S. federal income tax consequences as a
result of such deposit and termination. (Senior Indenture, Article 14;
Subordinated Indenture, Article 15.)
If the Corporation exercises its covenant defeasance option with respect to
any series of Debt Securities and any related coupons and such Debt Securities
and related coupons are declared due and payable because of the occurrence of
any Event of Default other than with respect to a covenant as to which there has
been covenant defeasance described above, the money and Government Obligations
on deposit with the Trustee will be sufficient to pay amounts due on such Debt
Securities at their Stated Maturity but may not be sufficient to pay amounts due
on such Debt Securities and any related coupons at the time of acceleration
relating to such Event of Default. However, the Corporation would remain liable
to make payment of such amounts due at the time of acceleration.
The Prospectus Supplement may further describe the provisions, if any,
permitting such defeasance or covenant defeasance, including any modifications
to the provisions described above, with respect to the Debt Securities of or
within any particular series and any related coupons.
Unless otherwise specified in the Prospectus Supplement, "Government
Obligations" means securities that are (i) direct obligations of the government
which issued the Currency in which the Debt Securities of a particular series
are payable or (ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the government which issued the
Currency in which the Debt Securities of a particular series are payable, the
payment of which is unconditionally guaranteed by such government, which, in
either case, are full faith and credit obligations of such government payable in
such Currency and are not callable or redeemable at the option of the issuer
thereof, and also includes a depositary receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the holder of a depositary receipt;
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest or principal of the Government
Obligation evidenced by such depositary receipt. (Section 101.)
REGARDING THE TRUSTEE
Norwest, the Trustee under the Indentures, has its principal corporate
trust office at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.
The Corporation and its banking subsidiaries maintain banking relationships with
the Trustee.
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SENIOR SECURITIES
The Senior Securities will be direct unsecured obligations of the
Corporation and will constitute Senior Indebtedness (as defined below under
"Subordinated Securities -- Subordination") ranking on a parity with the other
Senior Indebtedness of the Corporation.
EVENTS OF DEFAULT
The following will be Events of Default under the Senior Indenture with
respect to Senior Securities of any series: (a) failure to pay principal or
premium, if any, on any Senior Security of that series at Maturity; (b) failure
to pay any interest on any Senior Security of that series when due and payable,
continued for 30 days; (c) failure to deposit any sinking fund payment, when
due, in respect of any Senior Security of that series; (d) failure to perform
any covenant or warranty of the Corporation in the Senior Indenture (other than
a covenant or warranty included in the Senior Indenture solely for the benefit
of series of Senior Securities other than that series), continued for 60 days
after written notice as provided in the Senior Indenture; (e) default under any
bond, debenture, note, mortgage, indenture, other instrument or other evidence
of Indebtedness for Money Borrowed in an aggregate principal amount exceeding
$3,000,000 by the Corporation or the Bank or its successors (including a default
with respect to Senior Securities of another series) under the terms of the
instrument or instruments by or under which such indebtedness is evidenced,
issued or secured, which default results in the acceleration of such
indebtedness, if such acceleration is not rescinded or annulled, or such
indebtedness is not discharged, within ten days after written notice as provided
in the Senior Indenture; (f) certain events in bankruptcy, insolvency or
reorganization of the Corporation or the Bank; and (g) any other Event of
Default provided with respect to Senior Securities of that series. (Senior
Indenture, Section 501.)
If an Event of Default with respect to Senior Securities of any series at
the time Outstanding occurs and is continuing, either the Trustee or the Holders
of at least 25 percent in aggregate principal amount of the Outstanding Senior
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Senior Securities or
Indexed Securities, such portion of the principal amount of such Senior
Securities as may be specified in the terms thereof) of all the Senior
Securities of that series to be due and payable immediately, by a written notice
to the Corporation (and to the Trustee, if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become immediately
due and payable. At any time after a declaration of acceleration with respect to
Senior Securities of any series has been made, but before a judgment or decree
for payment of the money due has been obtained, the Holders of a majority in
principal amount of Outstanding Senior Securities of that series may, under
certain circumstances, rescind and annul such declaration and its consequences,
if all Events of Default have been cured, or if permitted, waived, and all
payments due (other than those due as a result of acceleration) have been made
or provided for. (Senior Indenture, Section 502.)
The Senior Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the Senior
Indenture at the request or direction of any of the Holders of Senior Debt
Securities of any series or any related coupons, unless such Holders shall have
offered to the Trustee reasonable indemnity or security against the costs,
expenses and liabilities which may be incurred. (Senior Indenture, Section 602.)
Subject to certain provisions, the Holders of a majority in aggregate principal
amount of the Outstanding Senior Securities of any series will 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, with respect to the Senior Securities of that series. (Senior
Indenture, Section 512.)
The Corporation is required to deliver to the Trustee annually an Officers'
Certificate as to its performance and observance of any of the terms, provisions
and conditions with respect to certain provisions in the Senior Indenture and as
to the absence of default. (Senior Indenture, Section 1010.)
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SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Corporation. The obligations of the Corporation pursuant to the Subordinated
Securities will be subordinate in right of payment to all Senior Indebtedness as
defined below under "Subordination."
Unless otherwise indicated in the applicable Prospectus Supplement, the
maturity of the Subordinated Securities will be subject to acceleration only in
the event of certain events of bankruptcy, insolvency or reorganization of the
Corporation or the receivership of the Bank. See "Events of Default; Defaults"
below.
SUBORDINATION
The obligation of the Corporation to make any payment on account of the
principal of or premium, if any, and interest, if any, on the Subordinated
Securities will be subordinate and junior in right of payment to the
Corporation's obligations to the Holders of Senior Indebtedness of the
Corporation to the extent described in the next paragraph. (Subordinated
Indenture, Section 1301.) "Senior Indebtedness" of the Corporation is defined in
the Subordinated Indenture to mean Indebtedness for Money Borrowed of the
Corporation and all Additional Senior Obligations, whether outstanding on the
date of execution of the Subordinated Indenture or thereafter created, assumed
or incurred, except "Indebtedness Ranking on a Parity with the Securities" or
"Indebtedness Ranking Junior to the Securities" and any deferrals, renewals or
extensions of such Senior Indebtedness. "Indebtedness for Money Borrowed" of the
Corporation is defined in the Subordinated Indenture as any obligation of, or
any obligation guaranteed by, the Corporation for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligations for the payment of the purchase price
of property or assets, except Additional Senior Obligations. "Additional Senior
Obligations" of the Corporation are defined in the Subordinated Indenture to
mean, unless otherwise determined with respect to any series of Subordinated
Securities, all obligations of the Corporation associated with derivative
products such as interest rate and foreign exchange rate contracts, commodity
contracts and similar arrangements, except Indebtedness for Money Borrowed.
"Indebtedness Ranking on a Parity with the Securities" is defined in the
Subordinated Indenture to mean Indebtedness for Money Borrowed of the
Corporation, whether outstanding on the date of execution of the Subordinated
Indenture or thereafter created, assumed or incurred, which specifically by its
terms ranks equally with and not prior to the Subordinated Securities in the
right of payment upon the happening of any event of the kind specified in the
next paragraph. The indentures of the Corporation governing the subordinated
indebtedness issued by the Corporation listed in items (i) through (v) in the
immediately succeeding sentence do not include Additional Senior Obligations in
the definition of Senior Indebtedness of the Corporation. Additional Senior
Obligations was added to the definition of Senior Indebtedness of the
Corporation in the Subordinated Indenture by the First Supplemental Indenture.
Indebtedness Ranking on a parity with the Securities includes the Corporation's
(i) 10.30% Subordinated Notes due September 1, 2000, issued under an indenture,
dated as of July 15, 1988, between the Corporation and Chemical Bank as Trustee;
(ii) Subordinated Floating Rate Notes Due 2001, issued under a Fiscal and Paying
Agency Agreement, dated as of February 10, 1986, between the Corporation and
Bankers Trust Company, as fiscal agent; (iii) 9 1/2% Subordinated Capital Notes
Due 1997, issued under an indenture, dated as of June 15, 1987, between the
Corporation and The Philadelphia National Bank, as Trustee; (iv) Floating Rate
Subordinated Notes Due 1998, issued pursuant to a Fiscal and Paying Agency
Agreement, dated as of August 26, 1986, between the Corporation and Morgan
Guaranty Trust Company of New York, as fiscal agent; (v) 7 3/4% Convertible
Subordinated Debentures Due 2011, issued pursuant to an indenture, dated as of
January 15, 1986, between the Corporation and Manufacturers Hanover Trust
Company, as successor Trustee; (vi) 6 7/8% Subordinated Notes Due 2003, issued
under the Subordinated Indenture on June 30, 1993; (vii) 6 5/8% Subordinated
Notes Due 2005, issued under the Subordinated Indenture on November 22, 1993;
and (viii) 6 5/8% Subordinated Notes Due 2004, issued under the Subordinated
Indenture on January 12, 1994. "Indebtedness Ranking Junior to the Securities"
is defined in the Subordinated Indenture to mean any Indebtedness for Money
Borrowed of the Corporation, whether outstanding on the date of execution of the
Subordinated Indenture or thereafter created, assumed or incurred, which
specifically by its terms ranks junior to and not equally with or prior to the
Subordinated Securities (and any other Indebtedness Ranking on a Parity with the
Subordinated Securities) in right of payment upon the happening of any event of
the kind specified in the next paragraph. (Subordinated Indenture, Section 101.)
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In the case of any bankruptcy, insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshalling of assets and liabilities or
similar proceedings or any liquidation or winding up of or relating to the
Corporation as a whole, whether voluntary or involuntary, all obligations of the
Corporation to Holders of Senior Indebtedness of the Corporation (other than
Additional Senior Obligations) shall be entitled to be paid in full before any
payment shall be made on account of the principal (including principal to be
paid by delivery of Capital Securities) of, or premium, if any, or interest, if
any, on the Subordinated Securities of any series. In the event of any such
proceeding, after payment in full of all sums owing with respect to Senior
Indebtedness of the Corporation (other than Additional Senior Obligations), the
Holders of the Subordinated Securities of any series, together with the Holders
of any Indebtedness Ranking on a Parity with the Subordinated Securities, shall
be entitled, ratably, to be paid from the remaining assets of the Corporation
the amounts at the time due and owing on account of unpaid principal (including
principal to be paid by delivery of Capital Securities) of, and premium, if any,
and interest, if any, on the Subordinated Securities of such series and on any
indebtedness Ranking on a Parity with the Subordinated Securities before any
payment or other distribution, whether in cash, property or otherwise, shall be
made on account of any capital stock or any Indebtedness Ranking Junior to the
Securities; provided, however, that if after payment in full of all sums owing
with respect to Senior Indebtedness of the Corporation (other than Additional
Senior Obligations) any amount of cash, property or securities remains available
for payment or distribution in respect of the Subordinated Securities ("Excess
Proceeds") and creditors in respect of Additional Senior Obligations have not
received payment in full of amounts due or to become due thereon or payments of
such amounts have not been provided for, then such Excess Proceeds shall be
applied to payment in full of the Additional Senior Obligations before any
payment is made on the Subordinated Securities. (Subordinated Indenture, Section
1301.) In the event and during the continuation of any default in the payment of
principal (including principal to be paid by delivery of Capital Securities) of,
or premium, if any, or interest, if any, on, any Senior Indebtedness (other than
Additional Senior Obligations) beyond any applicable grace period, or in the
event that any event of default with respect to any Senior Indebtedness (other
than Additional Senior Obligations) shall have occurred and be continuing, or
would occur as a result of certain payments, permitting the holders of such
Senior Indebtedness (or a trustee on behalf of the holders thereof) to
accelerate the maturity thereof, then, unless and until such default or event of
default shall have been cured or waived or shall have ceased to exist, no
payment of principal (including principal to be paid by delivery of Capital
Securities) of, or premium, if any, or interest, if any, on the Subordinated
Securities, or in respect of any redemption, exchange, retirement, purchase or
other acquisition of any of the Subordinated Securities, shall be made by the
Corporation. (Subordinated Indenture, Section 1303.)
By reason of such subordination in favor of the Holders of Senior
Indebtedness of the Corporation (including to the extent set forth above,
Additional Senior Obligations), in the event of the insolvency of the
Corporation, Holders of Senior Indebtedness of the Corporation may receive more,
ratably, and Holders of the Subordinated Securities having a claim pursuant to
the Subordinated Securities may receive less, ratably, than the other creditors
of the Corporation.
EVENTS OF DEFAULT; DEFAULTS
The following will be Events of Default under the Subordinated Indenture
with respect to Subordinated Securities of any series: (a) certain events in
bankruptcy, insolvency or reorganization of the Corporation or the receivership
of the Bank; and (b) any other Event of Default provided with respect to
Subordinated Securities of that series. (Subordinated Indenture, Section 501.)
If an Event of Default with respect to Subordinated Securities of any
series at the time Outstanding occurs and is continuing, the Trustee or the
Holders of at least 25 percent in aggregate principal amount of the Outstanding
Subordinated Securities of that series may declare the principal amount (or, if
any of the Subordinated Securities of that series are Original Issue Discount
Subordinated Securities or Indexed Securities, such portion of the principal
amount of such Subordinated Securities as may be specified in the terms thereof)
of all the Subordinated Securities of that series to be due and payable
immediately, by a written notice to the Corporation (and to the Trustee, if
given by Holders), and upon any such declaration such principal amount (or
specified amount) shall become immediately due and payable. (Subordinated
Indenture, Section 502.) The foregoing provision would, in the event of the
bankruptcy or insolvency of the
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Corporation, be subject as to enforcement to the broad equity powers of a
Federal bankruptcy court and to the determination by that court of the nature
and status of the payment claims of the Holders of the Subordinated Securities.
At any time after a declaration of acceleration with respect to the Subordinated
Securities of any series has been made, but before a judgment or decree for
payment of the money due has been obtained, the Holders of a majority in
principal amount of Outstanding Subordinated Securities of that series may,
under certain circumstances, rescind and annul such acceleration but only if all
Defaults have been remedied, or if permitted, waived and if certain other
conditions have been satisfied. (Subordinated Indenture, Section 502.)
The following events will be Defaults under the Subordinated Indenture with
respect to Subordinated Securities of any series: (a) an Event of Default with
respect to such series of Subordinated Securities; (b) failure to pay principal
(including the delivery of any Capital Securities in exchange for or upon the
conversion of Subordinated Securities) or premium, if any, on any Subordinated
Security of that series at Maturity; (c) failure to pay any interest, if any, on
any Subordinated Security of that series when due and payable, continued for 30
days; (d) failure to deposit any sinking fund payment, when due, in respect of
any Subordinated Security of that series; (e) failure to perform any covenant or
warranty of the Corporation in the Subordinated Indenture (other than a covenant
or warranty included in the Subordinated Indenture solely for the benefit of
series of Subordinated Securities other than that series), continued for 60 days
after written notice as provided in the Subordinated Indenture; (f) default
under any bond, debenture, note, mortgage, indenture, other instruments or other
evidence of Indebtedness for Money Borrowed (including a default with respect to
Subordinated Securities of another series) in an aggregate principal amount
exceeding $3,000,000 by the Corporation or the Bank or its successors under the
terms of the instrument or instruments by or under which such indebtedness is
evidenced, issued or secured, which default results in the acceleration of such
indebtedness, if such acceleration is not rescinded or annulled, or such
indebtedness is not discharged, within ten days after written notice as provided
in the Subordinated Indenture; and (g) any other default provided with respect
to Subordinated Securities of that series. (Subordinated Indenture, Section
507.)
Unless otherwise provided in the terms of a series of Subordinated
Securities, there will be no right of acceleration of the payment of principal
of the Subordinated Securities of such series upon a default in the payment
(including any obligation to exchange Capital Securities for Subordinated
Securities of such series) of principal of or premium, if any, or interest, if
any, or a default in the performance of any covenant or agreement in the
Subordinated Securities or the Subordinated Indenture. If a Default with respect
to the Subordinated Securities of any series occurs and is continuing, the
Trustee may, subject to certain limitations and conditions, seek to enforce its
rights and the rights of the Holders of Subordinated Securities of such series
or the performance of any covenant or agreement in the Subordinated Indenture.
(Subordinated Indenture, Section 503.)
The Subordinated Indenture provides that, subject to the duty of the
Trustee upon the occurrence of a Default to act with the required standard of
care, the Trustee will be under no obligation to exercise any of its rights or
powers under the Subordinated Indenture at the request or direction of any of
the Holders of Subordinated Securities of any series or any related coupons
unless such Holders shall have offered to the Trustee reasonable indemnity or
security against the costs, expenses and liabilities which may be incurred.
(Subordinated Indenture, Section 602.) Subject to certain provisions, the
Holders of a majority in aggregate principal amount of the Outstanding
Subordinated Securities of any series will 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, with respect
to the Subordinated Securities of that series. (Subordinated Indenture, Section
512.)
The Corporation is required to furnish to the Trustee annually an Officer's
Certificate as to the performance and observance by the Corporation of certain
of the terms, provisions and conditions under the Subordinated Indenture and as
to the absence of default. (Subordinated Indenture, Section 1010.)
CONVERSION
The Holders of Subordinated Securities of a specified series that are
convertible into Capital Securities ("Subordinated Convertible Securities") will
be entitled at certain times specified in the Prospectus Supplement relating to
such Subordinated Convertible Securities, subject to prior redemption, exchange,
repayment or repurchase, to convert any Subordinated Convertible Securities of
such series into Capital
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Securities, at the conversion price set forth in such Prospectus Supplement,
subject to adjustment and to such other terms as are set forth in such
Prospectus Supplement.
EXCHANGEABILITY
The Holders of Subordinated Securities of any series may be obligated at
any time or at Maturity to exchange them for Capital Securities of the
Corporation. The terms of any such exchange and any such Capital Securities will
be described in the Prospectus Supplement relating to such series of
Subordinated Securities. The Common Stock, Preferred Stock, and Capital
Securities of the Corporation are described below under "Description of Common
Stock," "Description of Preferred Stock," and "Description of Capital
Securities," respectively.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of
the Corporation's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of the Preferred Stock offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating thereto. If
so indicated in the Prospectus Supplement, the terms of any series may differ
from the terms set forth below. The description of certain provisions of the
Preferred Stock does not purport to be complete and is subject to and qualified
in its entirety by reference to the provisions of the Corporation's Restated
Articles of Organization (the "Articles"), and the Certificate of Vote of
Directors Establishing a Series of a Class of Stock (the "Certificate") relating
to each particular series of the Preferred Stock, which will be filed with the
Commission at or prior to the time of the sale of such Preferred Stock.
GENERAL
Under the Corporation's Articles, the Board of Directors of the Corporation
is authorized, without further stockholder action, to provide for the issuance
of up to 10,000,000 shares of preferred stock, without par value, in one or more
series, with such designations or titles; dividend rates; special or relative
rights in the event of liquidation, distribution or sale of assets or
dissolution or winding up of the Corporation; any sinking fund provisions; any
redemption or purchase account provisions; any conversion provisions; and any
voting rights thereof, as shall be set forth as and when established by the
Board of Directors of the Corporation. The shares of any series of Preferred
Stock will be, when issued, fully paid and non-assessable and holders thereof
shall have no preemptive rights in connection therewith.
The liquidation preference of any series of the Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with changes
in market and economic conditions, the financial condition and prospects of the
Corporation and other factors that generally influence the market prices of
securities.
The shares of outstanding Preferred Stock are fully paid and
non-assessable. Section 45 of Chapter 156B of the Massachusetts General Laws
("MGL") provides that stockholders to whom a corporation makes any distribution,
whether by way of dividend, repurchase or redemption of stock or otherwise
(other than a distribution of stock of the corporation) if the corporation is,
or is thereby rendered, insolvent shall be liable to the corporation for the
amount of such distribution made, or for the amount of such distribution which
exceeds that which could have been made without rendering the corporation
insolvent, but in either event, only to the extent of the amount paid or
distributed to such stockholders, respectively.
RANK
Any series of the Preferred Stock will, with respect to dividend rights and
rights on liquidation, winding up and dissolution, rank (i) senior to all
classes of common stock and the Junior Participating Preferred Stock, Series D,
of the Corporation and with all equity securities issued by the Corporation, the
terms of which specifically provide that such equity securities will rank junior
to the Preferred Stock (collectively referred to as the "Junior Securities");
(ii) on a parity with all equity securities issued by the Corporation, the terms
of
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which specifically provide that such equity securities will rank on a parity
with the Preferred Stock, including the Corporation's five series outstanding:
Adjustable Rate Cumulative Preferred Stock, Series A, B and C, 8.60% Cumulative
Preferred Stock, Series E, and 7 7/8% Cumulative Preferred Stock, Series F
(collectively referred to as the "Parity Securities"); and (iii) junior to all
equity securities issued by the Corporation, the terms of which specifically
provide that such equity securities will rank senior to the Preferred Stock
(collectively referred to as the "Senior Securities"). As used in any
Certificate for these purposes, the term "equity securities" will not include
debt securities convertible into or exchangeable for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation, out of
funds legally available therefor, cash dividends at such rates and on such dates
as are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Dividends will be payable to holders of record of the Preferred
Stock as they appear on the books of the Corporation (or, if applicable, the
records of the Depositary referred to below under "Depositary Shares") on such
record dates, as shall be fixed by the Board of Directors. Dividends on any
series of Preferred Stock may be cumulative or non-cumulative.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities unless dividends shall have been
paid or set apart for such payment on the Preferred Stock. If full dividends are
not so paid, the Preferred Stock shall share dividends pro rata with the Parity
Securities. If dividends are cumulative, any accumulated unpaid dividends will
not bear interest.
CONVERSION
The Prospectus Supplement for any series of the Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares of
another series of Preferred Stock or Capital Securities.
For any series of Preferred Stock which is convertible, the Corporation
shall at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued Preferred Stock or Capital
Securities or shares held in its treasury or both, for the purpose of effecting
the conversion of the shares of such series of Preferred Stock, the full number
of shares of Preferred Stock or Capital Securities then deliverable upon the
conversion of all outstanding shares of such series.
No fractional shares or scrip representing fractional shares of Preferred
Stock or Capital Securities will be issued upon the conversion of shares of any
series of convertible Preferred Stock. Each holder to whom fractional shares
would otherwise be issued will instead be entitled to receive, at the
Corporation's election, either (a) a cash payment equal to the current market
price of such holder's fractional interest or (b) a cash payment equal to such
holder's proportionate interest in the net proceeds (following the deduction of
applicable transaction costs) from the sale promptly by an agent, on behalf of
such holders, of shares of Preferred Stock or Capital Securities representing
the aggregate of such fractional shares.
The holders of any series of shares of Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will receive accrued and unpaid dividends to
such redemption date) on the corresponding dividend payment date notwithstanding
the conversion thereof or the Corporation's default in payment of the dividend
due. Except as provided above, the Corporation will make no payment or allowance
for unpaid dividends, whether or not in arrears, on converted shares or for
dividends on the shares of Preferred Stock or Capital Securities issued upon
conversion.
EXCHANGEABILITY
The holders of shares of Preferred Stock of any series may be obligated at
any time or at maturity to exchange such shares for Capital Securities or other
debt securities of the Corporation. The terms of any such exchange and any such
Capital Securities or other debt securities will be described in the Prospectus
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Supplement relating to such series of Preferred Stock. The Capital Securities of
the Corporation are described below under "Description of Capital Securities."
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Corporation or the holder thereof upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Corporation or by any other method determined to be equitable by the Board of
Directors.
On and after a redemption date, unless the Corporation defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock without the prior approval of the
Board of Governors. Ordinarily, the Board of Governors would not permit such a
redemption unless (1) the shares are redeemed with the proceeds of a sale by the
bank holding company of common stock or perpetual preferred stock or (2) the
Board of Governors determines that a bank holding company's capital position
after such redemption would clearly be adequate and that its condition and
circumstances warrant the reduction of a source of permanent capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, holders of each series of Preferred Stock that ranks senior to
the Junior Securities will be entitled to receive out of assets of the
Corporation available for distribution to stockholders, before any distribution
is made on any Junior Securities, including Common Stock, distributions upon
liquidation in the amount set forth in the Prospectus Supplement relating to
such series of Preferred Stock, plus an amount equal to any accrued and unpaid
dividends. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the amounts payable with respect to the Preferred
Stock of any series and any other Parity Securities are not paid in full, the
holders of the Preferred Stock of such series and the Parity Securities will
share ratably in any such distribution of assets of the Corporation in
proportion to the full liquidation preferences to which each is entitled. After
payment of the full amount of the liquidation preference to which they are
entitled, the holders of such series of Preferred Stock will not be entitled to
any further participation in any distribution of assets of the Corporation.
However, neither (i) the merger or consolidation of the Corporation with or into
one or more corporations pursuant to any statute which provides in effect that
the stockholders of the Corporation shall continue as stockholders of the
continuing or combined corporation nor (ii) the acquisition by the Corporation
of assets or stock of another corporation shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the Corporation.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will have no voting rights.
Under Massachusetts law, a corporation may not amend its articles of
organization so as to adversely affect the rights of any class or series of its
stock without the affirmative vote of at least two-thirds (or a lesser
proportion, but not less than a majority, if so provided in the corporation's
articles of organization) of the shares of such class or series, with all series
of a class of stock which are adversely affected in the same manner voting
together as one class and any other series, which is adversely affected in a
manner different from other series of the same class, voting as a separate
class.
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Under regulations adopted by the Board of Governors, if the holders of
shares of any series of Preferred Stock of the Corporation became entitled to
vote for the election of directors, such series may then be deemed a "class of
voting securities" and a holder of 25% or more of such series (or a holder of 5%
if it otherwise exercises a "controlling influence" over the Corporation) may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act of 1956, as amended. In addition, at such time as such
series is deemed a class of voting securities, (i) any other bank holding
company may be required to obtain the approval of the Board of Governors to
acquire or retain 5% or more of such series, and (ii) any person other than a
bank holding company may be required to obtain the approval of the Board of
Governors under the Change in Bank Control Act to acquire or retain 10% or more
of such series.
PREFERRED STOCK OUTSTANDING
The Corporation has issued and outstanding five series of Preferred Stock:
Adjustable Rate Cumulative Preferred Stock (Series A, Series B and Series C),
8.60% Cumulative Preferred Stock, Series E, and 7 7/8% Cumulative Preferred
Stock, Series F. The Series A, B and C Preferred Stock are issued as whole
shares, and the Series E and Series F Preferred Stock are issued as fractional
shares represented by depositary shares ("Depositary Shares"). Each Depositary
Share represents a one-tenth interest in a share of Series E or Series F
Preferred Stock. The shares of Series E and Series F Preferred Stock underlying
the Depositary Shares are deposited with the Bank, as Depositary (the
"Depositary"), under Deposit Agreements (the "Deposit Agreement"), among the
Corporation, the Depositary and the holders from time to time of the depositary
receipts issued by the Depositary thereunder (the "Depositary Receipts"). The
Depositary Receipts evidence the Depositary Shares. Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share is entitled through the
Depositary, in proportion to the one-tenth interest in a share of Series E or
Series F Preferred Stock underlying such Depositary Share, to all rights and
preferences of a share of Series E or Series F Preferred Stock (including
dividend, voting, redemption and liquidation rights).
As of December 31, 1993, 4,593,941 shares of Preferred Stock were issued
and outstanding with an aggregate liquidation preference of $508.4 million.
Holders of the outstanding Preferred Stock (or, Depositary Shares, in the case
of the Series E and Series F Preferred Stock) have no preemptive rights with
respect to shares of any other series of Preferred Stock or with respect to
shares of the Corporation's Common Stock. The outstanding Preferred Stock, and
in the case of the Series E and Series F Preferred Stock, the Depositary Shares,
are listed on the NYSE and BSE. The Bank is the registrar, transfer agent and
dividend disbursing agent for the outstanding Preferred Stock and the Depositary
Shares.
The shares of outstanding Preferred Stock are fully paid and
non-assessable, subject to the provisions of Section 45 of the MGL. See
"DESCRIPTION OF PREFERRED STOCK -- General."
DIVIDENDS. Holders of shares (or Depositary Shares, in the case of Series
E and Series F Preferred Stock) of each series of outstanding Preferred Stock
are entitled to cumulative dividends, when, as and if declared by the
Corporation's Board of Directors. Dividends on the existing Preferred Stock must
be paid or set apart for payment before any dividends can be paid to holders of
equity securities which by their terms rank junior to the Preferred Stock,
including the Corporation's Common Stock. Dividends on the outstanding Preferred
Stock are payable in arrears on the 15th day of March, June, September and
December in each year in which the Preferred Stock is outstanding.
LIQUIDATION AND REDEMPTION. In the event of any voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or winding up of the
Corporation, the holders of each share of outstanding Preferred Stock shall be
entitled to receive, prior to any payment upon the Corporation's Common Stock,
cash in the amount of $50 in the case of the Series A and Series B Preferred
Stock, cash in the amount of $100 in the case of the Series C Preferred Stock
and cash in the amount of $250 in the case of the Series E and Series F
Preferred Stock (equivalent to $25 per Depositary Share). The outstanding
Preferred Stock is subject to partial or complete redemption at the option of
the Corporation, with the prior approval of the Federal Reserve Board (if such
approval is required at the time of redemption), except that the Series E and
Series F Preferred Stock are not redeemable prior to September 15, 1997 and July
15, 1998, respectively.
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VOTING. Holders of outstanding Preferred Stock have no general voting
rights. However, during any period in which dividends on a series of outstanding
Preferred Stock are cumulatively in arrears in the amount of six or more full
quarterly dividends, the holders of shares of such series, shall be entitled (by
series, voting as a single class) to elect one director who shall serve until
such time as the arrearage in the payment of dividends has been cured.
DEPOSITARY SHARES
GENERAL. The Corporation may, at its option, elect to offer fractional
shares of Preferred Stock, rather than full shares of Preferred Stock. In the
event such option is exercised, the Corporation will issue receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock) of
a share of a particular series of Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Corporation and a bank or trust company selected by the Corporation
having its principal office in the United States and having a combined capital
and surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion
and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. The forms of
Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement, and the following summary is qualified in its entirety
by reference to such exhibits.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Corporation or any holder of Preferred Stock,
execute and deliver temporary Depositary Receipts which are substantially
identical to, and entitle the holders thereof to all the rights pertaining to,
the definitive Depositary Receipts. Definitive Depositary Receipts will be
prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at the
Corporation's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary will distribute cash
dividends or other cash distributions received in respect of the Preferred Stock
to the record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto. If the Depositary determines that it is not feasible to make
such distribution, it may, with the approval of the Corporation, sell such
property and distribute the net proceeds from such sale to such holders.
REDEMPTION OR EXCHANGE OF STOCK. If a series of Preferred Stock
represented by Depositary Shares is to be redeemed or exchanged, the Depositary
Shares will be redeemed from the proceeds received by the Depositary resulting
from the redemption, in whole or in part, of such series of Preferred Stock held
by the Depositary, or exchanged for the Capital Securities or other debt
securities to be issued in exchange for the Preferred Stock (as the case may be,
in accordance with the terms of such series of Preferred Stock). The Depositary
Shares will be redeemed or exchanged by the Depositary at a price per Depositary
Share equal to the applicable fraction of the redemption price per share or
market value of Capital Securities or other debt securities per Depositary Share
paid in respect of the shares of Preferred Stock so redeemed or exchanged.
Whenever the Corporation redeems or exchanges shares of Preferred Stock held by
the Depositary, the Depositary will redeem or exchange as of the same date the
number of Depositary Shares representing shares of Preferred Stock so redeemed
or exchanged. If fewer than all the Depositary Shares are to be redeemed or
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<PAGE> 32
exchanged, the Depositary Shares to be redeemed or exchanged will be selected by
the Depositary by lot or pro rata or by any other equitable method as may be
determined by the Corporation.
WITHDRAWAL OF STOCK. Any holder of Depositary Shares may, upon surrender
of the Depositary Receipts therefor to the Depositary, receive the number of
whole shares of the related series of Preferred Stock and any money or other
property represented by such Depositary Receipts. Holders of Depositary Shares
making such withdrawals will be entitled to receive whole shares of Preferred
Stock on the basis set forth in the related Prospectus Supplement for such
series of Preferred Stock, but holders of such whole shares of Preferred Stock
will not thereafter be entitled to deposit such Preferred Stock under the
Deposit Agreement or to receive Depositary Receipts therefor. If the Depositary
Shares surrendered by the holder in connection with such withdrawal exceed the
number of Depositary Shares that represent the number of whole shares of
Preferred Stock to be withdrawn, the Depositary will deliver to such holder at
the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
VOTING THE PREFERRED STOCK. Upon receipt of notice of any meeting at which
the holders of the Preferred Stock are entitled to vote, the Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder of
such Depositary Shares on the record date (which will be the same date as the
record date of the Preferred Stock) will be entitled to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of the
Preferred Stock represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the amount of the Preferred Stock
represented by such Depositary Shares in accordance with such instructions, and
the Corporation will agree to take all reasonable actions which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of the Preferred Stock to the extent
it does not receive specific instructions from the holder of Depositary Shares
representing such Preferred Stock.
CONVERSION RIGHTS. Any holder of Depositary Shares, upon surrender of the
Depositary Receipts therefor and delivery of instructions to the Depositary, may
cause the Corporation to convert any specified number of whole or fractional
shares of Preferred Stock represented by the Depositary Shares into the number
of whole shares of Capital Securities or other preferred stock (as the case may
be, in accordance with the terms of such series of the Preferred Stock) of the
Corporation obtained by dividing the aggregate liquidation preference of such
Depositary Shares by the Conversion Price (as such term is defined in the
Certificate) then in effect, as such Conversion Price may be adjusted by the
Corporation from time to time as provided in the Certificate. In the event that
a holder delivers Depositary Receipts to the Depositary for conversion which in
the aggregate are convertible either into less than one whole share of such
Capital Securities or other preferred stock or into any number of whole shares
of such Capital Securities or other preferred stock plus an excess constituting
less than one whole share of such Capital Securities or other preferred stock,
the holder shall receive payment in lieu of such fractional shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT. The form of Depositary
Receipt evidencing the Depositary Shares and any provision of the Deposit
Agreement may at any time be amended by agreement between the Corporation and
the Depositary. However, any amendment which materially and adversely alters the
rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement automatically
terminates if (i) all outstanding Depositary Shares have been redeemed; or (ii)
each share of Preferred Stock has been converted into Capital Securities or
other preferred stock or has been exchanged for Capital Securities or other debt
securities; or (iii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Corporation and such distribution has been distributed to the holders of
Depositary Shares. The Deposit Agreement also may be terminated by the
Corporation at any time upon 60 days prior written notice to the Depositary, in
which case the Depositary will deliver to the record holders, upon surrender of
the Depositary Receipts, such number of whole or fractional shares of Preferred
Stock represented by such Depositary Receipts.
CHARGES OF DEPOSITARY. The Corporation will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Corporation will pay all charges of the
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<PAGE> 33
Depositary in connection with the initial deposit of the Preferred Stock and the
initial issuance of the Depositary Shares, all withdrawals of shares of
Preferred Stock by owners of Depositary Shares, and any redemption or exchange
of the Preferred Stock. Holders of Depositary Shares will pay other transfer and
other taxes and governmental charges and such other charges or expenses as are
expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS. The Depositary will forward all reports and communications
from the Corporation which are delivered to the Depositary and which the
Corporation is required to furnish to the holders of the Preferred Stock.
Neither the Depositary nor the Corporation will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Corporation
and the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares of
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting Preferred Stock for deposit, holders of Depositary Receipts
or other persons believed to be competent and on documents believed to be
genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may resign at any
time by delivering to the Corporation notice of its election to do so, and the
Corporation may at any time remove the Depositary, any such resignation or
removal to take effect upon the appointment of a successor Depositary and its
acceptance of such appointment. Such successor Depositary must be appointed
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF COMMON STOCK
GENERAL
The Corporation's Common Stock as of February 25, 1994 consisted of
200,000,000 authorized shares, par value $2.25 per share, of which there were
106,357,915 shares outstanding. The Common Stock is traded on the NYSE and the
BSE. The transfer agent and registrar for the Common Stock is the Bank.
Shares of Common Stock may be issued from time to time, in such amounts and
proportion and for such consideration as may be fixed by the Board of Directors
of the Corporation. No holder of Common Stock has any preemptive or preferential
rights to purchase or to subscribe for any shares of capital stock or other
securities which may be issued by the Corporation. The Common Stock has no
redemption or sinking fund provisions applicable thereto. The Common Stock does
not have any conversion rights.
The Corporation issues authorized but unissued shares of its Common Stock
in connection with several employee benefit and stock option and incentive plans
maintained by the Corporation or its subsidiaries, and the Corporation's
Automatic Dividend Reinvestment and Common Stock Purchase Plan. In addition,
holders of the Corporation's 7 3/4% Convertible Subordinated Debentures Due 2011
(the "Debentures") are entitled to convert their Debentures into Common Stock at
any time on or before June 15, 2011, unless previously redeemed, at a conversion
price of $23.42 per share, subject to adjustment in certain events. As of
February 25, 1994 $94,396,000 in principal amount of the Debentures was
outstanding. The Debentures are redeemable at the option of the Corporation, in
whole or in part, at prices ranging from 101.55% of the principal amount plus
accrued interest in 1994 to 100% of the principal amount plus accrued interest
in 1995.
The shares of the Common Stock are fully paid and non-assessable. Section
45 of Chapter 156B of the MGL provides that stockholders to whom a corporation
makes any distribution, whether by way of dividend, repurchase or redemption of
stock or otherwise (other than a distribution of stock of the corporation) if
the corporation is, or is thereby rendered, insolvent shall be liable to the
corporation for the amount of such distribution made, or for the amount of such
distribution which exceeds that which could have been made without rendering the
corporation insolvent, but in either event, only to the extent of the amount
paid or distributed to such stockholders, respectively.
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<PAGE> 34
LIQUIDATION
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common Stock
are entitled to receive, on a share for share basis, any assets or funds of the
Corporation which are distributable to its holders of Common Stock upon such
events, subject to the prior rights of creditors of the Corporation and holders
of the Corporation's outstanding Preferred Stock.
VOTING
Holders of Common Stock are entitled to one vote for each share on all
matters voted upon by the stockholders. The shares of Common Stock have
non-cumulative voting rights, which means that the holders of more than 50% of
the shares voting for the election of directors can elect 100% of the directors
if they choose to do so, and in such event, the holders of the remaining shares
voting for the election of directors will not be able to elect any person or
persons to the Board of Directors of the Corporation.
DIVIDENDS
When, as and if dividends, payable in cash, stock or other property, are
declared by the Board of Directors of the Corporation out of funds legally
available therefor, the holders of Common Stock are entitled to share equally,
share for share, in such dividends. The payment of dividends on the Common Stock
is subject to the prior payment of dividends on the Preferred Stock.
STOCKHOLDER RIGHTS PLAN
On June 28, 1990, the Board of Directors of the Corporation adopted a
stockholder rights plan providing for a dividend of one Preferred Stock Purchase
Right for each outstanding share of Common Stock of the Corporation (the
"Rights"). The dividend was distributed on July 12, 1990 to stockholders of
record on that date. Holders of shares of Common Stock issued subsequent to that
date receive the Rights with their shares. The Rights trade automatically with
shares of Common Stock and become exercisable only under certain circumstances
as described below. The Rights are designed to protect the interests of the
Corporation and its stockholders against coercive takeover tactics. The purpose
of the Rights is to encourage potential acquirors to negotiate with the
Corporation's Board of Directors prior to attempting a takeover and to provide
the Board with leverage in negotiating on behalf of all stockholders the terms
of any proposed takeover. The Rights may have certain anti-takeover effects. The
Rights should not, however, interfere with any merger or other business
combination approved by the Board of Directors.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a stockholder of the Corporation including, without limitation, the
right to vote or receive dividends. Upon becoming exercisable, each Right will
entitle the holder thereof to purchase from the Corporation a unit equal to one
one-thousandth of a share of Junior Participating Preferred Stock, Series D at a
purchase price of $50 per unit, subject to adjustment. In general, the Rights
will become exercisable upon the earlier of (i) ten days following a public
announcement by the Corporation that a person or group has acquired beneficial
ownership of 15% or more of the Corporation's Common Stock or voting securities
representing 15% or more of the total voting power of the Corporation (the
"Stock Acquisition Date") or (ii) ten business days (or such later date as the
Board of Directors may determine) after the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 15% or
more of the Corporation's outstanding Common Stock or voting securities
representing 15% or more of the total voting power of the Corporation.
Generally, in the event that a person or group becomes the beneficial owner
of 15% or more of the Corporation's outstanding Common Stock or voting
securities representing 15% or more of the total voting power of the Corporation
(other than pursuant to an offer for all outstanding shares of Common Stock and
other voting securities which the Board of Directors determines to be fair to
stockholders and otherwise in the best interests of the Corporation) (a "Flip-In
Event"), each Right, other than Rights owned by the acquiror, will thereafter
entitle the holder to receive, upon exercise of the Right, Common Stock having a
value equal to two times the exercise price of the Right. In addition, at any
time after a Flip-In Event, the Board of Directors may exchange the then
exercisable Rights (other than Rights held by the acquiror) for Common Stock at
an exchange ratio of one share of Common Stock for each Right. In the event
that, at any time after the Stock
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<PAGE> 35
Acquisition Date, the Corporation is acquired in a merger or other business
combination transaction or more than 50% of the Corporation's assets, cash flow
or earning power is sold or transferred (a "Flip-Over Event"), each Right, other
than Rights owned by the acquiror, will thereafter entitle the holder thereof to
receive, upon the exercise of the Right, common stock of the acquiror having a
value equal to two times the exercise price of the Right.
The Rights are redeemable by the Corporation at $.01 per Right at any time
prior to ten days after the Stock Acquisition Date (which period may be extended
at any time while the Rights are still redeemable). The Rights will expire at
the close of business on July 12, 2000, unless earlier redeemed or exchanged.
The foregoing description of the Rights does not purport to be complete and
is qualified in its entirety by the description of the Rights contained in the
Rights Agreement, dated as of June 28, 1990, between the Corporation and the
Bank, as Rights Agent, which is incorporated herein by reference to Exhibit 1 to
the Corporation's Registration Statement on Form 8-A dated July 2, 1990.
DESCRIPTION OF CAPITAL SECURITIES
GENERAL
A Prospectus Supplement may provide that Capital Securities will be
issuable in exchange for or upon conversion of Subordinated Securities or
Preferred Stock of any series. "Capital Securities" may consist of common stock,
perpetual preferred stock or, if permitted by the Corporation's primary federal
banking regulator (currently the Board of Governors), other securities of the
Corporation. The Prospectus Supplement relating to a series of Subordinated Debt
Securities or Preferred Stock which are exchangeable for or convertible into
Capital Securities will contain a description of the Capital Securities.
TENDER OFFER RULES
Rules 13e-4 and 14e-1 of the Commission's rules and regulations relating to
tender offers by issuers, as currently in effect and interpreted, may be
applicable to exchanges or conversions such as that of Capital Securities for
Subordinated Securities or Preferred Stock of any series. If, at the time of any
such exchange or conversion, Rule 13e-4 or Rule 14e-1 (or any successor rule or
rules) applies to such transactions, the Corporation will comply with such rule
(or any successor rule or rules) and will afford holders of such Subordinated
Securities or Preferred Stock all rights and will make all filings required by
such rule (or successor rule or rules).
DESCRIPTION OF SECURITIES WARRANTS
The Corporation may issue, together with any Debt Securities or Preferred
Stock or Common Stock offered by any Prospectus Supplement or separately,
Securities Warrants for the purchase of other Debt Securities or Preferred Stock
or Common Stock. The Securities Warrants are to be issued under warrant
agreements (each a "Securities Warrant Agreement") to be entered into between
the Corporation and a bank or trust company, as warrant agent ("Securities
Warrant Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Securities Warrants. The form of Securities Warrant
Agreement, including the form of certificates representing the Securities
Warrants ("Securities Warrant Certificates"), reflecting the alternative
provisions to be included in the Securities Warrant Agreements that will be
entered into with respect to particular offerings of Securities Warrants, is
filed as an exhibit to the Registration Statement. The following summaries of
certain provisions of the Securities Warrant Agreement and the Securities
Warrant Certificates do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Securities Warrant Agreement and the Securities Warrant Certificates,
respectively, including the definitions therein of certain terms. Wherever
defined terms of the Securities Warrant Agreement are referred to, it is
intended that such defined terms shall be incorporated herein by reference.
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GENERAL
The Prospectus Supplement relating to the particular issue of Securities
Warrants offered thereby will describe the terms of the offered Securities
Warrants, the Securities Warrant Agreement relating to the offered Securities
Warrants and the Securities Warrant Certificates representing the offered
Securities Warrants, including the following: (1) if the Securities Warrants are
offered for separate consideration, the offering price and the Currency for
which Securities Warrants may be purchased; (2) the designation, aggregate
principal amount, Currency and terms of the series of Debt Securities
purchasable upon exercise of the offered Securities Warrants; (3) the
designation, number, stated value and terms (including, without limitation,
liquidation, dividend, conversion and voting rights) of the series of Preferred
Stock purchasable upon exercise of Preferred Stock Warrants and the price at
which such number of shares of Preferred Stock of such series may be purchased
upon such exercise; (4) the number of shares of Common Stock purchasable upon
exercise of Common Stock Warrants and the price at which such number of shares
of Common Stock may be purchased upon such exercise; (5) the date, if any, on
and after which the offered Securities Warrants and the related Debt Securities
and/or Preferred Stock and/or Common Stock will be separately transferable; (6)
the date on which the right to exercise the offered Securities Warrants shall
commence and the date ("Expiration Date") on which such right shall expire; (7)
a discussion of the specific U.S. federal income tax, accounting and other
considerations applicable to the Securities Warrants; (8) whether the offered
Securities Warrants represented by the Securities Warrant Certificates will be
issued in registered or bearer form, and if registered, where they may be
transferred and registered; and (9) any other terms of the offered Securities
Warrants.
Securities Warrant Certificates will be exchangeable on the terms specified
in the Prospectus Supplement for new Securities Warrant Certificates of
different denominations and Securities Warrants may be exercised at the
corporate trust office of the Securities Warrant Agent or any other office
indicated in the Prospectus Supplement relating thereto. Prior to the exercise
of their Securities Warrants, holders of Securities Warrants will not have any
of the rights of holders of the Debt Securities or Preferred Stock or Common
Stock purchasable upon such exercise, including the right in the case of Debt
Warrants to payments of principal of or any premium or interest, if any, on the
Debt Securities purchasable upon such exercise, or to enforce covenants in the
Indentures and in the case of Preferred Stock Warrants and Common Stock
Warrants, the right to receive payments of dividends or distributions of any
kind, if any, on the Preferred Stock and Common Stock, respectively, purchasable
upon exercise or to exercise any applicable right to vote.
EXERCISE OF WARRANTS
Each Securities Warrant will entitle the holder to purchase such principal
amount of Debt Securities or such number of shares of Preferred Stock or Common
Stock, as the case may be, at such exercise price as shall in each case be set
forth in, or be determinable from, the Prospectus Supplement relating to the
Securities Warrants, by payment of such exercise price in full in the Currency
and in the manner specified in the Prospectus Supplement. Securities Warrants
may be exercised at any time up to the close of business on the Expiration Date
(or such later date to which such Expiration Date may be extended by the
Corporation); unexercised Securities Warrants will become void.
Upon receipt at the corporate trust office of the Securities Warrant Agent
or any other office indicated in the Prospectus Supplement of (i) payment of the
exercise price and (ii) the Securities Warrant Certificate properly completed
and duly executed, the Corporation will, as soon as practicable, forward the
Debt Securities or Preferred Stock or Common Stock purchasable upon such
exercise. If less than all of the Securities Warrants represented by such
Warrant Certificate are exercised, a new Securities Warrant Certificate will be
issued for the remaining number of Securities Warrants.
PLAN OF DISTRIBUTION
The Corporation may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents (which agents may be affiliates of the Corporation) that solicit
or receive offers on behalf of the Corporation or through dealers or through a
combination of any
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<PAGE> 37
such method of sale. Any such underwriter, dealer or agent involved in the offer
and sale of the Securities is named in the Prospectus Supplement.
The Securities may be distributed in one or more transactions from time to
time at a fixed price or prices, which may be changed, from time to time at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Corporation also may, from
time to time, authorize agents of the Corporation acting on a best efforts or
other basis to solicit or receive offers to purchase the Securities upon the
terms and conditions as are set forth in the Prospectus Supplement. In
connection with the sale of Securities, underwriters may be deemed to have
received compensation from the Corporation in the form of underwriting discounts
or commissions and may also receive commissions from purchasers of Securities
for whom they may act as agent. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent.
Any underwriting compensation paid by the Corporation to underwriters or
agents in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Securities (including agents only
soliciting or receiving offers to purchase Securities on behalf of the
Corporation) may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Securities may
be deemed to be underwriting discounts and commissions, under the Securities
Act. Underwriters, dealers and agents may be entitled, under agreements entered
into with the Corporation, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
Certain of the underwriters and their associates may be customers of,
engage in transactions with and perform services for the Corporation in the
ordinary course of business.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Corporation by Gary A. Spiess, General Counsel of the Corporation and for the
Underwriters by Brown & Wood, New York, New York. Brown & Wood will rely as to
all matters of Massachusetts law on the opinion of Mr. Spiess. As of March 7,
1994, Mr. Spiess had a direct or indirect interest in 22,254 shares of the
Corporation's Common Stock and had options to purchase an additional 55,239
shares, of which options to purchase 50,239 shares will be exercisable within 60
days after March 7, 1994.
EXPERTS
The financial statements contained in and incorporated by reference into
the Corporation's Annual Report on Form 10-K for the fiscal year ended December
31, 1993, have been incorporated herein by reference in reliance upon the
report, set forth therein of Coopers & Lybrand, independent accountants, and
upon the authority of said firm as experts in accounting and auditing. The
report, referred to above, includes an explanatory paragraph related to the
Corporation's adoption of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," and change in its method of accounting for purchased mortgage servicing
rights, effective January 1, 1993; and its adoption of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," effective December 31, 1993.
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===============================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED
HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR BY THE UNDERWRITERS.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
<TABLE>
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TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds....................... S-2
Summary Financial Data................ S-3
Recent Developments................... S-6
Description of the Notes.............. S-6
Underwriting.......................... S-10
Legal Opinions........................ S-10
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Corporation....................... 3
Competition and Industry
Consolidation....................... 3
Consolidated Ratios of Earnings to
Fixed Charges and Combined Fixed
Charges and Preferred Stock Dividend
Requirements........................ 4
Supervision and Regulation............ 4
Use of Proceeds....................... 6
Description of Debt Securities........ 6
Description of Preferred Stock........ 17
Description of Common Stock........... 23
Description of Capital Securities..... 25
Description of Securities Warrants.... 25
Plan of Distribution.................. 26
Legal Opinions........................ 27
Experts............................... 27
===============================================================================
</TABLE>
===============================================================================
$100,000,000
[EAGLE LOGO]
BANK OF BOSTON
CORPORATION
FLOATING RATE NOTES
DUE JUNE 1996
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
JUNE 15, 1994
===============================================================================
