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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): MARCH 14, 1999
BANKBOSTON CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 1-6522 04-2471221
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 434-2200
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ITEM 5. OTHER EVENTS.
BankBoston Corporation, a Massachusetts corporation ("BankBoston"), has
entered into an Agreement and Plan of Merger, dated as of March 14, 1999 (the
"Merger Agreement") with Fleet Financial Group, Inc., a Rhode Island corporation
("Fleet"), pursuant to which BankBoston will be merged with and into Fleet (the
"Merger"). The headquarters of the combined company, which will be called Fleet
Boston Corporation ("Fleet Boston"), will remain in Boston. The Merger is
intended to constitute a tax-free reorganization for federal income tax purposes
and to be accounted for as a "pooling of interests." The Merger Agreement is
filed herewith as Exhibit 2 and is incorporated by reference herein.
Under the terms of the Merger Agreement, each share of BankBoston common
stock, par value $1.00 per share ("BankBoston Common Stock") outstanding at the
effective time of the Merger (subject to certain exceptions), together with the
rights attached thereto (the "Rights") issued pursuant to the Rights Agreement,
dated as of June 28, 1990, as amended (the "Rights Agreement"), between
BankBoston and BankBoston, N.A., as rights agent, will be converted into the
right to receive 1.1844 shares of Fleet common stock, par value $0.01 per share
("Fleet Common Stock") (with cash being paid in lieu of fractional share
interests).
Consummation of the Merger is subject to various conditions, including
(i) the approval of the holders of two-thirds of the shares of BankBoston Common
Stock and of the holders of a majority of the shares of Fleet Common Stock, (ii)
the approval of the appropriate state and federal banking regulators and other
governmental agencies, (iii) the receipt by BankBoston and Fleet of letters from
their independent accountants that the Merger will qualify for "pooling of
interests" accounting treatment, (iv) the receipt by BankBoston and Fleet of an
opinion of counsel that the Merger will be treated for federal tax purposes as a
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended, and (v) other customary conditions to closing.
Following consummation of the Merger, Terrence Murray, currently Chairman
and Chief Executive Officer of Fleet, will become Chairman of Fleet Boston.
Charles K. Gifford, currently BankBoston's Chairman and Chief Executive Officer,
will serve as President and Chief Operating Officer of Fleet Boston. Mr. Gifford
will become Chief Executive Officer of Fleet Boston on December 31, 2001 (or at
such earlier time as Mr. Murray may cease to serve in such role) and Chairman
one year later (or at such earlier time as Mr. Murray may cease to serve in such
role). Following consummation of the Merger, the Board of Directors of Fleet
Boston will consist of ten individuals designated by BankBoston and twelve
individuals designated by Fleet.
In connection with the Merger Agreement, BankBoston and Fleet have
entered into reciprocal stock option agreements (the "Stock Option Agreements"),
each dated March 14, 1999. The Stock Option Agreements provide (i) BankBoston
with the right to purchase up to 113,127,918 shares of Fleet Common Stock at a
price, subject to
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certain adjustments, of $44.75 per shares (the "Fleet Option") and (ii) Fleet
with the right to purchase up to 59,005,179 shares of BankBoston Common Stock at
a price, subject to certain adjustments, of $46.938 per share (the "BankBoston
Option" and, together with the Fleet Option, the "Options"). Each of the
Options, if exercised by the grantee thereto, is intended to provide the
grantee, before giving effect to the exercise of such Option, 19.9% of the total
number of shares of the issuer then issued and outstanding. The Options will
become exercisable only upon the occurrence of certain events, none of which has
occurred as of the date hereof. Under certain circumstances, the issuer of the
Option may be required to repurchase the applicable Option or the shares
acquired pursuant to the exercise of such Option. Alternatively, the holder of
such Option could surrender the Option and any shares purchased under the Option
in exchange for a cash payment of $560 million, subject to adjustment. The
options were granted by each of BankBoston and Fleet as a condition to the other
party's entering into the Merger Agreement. The Stock Option Agreements are
filed as Exhibits 99(a) and 99(b) and are incorporated by reference herein.
The joint press release issued by BankBoston and Fleet with respect to
the Merger is filed herewith as Exhibit 99(c).
In connection with the execution of the Merger Agreement and the Stock
Option Agreements, BankBoston amended the Rights Agreement to provide that the
Rights will not become distributable or exercisable as a result of the execution
of the Merger Agreement and the Stock Option Agreement relating to the
BankBoston Option or the consummation of the transactions contemplated thereby.
At the time it amended the Rights Agreement, BankBoston adopted a substantially
identical amendment to its Renewed Rights Agreement, dated as of December 17,
1998. The amendments to the Rights Agreement and the Renewed Rights Agreement
are filed herewith as Exhibits 99(d) and 99(e) and are incorporated by reference
herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
2 Agreement and Plan of Merger, dated as of March 14, 1999, by and
between BankBoston Corporation and Fleet Financial Group, Inc.
99(a) Stock Option Agreement, dated March 14, 1999, between Fleet
Finacial Group, Inc., as issuer, and BankBoston Corporation, as
grantee.
99(b) Stock Option Agreement, dated March 14, 1999, between
BankBoston Corporation, as issuer, and Fleet Finacial Group, Inc.,
as grantee.
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99(c) Press Release issued by BankBoston Corporation and Fleet Financial
Group, Inc. on March 14, 1999.
99(d) Amendment No. 2, dated as of March 14, 1999, to the Rights
Agreement, dated as of June 28, 1990, as amended, between
BankBoston Corporation and BankBoston, N.A., as rights agent.
99(e) Amendment No. 1, dated as of March 14, 1999, to the Renewed Rights
Agreement, dated as of December 17, 1998, between BankBoston
Corporation and BankBoston, N.A., as rights agent.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BANKBOSTON CORPORATION
Dated: March 19, 1999 /s/ JANICE B. LIVA
-----------------------------
Janice B. Liva
Assistant General Counsel and
Assistant Clerk
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EXHIBIT 2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and between
FLEET FINANCIAL GROUP, INC.
and
BANKBOSTON CORPORATION
DATED AS OF MARCH 14, 1999
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TABLE OF CONTENTS
ARTICLE I
<TABLE>
THE MERGER
<S> <C> <C>
1.1. The Merger............................................................................... 2
1.2 Effective Time........................................................................... 2
1.3 Effects of the Merger.................................................................... 2
1.4 Conversion of BankBoston Common Stock.................................................... 2
1.5 Fleet Capital Stock...................................................................... 4
1.6 Options.................................................................................. 4
1.7 Articles of Incorporation of Fleet....................................................... 5
1.8 By-Laws of Fleet......................................................................... 5
1.9 Tax and Accounting Consequences.......................................................... 5
1.10 Headquarters of Surviving Corporation.................................................... 5
ARTICLE II
EXCHANGE OF SHARES
2.1 Fleet to Make Shares Available........................................................... 5
2.2 Exchange of Shares....................................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANKBOSTON
3.1 Corporate Organization................................................................... 7
3.2 Capitalization........................................................................... 8
3.3 Authority; No Violation.................................................................. 9
3.4 Consents and Approvals................................................................... 10
3.5 Reports.................................................................................. 10
3.6 Financial Statements..................................................................... 11
3.7 Broker's Fees............................................................................ 12
3.8 Absence of Certain Changes or Events..................................................... 12
3.9 Legal Proceedings........................................................................ 12
3.10 Taxes and Tax Returns.................................................................... 12
3.11 Employees................................................................................ 13
3.12 SEC Reports.............................................................................. 14
3.13 Compliance with Applicable Law........................................................... 15
3.14 Certain Contracts........................................................................ 15
3.15 Agreements with Regulatory Agencies...................................................... 16
3.16 International Operations................................................................. 16
3.17 Interest Rate Risk Management Instruments................................................ 17
3.18 Undisclosed Liabilities.................................................................. 17
3.19 Environmental Liability.................................................................. 17
3.20 State Takeover Laws; BankBoston Rights Agreement......................................... 17
3.21 Year 2000................................................................................ 18
</TABLE>
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3.22 Reorganization; Pooling of Interests..................................................... 18
3.23 Ownership of Company Common Stock; Affiliates and Associates............................. 18
3.24 Opinion.................................................................................. 18
3.25 Company Information...................................................................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF Fleet
4.1 Corporate Organization................................................................... 19
4.2 Capitalization........................................................................... 19
4.3 Authority, No Violation.................................................................. 21
4.4 Consents and Approvals................................................................... 21
4.5 Reports.................................................................................. 22
4.6 Financial Statements..................................................................... 22
4.7 Broker's Fees............................................................................ 23
4.8 Absence of Certain Changes or Events..................................................... 23
4.9 Legal Proceedings........................................................................ 23
4.10 Taxes and Tax Returns.................................................................... 24
4.11 Employees................................................................................ 24
4.12 SEC Reports.............................................................................. 25
4.13 Compliance with Applicable Law........................................................... 26
4.14 Certain Contracts........................................................................ 26
4.15 Agreements with Regulatory Agencies...................................................... 27
4.16 International Operations................................................................. 28
4.17 Interest Rate Risk Management Instruments................................................ 27
4.18 Undisclosed Liabilities.................................................................. 28
4.19 Environmental Liability.................................................................. 28
4.20 State Takeover Laws; Article Ninth of Fleet Articles; Fleet Rights Agreement............. 28
4.21 Year 2000................................................................................ 28
4.22 Reorganization; Pooling of Interests..................................................... 29
4.23 Ownership of BankBoston Common Stock; Affiliates and Associates.......................... 29
4.24 Opinion.................................................................................. 29
4.25 Parent Information....................................................................... 29
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time........................................ 29
5.2 Forbearances............................................................................. 30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters....................................................................... 32
6.2 Access to Information.................................................................... 33
6.3 Stockholders'Approvals................................................................... 34
</TABLE>
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6.4 Legal Conditions to Merger............................................................... 34
6.5 Affiliates; Publication of Combined Financial Results.................................... 34
6.6 Stock Exchange Listing................................................................... 35
6.7 Employee Benefit Plans................................................................... 35
6.8 Indemnification; Directors'and Officers'Insurance........................................ 36
6.9 Additional Agreements.................................................................... 37
6.10 Advice of Changes........................................................................ 37
6.11 Dividends................................................................................ 37
6.12 Restructuring Efforts.................................................................... 37
6.13 Executive Officers, Succession........................................................... 37
6.14 Post-Merger Board of Directors and Committees............................................ 38
6.15 Exemption from Liability Under Section 16(b) ............................................ 40
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger............................... 39
7.2 Conditions to Obligations of Fleet....................................................... 40
7.3 Conditions to Obligations of BankBoston.................................................. 40
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination.............................................................................. 41
8.2 Effect of Termination.................................................................... 42
8.3 Amendment................................................................................ 42
8.4 Extension; Waiver........................................................................ 42
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing.................................................................................. 43
9.2 Nonsurvival of Representations, Warranties and Agreements................................ 43
9.3 Expenses................................................................................. 43
9.4 Notices.................................................................................. 43
9.5 Interpretation........................................................................... 44
9.6 Counterparts............................................................................. 44
9.7 Entire Agreement......................................................................... 44
9.8 Governing Law............................................................................ 44
9.9 Publicity................................................................................ 44
9.10 Assignment; Third Party Beneficiaries.................................................... 44
9.11 Certain Agreements of Surviving Corporation.............................................. 47
</TABLE>
Exhibit A - Fleet Option Agreement
Exhibit B - BankBoston Option Agreement
Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed to BankBoston
Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed to Fleet
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INDEX OF DEFINED TERMS
<TABLE>
PAGE NO.
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Agreement...................................................................................... 1
Articles of Merger............................................................................. 2
BankBoston..................................................................................... 1
BankBoston Articles............................................................................ 8
BankBoston Benefit Plans....................................................................... 14
BankBoston Capital Stock....................................................................... 13
BankBoston Common Stock........................................................................ 2
BankBoston Contract............................................................................ 16
BankBoston Director............................................................................ 40
BankBoston Disclosure Schedule................................................................. 12
BankBoston DRIP................................................................................ 9
BankBoston ERISA Affiliate..................................................................... 14
BankBoston Option Agreement.................................................................... 1
BankBoston Preferred Stock..................................................................... 8
BankBoston Regulatory Agreement................................................................ 17
BankBoston Reports............................................................................. 15
BankBoston Rights.............................................................................. 9
BankBoston Rights Agreement.................................................................... 3
BankBoston Stock Plans......................................................................... 4
BankBoston Stockholder Rights.................................................................. 2
BankBoston 1998 10-K........................................................................... 12
BHC Act........................................................................................ 8
Bylaw Amendment................................................................................ 5
CERCLA......................................................................................... 18
CEO Succession Date............................................................................ 39
Certificate.................................................................................... 3
Chairmanship Succession Date................................................................... 39
Code........................................................................................... 1
Confidentiality Agreement...................................................................... 35
Dissenting Shares.............................................................................. 3
Distribution Date.............................................................................. 26
DPC Shares..................................................................................... 3
Effective Time................................................................................. 2
ERISA.......................................................................................... 14
Exchange Act................................................................................... 12
Exchange Agent................................................................................. 5
Exchange Fund.................................................................................. 5
Exchange Ratio................................................................................. 3
Fleet.......................................................................................... 1
Fleet Articles................................................................................. 5
Fleet Articles................................................................................. 20
Fleet Benefit Plans............................................................................ 25
</TABLE>
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Fleet Capital Stock............................................................................ 4
Fleet Common Stock............................................................................. 3
Fleet Contract................................................................................. 27
Fleet Director................................................................................. 40
Fleet Disclosure Schedule...................................................................... 20
Fleet DRIP..................................................................................... 21
Fleet ERISA Affiliate.......................................................................... 25
Fleet Option Agreement......................................................................... 1
Fleet Purchase Rights.......................................................................... 21
Fleet Preferred Stock.......................................................................... 4
Fleet Regulatory Agreement..................................................................... 28
Fleet Reports.................................................................................. 26
Fleet Rights................................................................................... 21
Fleet Rights Agreement......................................................................... 3
Fleet Stock Plans.............................................................................. 20
Fleet Stockholder Rights ...................................................................... 3
Fleet 1998 Financial Information............................................................... 23
Fleet Warrants................................................................................. 21
Regulatory Agencies............................................................................ 11
Requisite Regulatory Approvals................................................................. 41
Restated By-Laws............................................................................... 9
Rhode Island Secretary......................................................................... 2
RIBCA.......................................................................................... 2
Safety and Soundness Guidelines Concerning the Year 2000 Business.............................. 26
SBA............................................................................................ 11
SEC............................................................................................ 10
Securities Act................................................................................. 15
SRO............................................................................................ 11
State and Foreign Approvals.................................................................... 10
State Regulator................................................................................ 11
Surviving Corporation.......................................................................... 1
S-4............................................................................................ 10
Tax............................................................................................ 20
Trust Account Shares........................................................................... 3
Year 2000 Issues............................................................................... 26
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 14, 1999 (this
"Agreement"), by and between BankBoston Corporation, a Massachusetts corporation
("BankBoston"), and Fleet Financial Group, Inc., a Rhode Island corporation
("Fleet").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of BankBoston and Fleet have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for herein in which BankBoston will, subject to the terms and
conditions set forth herein, merge with and into Fleet (the "Merger"), so that
Fleet is the surviving corporation (hereinafter sometimes referred to in such
capacity as the "Surviving Corporation") in the Merger; and
WHEREAS, as a condition to, and immediately after, the execution of
this Agreement, and as a condition to the execution of the BankBoston Option
Agreement, BankBoston and Fleet are entering into a Fleet stock option agreement
(the "Fleet Option Agreement") in the form attached hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately after, the execution of
this Agreement, and as a condition to the execution of the Fleet Option
Agreement, BankBoston and Fleet are entering into a BankBoston stock option
agreement (the "BankBoston Option Agreement;" and together with the Fleet Option
Agreement, the "Option Agreements") in the form attached hereto as Exhibit B;
and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement
is intended to be and is adopted as a plan of reorganization for purposes of
Sections 354, 361 and 368 of the Code; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
<PAGE>
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) Subject to the terms and conditions of this Agreement,
in accordance with the Massachusetts Business Corporation Law (the "MBCL") and
the Rhode Island Business Corporation Act (the "RIBCA"), at the Effective Time,
BankBoston shall merge with and into Fleet. Fleet shall be the Surviving
Corporation in the Merger, and shall continue its corporate existence under the
laws of the State of Rhode Island. Upon consummation of the Merger, the separate
corporate existence of BankBoston shall terminate.
(b) Fleet may at any time change the method of effecting the
combination with BankBoston (including by providing for the merger of a wholly
owned subsidiary of Fleet with and into BankBoston or the merger of a wholly
owned subsidiary of BankBoston with and into Fleet) if and to the extent Fleet
deems such change to be desirable; PROVIDED, HOWEVER, that no such change shall
(i) alter or change the amount or kind of consideration to be issued to holders
of the capital stock of BankBoston as provided for in this Agreement (the
"Merger Consideration"), except for appropriate adjustments in the event of a
merger described in the preceding parenthetical (which shall in no event result
in a change in the relative interests in the Surviving Corporation of the
parties' respective holders of capital stock from the relative interests
contemplated by this Agreement as currently structured) (ii) adversely affect
the tax treatment of BankBoston's stockholders as a result of receiving the
Merger Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in
the respective articles of merger (the "Articles of Merger") which shall be
filed with the Secretary of State of the State of Rhode Island (the "Rhode
Island Secretary") and the Secretary of Commonwealth of the Commonwealth of
Massachusetts (the "Massachusetts Secretary") on the Closing Date. The term
"Effective Time" shall be the date and time when the Merger becomes effective,
as set forth in the Articles of Merger.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Section 7-1.1-69 of the RIBCA and Section 80
of the MBCL.
1.4 CONVERSION OF BANKBOSTON COMMON STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Fleet, BankBoston or
the holder of any of the following securities:
(a) Subject to Section 2.2(e), each share of the common stock, par
value $1.00 per share, of BankBoston issued and outstanding immediately prior to
the Effective Time (together with the rights (the "BankBoston Stockholder
Rights") attached thereto issued pursuant to that certain Rights Agreement,
dated June 28, 1990, as amended, as it may be further amended, supplemented,
restated or replaced from time to time, between BankBoston and BankBoston, N.A.,
as Rights Agent (the "BankBoston Rights Agreement"), the "BankBoston Common
Stock") except for Dissenting Shares (as defined below), shares of BankBoston
Common Stock owned by BankBoston as treasury stock or owned, directly or
indirectly, by BankBoston or Fleet or any of their respective wholly-owned
subsidiaries
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(other than shares of BankBoston Common Stock held, directly or indirectly, in
trust accounts, managed accounts and the like, or otherwise held in a fiduciary
capacity, that are beneficially owned by third parties (any such shares of
BankBoston Common Stock or Fleet Common Stock which are similarly held, whether
held directly or indirectly by BankBoston or Fleet, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of
BankBoston Common Stock held by BankBoston or Fleet or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
BankBoston Common Stock, and shares of Fleet Common Stock which are similarly
held, whether held directly or indirectly by BankBoston or Fleet or any of their
respective Subsidiaries, being referred to herein as "DPC Shares")), shall be
converted into the right to receive 1.1844 shares (the "Exchange Ratio") of the
common stock, par value $0.01 per share, of Fleet (together with the number of
preferred stock purchase rights (the "Fleet Stockholder Rights") attached
thereto pursuant to that certain Rights Agreement, dated as of November 21,
1988, as amended (as such may be further amended, supplemented, restated or
replaced from time to time), between Fleet and Fleet National Bank, as Rights
Agent (the "Fleet Rights Agreement"), the "Fleet Common Stock").
(b) All of the shares of BankBoston Common Stock converted into the
right to receive Fleet Common Stock pursuant to this Article I shall no longer
be outstanding and shall automatically be cancelled and shall cease to exist as
of the Effective Time, and each certificate (each a "Certificate") previously
representing any such shares of BankBoston Common Stock shall thereafter
represent only the right to receive (i) a certificate representing the number of
whole shares of Fleet Common Stock and (ii) cash in lieu of fractional shares
into which the shares of BankBoston Common Stock represented by such Certificate
have been converted pursuant to this Section 1.4 and Section 2.2(e).
Certificates previously representing shares of BankBoston Common Stock shall be
exchanged for certificates representing whole shares of Fleet Common Stock and
cash in lieu of fractional shares issued in consideration therefor upon the
surrender of such Certificates in accordance with Section 2.2, without any
interest thereon. If, prior to the Effective Time, the outstanding shares of
Fleet Common Stock or BankBoston Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in
capitalization, an appropriate and proportionate adjustment shall be made to the
Exchange Ratio.
(c) Notwithstanding anything in the Agreement to the contrary, at the
Effective Time, all shares of BankBoston Common Stock that are owned, directly
or indirectly, by BankBoston or Fleet or any of their respective wholly owned
Subsidiaries (other than Trust Account Shares and DPC Shares) shall be cancelled
and shall cease to exist and no stock of Fleet or other consideration shall be
delivered in exchange therefor.
(d) Notwithstanding anything in this Agreement to the contrary, shares
of BankBoston Common Stock that are outstanding immediately prior to the
Effective Time, the holders of which shall have delivered to BankBoston a
written demand for appraisal of such shares in the manner provided in Sections
86 and 89 of the MBCL ("Dissenting Shares"), shall not be converted into the
right to receive, or be exchangeable for, the shares of Fleet Common Stock
otherwise issuable in exchange for such shares of BankBoston Common Stock
pursuant to this Section 1.4 but, instead, the holders thereof shall be entitled
to payment of the appraised value of such Dissenting Shares in accordance with
the provisions of Section 89 of the MBCL;
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PROVIDED, HOWEVER, that (i) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal of such
shares (with the written approval of the Surviving Corporation if such
withdrawal is not tendered within 60 days after the Effective Time), or (ii) if
any holder fails to establish his entitlement to appraisal rights under the
MBCL, such holder or holders (as the case may be) shall forfeit the right to
appraisal of such shares of BankBoston Common Stock and each of such shares
shall thereupon be deemed to have been converted into the right to receive, and
to have become exchangeable for, as of the Effective Time, the shares of Fleet
Common Stock otherwise issuable in exchange for such shares of BankBoston Common
Stock pursuant to this Section 1.4, without any interest thereon.
1.5 FLEET CAPITAL STOCK. At and after the Effective Time, each share of
Fleet Common Stock and each share of preferred stock, par value $1.00 per share,
of Fleet ("Fleet Preferred Stock," and together with the Fleet Common Stock, the
"Fleet Capital Stock") issued and outstanding immediately prior to the Effective
Time shall remain an issued and outstanding share of common stock of the
Surviving Corporation and shall not be affected by the Merger.
1.6 OPTIONS. (a) At the Effective Time, each option granted by
BankBoston to purchase shares of BankBoston Common Stock which is outstanding
and unexercised immediately prior thereto shall cease to represent a right to
acquire shares of BankBoston Common Stock and shall be converted automatically
into an option to purchase shares of Fleet Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject to the terms
of the BankBoston 1982 Stock Option Plan, as amended, the BankBoston 1986 Stock
Option Plan, as amended, the BankBoston 1991 Long-Term Incentive Plan, the
BankBoston 1996 Long-Term Incentive Plan, the BankBoston 1997 Stock Option Plan
for Non-Employee Directors, the Society for Savings 1993 Stock Incentive Plan,
the Multibank 1982 Employee Stock Option Plan, the Boston Bancorp Stock Option
Plan, or the 1988 Stock Option Plan for Key Employees of BayBanks, Inc. and
Affiliates, as amended, BankBoston Shared Opportunities Program, BankBoston 1998
Shared Opportunities Program, 1998 Stock Option Plan for Employees of BancBoston
Robertson Stephens Inc. (collectively, the "BankBoston Stock Plans"), and the
agreements evidencing grants thereunder):
(i) The number of shares of Fleet Common Stock to be subject
to the new option shall be equal to the product of the number of shares
of BankBoston Common Stock subject to the original option and the
Exchange Ratio, provided that any fractional shares of Fleet Common
Stock resulting from such multiplication shall be rounded down to the
nearest whole share; and
(ii) The exercise price per share of Fleet Common Stock under
the new option shall be equal to the exercise price per share of
BankBoston Common Stock under the original option divided by the
Exchange Ratio, provided that such exercise price shall be rounded up
to the nearest whole cent.
(b) The adjustment provided herein with respect to any options which
are "incentive stock options" (as defined in Section 422 of the Code) shall be
and is intended to be effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the new option shall be the
same as the original option except that all references to BankBoston shall be
deemed to be references to Fleet.
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1.7 ARTICLES OF INCORPORATION OF FLEET. At the Effective Time, the
Restated Articles of Incorporation of Fleet ("Fleet Articles"), as in effect at
the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation, except to the extent otherwise contemplated by Section 1.10 below.
1.8 BY-LAWS OF FLEET. At the Effective Time, the By-Laws of Fleet, as
in effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended in accordance with applicable
law; PROVIDED, HOWEVER, that Fleet shall cause the Bylaws of Fleet to be amended
as provided in Schedule A (the "Bylaw Amendment") effective as of the Effective
Time.
1.9 TAX AND ACCOUNTING CONSEQUENCES. It is intended that the Merger
shall constitute a "reorganization" within the meaning of Section 368(a) of the
Code, that this Agreement shall constitute a "plan of reorganization" for the
purposes of Sections 354, 361 and 368 of the Code and that the Merger shall be
accounted for as a "pooling of interests" under generally accepted accounting
principles ("GAAP").
1.10 HEADQUARTERS OF SURVIVING CORPORATION; NAME OF THE SURVIVING
CORPORATION. From and after the Effective Time, the location of the headquarters
and principal executive offices of the Surviving Corporation shall be Boston,
Massachusetts, and the name of the Surviving Corporation shall be "FLEET BOSTON
CORPORATION"; PROVIDED that the parties shall consult and undertake such studies
and analyses as they shall consider necessary or desirable to determine the most
suitable name for the Surviving Corporation.
ARTICLE II
EXCHANGE OF SHARES
2.1 FLEET TO MAKE SHARES AVAILABLE. At or prior to the Effective Time,
Fleet shall deposit, or shall cause to be deposited, with a Subsidiary of Fleet,
or another bank or trust company reasonably acceptable to each of BankBoston and
Fleet (the "Exchange Agent"), for the benefit of the holders of Certificates,
for exchange in accordance with this Article II, certificates representing the
shares of Fleet Common Stock, and cash in lieu of any fractional shares (such
cash and certificates for shares of Fleet Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"), to be issued pursuant to Section 1.4 and paid pursuant
to Section 2.2(a) in exchange for outstanding shares of BankBoston Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, and in no event later than five business days thereafter, the Exchange
Agent shall mail to each holder of record of one or more Certificates a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Fleet Common Stock and any cash in lieu of fractional shares into
which the shares of BankBoston Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon proper
surrender of a Certificate or Certificates for exchange and cancellation
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to the Exchange Agent, together with such properly completed letter of
transmittal, duly executed, the holder of such Certificate or Certificates shall
be entitled to receive in exchange therefor, as applicable, (i) a certificate
representing that number of whole shares of Fleet Common Stock to which such
holder of BankBoston Common Stock shall have become entitled pursuant to the
provisions of Article I and (ii) a check representing the amount of any cash in
lieu of fractional shares which such holder has the right to receive in respect
of the Certificate or Certificates surrendered pursuant to the provisions of
this Article II, and the Certificate or Certificates so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on any cash in lieu
of fractional shares or on any unpaid dividends and distributions payable to
holders of Certificates.
(b) No dividends or other distributions declared with respect to Fleet
Common Stock shall be paid to the holder of any unsurrendered Certificate until
the holder thereof shall surrender such Certificate in accordance with this
Article II. After the surrender of a Certificate in accordance with this Article
II, the record holder thereof shall be entitled to receive any such dividends or
other distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Fleet Common Stock represented by such
Certificate.
(c) If any certificate representing shares of Fleet Common Stock is to
be issued in a name other than that in which the Certificate or Certificates
surrendered in exchange therefor is or are registered, it shall be a condition
of the issuance thereof that the Certificate or Certificates so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other taxes required by reason of the issuance of a certificate representing
shares of Fleet Common Stock in any name other than that of the registered
holder of the Certificate or Certificates surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of BankBoston of the shares of BankBoston Capital Stock that were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Fleet Common Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Fleet Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Fleet Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Fleet. In lieu of the issuance of any such fractional share, Fleet shall pay to
each former stockholder of BankBoston who otherwise would be entitled to receive
such fractional share an amount in cash determined by multiplying (i) the
average of the closing-sale prices of Fleet Common Stock on the New York Stock
Exchange, Inc. (the "NYSE") as reported by The Wall Street Journal for the five
trading days immediately preceding the date of the Effective Time by (ii) the
fraction of a share
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(rounded to the nearest thousandth when expressed in decimal form) of Fleet
Common Stock to which such holder would otherwise be entitled to receive
pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of BankBoston for 12 months after the Effective Time shall be paid
to Fleet. Any former stockholders of BankBoston who have not theretofore
complied with this Article II shall thereafter look only to Fleet for payment of
the shares of Fleet Common Stock, cash in lieu of any fractional shares and any
unpaid dividends and distributions on the Fleet Common Stock deliverable in
respect of each share of BankBoston Common Stock, as the case may be, such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Fleet,
BankBoston, the Exchange Agent or any other person shall be liable to any former
holder of shares of BankBoston Common Stock for any amount delivered in good
faith to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by
Fleet, the posting by such person of a bond in such amount as Fleet may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of Fleet
Common Stock and any cash in lieu of fractional shares deliverable in respect
thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANKBOSTON
Except as disclosed in the BankBoston disclosure schedule delivered to
Fleet concurrently herewith (the "BankBoston Disclosure Schedule"), BankBoston
hereby represents and warrants to Fleet as follows:
3.1 CORPORATE ORGANIZATION. (a) BankBoston is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. BankBoston has the corporate power and authority
to own or lease all of its properties and assets and to carry on its business as
it is now being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not, either individually or in the aggregate, have a
Material Adverse Effect on BankBoston. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to Fleet, BankBoston or the
Surviving Corporation, as the case may be, a material adverse effect on (i) the
business, results of operations or financial condition of such party and its
Subsidiaries taken as a whole or (ii) the ability of such party to timely
consummate the transactions contemplated hereby; PROVIDED, HOWEVER, that
Material Adverse Effect shall not be deemed to include the impact of (a) changes
in banking and similar laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or
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regulatory accounting requirements applicable to banks or savings associations
and their holding companies generally, (c) actions or omissions of Fleet or
BankBoston taken with the prior written consent of the other in contemplation of
the transactions contemplated hereby, (d) any changes in general economic
conditions affecting banks, savings associations or their holding companies
generally and (e) the effects of the Merger and compliance by either party with
the provisions of this Agreement on the business, financial condition or results
of operations of such party and its Subsidiaries, or the other party and its
Subsidiaries, as the case may be. As used in this Agreement, the word
"Subsidiary" when used with respect to any party, means any bank, corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes. BankBoston is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
True and complete copies of the BankBoston Articles and By-Laws of BankBoston,
as in effect as of the date of this Agreement, have previously been made
available by BankBoston to Fleet.
(b) Each BankBoston Subsidiary (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) is duly
qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property
or the conduct of its business requires it to be so qualified and in which
the failure to be so qualified would have a Material Adverse Effect on
BankBoston and (iii) has all requisite corporate power and authority to own
or lease its properties and assets and to carry on its business as now
conducted.
3.2 CAPITALIZATION. (a) The authorized capital stock of BankBoston
consists of (i) 500,000,000 shares of BankBoston Common Stock, of which, as of
March 11, 1999, 296,508,437 shares were issued and outstanding and 10,560,550
shares were held in treasury, and (ii) 10,000,000 shares of preferred stock,
without par value (the "BankBoston Preferred Stock" and together with the
BankBoston Common Stock, the "BankBoston Capital Stock"), of which no shares are
issued or outstanding as of the date hereof. All of the issued and outstanding
shares of BankBoston Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except as described in this Section 3.2(a) and except pursuant to the
terms of (i) the BankBoston Option Agreement, (ii) options issued pursuant to
the BankBoston Stock Plans and (iii) the BankBoston Rights Agreement, BankBoston
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of BankBoston Capital Stock or any other
equity securities of BankBoston or any securities representing the right to
purchase or otherwise receive any shares of BankBoston Capital Stock
(collectively, including the items contemplated by clauses (i) through (iii) of
this sentence, the "BankBoston Rights"). As of March 11, 1999, no shares of
BankBoston Capital Stock were reserved for issuance, except for 59,005,178
shares of BankBoston Common Stock reserved for issuance upon exercise of the
BankBoston Option Agreement, 12,311,154 shares of BankBoston Common Stock
reserved for issuance in connection with the BankBoston Automatic Dividend
Reinvestment and Common Stock Purchase Plan (the "BankBoston DRIP"), 68,175,454
shares of BankBoston Common Stock reserved for issuance upon the exercise of
stock options pursuant to the BankBoston Stock Plans and in respect of the
employee and director savings, compensation and deferred compensation plans
described in Section 3.11(a) of
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the BankBoston Disclosure Schedule and 200,000 shares of BankBoston Junior
Participating Preferred Stock, Series D, reserved for issuance in connection
with the BankBoston Rights Agreement. Since March 11, 1999, BankBoston has not
issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than as permitted by
Section 5.2(b). BankBoston has previously provided Fleet with a list of (i) the
aggregate number of options outstanding under the BankBoston Stock Plans as of
March 11, 1999 (other than under the Shared Opportunities Program) and the
weighted average exercise price for such options and (ii) the aggregate number
of options outstanding under the Shared Opportunities Program as of March 11,
1999 and the weighted average exercise price for such options. In no event will
the aggregate number of shares of BankBoston Common Stock outstanding
immediately prior to the Effective Time (including all shares of BankBoston
Common Stock subject to BankBoston Rights other than the BankBoston Option
Agreement) exceed the number specified in Section 3.2(a) of the BankBoston
Disclosure Schedule.
(b) BankBoston owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the BankBoston Subsidiaries, free and clear of any liens, pledges, charges,
encumbrances and security interests whatsoever ("Liens"), and all of such shares
or equity ownership interests are duly authorized and validly issued and are
fully paid, nonassessable (subject to 12 U. S. C. sections 55) and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No BankBoston Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. Section 3.2(b) of the BankBoston Disclosure
Schedule sets forth a list of the material investments of BankBoston in
corporations, joint ventures, partnerships, limited liability companies and
other entities other than its Subsidiaries (each a "Non-Subsidiary Affiliate").
3.3 AUTHORITY; NO VIOLATION. (a) BankBoston has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of BankBoston. The Board of Directors
of BankBoston has directed that this Agreement and the transactions contemplated
hereby be submitted to BankBoston's stockholders for adoption at a meeting of
such stockholders and, except for the approval of this Agreement and the
transactions contemplated hereby by the affirmative vote of the holders of
two-thirds of the outstanding shares of BankBoston Common Stock, no other
corporate proceedings on the part of BankBoston are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by BankBoston and (assuming due
authorization, execution and delivery by Fleet) constitutes a valid and binding
obligation of BankBoston, enforceable against BankBoston in accordance with its
terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by BankBoston
nor the consummation by BankBoston of the transactions contemplated hereby, nor
compliance by BankBoston with any of the terms or provisions hereof, will (i)
violate any provision of the
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BankBoston Articles or By-Laws or (ii) assuming that the consents and approvals
referred to in Section 3.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to BankBoston, any of its Subsidiaries or Non-Subsidiary Affiliates
or any of their respective properties or assets or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of BankBoston, any of its Subsidiaries or Non-Subsidiary Affiliates
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which BankBoston, any of its Subsidiaries or its Non-Subsidiary
Affiliates is a party, or by which they or any of their respective properties or
assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which, either individually or
in the aggregate, will not have a Material Adverse Effect on BankBoston.
3.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and the Federal Reserve
Act, as amended, and approval of such applications and notices, (ii) the filing
of any required applications or notices with any state or foreign agencies and
approval of such applications and notices (the "State and Foreign Approvals"),
(iii) the filing with the Securities and Exchange Commission (the "SEC") of a
joint proxy statement in definitive form relating to the meetings of
BankBoston's and Fleet's stockholders to be held in connection with this
Agreement and the transactions contemplated hereby (the "Joint Proxy
Statement"), and of the registration statement on Form S-4 (the "S-4") in which
the Joint Proxy Statement will be included as a prospectus, (iv) the filing of
the Articles of Merger with the Rhode Island Secretary pursuant to the RIBCA and
the filing of the Articles of Merger with the Secretary of Commonwealth of the
Commonwealth of Massachusetts pursuant to the MBCL, (v) any notices to or
filings with the Small Business Administration ("SBA"), (vi) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with the applicable provisions of federal and state securities laws relating to
the regulation of broker-dealers, investment advisers or transfer agents, and
federal commodities laws relating to the regulation of futures commission
merchants and the rules and regulations thereunder and of any applicable
industry self-regulatory organization ("SRO"), and the rules of the NYSE, or
which are required under consumer finance, mortgage banking and other similar
laws, (vii) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Fleet Capital Stock pursuant to this Agreement, and
(viii) the approval of this Agreement by the requisite vote of stockholders of
BankBoston, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") are necessary in connection with
(A) the execution and delivery by BankBoston of this Agreement and (B) the
consummation by BankBoston of the Merger and the other transactions contemplated
hereby.
3.5 REPORTS. BankBoston and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since January
1, 1996 with (i) the Federal Reserve
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Board, (ii) the Federal Deposit Insurance Corporation, (iii) any state
regulatory authority (each a "State Regulator"), (iv) the Office of the
Comptroller of the Currency (the "OCC"), (v) the SEC (vi) any foreign regulatory
authority and (vii) any SRO (collectively "Regulatory Agencies"), and all other
reports and statements required to be filed by them since January 1, 1996,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, any state, any
foreign entity, or any Regulatory Agency, and have paid all fees and assessments
due and payable in connection therewith, except where the failure to file such
report, registration or statement or to pay such fees and assessments, either
individually or in the aggregate, will not have a Material Adverse Effect on
BankBoston. Except for normal examinations conducted by a Regulatory Agency in
the ordinary course of the business of BankBoston and its Subsidiaries, no
Regulatory Agency has initiated or has pending any proceeding or, to the best
knowledge of BankBoston, investigation into the business or operations of
BankBoston or any of its Subsidiaries since January 1, 1996, except where such
proceedings or investigation will not, either individually or in the aggregate,
have a Material Adverse Effect on BankBoston. There (i) is no unresolved
violation, criticism, or exception by any Regulatory Agency with respect to any
report or statement relating to any examinations or inspections of BankBoston or
any of its Subsidiaries and (ii) has been no formal or informal inquiries by, or
disagreements or disputes with, any Regulatory Agency with respect to the
business, operations policies or procedures of BankBoston since January 1, 1997,
which, in the reasonable judgment of BankBoston, will, either individually or in
the aggregate, have a Material Adverse Effect on BankBoston.
3.6 FINANCIAL STATEMENTS. BankBoston has previously made available to
Fleet copies of the consolidated balance sheet of BankBoston and its
Subsidiaries as of December 31, for the fiscal years 1997 and 1998, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1996 through 1998, inclusive, as reported in
BankBoston's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 (the "BankBoston 1998 10-K") filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied
by the audit report of PricewaterhouseCoopers LLP, independent public
accountants with respect to BankBoston. The December 31, 1998 consolidated
balance sheet of BankBoston (including the related notes, where applicable)
fairly presents in all material respects the consolidated financial position of
BankBoston and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 3.6 (including the related notes, where
applicable) fairly present in all material respects the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of BankBoston and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) complies in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been prepared in all
material respects in accordance with GAAP consistently applied during the
periods involved, except, in each case, as indicated in such statements or in
the notes thereto. The books and records of BankBoston and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
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3.7 BROKER'S FEES. Neither BankBoston nor any BankBoston Subsidiary nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly
disclosed in BankBoston Reports filed prior to the date hereof, since December
31, 1998, no event or events have occurred that have had, either individually or
in the aggregate, a Material Adverse Effect on BankBoston.
(b) Except as publicly disclosed in BankBoston Reports filed prior to
the date hereof, since December 31, 1998, BankBoston and its Subsidiaries have
carried on their respective businesses in all material respects in the ordinary
course.
(c) Since December 31, 1998, neither BankBoston nor any of its
Subsidiaries has (i) except for normal increases for employees (other than
officers subject to the reporting requirements of Section 16(a) of the Exchange
Act) made in the ordinary course of business consistent with past practice or as
required by applicable law, increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect as of December
31, 1998, granted any severance or termination pay, entered into any contract to
make or grant any severance or termination pay, or paid any bonus other than the
customary year-end bonuses for fiscal 1998 and 1999 in amounts consistent with
past practice, (ii) granted any stock appreciation rights or granted any rights
to acquire any shares of its capital stock to any executive officer, director or
employee other than grants to employees (other than officers subject to the
reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice under the BankBoston
Stock Plans and except as permitted by Section 5.2(b)(iii) or (iii) suffered any
strike, work stoppage, slow-down, or other labor disturbance.
3.9 LEGAL PROCEEDINGS. (a) Neither BankBoston nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
BankBoston's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against BankBoston or any of its Subsidiaries or challenging the validity
or propriety of the transactions contemplated by this Agreement or the
BankBoston Option Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and which, if adversely determined,
will, either individually or in the aggregate, have a Material Adverse Effect on
BankBoston.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those of general application that apply to similarly
situated bank holding companies or their subsidiaries) imposed upon BankBoston,
any of its Subsidiaries or the assets of BankBoston or any of its Subsidiaries
that has had, or will have, either individually or in the aggregate, a Material
Adverse Effect on BankBoston or the Surviving Corporation.
3.10 TAXES AND TAX RETURNS. (a) Each of BankBoston and its Subsidiaries
has duly filed all federal, state, foreign and local information returns and tax
returns required to be
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filed by it on or prior to the date hereof (all such returns being accurate and
complete in all material respects) and has duly paid or made provisions for the
payment of all Taxes and other governmental charges which have been incurred or
are due or claimed to be due from it by federal, state, foreign or local taxing
authorities on or prior to the date of this Agreement (including, without
limitation, if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits, franchises, licenses,
sales and payrolls) other than (i) Taxes or other charges which are not yet
delinquent or are being contested in good faith and have not been finally
determined, or (ii) information returns, tax returns, Taxes or other
governmental charges as to which the failure to file, pay or make provision for
will not, either individually or in the aggregate, have a Material Adverse
Effect on BankBoston. The federal income tax returns of BankBoston and its
Subsidiaries have been examined by the Internal Revenue Service (the "IRS") for
all years to and including 1992 and any liability with respect thereto has been
satisfied or any liability with respect to deficiencies asserted as a result of
such examination is covered by adequate reserves. To the best of BankBoston's
knowledge, there are no material disputes pending, or claims asserted for, Taxes
or assessments upon BankBoston or any of its Subsidiaries for which BankBoston
does not have adequate reserves.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, local, and foreign income, excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon.
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by BankBoston or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding
would be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BankBoston.
3.11 EMPLOYEES. (a) The BankBoston Disclosure Schedule sets forth a
true and complete list of each material employee or director benefit or
compensation plan, arrangement or agreement, and any material bonus, incentive,
deferred compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or agreement that
is maintained, or contributed to, as of the date of this Agreement (the
"BankBoston Benefit Plans") by BankBoston, any of its Subsidiaries or by any
trade or business, whether or not incorporated (an "BankBoston ERISA
Affiliate"), all of which together with BankBoston would be deemed a "single
employer" within the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(b) BankBoston has heretofore made available to Fleet true and complete
copies of each of the BankBoston Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such BankBoston
Benefit Plan (if applicable) for each of the last two years and (ii) the most
recent determination letter from the IRS (if applicable) for such BankBoston
Benefit Plan.
(c) (i) Each of the BankBoston Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the BankBoston
Benefit Plans intended to be
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"qualified" within the meaning of Section 401 (a) of the Code is so qualified,
and there are no existing circumstances or any events that have occurred that
will adversely affect the qualified status of any such BankBoston Benefit Plan,
(iii) with respect to each BankBoston Benefit Plan that is subject to Title IV
of ERISA, the present value of accrued benefits under such BankBoston Benefit
Plan, based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such BankBoston Benefit Plan's actuary with
respect to such BankBoston Benefit Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such BankBoston Benefit
Plan allocable to such accrued benefits, (iv) no BankBoston Benefit Plan
provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees or
directors of BankBoston or its Subsidiaries beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law, (B)
death benefits or retirement benefits under any "employee pension plan" (as such
term is defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of BankBoston or its Subsidiaries or (D)
benefits the full cost of which is borne by the current or former employee or
director (or his beneficiary), (v) no liability under Title IV of ERISA has been
incurred by BankBoston, its Subsidiaries or any BankBoston ERISA Affiliate that
has not been satisfied in full, and no condition exists that presents a material
risk to BankBoston, its Subsidiaries or any BankBoston ERISA Affiliate of
incurring a liability thereunder, (vi) no BankBoston Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA), (vii) all contributions or other amounts payable by BankBoston or its
Subsidiaries as of the Effective Time with respect to each BankBoston Benefit
Plan in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) none of BankBoston, its
Subsidiaries or any other person, including any fiduciary, has engaged in a
transaction in connection with which BankBoston, its Subsidiaries or any
BankBoston Benefit Plan will be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code, and (ix) to the best knowledge of
BankBoston there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the BankBoston
Benefit Plans or any trusts related thereto that will have, either individually
or in the aggregate, a Material Adverse Effect on BankBoston.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of BankBoston or any of
its affiliates from BankBoston or any of its affiliates under any BankBoston
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any BankBoston Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting of any such benefits. Prior to the execution and delivery of
this Agreement, BankBoston amended the BankBoston, N.A. Cash Balance Retirement
Plan (and any related trust) to provide that the transactions contemplated by
this Agreement shall not constitute a "change in control" as that term is
defined in each such plan.
3.12 SEC REPORTS. BankBoston has previously made available to Fleet an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule
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and definitive proxy statement filed since January 1, 1996 by BankBoston with
the SEC pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act (the "BankBoston Reports") and prior to the date
hereof and (b) communication mailed by BankBoston to its stockholders since
January 1, 1996 and prior to the date hereof, and no such BankBoston Report or
communication, as of the date thereof, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date hereof) shall be deemed to modify
information as of an earlier date. Since January 1, 1996, as of their respective
dates, all BankBoston Reports filed under the Securities Act and the Exchange
Act complied in all material respects with the published rules and regulations
of the SEC with respect thereto.
3.13 COMPLIANCE WITH APPLICABLE LAW. (a) BankBoston and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
BankBoston or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
will not, either individually or in the aggregate, have a Material Adverse
Effect on BankBoston.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on BankBoston, BankBoston and each BankBoston Subsidiary
have properly administered all accounts for which it acts as a fiduciary,
including accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal law and
regulation and common law. None of BankBoston, any BankBoston Subsidiary, or any
director, officer or employee of BankBoston or of any BankBoston Subsidiary, has
committed any breach of trust with respect to any such fiduciary account that
will have a Material Adverse Effect on BankBoston, and the accountings for each
such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account.
3.14 CERTAIN CONTRACTS. (a) Neither BankBoston nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers or employees, other than in the ordinary course of
business consistent with past practice, (ii) which, upon the consummation or
stockholder approval of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from Fleet,
BankBoston, the Surviving Corporation, or any of their respective Subsidiaries
to any officer or employee thereof, (iii) which is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the BankBoston Reports, (iv) which materially
restricts the conduct of any line of business by BankBoston or upon consummation
of the Merger will materially restrict the ability of the Surviving Corporation
to engage in any line of business in which a bank holding company may lawfully
engage, (v) with or to a labor union or guild (including any collective
bargaining agreement) or (vi) (including any stock option plan, stock
appreciation rights plan, restricted
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stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any stockholder approval or the consummation of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. BankBoston has previously made available to Fleet true and
correct copies of all employment and deferred compensation agreements which are
in writing and to which BankBoston or any of its Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type described in this
Section 3.14(a), whether or not set forth in the BankBoston Disclosure Schedule,
is referred to herein as a "BankBoston Contract," and neither BankBoston nor any
of its Subsidiaries knows of, or has received notice of, any violation of the
above by any of the other parties thereto which, either individually or in the
aggregate, will have a Material Adverse Effect on BankBoston.
(b) (i) Each BankBoston Contract is valid and binding on BankBoston or
any of its Subsidiaries, as applicable, and in full force and effect, (ii)
BankBoston and each of its Subsidiaries has in all material respects performed
all obligations required to be performed by it to date under each BankBoston
Contract, except where such noncompliance, either individually or in the
aggregate, will not have a Material Adverse Effect on BankBoston, and (iii) no
event or condition exists which constitutes or, after notice or lapse of time or
both, will constitute, a material default on the part of BankBoston or any of
its Subsidiaries under any such BankBoston Contract, except where such default,
either individually or in the aggregate, will not have a Material Adverse Effect
on BankBoston.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither BankBoston nor any of
its Subsidiaries is subject to any cease-and-desist or other order or
enforcement action issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
has been ordered to pay any civil money penalty by, or has been since January 1,
1996, a recipient of any supervisory letter from, or since January 1, 1996, has
adopted any policies, procedures or board resolutions at the request or
suggestion of any Regulatory Agency or other Governmental Entity that currently
restricts in any material respect the conduct of its business or that in any
material manner relates to its capital adequacy, its ability to pay dividends,
its credit or risk management policies, its management or its business (each
item in this sentence, whether or not set forth in the BankBoston Disclosure
Schedule, a "BankBoston Regulatory Agreement"), nor has BankBoston or any of its
Subsidiaries been advised since January 1, 1996, by any Regulatory Agency or
other Governmental Entity that it is considering issuing, initiating, ordering,
or requesting any such BankBoston Regulatory Agreement.
3.16 INTERNATIONAL OPERATIONS. All non-U.S. banking, consumer finance
and securities operations have been conducted in compliance with the
requirements of all applicable federal and foreign laws, statutes, orders,
rules, regulations or policies and guidelines of any Regulatory Agency or
Governmental Entity, except for such noncompliance as would not have a Material
Adverse Effect on BankBoston. Neither BankBoston nor any Subsidiary is subject
to any Regulatory Agreement with any non-U.S. Regulatory Agency or Governmental
Entity, nor has BankBoston or any of its Subsidiaries been advised that any such
authority or entity is considering issuing or requesting any such agreement.
There (i) is no unresolved violation, criticism or exception by any non-U.S.
Regulatory Agency or Governmental Entity relating to
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any examinations or inspections of BankBoston or any Subsidiary and (ii) has
been no formal or informal inquiries by, or disagreements or disputes with, any
non-U.S. Regulatory Agency or Governmental Entity with respect to the business,
operations, policies and procedures of BankBoston or any of its Subsidiaries
since January 1, 1997.
3.17 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of BankBoston or
for the account of a customer of BankBoston or one of its Subsidiaries, were
entered into in the ordinary course of business and, to BankBoston's knowledge,
in accordance with prudent banking practice and applicable rules, regulations
and policies of any Regulatory Authority and with counterparties believed to be
financially responsible at the time and are legal, valid and binding obligations
of BankBoston or one of its Subsidiaries enforceable in accordance with their
terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies), and are in full force and effect.
BankBoston and each of its Subsidiaries have duly performed in all material
respects all of their material obligations thereunder to the extent that such
obligations to perform have accrued; and, to BankBoston's knowledge, there are
no material breaches, violations or defaults or allegations or assertions of
such by any party thereunder.
3.18 UNDISCLOSED LIABILITIES. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of
BankBoston included in the BankBoston 1998 Form 10-K and for liabilities
incurred in the ordinary course of business consistent with past practice, since
December 31, 1998, neither BankBoston nor any of its Subsidiaries has incurred
any liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or will have a Material Adverse Effect on BankBoston.
3.19 ENVIRONMENTAL LIABILITY. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on BankBoston of any liability or obligation arising under
common law or under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), pending or threatened against BankBoston, which liability or
obligation will, either individually or in the aggregate, have a Material
Adverse Effect on BankBoston. To the knowledge of BankBoston, there is no
reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any liability or obligation that will,
individually or in the aggregate, have a Material Adverse Effect on BankBoston.
BankBoston is not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any liability or obligation with respect to the foregoing
that will have, either individually or in the aggregate, a Material Adverse
Effect on BankBoston.
3.20 STATE TAKEOVER LAWS; BANKBOSTON RIGHTS AGREEMENT. (a) Assuming the
accuracy of the representations of Fleet set forth in Section 4.23, the Board of
Directors of BankBoston has approved the transactions contemplated by this
Agreement and the Option
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Agreements for purposes of Ch. 110F of the Massachusetts General Laws such that
the provisions of Ch. 110F of the Massachusetts General Laws will not apply to
this Agreement or the Option Agreements or any of the transactions contemplated
hereby or thereby.
(b) BankBoston has taken all action, if any, necessary or appropriate
so that the entering into of this Agreement and the Option Agreements, and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the ability of any person to exercise any BankBoston Stockholder
Rights under the BankBoston Rights Agreement or enable or require the BankBoston
Stockholder Rights to separate from the shares of BankBoston Common Stock to
which they are attached or to be triggered or become exercisable. No
"Distribution Date" or "Stock Acquisition Date" (as such terms are defined in
the BankBoston Rights Agreement) has occurred.
3.21 YEAR 2000. None of BankBoston or any of the BankBoston
Subsidiaries has received, or reasonably expects to receive, a "Year 2000
Deficiency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4,
1998). BankBoston has disclosed to Fleet a complete and accurate copy of
BankBoston's plan, including an estimate of the anticipated associated costs,
for addressing the issues ("Year 2000 Issues") set forth in the interagency
statements of the Federal Financial Institutions Examination Council addressed
to the boards of directors and chief executive officers of all federally
supervised financial institutions regarding Year 2000 safety and soundness for
insured depository institutions. Between the date of this Agreement and the
Effective Time, BankBoston shall use commercially practicable efforts to
implement such plan. BankBoston and its Subsidiaries has complied in all
material respects with the "Interagency Guidelines Establishing Year 2000
Standards for Safety and Soundness" issued pursuant to section 39 of the Federal
Deposit Insurance Act and effective October 15, 1998.
3.22 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, BankBoston has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
3.23 OWNERSHIP OF FLEET COMMON STOCK; AFFILIATES AND ASSOCIATES. Except
with respect to the Fleet Option Agreement and this Agreement, as of the date
hereof, neither BankBoston nor any of its affiliates or associates (as such
terms are defined under the Exchange Act) (i) beneficially owns, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares of
capital stock of Fleet (other than Trust Account Shares and DPC Shares).
3.24 OPINIONS. Prior to the execution of this Agreement, BankBoston has
received an opinion from each of Morgan Stanley & Co. Incorporated and Merrill
Lynch, Pierce, Fenner & Smith Incorporated to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the stockholders of BankBoston from a financial point
of view. Such opinions have not been amended or rescinded as of the date of this
Agreement.
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3.25 BANKBOSTON INFORMATION. The information relating to BankBoston and
its Subsidiaries which is provided by BankBoston or its representatives for
inclusion in the Joint Proxy Statement and the S-4, or in any other document
filed with any other regulatory agency in connection herewith, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Joint Proxy Statement (except for such
portions thereof that relate only to Fleet or any of its Subsidiaries) will
comply with the provisions of the Exchange Act and the rules and regulations
thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FLEET
Except as disclosed in the Fleet disclosure schedule delivered to
BankBoston concurrently herewith (the "Fleet Disclosure Schedule") Fleet
represents and warrants to BankBoston as follows:
4.1 CORPORATE ORGANIZATION. (a) Fleet is a corporation duly organized,
validly existing and in good standing under the laws of the State of Rhode
Island. Fleet has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Fleet. Fleet is duly registered as a bank holding company under the
BHC Act. True and complete copies of the Restated Articles of Incorporation (the
"Fleet Articles") and By-Laws of Fleet, as in effect as of the date of this
Agreement, have previously been made available by Fleet to BankBoston.
(b) Each Fleet Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether Federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Fleet, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 CAPITALIZATION. (a) The authorized capital stock of Fleet consists
of 1,200,000,000 shares of Fleet Common Stock, of which, as of March 11,1999, no
more than 568,482,000 shares were issued and outstanding, and 16,000,000 shares
of preferred stock, $1.00 par value, of which (i) 500,000 shares were
designated, issued and outstanding as Fleet 9.35% Cumulative Preferred, (ii)
765,010 shares were designated, issued and outstanding as Fleet Series V 7.25%
Perpetual Preferred, (iii) 600,000 shares were designated, issued and
outstanding as Fleet Series VI 6.75% Perpetual Preferred, (iv) 700,000 shares
were designated, issued and outstanding as Fleet Series VII Fixed/Adjustable
Rate Cumulative Preferred, (v) 200,000 shares
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were designated, issued and outstanding as Fleet Series VIII Fixed/Adjustable
Rate Noncumulative Preferred and (vi) 6,000,000 shares were designated and no
shares were issued or outstanding as Cumulative Participating Junior Preferred
Stock. As of March 11, 1999, no more than 2,736,000 shares of Fleet Common Stock
were held in Fleet's treasury. As of the date hereof, no shares of Fleet Common
Stock or Fleet Preferred Stock were reserved for issuance, except as described
in this Section 4.2(a) and except for (i) the shares of Fleet Common Stock
issuable pursuant to the Fleet Option Agreement, (ii) 47,000,000 shares reserved
for issuance upon exercise of options issued pursuant to employee and director
stock plans of Fleet in effect as of the date hereof (the "Fleet Stock Plans"),
(iii) 1,927,328 shares reserved for issuance pursuant to the Fleet Dividend
Reinvestment Plan (the "Fleet DRIP"), (iv) 17,891,282 shares reserved for
issuance pursuant to outstanding warrants to purchase Fleet Common Stock (the
"Fleet Warrants"), (v) 13,000,000 shares reserved for issuance pursuant to
outstanding rights to purchase Fleet Common Stock (the "Fleet Purchase Rights"),
(vi) 6,000,000 shares of Cumulative Participating Junior Preferred Stock, $1.00
par value, reserved for issuance pursuant to the Fleet Rights Agreement. All of
the issued and outstanding shares of Fleet Capital Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except for this Agreement, the Fleet
Option Agreement, the Fleet Stock Plans, the Fleet Warrants, the Fleet Purchase
Rights and the Fleet Rights Agreement, Fleet does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Fleet Capital Stock or any other equity securities of Fleet or any securities
representing the right to purchase or otherwise receive any shares of Fleet
Capital Stock (collectively, "Fleet Rights"). Since March 11, 1999, Fleet has
not issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than as permitted by
Section 5.2(b) and pursuant to (A) the exercise of employee stock options
granted prior to such date, (B) the Fleet DRIP, (C) the Fleet Warrants, (D) the
Fleet Purchase Rights and (E) pursuant to the Fleet Option Agreement. Fleet has
previously provided BankBoston with a list of the aggregate number of options
outstanding under the Fleet Stock Plans as of March 11, 1999 and the weighted
average exercise price for such options. In no event will the aggregate number
of shares of Fleet Common Stock outstanding at the Effective Time (including all
shares of Fleet Common Stock subject to then-outstanding Fleet Rights other than
the Fleet Option Agreement) exceed the number specified in Section 4.2(a) of the
Fleet Disclosure Schedule.
(b) Fleet owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the Fleet Subsidiaries, free and clear of any Liens, and all of such shares
or equity ownership interests are duly authorized and validly issued and are
fully paid, nonassessable (subject to 12 U.S.C. sections 55) and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Fleet Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary. Section 4.2(b) of the Fleet Disclosure Schedule sets forth a
list of the material investments of Fleet in Non-Subsidiary Affiliates.
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4.3 AUTHORITY, NO VIOLATION. (a) Fleet has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Fleet. The Board of Directors of
Fleet has directed that this Agreement and the transactions contemplated hereby
be submitted to Fleet's stockholders for adoption at a meeting of such
stockholders and, except for the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding shares of Fleet Common
Stock, no other corporate proceedings on the part of Fleet are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Fleet and
(assuming due authorization, execution and delivery by BankBoston) constitutes a
valid and binding obligation of Fleet, enforceable against Fleet in accordance
with its terms (except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by Fleet, nor
the consummation by Fleet of the transactions contemplated hereby, nor
compliance by Fleet with any of the terms or provisions hereof, will (i) violate
any provision of the Fleet Articles or By-Laws, or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Fleet, any of its Subsidiaries or Non-Subsidiary
Affiliates or any of their respective properties or assets or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Fleet, any of its Subsidiaries or its Non-Subsidiary Affiliates under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Fleet, any of its Subsidiaries or Non-Subsidiary Affiliates
is a party, or by which they or any of their respective properties or assets may
be bound or affected, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults which either individually or in the
aggregate will not have a Material Adverse Effect on Fleet.
4.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act and
the Federal Reserve Act, as amended, and approval of such applications and
notices, (ii) the State and Foreign Approvals, (iii) the filing with the SEC of
the Joint Proxy Statement and the filing and declaration of effectiveness of the
S-4, (iv) the filing of the Articles of Merger with the Rhode Island Secretary
pursuant to the RIBCA and the issuance by the Rhode Island Secretary of a
Certificate of Merger and the filing of the Articles of Merger with the
Secretary of Commonwealth of the Commonwealth of Massachusetts pursuant to the
MBCL, (v) any notices to or filings with the SBA, (vi) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with the applicable provisions of federal and state securities laws relating to
the regulation of broker-dealers, investment advisers or transfer agents, and
federal commodities laws relating to the regulation of futures commission
merchants and the rules and regulations thereunder and of any applicable SRO,
and the rules of the NYSE, or which are required under consumer finance,
mortgage banking and other similar laws, (vii) such filings and
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approvals as are required to be made or obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of the shares of
Fleet Capital Stock pursuant to this Agreement and (viii) the approval of this
Agreement by the requisite vote of the stockholders of Fleet, no consents or
approvals of or filings or registrations with any Governmental Entity are
necessary in connection with (A) the execution and delivery by Fleet of this
Agreement and (B) the consummation by Fleet of the Merger and the other
transactions contemplated hereby.
4.5 REPORTS. Fleet and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1996 with the Regulatory Agencies, and all other reports and statements required
to be filed by them since January 1, 1996, including, without limitation, any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, any foreign entity or any
Regulatory Agency, and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report, registration
or statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Fleet. Except for normal
examinations conducted by a Regulatory Agency in the ordinary course of the
business of Fleet and its Subsidiaries, no Regulatory Agency has initiated or
has pending any proceeding or, to the best knowledge of Fleet, investigation
into the business or operations of Fleet or any of its Subsidiaries since
January 1, 1996, except where such proceedings or investigation will not have,
either individually or in the aggregate, a Material Adverse Effect on Fleet.
There (i) is no unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations or
inspections of Fleet or any of its Subsidiaries, and (ii) has been no formal or
informal inquiries by, or disagreements or disputes with, any Regulatory Agency
with respect to the business, operations, policies or procedures of Fleet since
January 1, 1997, which, in the reasonable judgment of Fleet, will have, either
individually or in the aggregate, a Material Adverse Effect on Fleet.
4.6 FINANCIAL STATEMENTS. Fleet has previously provided to BankBoston
copies of the audited consolidated balance sheets of Fleet and its Subsidiaries
as of December 31, for the fiscal years 1997 and 1998, and the related audited
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1996 through 1998, inclusive (the "Fleet 1998
Financial Information"), in each case accompanied by the audit report of KPMG
LLP, independent public accountants with respect to Fleet. The December 31, 1998
consolidated balance sheet of Fleet (including the related notes, where
applicable) fairly presents in all material respects the consolidated financial
position of Fleet and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 4.6 (including the related
notes, where applicable) fairly present in all material respects the results of
the consolidated operations and changes in stockholders' equity and consolidated
financial position of Fleet and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth, subject to normal
year-end audit adjustments in the case of unaudited statements; each of such
statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto. The books and records of Fleet and its Subsidiaries have been,
and are being, maintained in all
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material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
4.7 BROKER'S FEES. Neither Fleet nor any Fleet Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any brokers fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreements.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly
disclosed in Fleet Reports filed prior to the date hereof, since December 31,
1998, no event or events have occurred which has had, individually or in the
aggregate, a Material Adverse Effect on Fleet.
(b) Except as publicly disclosed in Fleet Reports filed prior to the
date hereof, since December 31, 1998, Fleet and its Subsidiaries have carried on
their respective businesses in all material respects in the ordinary course.
(c) Since December 31, 1998, neither Fleet nor any of its Subsidiaries
has (i) except for normal increases for employees (other than officers subject
to the reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice or as required by
applicable law, increased the wages, salaries, compensation, pension, or other
fringe benefits or perquisites payable to any executive officer, employee, or
director from the amount thereof in effect as of December 31, 1998, granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than the customary
year-end bonuses for fiscal 1998 and 1999 in amounts consistent with past
practice, (ii) granted any stock appreciation rights or granted any rights to
acquire any shares of its capital stock to any executive officer, director or
employee other than grants to employees (other than officers subject to the
reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice under the Fleet Stock
Plans and except as permitted by Section 5.2(b)(ii) or (iii) suffered any
strike, work stoppage, slow-down, or other labor disturbance.
4.9 LEGAL PROCEEDINGS. (a) Neither Fleet nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of Fleet's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against Fleet
or any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Fleet Option Agreement as to
which, in any such case, there is a reasonable probability of an adverse
determination and which, if adversely determined, will have, either individually
or in the aggregate, a Material Adverse Effect on Fleet.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those of general application that apply to similarly
situated bank holding companies or their subsidiaries) imposed upon Fleet, any
of its Subsidiaries or the assets of Fleet or any of its Subsidiaries that has
had or will have, either individually or in the aggregate, a Material Adverse
Effect on Fleet or the Surviving Corporation.
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4.10 TAXES AND TAX RETURNS. Each of Fleet and its Subsidiaries has duly
filed all federal, state, foreign and local information returns and tax returns
required to be filed by it on or prior to the date hereof (all such returns
being accurate and complete in all material respects) and has duly paid or made
provisions for the payment of all Taxes and other governmental charges which
have been incurred or are due or claimed to be due from it by federal, state,
foreign or local taxing authorities on or prior to the date of this Agreement
(including, without limitation, if and to the extent applicable, those due in
respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
which are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not have, either individually or in the aggregate, a Material
Adverse Effect on Fleet. The federal income tax returns of Fleet and its
Subsidiaries have been examined by the IRS through 1990 and any liability with
respect thereto has been satisfied or any liability with respect to deficiencies
asserted as a result of such examination is covered by adequate reserves. To the
best of Fleet's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon Fleet or any of its Subsidiaries for
which Fleet does not have adequate reserves.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Fleet or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding
would be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Fleet.
4.11 EMPLOYEES. (a) The Fleet Disclosure Schedule sets forth a true and
complete list of each material employee benefit or compensation plan,
arrangement or agreement and any material bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or agreement that is
maintained, or contributed to, as of the date of this Agreement (the "Fleet
Benefit Plans") by Fleet, any of its Subsidiaries or by any trade or business,
whether or not incorporated (a "Fleet ERISA Affiliate"), all of which together
with Fleet would be deemed a "single employer" within the meaning of Section
4001 of ERISA.
(b) Fleet has heretofore made available to BankBoston true and complete
copies of each of the Fleet Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such Fleet Benefit
Plan (if applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Fleet Benefit Plan.
(c) (i) Each of the Fleet Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Fleet
Benefit Plans intended to be "qualified" within the meaning of Section 401 (a)
of the Code is so qualified, and there are no existing circumstances or any
events that have occurred that will adversely affect the qualified status of any
such Fleet Benefit Plan, (iii) with respect to each Fleet Benefit Plan which is
subject to Title IV of ERISA, the present value of accrued benefits under such
Fleet Benefit Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Fleet Benefit
Plan's actuary with respect to such Fleet Benefit Plan, did not, as of its
latest valuation
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date, exceed the then current value of the assets of such Fleet Benefit Plan
allocable to such accrued benefits, (iv) no Fleet Benefit Plan provides
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees or directors of Fleet
or its Subsidiaries beyond their retirement or other termination of service,
other than (A) coverage mandated by applicable law, (B) death benefits or
retirement benefits under any "employee pension plan" (as such term is defined
in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of Fleet or its Subsidiaries or (D) benefits the full
cost of which is borne by the current or former employee or director (or his
beneficiary), (v) no liability under Title IV of ERISA has been incurred by
Fleet, its Subsidiaries or any Fleet ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a risk to Fleet, its Subsidiaries
or any Fleet ERISA Affiliate of incurring a material liability thereunder, (vi)
no Fleet Benefit Plan is a "multiemployer pension plan" (as such term is defined
in Section 3(37) of ERISA), (vii) all contributions or other amounts payable by
Fleet or its Subsidiaries as of the Effective Time with respect to each Fleet
Benefit Plan in respect of current or prior plan years have been paid or accrued
in accordance with GAAP and Section 412 of the Code, (viii) none of Fleet, its
Subsidiaries or any other person, including any fiduciary, has engaged in a
transaction in connection with which Fleet, its Subsidiaries or any Fleet
Benefit Plan will be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of Fleet there
are no pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Fleet Benefit Plans or any
trusts related thereto which will have, either individually or in the aggregate,
a Material Adverse Effect on Fleet.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Fleet or any of its
affiliates from Fleet or any of its affiliates under any Fleet Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Fleet Benefit
Plan or (iii) result in any acceleration of the time of payment or vesting of
any such benefits.
4.12 SEC REPORTS. Fleet has previously made available to BankBoston an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
Fleet with the SEC pursuant to the Securities Act or the Exchange Act (the
"Fleet Reports") and prior to the date hereof and (b) communication mailed by
Fleet to its stockholders since January 1, 1996 and prior to the date hereof,
and no such Fleet Report or communication, as of the date thereof, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date (but before the date hereof) shall be
deemed to modify information as of an earlier date. Since January 1, 1996, as of
their respective dates, all Fleet Reports filed under the Securities Act and the
Exchange Act complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
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4.13 COMPLIANCE WITH APPLICABLE LAW. (a) Fleet and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to Fleet
or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default will not,
either individually or in the aggregate, have a Material Adverse Effect on
Fleet.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Fleet, Fleet and each Fleet Subsidiary have properly
administered all accounts for which it acts as a fiduciary, including accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents, applicable state and federal law and regulation and common
law. None of Fleet, any Fleet Subsidiary, or any director, officer or employee
of Fleet or of any Fleet Subsidiary, has committed any breach of trust with
respect to any such fiduciary account that will have a Material Adverse Effect
on Fleet, and the accountings for each such fiduciary account are true and
correct in all material respects and accurately reflect the assets of such
fiduciary account.
4.14 CERTAIN CONTRACTS. (a) Neither Fleet nor any of its Subsidiaries
is a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Fleet, BankBoston, the Surviving
Corporation, or any of their respective Subsidiaries to any officer or employee
thereof, (iii) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the Fleet
Reports, (iv) which materially restricts the conduct of any line of business by
Fleet or upon consummation of the Merger will materially restrict the ability of
the Surviving Corporation to engage in any line of business in which a bank
holding company may lawfully engage, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any stockholder
approval or the consummation of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement. Fleet has
previously made available to BankBoston true and correct copies of all
employment and deferred compensation agreements which are in writing and to
which Fleet or any of its Subsidiaries is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section 4.14(a),
whether or not set forth in the Fleet Disclosure Schedule, is referred to herein
as a "Fleet Contract," and neither Fleet nor any of its Subsidiaries knows of,
or has received notice of, any violation of the above by any of the other
parties thereto which will have, individually or in the aggregate, a Material
Adverse Effect on Fleet.
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(b) (i) Each Fleet Contract is valid and binding on Fleet and/or one of
its Subsidiaries, as applicable, and in full force and effect, (ii) Fleet and
each of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each Fleet Contract, except where
such noncompliance, either individually or in the aggregate, will not have a
Material Adverse Effect on Fleet, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, will constitute, a
material default on the part of Fleet or any of its Subsidiaries under any such
Fleet Contract, except where such default, either individually or in the
aggregate, will not have a Material Adverse Effect on Fleet.
4.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Fleet nor any of its
Subsidiaries is subject to any cease-and-desist or other order or enforcement
action issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has been
since January 1, 1996, a recipient of any supervisory letter from, or has been
ordered to pay any civil money penalty by, or since January 1, 1996, has adopted
any policies, procedures or board resolutions at the request of any Regulatory
Agency or other Governmental Entity that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its ability to pay dividends, its credit or risk
management policies, its management or its business (each, whether or not set
forth in the Fleet Disclosure Schedule, a "Fleet Regulatory Agreement"), nor has
Fleet or any of its Subsidiaries been advised since January 1, 1996, by any
Regulatory Agency or other Governmental Entity that it is considering issuing,
initiating, ordering or requesting any such Fleet Regulatory Agreement.
4.16 INTERNATIONAL OPERATIONS. All non-U.S. banking, consumer finance
and securities operations have been conducted in compliance with the
requirements of all applicable federal and foreign laws, statutes, orders,
rules, regulations or policies and guidelines of any Regulatory Agency or
Governmental Entity, except for such noncompliance as would not have a Material
Adverse Effect on Fleet. Neither Fleet nor any Subsidiary is subject to any
Regulatory Agreement with any non-U.S. Regulatory Agency or Governmental Entity,
nor has Fleet or any of its Subsidiaries been advised that any such authority or
entity is considering issuing or requesting any such agreement. There (i) is no
unresolved violation, criticism or exception by any non-U.S. Regulatory Agency
or Governmental Entity relating to any examinations or inspections of Fleet or
any Subsidiary and (ii) has been no formal or informal inquiries by, or
disagreements or disputes with, any non-U.S. Regulatory Agency or Governmental
Entity with respect to the business, operations, policies and procedures of
Fleet or any of its Subsidiaries since January 1, 1997.
4.17 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Fleet or for
the account of a customer of Fleet or one of its Subsidiaries, were entered into
in the ordinary course of business and, to Fleet's knowledge, in accordance with
prudent banking practice and applicable rules, regulations and policies of any
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of Fleet or
one of its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
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equitable remedies), and are in full force and effect. Fleet and each of its
Subsidiaries have duly performed in all material respects all of their material
obligations thereunder to the extent that such obligations to perform have
accrued; and to Fleet's knowledge, there are no material breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
4.18 UNDISCLOSED LIABILITIES. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of Fleet
included in the Fleet 1998 Financial Information and for liabilities incurred in
the ordinary course of business consistent with past practice, since December
31, 1998, neither Fleet nor any of its Subsidiaries has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either individually or in the aggregate, has
had or will have, a Material Adverse Effect on Fleet.
4.19 ENVIRONMENTAL LIABILITY. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that reasonably could result
in the imposition, on Fleet of any liability or obligation arising under common
law or under any local, state or federal environmental statute, regulation or
ordinance including, without limitation, CERCLA, pending or threatened against
Fleet, which liability or obligation will have, either individually or in the
aggregate, a Material Adverse Effect on Fleet. To the knowledge of Fleet, there
is no reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any liability or obligation that will have,
either individually or in the aggregate, a Material Adverse Effect on Fleet.
Fleet is not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any liability or obligation with respect to the foregoing
that will have, either individually or in the aggregate, a Material Adverse
Effect on Fleet.
4.20 STATE TAKEOVER LAWS; ARTICLE NINTH OF FLEET ARTICLES; FLEET RIGHTS
AGREEMENT. (a) Assuming the accuracy of the representations of BankBoston set
forth in Section 3.23, the Board of Directors of Fleet has approved the
transactions contemplated by this Agreement and the Option Agreements for
purposes of Section 7-5.2-4 of the RIBCA such that the provisions of Business
Combination Act of Rhode Island and Article Ninth of Fleet's Articles of
Incorporation will not apply to this Agreement or the Option Agreements or any
of the transactions contemplated hereby or thereby.
(b) Fleet has taken all action, if any, necessary or appropriate so
that the entering into of this Agreement and the Option Agreements, and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the ability of any person to exercise any Fleet Stockholder Rights
under the Fleet Rights Agreement or enable or require the Fleet Stockholder
Rights to separate from the shares of Fleet Common Stock to which they are
attached or to be triggered or become exercisable. No "Distribution Date" or
"Stock Acquisition Date" (as such terms are defined in the Fleet Rights
Agreement) has occurred.
4.21 YEAR 2000. None of Fleet or any of the Fleet Subsidiaries has
received, or reasonably expects to receive, a Year 2000 Deficiency Notification
Letter. Fleet has disclosed to BankBoston a complete and accurate copy of
Fleet's plan, including an estimate of the
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anticipated associated costs, for addressing Year 2000 Issues as such issues
affect Fleet and its Subsidiaries. Between the date of this Agreement and the
Effective Time, Fleet shall use all commercially reasonable efforts to implement
such plan. Fleet and its Subsidiaries has complied in all material respects with
the "Interagency Guidelines Establishing Year 2000 Standards for Safety and
Soundness" issued pursuant to section 39 of the Federal Deposit Insurance Act
and effective October 15, 1998.
4.22 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, Fleet has no reason to believe that the Merger will not qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
4.23 OWNERSHIP OF BANKBOSTON COMMON STOCK; AFFILIATES AND ASSOCIATES.
As of the date hereof, except for the BankBoston Option Agreement and this
Agreement, neither Fleet nor any of its affiliates or associates (as such terms
are defined under the Exchange Act) (i) beneficially owns, directly or
indirectly, or (ii) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares of
capital stock of BankBoston (other than Trust Account Shares and DPC Shares).
4.24 OPINIONS. Prior to the execution of this Agreement, Fleet has
received an opinion from each of Goldman, Sachs & Co. and Donaldson, Lufkin &
Jenrette Securities Corporation to the effect that as of the date thereof and
based upon and subject to the matters set forth therein, the Exchange Ratio
pursuant to this Agreement is fair from a financial point of view to Fleet and
its shareholders. Such opinions have not been amended or rescinded as of the
date of this Agreement.
4.25 FLEET INFORMATION. The information relating to Fleet and its
Subsidiaries to be contained in the Joint Proxy Statement and the S-4, or the
information relating to Fleet and its Subsidiaries that is provided by Fleet or
its representatives for inclusion in any other document filed with any other
regulatory agency in connection herewith, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The Joint Proxy Statement (except for such portions thereof that
relate only to BankBoston or any of its Subsidiaries) will comply with the
provisions of the Exchange Act and the rules and regulations thereunder. The S-4
will comply with the provisions of the Securities Act and the rules and
regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement (including the BankBoston
Disclosure Schedule and the Fleet Disclosure Schedule) or the Option Agreements,
each of Fleet and BankBoston shall, and shall cause each of their respective
Subsidiaries to, (a) conduct its business in the ordinary course, (b) use
reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its key officers and key employees and (c) take
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no action which would adversely affect or delay the ability of either Fleet or
BankBoston to obtain any necessary approvals of any Regulatory Agency or other
Governmental Entity required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement or the Option
Agreements or to consummate the transactions contemplated hereby or thereby.
5.2 FORBEARANCES. During the period from the date of this Agreement to
the Effective Time, except as set forth in the Fleet Disclosure Schedule or the
BankBoston Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, neither
Fleet nor BankBoston shall, and neither Fleet nor BankBoston shall permit any of
their respective Subsidiaries to, without the prior written consent of the other
party to this Agreement:
(a) other than in the ordinary course of business, incur any
indebtedness for borrowed money (other than short-term indebtedness incurred to
refinance short-term indebtedness and indebtedness of BankBoston or any of its
wholly-owned Subsidiaries to BankBoston or any of its Subsidiaries, on the one
hand, or of Fleet or any of its Subsidiaries to Fleet or any of its wholly-owned
Subsidiaries, on the other hand), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation or other entity, or make any loan or advance (it being understood
and agreed that incurrence of indebtedness in the ordinary course of business
shall include, without limitation, the creation of deposit liabilities,
purchases of Federal funds, sales of certificates of deposit and entering into
repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible (whether currently convertible or convertible
only after the passage of time or the occurrence of certain events)
into or exchangeable for any shares of its capital stock (except (A) in
the case of BankBoston, for regular quarterly cash dividends at a rate
not in excess of $0.32 per share of BankBoston Common Stock, (B) in the
case of Fleet, for regular quarterly cash dividends on Fleet Common
Stock at a rate not in excess of $0.27 per share of Fleet Common Stock
and regular quarterly cash dividends on the Fleet Preferred Stock
outstanding as of the date hereof at the rates required by the terms
thereof, (C) dividends paid by any of the Subsidiaries of each of Fleet
and BankBoston to Fleet or BankBoston or any of their Subsidiaries,
respectively, and dividends paid in the ordinary course of business
consistent with past practice by any subsidiaries (whether or not
wholly owned) of each of Fleet and BankBoston) and (D) the acceptance
of shares of BankBoston Common Stock or Fleet Common Stock, as the case
may be, as payment for the exercise price of stock options or for
withholding taxes incurred in connection with the exercise of stock
options or the vesting of restricted stock, in each case in accordance
with past practice and the terms of the applicable award agreements;
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(iii) grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any shares
of its capital stock, other than (A) pursuant to the Fleet Rights
Agreement or the BankBoston Rights Agreement or any renewal or
replacement of either of them and (B) pursuant to the BankBoston Stock
Plans or the Fleet Stock Plans, as the case may be, in the ordinary
course of business; or
(iv) issue any additional shares of capital stock except (A)
pursuant to the exercise of stock options outstanding as of the date
hereof or issued in compliance with Section 5.2(b)(iii), (B) pursuant
to the Option Agreements, (C) pursuant to the BankBoston Rights
Agreement or the Fleet Rights Agreement or any renewal or replacement
of either of them or (D) in the ordinary course of business and
consistent with past practice in connection with the BankBoston DRIP,
the BankBoston Stock Plans, the Fleet Stock Plans and the Fleet DRIP;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets to any individual, corporation or other entity
other than a Subsidiary, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, in each case other than in
the ordinary course of business or pursuant to contracts or agreements in force
at the date of this Agreement;
(d) except for transactions in the ordinary course of business or
pursuant to contracts or agreements in force at the date of or permitted by this
Agreement, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity other
than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business,
terminate, or waive any material provision of, any BankBoston Contract or Fleet
Contract, as the case may be, or make any change in any instrument or agreement
governing the terms of any of its securities, or material lease or contract,
other than normal renewals of contracts and leases without material adverse
changes of terms;
(f) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of any employee
other than in the ordinary course of business, or accelerate the vesting of, or
the lapsing of restrictions with respect to, any stock options or other
stock-based compensation;
(g) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from any third
party or enter into any negotiations, discussions or agreements in respect of,
or provide or cause to be provided any confidential information in connection
with, any inquiries or proposals relating to the disposition of all or
substantially all of its business or assets, or the acquisition of its voting
securities, or the merger of it or any of its
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Subsidiaries with any corporation or other entity, other than as provided by
this Agreement (and each party shall promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it may receive
relating to any of such matters);
(h) settle any material claim, action or proceeding involving money
damages, except in the ordinary course of business;
(i) knowingly take any action that would prevent or impede the Merger
from qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided, however,
that nothing contained herein shall limit the ability of Fleet or BankBoston to
exercise its rights under the Fleet Option Agreement or the BankBoston Option
Agreement, as the case may be;
(j) amend its articles of incorporation, its bylaws or comparable
governing documents, or amend, or redeem the rights issued under, the Fleet
Rights Agreement or the BankBoston Rights Agreement, as the case may be (except
as required hereunder), or otherwise take any action to exempt any person or
entity (other than BankBoston or its Subsidiaries or Fleet or its Subsidiaries,
as the case may be) or any action taken by such person or entity from the Fleet
Rights Agreement or the BankBoston Rights Agreement, as the case may be, or any
Takeover Statute or similarly restrictive provisions of such party's
organizational documents;
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities portfolio
or its gap position, through purchases, sales or otherwise, or the manner in
which the portfolio is classified or reported;
(l) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VII not being satisfied
or in a violation of any provision of this Agreement, except, in every case, as
may be required by applicable law;
(m) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines; or
(n) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
REGULATORY MATTERS. (a) Fleet and BankBoston shall promptly prepare and
file with the SEC the Joint Proxy Statement and Fleet shall promptly prepare and
file with the SEC the S-4, in which the Joint Proxy Statement will be included
as a prospectus. Each of Fleet and BankBoston shall use their reasonable best
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and Fleet and BankBoston shall thereafter mail
or deliver the Joint Proxy Statement to their respective stockholders. Fleet
shall also use its
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reasonable best efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement, and BankBoston shall furnish all information concerning
BankBoston and the holders of BankBoston Capital Stock as may be reasonably
requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and authorizations
of all such Governmental Entities. Fleet and BankBoston shall have the right to
review in advance, and, to the extent practicable, each will consult the other
on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to BankBoston or Fleet, as the case
may be, and any of their respective Subsidiaries, which appear in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) Fleet and BankBoston shall, upon request, furnish each other with
all information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Fleet,
BankBoston or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) Fleet and BankBoston shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement that causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Fleet and
BankBoston, for the purposes of verifying the representations and warranties of
the other and preparing for the Merger and the other matters contemplated by
this Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, and, during such period, each of Fleet and BankBoston
shall, and shall cause their respective Subsidiaries to, make available to the
other party (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal
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securities laws or federal or state banking laws (other than reports or
documents which Fleet or BankBoston, as the case may be, is not permitted to
disclose under applicable law) and (ii) all other information concerning its
business, properties and personnel as such party may reasonably request. Neither
Fleet nor BankBoston nor any of their respective Subsidiaries shall be required
to provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of Fleet's or BankBoston's, as the case
may be, customers, jeopardize the attorney-client privilege of the institution
in possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Each of Fleet and BankBoston shall hold all information furnished
by or on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the extent required
by, and in accordance with, the provisions of the confidentiality agreement,
dated February 19, 1999, between Fleet and BankBoston (the "Confidentiality
Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 STOCKHOLDERS' APPROVALS. Each of Fleet and BankBoston shall call a
meeting of its stockholders to be held as soon as reasonably practicable for the
purpose of voting upon the requisite stockholder approvals required in
connection with this Agreement and the Merger (including approval of the Bylaw
Amendment by the stockholders of Fleet), and each shall use its reasonable best
efforts to cause such meetings to occur as soon as reasonably practicable and on
the same date. The Board of Directors of each of BankBoston and Fleet shall use
its reasonable best efforts to obtain from the stockholders of BankBoston and
Fleet, as the case may be, the vote in favor of the adoption of this Agreement
required by the RIBCA and in favor of the adoption of the Bylaw Amendment
required by the RIBCA and the Fleet Articles, in the case of Fleet, and the
votes in favor of the adoption of this Agreement required by the MBCL, in the
case of BankBoston, in each case to consummate the transactions contemplated
hereby.
6.4 LEGAL CONDITIONS TO MERGER. Each of Fleet and BankBoston shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement, and (b) to obtain (and to cooperate with the other party to obtain)
any material consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party that is required to be
obtained by BankBoston or Fleet or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS. (a) Each of
Fleet and BankBoston shall use its reasonable best efforts to cause each
director, executive officer and
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other person who is an "affiliate" (for purposes of Rule 145 under the
Securities Act and for purposes of qualifying the Merger for "pooling of
interests" accounting treatment) of such party to deliver to the other party
hereto, as soon as practicable after the date of this Agreement, and prior to
the date of the stockholders' meetings called by Fleet and BankBoston to approve
this Agreement, a written agreement, in the form of Exhibit 6.5(a)(1) or (2), as
applicable, hereto, providing that such person will not sell, pledge, transfer
or otherwise dispose of any shares of Fleet Capital Stock, or BankBoston Capital
Stock held by such "affiliate" and, in the case of the "affiliates" of
BankBoston, the shares of Fleet Capital Stock to be received by such "affiliate"
in the Merger.
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least 30
days of post-Merger combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
6.6 STOCK EXCHANGE LISTING. Fleet shall cause the shares of Fleet
Common Stock, to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time.
6.7 EMPLOYEE BENEFIT PLANS. (a) From and after the Effective Time,
unless otherwise mutually determined, the BankBoston Benefit Plans and Fleet
Benefit Plans in effect as of the date of this Agreement shall remain in effect
with respect to employees of BankBoston and Fleet (and their respective
Subsidiaries), respectively, covered by such plans at the Effective Time until
such time as the Surviving Corporation shall, subject to applicable law, the
terms of this Agreement and the terms of such plans, adopt new benefit plans
with respect to employees of the Surviving Corporation and its Subsidiaries (the
"New Benefit Plans"). Prior to the Closing Date, BankBoston and Fleet shall
cooperate in reviewing, evaluating and analyzing the Fleet Benefit Plans and
BankBoston Benefit Plans with a view towards developing appropriate New Benefit
Plans for the employees covered thereby.
(b) The foregoing notwithstanding, the Surviving Corporation agrees to
honor in accordance with their terms all benefits vested as of the date hereof
under the Fleet Benefit Plans or the BankBoston Benefit Plans or under other
contracts, arrangements, commitments, or understandings described in the Fleet
Disclosure Schedule and the BankBoston Disclosure Schedule.
(c) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any Fleet Benefit
Plans, BankBoston Benefit Plans, or other contracts, arrangements, commitments
or understandings, in accordance with their terms and applicable law.
(d) Prior to the Effective Time, BankBoston shall use its reasonable
best efforts to take all actions necessary, including securing the consent of
award holders, to amend the terms of the BankBoston Stock Plans and the award
agreements thereunder to provide that any stock appreciation rights, performance
shares or other equity-based awards, the terms of which provide
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for the settlement of such award in cash, shall be settled in stock with a fair
market value equal to the cash that would otherwise have been payable
thereunder. The pro-rata bonuses payable to employees of BankBoston and its
Subsidiaries (or, on or after the Effective Time, Surviving Corporation) in
connection with a change in control of BankBoston, including without limitation
the pro-rata bonuses payable under the Performance Recognition Opportunity Plan
and any incentive bonus plans of a business unit, shall be determined in
accordance with the terms of such plans and consistent with past practice. In no
event shall the aggregate amount required to be contributed to the trusts (as
identified in Section 3.11 of the BankBoston Disclosure Schedule) upon a change
in control of BankBoston exceed the amount set forth in Section 6.7(d) of the
BankBoston Disclosure.
(e) Prior to the Effective Time, Fleet shall enter into employment
agreements and other employment arrangements on the terms set forth in Exhibit
6.7 hereto.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any individual who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of BankBoston or any of its Subsidiaries, including any entity
specified in the BankBoston Disclosure Schedule (the "Indemnified Parties"), is,
or is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of BankBoston or any of its Subsidiaries or (ii)
this Agreement, the Option Agreements or any of the transactions contemplated
hereby or thereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that after
the Effective Time, Fleet shall indemnify and hold harmless, as and to the
fullest extent permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation.
(b) Fleet shall use its reasonable best efforts to cause the
individuals serving as officers and directors of BankBoston or any of its
Subsidiaries immediately prior to the Effective Time to be covered for a period
of six (6) years from the Effective Time (or the period of the applicable
statute of limitations, if longer) by the directors' and officers' liability
insurance policy maintained by BankBoston (provided that Fleet may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) with respect to
acts or omissions occurring prior to the Effective Time which were committed by
such officers and directors in their capacity as such.
(c) In the event Fleet or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision
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shall be made so that the successors and assigns of Fleet assume the obligations
set forth in this Section 6.8.
(d) The provisions of this Section 6.8 shall survive the Effective Time
and are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Fleet, on the one hand, and a Subsidiary of BankBoston, on the other) or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
proper officers and directors of each party to this Agreement and their
respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Fleet.
6.10 ADVICE OF CHANGES. Fleet and BankBoston shall each promptly advise
the other party of any change or event (i) having a Material Adverse Effect on
it or (ii) which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
6.11 DIVIDENDS. After the date of this Agreement, each of Fleet and
BankBoston shall coordinate with the other the declaration of any dividends in
respect of Fleet Common Stock and BankBoston Common Stock and the record dates
and payment dates relating thereto, it being the intention of the parties hereto
that holders of BankBoston Common Stock shall not receive two dividends, or fail
to receive one dividend, for any quarter with respect to their shares of
BankBoston Common Stock and any shares of Fleet Common Stock any such holder
receives in exchange therefor in the Merger.
6.12 RESTRUCTURING EFFORTS. If either BankBoston or Fleet shall have
failed to obtain the requisite vote or votes of its shareholders for the
consummation of the transactions contemplated by this Agreement at a duly held
meeting of its shareholders or at any adjournment or postponement thereof, each
of the parties shall in good faith use its reasonable best efforts to negotiate
a restructuring of the transaction provided for herein for the purpose of
resubmitting the transaction to their respective shareholders for approval.
6.13 EXECUTIVE OFFICERS, SUCCESSION. In accordance with the terms
hereof and of the employment agreement between Fleet and Charles K. Gifford
entered into in connection with this Agreement, (i) at the Effective Time and
until December 31, 2001 (the "CEO Succession Date"), Mr. Murray shall serve as
Chairman of the Board of Directors and Chief Executive Officer of Fleet, and
from and after the CEO Succession Date, Mr. Murray shall cease to serve as Chief
Executive Officer but shall continue to serve as Chairman of the Board of Fleet
until December 31, 2002 (the "Chairmanship Succession Date"), and (ii) at the
Effective Time and until the CEO Succession Date, Mr. Gifford shall serve as
President and Chief Operating Officer of Fleet, and from and after the CEO
Succession Date, Mr. Gifford shall cease to serve as President and Chief
Operating Officer and shall be Chief Executive Officer of Fleet. In addition,
from and after the Chairmanship Succession Date, Mr. Gifford shall be the
Chairman of the Board of Fleet. If, for any reason, Mr. Murray ceases to serve
as Chief Executive Officer of Fleet
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prior to the CEO Succession Date and/or as Chairman of the Board of Fleet prior
to the Chairmanship Succession Date and at such time Mr. Gifford is then serving
as President of Fleet, or Chief Executive Officer of Fleet, Mr. Gifford shall at
such time become Chief Executive Officer and/or Chairman of the Board, as the
case may be, of Fleet. Except for the succession contemplated by the previous
sentence, if either of such persons is unable or unwilling to hold such offices
for the period set forth herein and in his employment agreement, his successor
shall be selected by the Board of Directors of Fleet in the manner set forth in
the bylaws of the Surviving Corporation.
6.14 POST-MERGER BOARD OF DIRECTORS AND COMMITTEES. (a) At the
Effective Time, the total number of persons serving on the Board of Directors of
Fleet shall be twenty-two (22), twelve (12) of whom shall be Fleet Directors and
ten (10) of whom shall be BankBoston Directors (as such terms are defined in
subsection (c) below). The 12 persons to serve initially on the Board of
Directors of Fleet as of the Effective Time who are Fleet Directors shall be
selected by the Board of Directors of Fleet prior to the Effective Time; and the
10 persons to serve on the Board of Directors of Fleet as of the Effective Time
who are BankBoston Directors shall be selected by the Board of Directors of
BankBoston prior to the Effective Time. Four Fleet Directors shall be assigned
to each of the three classes of the Board of Directors of Fleet from and after
the Effective Time, and the ten BankBoston Directors shall be assigned to the
three classes of the Board of Directors of Fleet so that two of such classes
contain three BankBoston Directors and one class contains four BankBoston
Directors. In the event that, prior to the Effective Time, any person so
selected to serve on the Board of Directors of Fleet after the Effective Time is
unable or unwilling to serve in such position, the Board of Directors which
selected such person shall designate another of its members to serve in such
person's stead in accordance with the provisions of the immediately preceding
sentence. Prior to the Effective Time, Fleet shall cause its Board of Directors
to approve and adopt resolutions effecting the Board composition contemplated by
this Section 6.14 and designating all such Fleet Directors and BankBoston
Directors as "Continuing Directors" for purposes of Article Seventh and Article
Ninth of the Fleet Articles.
(b) From and after the Effective Time, each of the committees of the
Board of Directors of Fleet shall be comprised of an equal number of Fleet
Directors and BankBoston Directors and the respective chairmen of such
committees shall be drawn equally from the Fleet Directors and the BankBoston
Directors, the identity of the members of such committees and such chairmen to
otherwise be as mutually determined by Mr. Murray and Mr. Gifford.
(c) The term "Fleet Director" means (i) any person serving as a
Director of Fleet on the date of this Agreement who continues as a Director of
Fleet at the Effective Time and (ii) any person who becomes a Director of Fleet
and who is designated as such by the Fleet Directors prior to his or her
election; and the term "BankBoston Director" means (i) any person serving as a
Director of BankBoston on the date of this Agreement who becomes a Director of
Fleet at the Effective Time and (ii) any person who becomes a Director of Fleet
and who is designated as such by the BankBoston Directors prior to his or her
election.
6.15 EXEMPTION FROM LIABILITY UNDER SECTION 16(b). Assuming that
BankBoston delivers to Fleet the Section 16 Information in a timely fashion, the
Board of Directors of Fleet, or a committee of Non-Employee Directors thereof
(as such term is defined for purposes of Rule
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16b-3(d) under the Exchange Act), shall adopt a resolution providing that the
receipt by the BankBoston Insiders of Fleet Common Stock in exchange for shares
of BankBoston Common Stock, and of options on Fleet Common Stock upon conversion
of options on BankBoston Common Stock, in each case pursuant to the transactions
contemplated hereby and to the extent such securities are listed in the Section
16 Information, are intended to be exempt from liability pursuant to Section
16(b) under the Exchange Act. "Section 16 Information" shall mean information
accurate in all respects regarding the BankBoston Insiders, the number of shares
of BankBoston Common Stock held by each such BankBoston Insider and expected to
be exchanged for Fleet Common Stock in the Merger, and the number and
description of the options on BankBoston Common Stock held by each such
BankBoston Insider and expected to be converted into options on Fleet Common
Stock in connection with the Merger. "BankBoston Insiders" shall mean those
officers and directors of BankBoston who are subject to the reporting
requirements of Section 16(a) of the Exchange Act and who are listed in the
Section 16 Information.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by the
requisite affirmative vote of the holders of Fleet Common Stock entitled to vote
thereon and by the requisite affirmative votes of the holders of BankBoston
Common Stock entitled to vote thereon.
(b) NYSE LISTING. The shares of Fleet Common Stock which shall be
issued to the stockholders of Fleet upon consummation of the Merger shall have
been authorized for listing on the NYSE, subject to official notice of issuance.
(c) OTHER APPROVALS. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been issued
and no proceedings for that purpose shall have been initiated or threatened by
the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, injunction
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or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, materially restricts or makes illegal
consummation of the Merger.
(f) FEDERAL TAX OPINION. The parties hereto shall have received the
opinions of their respective counsel, Wachtell, Lipton, Rosen & Katz, and
Skadden, Arps, Slate, Meagher & Flom LLP, in form and substance reasonably
satisfactory to Fleet and BankBoston, as the case may be, dated as of the
Closing Date, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in each such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated as a reorganization within the meaning of Section 368(a) of the
Code. In rendering such opinions, counsel may require and rely upon
representations contained in certificates of officers of Fleet, BankBoston and
others, reasonably satisfactory in form and substance to such counsel.
(g) POOLING OF INTERESTS. Fleet and BankBoston shall each have received
a letter from their respective independent accountants addressed to BankBoston
or Fleet, as the case may be, to the effect that the Merger will qualify for
"pooling of interests" accounting treatment.
7.2 CONDITIONS TO OBLIGATIONS OF FLEET. The obligation of Fleet to
effect the Merger is also subject to the satisfaction, or waiver by Fleet, at or
prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of BankBoston set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided, however,
that for purposes of this paragraph, such representations and warranties (other
than the representation set forth in the last sentence of Section 3.2(a)) shall
be deemed to be true and correct unless the failure or failures of such
representations and warranties to be so true and correct, either individually or
in the aggregate, and without giving effect to any qualification as to
materiality or Material Adverse Effect set forth in such representations or
warranties, will have a Material Adverse Effect on BankBoston or the Surviving
Corporation. Fleet shall have received a certificate signed on behalf of
BankBoston by the Chief Executive Officer and the Chief Financial Officer of
BankBoston to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF BANKBOSTON. BankBoston shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Fleet shall have
received a certificate signed on behalf of BankBoston by the Chief Executive
Officer and the Chief Financial Officer of BankBoston to such effect.
(c) FLEET DIVESTITURES. No contract, agreement, arrangement or
commitment to sell or divest a significant amount of the branch deposits of
Fleet located within either the State of Connecticut or the State of Rhode
Island shall have been entered into or contemplated.
7.3 CONDITIONS TO OBLIGATIONS OF BANKBOSTON. The obligation of
BankBoston to effect the Merger is also subject to the satisfaction or waiver by
BankBoston at or prior to the Effective Time of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Fleet set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, PROVIDED, HOWEVER, that for
purposes of this paragraph, such representations and warranties (other than the
representation set forth in the last sentence of Section 4.2(a)) shall be deemed
to be true and correct unless the failure or failures of such representations
and warranties to be so true and correct, either individually or in the
aggregate, and without giving effect to any qualification as to materiality or
Material Adverse Effect set forth in such representations or warranties, will
have a Material Adverse Effect on Fleet. BankBoston shall have received a
certificate signed on behalf of Fleet by the Chief Executive Officer and the
Chief Financial Officer of Fleet to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF FLEET. Fleet shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and BankBoston shall have received a
certificate signed on behalf of Fleet by the Chief Executive Officer and the
Chief Financial Officer of Fleet to such effect.
(c) BANKBOSTON DIVESTITURES. No contract, agreement, arrangement or
commitment to sell or divest a significant amount of the branch deposits of
BankBoston located within the Commonwealth of Massachusetts shall have been
entered into or contemplated.
(d) BYLAW AMENDMENT/BOARD RESOLUTIONS. Fleet shall have taken all such
actions as shall be necessary so that (i) the Bylaw Amendment shall have been
adopted by the Board of Directors and the stockholders of Fleet effective not
later than the Effective Time and (ii) the resolutions contemplated by Section
6.14 of this Agreement shall have been adopted by the Board of Directors of
Fleet effective not later than the Effective Time.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Fleet or BankBoston:
(a) by mutual consent of Fleet and BankBoston in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either the Board of Directors of Fleet or the Board of Directors
of BankBoston if any Governmental Entity that must grant a Requisite Regulatory
Approval has denied approval of the Merger and such denial has become final and
nonappealable or any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;
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(c) by either the Board of Directors of Fleet or the Board of Directors
of BankBoston if the Merger shall not have been consummated on or before the
first anniversary of the date of this Agreement, unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either the Board of Directors of Fleet or the Board of Directors
of BankBoston (provided that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement contained herein) if there
shall have been a breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of
BankBoston, in the case of a termination by Fleet, or Fleet, in the case of a
termination by BankBoston, which breach, either individually or in the
aggregate, would constitute, if occurring or continuing on the Closing Date, the
failure of the conditions set forth in Section 7.2 or 7.3, as the case may be,
and which is not cured within 45 days following written notice to the party
committing such breach or by its nature or timing cannot be cured prior to the
Closing Date; or
(e) by either BankBoston or Fleet, if its Board of Directors determines
in good faith by a majority vote that the other party has substantially engaged
in bad faith in breach of its obligations under Section 6.12 of this Agreement.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Fleet or BankBoston as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and none of Fleet,
BankBoston, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (i) Sections 6.2(b), 8.2, 9.2 and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Fleet nor BankBoston shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 AMENDMENT. Subject to compliance with applicable law and Section
1.1(b), this Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with Merger by the stockholders
of Fleet and BankBoston; PROVIDED, HOWEVER, that after any approval of the
transactions contemplated by this Agreement by the respective stockholders of
Fleet or BankBoston, there may not be, without further approval of such
stockholders, any amendment of this Agreement that changes the amount or the
form of the consideration to be delivered hereunder to the holders of BankBoston
Common Stock, other than as contemplated by this Agreement. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with
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<PAGE>
any of the agreements or conditions contained herein; PROVIDED, HOWEVER, that
after any approval of the transactions contemplated by this Agreement by the
respective stockholders of Fleet or BankBoston, there may not be, without
further approval of such stockholders, any extension or waiver of this Agreement
or any portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of Fleet Common Stock hereunder,
other than as contemplated by this Agreement. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no later than five
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof, unless
extended by mutual agreement of the parties (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall terminate in
accordance with their terms) shall survive the Effective Time, except for
Section 6.8 and for those other covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time.
9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, PROVIDED, HOWEVER, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by Fleet
and BankBoston.
9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Fleet, to:
Fleet Financial Group, Inc.
One Federal Street
Boston, Massachusetts 02110
Attention: General Counsel
Telecopier: (617) 346-3185
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<PAGE>
and
(b) if to BankBoston, to:
BankBoston Corporation
100 Federal Street
25th Floor
Boston, Massachusetts 02110
Attention: General Counsel
Telecopier: (617) 434-6525
9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) together with the Option Agreements and the
Confidentiality Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Rhode Island, without regard to any
applicable conflicts of law principles.
9.9 PUBLICITY. Except as otherwise required by applicable law or the
rules of the NYSE, neither Fleet nor BankBoston shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of BankBoston, in the case of a proposed announcement or statement
by Fleet, or Fleet, in the case of a proposed announcement or statement by
BankBoston, which consent shall not be unreasonably withheld.
9.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.8, this Agreement (including the documents
and instruments
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<PAGE>
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
9.11 CERTAIN AGREEMENTS OF SURVIVING CORPORATION. The Surviving
Corporation agrees that it may be sued in the Commonwealth of Massachusetts for
any prior obligation of Fleet or BankBoston and any obligation incurred by the
Surviving Corporation after the Effective Time, so long as any liability remains
outstanding against any such entity in the Commonwealth of Massachusetts, and
the Surviving Corporation irrevocably appoints the State Secretary of the
Commonwealth of Massachusetts as its agent to accept service of process in any
action for the enforcement of any such obligation, including taxes, in the
manner provided in Chapter 181 of the General Laws of the Commonwealth of
Massachusetts.
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<PAGE>
IN WITNESS WHEREOF, Fleet Financial Group, Inc. and BankBoston
Corporation have caused this Agreement to be executed under seal by their
respective officers thereunto duly authorized as of the date first above
written.
BANKBOSTON CORPORATION
By: /S/ PETER J. MANNING
------------------------------------
Name: Peter J. Manning
Title: Executive Vice President
By: /S/ SUSANNAH M. SWIHART
------------------------------------
Name: Susannah M. Swihart
Title: Vice Chairman, Chief Financial
Officer and Treasurer
FLEET FINANCIAL GROUP, INC.
By: /S/ H. JAY SARLES
-----------------------------------
Name: H. Jay Sarles
Title: Vice Chairman and Chief
Administrative Officer
By: /S/ EUGENE M. MCQUADE
------------------------------------
Name: Eugene M. McQuade
Title: Vice Chairman and Chief Financial
Officer
[Agreement and Plan of Merger]
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<PAGE>
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated March 14, 1999, between Fleet
Financial Group, Inc., a Rhode Island corporation ("Issuer"), and BankBoston
Corporation, a Massachusetts corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), which agreement
has been executed by the parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
113,127,918 fully paid and nonassessable shares of Issuer's Common Stock, par
value $0.01 per share ("Common Stock"), at a price of $44.75 per share (the
"Option Price"); PROVIDED, HOWEVER, that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9% of the
Issuer's issued and outstanding shares of Common Stock without giving effect to
any shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement) or (ii)
redeemed, repurchased, retired or otherwise cease to be outstanding
after the date of this Agreement, the number of shares of Common Stock
subject to the Option shall be increased or decreased, as appropriate,
so that, after such issuance, such number equals 19.9% of the number of
shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the
Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), PROVIDED that the
<PAGE>
Holder shall have sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 90 days following such Subsequent
Triggering Event. Each of the following shall be an "Exercise Termination
Event": (i) the Effective Time (as defined in the Merger Agreement) of the
Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of 12 months after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional). The term "Holder" shall mean
the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the stockholders of Issuer
approve or accept any Acquisition Transaction with any person
other than Grantee or a Subsidiary of Grantee. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w) a
merger or consolidation, or any similar transaction, involving
Issuer or any Significant Subsidiary (as defined in Rule 1-02
of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or
other acquisition or assumption of all or a substantial
portion of the assets or deposits of Issuer or any Significant
Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the
voting power of Issuer, or (z) any substantially similar
transaction; PROVIDED, HOWEVER, that in no event shall any
merger, consolidation, purchase or similar transaction
involving only the Issuer and one or more of its Subsidiaries
or involving only any two or more of such Subsidiaries, be
deemed to be an Acquisition Transaction, provided that any
such transaction is not entered into in violation of the terms
of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its
intention to authorize, recommend or propose, to engage in an
Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or modified, or publicly
announced its intention to withdraw or modify, in any manner
adverse to Grantee, its recommendation that the stockholders
of Issuer
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<PAGE>
approve the transactions contemplated by the Merger Agreement
in anticipation of engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business shall have
acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares
of Common Stock (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a BONA FIDE proposal to Issuer or
its stockholders by public announcement or written
communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to
Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such breach
(x) would entitle Grantee to terminate the Merger Agreement
and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to
which Grantee has given its prior written consent, shall have
filed an application or notice with the Federal Reserve Board,
or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date
hereof:
(i) The acquisition by any person of beneficial
ownership of 20% or more of the then outstanding Common Stock;
or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (b) of this Section
2, except that the percentage referred to in clause (y) shall
be 20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering
Event of which it has notice (together, a "Triggering Event"), it being
understood that the giving of such notice by Issuer shall not be a
condition to the right of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date
of which being herein referred to as the "Notice Date") specifying (i)
the total number of shares it will purchase pursuant to such exercise
and (ii) a place and date not earlier than three business days nor
later than
3
<PAGE>
60 business days from the Notice Date for the closing of such
purchase (the "Closing Date"); PROVIDED that if prior notification to
or approval of the Federal Reserve Board or any other regulatory agency
is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price
for the shares of Common Stock purchased pursuant to the exercise of
the Option in immediately available funds by wire transfer to a bank
account designated by Issuer, PROVIDED that failure or refusal of
Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part
only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this
Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
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<PAGE>
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of
this Section 2 and the tender of the applicable purchase price in
immediately available funds, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with
the preparation, issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, transferee or
designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of
1978, as amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as they may require)
in order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the
Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the
5
<PAGE>
number of shares of Common Stock purchasable upon the exercise of the Option and
the Option Price shall be subject to adjustment from time to time as provided in
this Section 5. In the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares,
distributions on or in respect of the Common Stock that would be prohibited
under the terms of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and the Option Price
shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and PROVIDED FURTHER, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practicable and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in secondary
offering underwriting agreements for the Issuer. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof to
any other person known to Issuer to be entitled to registration rights under
this Section 6, in each case by promptly mailing the same, postage prepaid, to
the address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall
Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of
6
<PAGE>
the fact that there shall be more than one Grantee as a result of any assignment
or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option
Shares pursuant to this Section 7 by surrendering for such purpose to
Issuer, at its principal office, this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may be,
elects to require Issuer to repurchase this Option and/or the Option
Shares in accordance with the provisions of this Section 7. Within the
latter to occur of (x) five business days after the surrender of the
Option and/or certificates representing Option Shares and the receipt
of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase
Price and/or to the Owner the Option Share Repurchase Price therefor or
the portion thereof, if any, that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify the Holder and/or the Owner
and thereafter deliver or cause to be delivered, from time to time, to
the Holder and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business
days after the date on
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<PAGE>
which Issuer is no longer so prohibited; PROVIDED, HOWEVER, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation from delivering to the Holder and/or the Owner, as
appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes
to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices, in each case as promptly as
practicable in order to accomplish such repurchase), the Holder or
Owner may revoke its notice of repurchase of the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon,
in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase
Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either
(A) to the Holder, a new Stock Option Agreement evidencing the right of
the Holder to purchase that number of shares of Common Stock obtained
by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of
which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving Issuer or any purchase,
lease or other acquisition of all or a substantial portion of the
assets of Issuer, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the provisos to
Section 2(b)(i) hereof or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase
Event unless a Subsequent Triggering Event shall have occurred prior to
an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise
Termination Event unless no Subsequent Triggering Event shall have
occurred prior to the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged
8
<PAGE>
for, an option (the "Substitute Option"), at the election of the Holder, of
either (x) the Acquiring Corporation (as hereinafter defined) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving person,
and (iii) the transferee of all or substantially all of
Issuer's assets.
(B) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger or sale
in question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is
the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by
the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the
Option, PROVIDED, that if the terms of the Substitute Option cannot,
for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to the Holder.
The issuer of the Substitute Option shall also enter into an agreement
with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option
is then exercisable, divided by the Average Price. The exercise price
of the Substitute Option per share of Substitute Common Stock shall
then be equal to the Option Price multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock for
which the Option is then exercisable and the denominator of which shall
be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the shares of Substitute Common
Stock outstanding prior to exercise but for this clause (e), the issuer
of the Substitute Option (the "Substitute Option Issuer") shall make a
cash payment to
9
<PAGE>
Holder equal to the excess of (i) the value of the Substitute Option
without giving effect to the limitation in this clause (e) over (ii)
the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and reasonably
acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in writing
all the obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require
the Substitute Option Issuer to repurchase the Substitute Option and
the Substitute Shares pursuant to this Section 9 by surrendering for
such purpose to the Substitute Option Issuer, at its principal office,
the agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Agreement) and certificates for Substitute
Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may
be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the
receipt of such notice or notices relating thereto, the Substitute
Option Issuer shall deliver or cause to be delivered to the Substitute
Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor
or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to
this Section 9 shall immediately so notify the Substitute Option Holder
and/or the Substitute Share Owner and thereafter deliver or cause to be
delivered,
10
<PAGE>
from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute
Share Repurchase Price, respectively, which it is no longer prohibited
from delivering, within five business days after the date on which the
Substitute Option Issuer is no longer so prohibited; PROVIDED, HOWEVER,
that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation from delivering to the
Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute
Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to obtain all required
regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute
Option Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in
whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is
not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that
number of shares of the Substitute Common Stock obtained by multiplying
the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery
of the notice of repurchase by a fraction, the numerator of which is
the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or (B)
to the Substitute Share Owner, a certificate for the Substitute Common
Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2,
6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum
number of shares of Common Stock at any time and from time to time
11
<PAGE>
issuable hereunder, and all such shares, upon issuance pursuant hereto,
will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrance and
security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required
redeeming all of the Rights or amending or terminating the Rights
Agreement) so that the entering into of this Option Agreement, the
acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the
grant of any rights to any person under the Rights Agreement or enable
or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the 1933 Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 90 days
following such Subsequent Triggering Event (or such later period as provided in
Section 10); PROVIDED, HOWEVER, that until the date 15 days following the date
on which the Federal Reserve Board approves an application by Grantee under the
BHCA to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (E.G., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be
12
<PAGE>
obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. (a) Grantee may, at any time during which Issuer would be required
to repurchase the Option or any Option Shares pursuant to Section 7, surrender
the Option (together with any Option Shares issued to and then owned by Grantee)
to Issuer in exchange for a cash fee equal to the Surrender Price (as defined
below); PROVIDED, HOWEVER, that Grantee may not exercise its rights pursuant to
this Section 15 if Issuer has repurchased the Option (or any portion thereof) or
any Option Shares pursuant to Section 7. The "Surrender Price" shall be equal to
(i) $560 million, plus (ii) if applicable, the aggregate purchase price
previously paid pursuant hereto by Grantee with respect to any Option Shares,
minus (iii) if applicable, the sum of (A) the excess of (1) the net cash
amounts, if any, received by Grantee pursuant to the arms' length sale of Option
Shares (or any other securities into which such Option Shares were converted or
exchanged) to any party not affiliated with Grantee, over (2) the aggregate
purchase price previously paid pursuant hereto by Grantee with respect to such
Option Shares and (B) the net cash amounts, if any, received by Grantee pursuant
to an arms' length sale of a portion of the Option to any party not affiliated
with Grantee.
(b) Grantee may exercise its right to surrender the Option and any
Option Shares pursuant to this Section 15 by surrendering to Issuer, at its
principal office, this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
surrender the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver or cause to be delivered,
from time to time, to Grantee, the portion of the Surrender Price that Issuer is
no longer prohibited from paying, within five business days after the date on
which Issuer is no longer so prohibited, PROVIDED, HOWEVER, that if Issuer at
any time after delivery of a notice of surrender pursuant to paragraph (b) of
this Section 15 is prohibited under applicable law or regulation from paying to
Grantee the Surrender Price in full (i) Issuer shall (A) use its reasonable best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to make such payments, (B)
within five days of the submission or receipt of any documents relating to any
such regulatory and legal approvals, provide Grantee with copies of the same,
and (C) keep Grantee advised of both the status of any such request for
regulatory and legal approvals, as well as any discussions with any relevant
regulatory or other third party reasonably related to the same and (ii) Grantee
may revoke such notice of surrender by delivery of a notice of revocation to
Issuer and, upon delivery of such notice of revocation, the Exercise Termination
Date shall be extended to a date six months from the date on which the Exercise
Termination Date would have occurred if not for the provisions of this Section
15(c) (during which period Grantee may exercise any of its rights hereunder,
including any and all rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those set
forth in paragraphs (a),(b) and (c) of this Section 15 with respect to the
Substitute Option and the Substitute Option
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<PAGE>
Issuer during any period in which the Substitute Option Issuer would be required
to repurchase the Substitute Option pursuant to Section 9.
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof
(except to the extent that mandatory provisions of federal or state law apply).
20. This Agreement may be executed in two counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
14
<PAGE>
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
15
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
FLEET FINANCIAL GROUP, INC.
By: /s/ H. Jay Sarles
---------------------------------
Name: H. Jay Sarles
Title: Vice Chairman and Chief
Administrative Officer
BANKBOSTON CORPORATION
By: /s/ Peter J. Manning
---------------------------------
Name: Peter J. Manning
Title: Executive Vice President
[Fleet Option Agreement]
<PAGE>
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated March 14, 1999, between
BankBoston Corporation, a Massachusetts corporation ("Issuer"), and Fleet
Financial Group, Inc., a Rhode Island corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger of even date herewith (the "Merger Agreement"), which agreement
has been executed by the parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 59,005,179
fully paid and non-assessable shares of Issuer's Common Stock, par value $1.00
per share ("Common Stock"), at a price of $46.938 per share (the "Option
Price"); provided, however, that in no event shall the number of shares of
Common Stock for which this Option is exercisable exceed 19.9% of the Issuer's
issued and outstanding shares of Common Stock without giving effect to any
shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement) or
(ii) redeemed, repurchased, retired or otherwise cease to be
outstanding after the date of this Agreement, the number of shares of
Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such number equals 19.9% of
the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the
Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined),
<PAGE>
PROVIDED that the Holder shall have sent the written notice of such exercise (as
provided in subsection (e) of this Section 2) within 90 days following such
Subsequent Triggering Event. Each of the following shall be an "Exercise
Termination Event": (i) the Effective Time (as defined in the Merger Agreement)
of the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of 12 months after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise
to such right of termination is non-volitional). The "Last Triggering Event"
shall mean the last Initial Triggering Event to expire. The term "Holder" shall
mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior
written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of
Directors of Issuer shall have recommended that the
stockholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a subsidiary
of Grantee. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Significant
Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission
(the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of
the assets or deposits of Issuer or any Significant Subsidiary
of Issuer, (y) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of
Issuer, or (z) any substantially similar transaction;
provided, however, that in no event shall any merger,
consolidation, purchase or similar transaction involving only
the Issuer and one or more of its Subsidiaries or involving
only any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided that any such transaction
is not entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without having
received Grantee's prior written consent, shall have
authorized, recommended, proposed or publicly announced its
intention to authorize, recommend or propose, to engage in an
Acquisition Transaction with any person other than Grantee or
a Grantee Subsidiary, or the Board of Directors of Issuer
shall have publicly withdrawn or
2
<PAGE>
modified, or publicly announced its intention to withdraw or
modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of
engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary
capacity in the ordinary course of its business shall have
acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares
of Common Stock (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a BONA FIDE proposal to Issuer or
its stockholders by public announcement or written
communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to
Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or
obligation contained in the Merger Agreement and such breach
(x) would entitle Grantee to terminate the Merger Agreement
and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a transaction to
which Grantee has given its prior written consent, shall have
filed an application or notice with the Federal Reserve Board,
or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date
hereof:
(i) The acquisition by any person of beneficial
ownership of 20% or more of the then outstanding Common Stock;
or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (b) of this Section
2, except that the percentage referred to in clause (y) shall
be 20%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering
Event of which it has notice (together, a "Triggering Event"), it being
understood that the giving of such notice by Issuer shall not be a
condition to the right of the Holder to exercise the Option.
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(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date
of which being herein referred to as the "Notice Date") specifying
(i) the total number of shares it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days
nor later than 60 business days from the Notice Date for the closing of
such purchase (the "Closing Date"); PROVIDED that if prior notification
to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated
or such approvals have been obtained and any requisite waiting period
or periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price
for the shares of Common Stock purchased pursuant to the exercise of
the Option in immediately available funds by wire transfer to a bank
account designated by Issuer, PROVIDED that failure or refusal of
Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in part
only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this
Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of
Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by
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delivery of substitute certificate(s) without such reference if the shares have
been sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of
this Section 2 and the tender of the applicable purchase price in
immediately available funds, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with
the preparation, issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee, transferee or
designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. 18a and
regulations promulgated thereunder and (y) in the event, under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), or the Change in Bank
Control Act of 1978, as amended, or any state banking law, prior approval of
or notice to the Federal Reserve Board or to any state regulatory authority
is necessary before the Option may be exercised, cooperating fully with the
Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state regulatory authority
as they may require) in order to permit the Holder to exercise the Option and
Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to protect the rights of
the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of
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this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and PROVIDED FURTHER, however, that if such
reduction occurs, then the Issuer shall file a registration statement for the
balance as promptly as practicable and no reduction shall thereafter occur. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any
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<PAGE>
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in secondary offering
underwriting agreements for the Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall Issuer be obligated to
effect more than two registrations pursuant to this Section 6 by reason of the
fact that there shall be more than one Grantee as a result of any assignment or
division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option
Shares pursuant to this Section 7 by surrendering for such purpose to
Issuer, at its principal office, this Agreement or certificates for
Option Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may be,
elects to require Issuer to repurchase this Option and/or the Option
Shares in accordance with the provisions of this Section 7. Within the
latter to occur of (x) five business days after the surrender of the
Option and/or certificates representing Option Shares and the receipt
of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase
Price and/or to the Owner the Option Share Repurchase
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<PAGE>
Price therefor or the portion thereof, if any, that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify the Holder and/or the Owner
and thereafter deliver or cause to be delivered, from time to time, to
the Holder and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business
days after the date on which Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is
prohibited under applicable law or regulation from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price
and the Option Share Repurchase Price, respectively, in full (and
Issuer hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices, in
each case as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of
the Option or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share Repurchase
Price that Issuer is not prohibited from delivering; and (ii) deliver,
as appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Stock Option Agreement was exercisable
at the time of delivery of the notice of repurchase by a fraction, the
numerator of which is the Option Repurchase Price less the portion
thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall
be deemed to have occurred (i) upon the consummation of any merger,
consolidation or similar transaction involving Issuer or any purchase,
lease or other acquisition of all or a substantial portion of the
assets of Issuer, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the provisos to
Section 2(b)(i) hereof or (ii) upon the acquisition by any person of
beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, provided that no such event shall constitute a Repurchase
Event unless a Subsequent Triggering Event shall have occurred prior to
an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise
Termination Event unless no Subsequent Triggering Event shall have
occurred prior to the occurrence of an Exercise Termination Event.
8. In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into
8
<PAGE>
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(A) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or
merger with Issuer (if other than Issuer), (ii) Issuer in a
merger in which Issuer is the continuing or surviving person,
and (iii) the transferee of all or substantially all of
Issuer's assets.
(B) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(4) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one
year immediately preceding the consolidation, merger or sale
in question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by
the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the
Option, PROVIDED, that if the terms of the Substitute Option cannot,
for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to the Holder.
The issuer of the Substitute Option shall also enter into an agreement
with the then Holder or Holders of the Substitute Option in
substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option
is then exercisable, divided by the Average Price. The exercise price
of the Substitute Option per share of Substitute
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Common Stock shall then be equal to the Option Price multiplied by a
fraction, the numerator of which shall be the number of shares of
Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the shares of Substitute Common
Stock outstanding prior to exercise but for this clause (e), the issuer
of the Substitute Option (the "Substitute Option Issuer") shall make a
cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, and reasonably
acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and
any person that controls the Acquiring Corporation assume in writing
all the obligations of Issuer hereunder.
9. At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated plus. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share
Owner, as the case may be, may exercise its respective right to require
the Substitute Option Issuer to repurchase the Substitute Option and
the Substitute Shares pursuant to this Section 9 by surrendering for
such purpose to the Substitute Option Issuer, at its principal office,
the agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Agreement) and certificates for Substitute
Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may
be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any
event within five business days after the surrender
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of the Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto, the
Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or
to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to
this Section 9 shall immediately so notify the Substitute Option Holder
and/or the Substitute Share Owner and thereafter deliver or cause to be
delivered, from time to time, to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the portion of the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited;
PROVIDED, HOWEVER, that if the Substitute Option Issuer is at any time
after delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from
delivering to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to obtain all
required regulatory and legal approvals, in each case as promptly as
practicable, in order to accomplish such repurchase), the Substitute
Option Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in
whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is
not prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that
number of shares of the Substitute Common Stock obtained by multiplying
the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery
of the notice of repurchase by a fraction, the numerator of which is
the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price, or
(B) to the Substitute Share Owner, a certificate for the Substitute
Common Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2,
6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
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(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum
number of shares of Common Stock at any time and from time to time
issuable hereunder, and all such shares, upon issuance pursuant hereto,
will be duly authorized, validly issued, fully paid, non-assessable,
and will be delivered free and clear of all claims, liens, encumbrance
and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required
redeeming all of the Rights or amending or terminating the Rights
Agreement) so that the entering into of this Option Agreement, the
acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the
grant of any rights to any person under the Rights Agreement or enable
or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the 1933 Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 90 days
following such Subsequent Triggering Event (or such later period as provided in
Section 10); PROVIDED, HOWEVER, that until the date 15 days following the date
on which the Federal Reserve
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<PAGE>
Board approves an application by Grantee under the BHCA to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (E.G., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf, or (iv) any other manner approved by
the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. (a) Grantee may, at any time during which Issuer would be required
to repurchase the Option or any Option Shares pursuant to Section 7, surrender
the Option (together with any Option Shares issued to and then owned by Grantee)
to Issuer in exchange for a cash fee equal to the Surrender Price (as defined
below); PROVIDED, HOWEVER, that Grantee may not exercise its rights pursuant to
this Section 15 if Issuer has repurchased the Option (or any portion thereof) or
any Option Shares pursuant to Section 7. The "Surrender Price" shall be equal to
(i) $560 million, plus (ii) if applicable, the aggregate purchase price
previously paid pursuant hereto by Grantee with respect to any Option Shares,
minus (iii) if applicable, the sum of (A) the excess of (1) the net cash
amounts, if any, received by Grantee pursuant to the arms' length sale of Option
Shares (or any other securities into which such Option Shares were converted or
exchanged) to any party not affiliated with Grantee, over (2) the aggregate
purchase price previously paid pursuant hereto by Grantee with respect to such
Option Shares and (B) the net cash amounts, if any, received by Grantee pursuant
to an arms' length sale of a portion of the Option to any party not affiliated
with Grantee.
(b) Grantee may exercise its right to surrender the Option and
any Option Shares pursuant to this Section 15 by surrendering to
Issuer, at its principal office, this Agreement together with
certificates for Option Shares, if any, accompanied by a written notice
stating (i) that Grantee elects to surrender the Option and Option
Shares, if any, in accordance with the provisions of this Section 15
and (ii) the Surrender Price. The Surrender Price shall be payable in
immediately available funds on or before the second business day
following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable
law or regulation from paying the Surrender Price to Grantee in full,
Issuer shall immediately so notify Grantee and thereafter deliver or
cause to be delivered, from time to time, to Grantee, the portion of
the Surrender Price that Issuer is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer
so prohibited, PROVIDED, HOWEVER, that if Issuer at any time after
delivery of a notice of surrender pursuant to paragraph (b) of this
Section 15 is prohibited
13
<PAGE>
under applicable law or regulation from paying to Grantee the Surrender
Price in full (i) Issuer shall (A) use its reasonable best efforts to
obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to make such
payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide
Grantee with copies of the same, and (C) keep Grantee advised of both
the status of any such request for regulatory and legal approvals, as
well as any discussions with any relevant regulatory or other third
party reasonably related to the same and (ii) Grantee may revoke such
notice of surrender by delivery of a notice of revocation to Issuer
and, upon delivery of such notice of revocation, the Exercise
Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for
the provisions of this Section 15(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights
pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those
set forth in paragraphs (a),(b) and (c) of this Section 15 with respect
to the Substitute Option and the Substitute Option Issuer during any
period in which the Substitute Option Issuer would be required to
repurchase the Substitute Option pursuant to Section 9.
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof
(except to the extent that mandatory provisions of federal or state law apply).
20. This Agreement may be executed in two counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and the
same agreement.
14
<PAGE>
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
15
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
BANKBOSTON CORPORATION
By: /s/ Peter J. Manning
--------------------------------------
Name: Peter J. Manning
Title: Executive Vice President
FLEET FINANCIAL GROUP, INC.
By: /s/ H. Jay Sarles
--------------------------------------
Name: H. Jay Sarles
Title: Vice Chairman and Chief
Administrative Officer
[BankBoston Option Agreement]
<PAGE>
Exhibit 99(c)
Contacts: James Mahoney
Fleet Financial Group
(617) 346-5472
Ira Jackson
BankBoston
(617) 434-5470
FOR IMMEDIATE RELEASE
FLEET AND BANKBOSTON TO COMBINE IN $16 BILLION
STOCK TRANSACTION
--Strategic Merger Creates Nation's 8th Largest Bank With
Assets of Approximately $180 Billion and 20 Million Customers--
BOSTON, MA, March 14, 1999 - Fleet Financial Group (NYSE: FLT) and
BankBoston (NYSE: BKB) today announced a strategic combination of the two
companies through the merger of BankBoston and Fleet. The combined company,
which will be called Fleet Boston Corporation, brings together two highly
complementary institutions to create a strategically, operationally and
financially stronger and more competitive company with a commitment to make its
Northeast base of operations the springboard for domestic and global growth.
The transaction creates the nation's 8th largest bank with assets of
approximately $180 billion, powerful consumer and commercial platforms serving
20 million customers, and a diversified portfolio of superior financial products
and services. Fleet Boston will also have a market capitalization of $40
billion, ranking it 7th in the industry by this measure.
<PAGE>
Under the terms of the agreement, BankBoston shareholders will receive
1.1844 shares of Fleet for each BankBoston share they own. Based on the closing
prices of each company's stock on Friday, March 12, 1999, the transaction values
BankBoston shares at $53.00, or in the aggregate at $16 billion. The
transaction, which has been unanimously approved by the Boards of Directors of
both companies, is expected to close during the fourth quarter of 1999 subject
to regulatory approval. It is expected to be accretive to earnings in the first
year following the closing.
Terrence Murray, currently Chairman and Chief Executive Officer of Fleet,
will become Fleet Boston Corporation's Chairman and Chief Executive Officer, and
Chad Gifford, currently BankBoston's Chairman and Chief Executive Officer, will
serve as President and Chief Operating Officer of the new entity. Mr. Gifford
will become Chief Executive Officer at year-end 2001 and will become Chairman
one year later.
Robert J. Higgins, Fleet's President and Chief Operating Officer, and
Henrique C. Meirelles, BankBoston's President and Chief Operating Officer, will
manage the new corporation's businesses. The Latin American bank will retain the
name BankBoston. The name of the domestic bank will be determined at a later
date following a market and operations review.
Mr. Murray said, "This transaction is driven by and meets our strategic
objectives of achieving the requisite size and scope to compete effectively in
our industry while diversifying and improving the range of business lines we
have to serve our customers. The combined company will have a healthy mix of
earnings streams, with greater emphasis on higher growth businesses and less
reliance on core banking activities. On a combined basis, no line of business
will contribute more than 20% of total earnings, and higher-growth business
areas, like commercial finance, asset management and investment banking, will
contribute a greater percentage to earnings than they do today."
Mr. Gifford said, "As the oldest commercial bank in the nation, founded
and deeply rooted in New England, BankBoston joins Fleet to become a financial
services
2
<PAGE>
powerhouse based in Boston and leading the way globally as we enter the next
century. Terry and I are convinced that our new company will create superior
shareholder value through innovative products provided by talented and committed
professionals. Together, we will build a new company with a new culture for a
new century."
Mr. Higgins said, "As close neighbors, BankBoston and Fleet are well
aware of each other's complementary strengths and the cross-selling
opportunities they offer. Once we combine the strong technology and retail
platforms of both companies, we intend to build our electronic banking and
brokerage services to become one of the world's premier financial services
companies. BankBoston's capabilities will strengthen the product lines available
to Fleet's commercial customers. Just as important, we will offer our retail
customers a stronger banking platform throughout the Northeast."
Mr. Meirelles said, "One of the most exciting aspects of this transaction
is the increased size and scope of operations that the new entity can use to
support BankBoston's established and successful international operations. We
have done business in Latin American for over 80 years, and we expect to
continue that tradition while pursuing opportunities in other global markets. We
also have a tremendous opportunity to achieve synergies in our product
capabilities which will benefit our combined customer base."
The transaction will create a strong, growth oriented company
well-positioned in key business segments. In particular, the combination:
- - Creates a world-class competitor with large, diverse business lines
capable of competing against global competition;
- - Provides additional scale to invest in core areas like technology,
information management, product development and staff;
3
<PAGE>
- - Improves the combined company's competitive position in key consumer and
asset management markets;
- - Creates a top-three national commercial lender with full service product
capabilities such as loans, debt underwriting, equity underwriting, cash
management, and foreign trade services; and
- - Provides a stronger platform for international activities with the
capital base and earnings mix that can accommodate future growth.
Mr. Gifford said, "This transaction also allows BankBoston shareholders
to retain a significant ongoing interest in the combined enterprise which, as a
world-class company with large and diverse business lines, will be able to
compete more effectively and create greater value for shareholders than either
company could on its own. In addition, both BankBoston and Fleet employees are
becoming part of a larger, stronger company with increased opportunities."
Mr. Murray said, "One important feature of this transaction is that it
preserves a world-class financial institution. The new Fleet Boston Corporation
will be an exemplary corporate citizen that will continue the best traditions of
both companies' support for and investment in the communities we serve. We will
maintain or increase the current level of contributions by both companies and
seek opportunities to leverage our strengths for the benefit of communities
throughout the Northeast."
Following the transaction, which will be accounted for on a pooling
basis, Fleet shareholders will own 62% of the combined company and BankBoston
shareholders will own 38%. On a pro forma basis, the combined company in 1998
would have generated net income of approximately $2.5 billion and at year-end
would have had total assets of approximately $180 billion. The combined market
capitalization of Fleet Boston Corporation will be approximately $40 billion.
Following the close of the transaction,
4
<PAGE>
Fleet Boston's Board of Directors will have 22 members, including 12 directors
from the current Fleet Board and 10 directors from the current BankBoston Board.
The companies said that they expect to divest a significant number of
branches, customers and ATMs in order to receive regulatory approval for the
transaction. The companies have developed a divestiture proposal which they
believe is consistent with the policies and precedent of both the Department of
Justice and the Federal Reserve.
Goldman Sachs and Donaldson, Lufkin and Jenrette acted as financial
advisors and provided fairness opinions to Fleet. Merrill Lynch and Morgan
Stanley Dean Witter acted as financial advisors and provided fairness opinions
to BankBoston.
Fleet Financial Group, headquartered in Boston and listed on the New York
Stock Exchange, is a diversified financial services company with $104.4 billion
in assets and more than $84 billion in assets under management. Fleet is the
nation's sixth largest commercial lender and New England's leading small
business lender. Fleet's products and services include consumer banking,
government banking, mortgage banking, private banking, corporate finance,
commercial real estate lending, credit cards, insurance services, cash
management, capital markets, equipment leasing and asset-based lending. Fleet
also provides a wide array of investment management services for both
individuals and institutional clients and operates the nation's third largest
discount brokerage firm through its Quick & Reilly, Inc. subsidiary. With nearly
1,200 branches and 2,500 ATMs, Fleet also provides 24-hour telephone banking as
well as on-line banking services through the internet and its PC Banking
software for individuals and businesses.
BankBoston, with assets of $73.5 billion and some 25,000 employees, is
the nation's oldest commercial bank. BankBoston is engaged in consumer and
business banking in New England; delivering sophisticated financial solutions to
corporations and governments nationally and internationally; and full-service
banking in leading
5
<PAGE>
Latin American markets. The Corporation's common stock is listed on the New York
and Boston stock exchanges.
# # #
6
<PAGE>
Exhibit 99(d)
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
AMENDMENT NO. 2, dated as of March 14, 1999 (this
"Amendment"), to the Rights Agreement, dated as of June 28, 1990, as amended by
an Amendment thereto dated December 12, 1995 (the "Rights Agreement"), between
BankBoston Corporation, a Massachu setts corporation (the "Company"), and
BankBoston, N.A., as successor rights agent (the "Rights
Agent").
WITNESSETH
WHEREAS, the Company and the Rights Agent have previously
entered into the Rights Agreement; and
WHEREAS, no Distribution Date (as defined in Section 3(a) of
the Rights Agreement) has occurred as of the date of this Amendment; and
WHEREAS, Section 27 of the Rights Agreement provides that the
Company may from time to time supplement or amend the Rights Agreement in
accordance with the terms of Section 27; and
WHEREAS, the Company and Fleet Financial Group, Inc., a Rhode
Island corporation ("Fleet"), have entered into an Agreement and Plan of Merger,
dated as of March 14, 1999 (the "Merger Agreement"), pursuant to which the
Company will merge (the "Merger") with and into Fleet; and
WHEREAS, in connection with the Merger Agreement, the Company
and Fleet have entered into a Stock Option Agreement, dated March 14, 1999 (the
"Option Agreement"), pursuant to which the Company has granted to Fleet an
option to purchase shares of the Company's Common Stock under certain
circumstances and upon certain terms and conditions; and
WHEREAS, the Board of Directors has determined that the
transactions contem plated by the Merger Agreement are in the best interests of
the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is
advisable and in the best interest of the Company and its stockholders to amend
the Rights Agreement to exempt the Merger Agreement, the Option Agreement and
the transactions contemplated thereby (including, without limitation, the option
granted pursuant to the Option Agreement) from the application of the Rights
Agreement; and
<PAGE>
WHEREAS, the Board of Directors of the Company has approved
and adopted this Amendment and directed that the proper officers take all
appropriate steps to execute and put into effect this Amendment.
NOW, THEREFORE, the Company hereby amends the Rights Agreement
as follows:
1. Section 1(a) of the Rights Agreement is hereby amended by
inserting the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
until the termination of both the Fleet Merger Agreement and
the Fleet Stock Option Agreement (each as defined below) in
accordance with their respective terms, neither Fleet
Financial Group, Inc, a Rhode Island corporation ("Fleet"),
nor any Affiliate or Associate of Fleet (collectively with
Fleet, the "Fleet Parties") shall be deemed to be an Acquiring
Person by virtue of the fact that Fleet is the Beneficial
Owner solely of shares of Common Stock (i) of which any Fleet
Party is or becomes the Beneficial Owner by reason of the
approval, execution or delivery of the Agreement and Plan of
Merger, dated as of March 14, 1999, by and between the Company
and Fleet, as may be amended from time to time (the "Fleet
Merger Agreement"), or the Stock Option Agreement, dated March
14, 1999, between the Company, as issuer, and Fleet, as
grantee, as may be amended from time to time (the "Fleet Stock
Option Agreement"), or by reason of the consummation of any
transaction contemplated in the Fleet Merger Agreement, the
Fleet Stock Option Agreement or both, (ii) of which any Fleet
Party is the Beneficial Owner on the date hereof, (iii)
acquired in satisfaction of debts contracted prior to the
date hereof by any Fleet Party in good faith in the ordinary
course of such Fleet Party's banking business, (iv) held by
any Fleet Party in a BONA FIDE fiduciary or depository
capacity, or (v) owned in the ordinary course of business by
either (A) an investment company registered under the
Investment Company Act of 1940, as amended, or (B) an
investment account, in either case for which any Fleet Party
acts as investment advisor."
2. Section 13 of the Rights Agreement is hereby amended to add
the following subsection (d) at the end thereof:
2
<PAGE>
"Notwithstanding any other provision of this Agreement, at the
Effective Time (as defined in the Fleet Merger Agreement), the
Common Stock will be converted into the consideration provided
for in the Fleet Merger Agreement, and all Rights attached
thereto shall simultaneously be extinguished with no
additional consideration being paid on account thereof."
3. Section 15 of the Rights Agreement is hereby amended to add
the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any
holder of Rights or any other Person any legal or equitable
rights, remedies or claims under this Agree ment in connection
with any transactions contemplated by the Fleet Merger
Agreement or the Fleet Stock Option Agreement."
4. This Amendment shall be deemed to be in force and effective
immediately prior to the execution and delivery of the Merger Agreement. Except
as amended hereby, the Rights Agreement shall remain in full force and effect
and shall be otherwise unaffected hereby.
5. Capitalized terms used in this Amendment and not defined
herein shall have the meanings assigned thereto in the Rights Agreement.
6. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
7. In all respects not inconsistent with the terms and
provisions of this Amendment, the Rights Agreement is hereby ratified, adopted,
approved and confirmed. In executing and delivering this Amendment, the Rights
Agent shall be entitled to all the privileges and immunities afforded to the
Rights Agent under the terms and conditions of the Rights Agreement.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested as of the day and year first above
written.
ATTEST: BANKBOSTON CORPORATION
By:/s/Janice B. Liva By:/s/Peter J. Manning
-------------------- -------------------
Name: Janice B. Liva Name: Peter J. Manning
Title: Assistant General Counsel Title:Executive Vice President,
and Assistant Clerk Mergers and Acquisitions
ATTEST: BANKBOSTON, N.A., as Rights Agent
By Its Agent, Boston EquiServe Division
of EquiServe Limited Partnership
By:/s/Darlene DioDato By: /s/Charles V. Rossi
------------------------------ -------------------------------
Name: Darlene DioDato Name: Charles V. Rossi
Title: Managing Director Title: President
4
<PAGE>
Exhibit 99(e)
AMENDMENT NO. 1 TO RENEWED RIGHTS AGREEMENT
AMENDMENT NO. 1, dated as of March 14, 1999 (this
"Amendment"), to the Renewed Rights Agreement, dated as of dated December 17,
1998 (the "Renewed Rights Agree ment"), between BankBoston Corporation, a
Massachusetts corporation (the "Company"), and BankBoston, N.A., as rights agent
(the "Rights Agent").
WITNESSETH
WHEREAS, the Company and the Rights Agent have previously
entered into the Renewed Rights Agreement; and
WHEREAS, no Distribution Date (as defined in Section 3(a) of
the Renewed Rights Agreement) has occurred as of the date of this Amendment; and
WHEREAS, Section 27 of the Renewed Rights Agreement provides
that the Company may from time to time supplement or amend the Renewed Rights
Agreement in accordance with the terms of Section 27; and
WHEREAS, the Company and Fleet Financial Group, Inc., a Rhode
Island corporation ("Fleet"), have entered into an Agreement and Plan of Merger,
dated as of March 14, 1999 (the "Merger Agreement"), pursuant to which the
Company will merge (the "Merger") with and into Fleet; and
WHEREAS, in connection with the Merger Agreement, the Company
and Fleet have entered into a Stock Option Agreement, dated March 14, 1999 (the
"Option Agreement"), pursuant to which the Company has granted to Fleet an
option to purchase shares of the Company's Common Stock under certain
circumstances and upon certain terms and conditions; and
WHEREAS, the Board of Directors has determined that the
transactions contem plated by the Merger Agreement are in the best interests of
the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is
advisable and in the best interest of the Company and its stockholders to amend
the Renewed Rights Agreement to exempt the Merger Agreement, the Option
Agreement and the transactions contemplated thereby (including, without
limitation, the option granted pursuant to the Option Agreement) from the
application of the Renewed Rights Agreement; and
<PAGE>
WHEREAS, the Board of Directors of the Company has approved
and adopted this Amendment and directed that the proper officers take all
appropriate steps to execute and put into effect this Amendment.
NOW, THEREFORE, the Company hereby amends the Renewed Rights
Agree ment as follows:
1. Section 1(a) of the Renewed Rights Agreement is hereby
amended by inserting the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
until the termination of both the Merger Agreement and the
Stock Option Agreement (each as defined below) in accordance
with their respective terms, neither Fleet Financial Group,
Inc., a Rhode Island corporation ("Fleet"), nor any Affiliate
or Associate of Fleet (collectively with Fleet, the "Fleet
Parties") shall be deemed to be an Acquiring Person by virtue
of the fact that Fleet is the Benefi cial Owner solely of
shares of Common Stock (i) of which any Fleet Party is or
becomes the Beneficial Owner by reason of the approval,
execution or delivery of the Agreement and Plan of Merger,
dated as of March 14, 1999, by and between the Company and
Fleet, as may be amended from time to time (the "Merger
Agreement"), or the Stock Option Agreement, dated March 14,
1999, between the Company, as issuer, and Fleet, as grantee,
as may be amended from time to time (the "Stock Option Agree
ment"), or by reason of the consummation of any transaction
con templated in the Merger Agreement, the Stock Option
Agreement or both, (ii) of which any Fleet Party is the
Beneficial Owner on the date hereof, (iii) acquired in
satisfaction of debts contracted prior to the date hereof by
any Fleet Party in good faith in the ordi nary course of such
Fleet Party's banking business, (iv) held by any Fleet Party
in a BONA FIDE fiduciary or depository capacity, or (v) owned
in the ordinary course of business by either (A) an invest
ment company registered under the Investment Company Act of
1940, as amended, or (B) an investment account, in either case
for which any Fleet Party acts as investment advisor."
2. Section 3 of the Renewed Rights Agreement is hereby amended
by inserting the following new subsection (d) at the end thereof:
"Notwithstanding anything to the contrary contained in this
Agreement, at the Effective Time (as defined in the Merger
Agreement), the Common Stock will be
2
<PAGE>
converted into the consideration provided for in the Merger
Agreement (the "Merger Consideration"), and (i) to the extent
that the Record Date has occurred prior to the Effective Time,
all Rights attached to the Common Stock shall, simultaneously
with the conversion of the Common Stock into the Merger
Consideration, be extinguished with no additional
consideration being paid on account thereof, or (ii) to the
extent that the Record Date has not occurred prior to the
Effective Time, this Agreement shall terminate and be of no
further force or effect, no Rights shall be issued or
distributed in any manner contemplated by this Agreement, and
the former holders of Common Stock shall have no rights
hereunder.
3. Section 15 of the Renewed Rights Agreement is hereby
amended to add the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any
holder of Rights or any other Person any legal or equitable
rights, remedies or claims under this Agree ment in connection
with any transactions contemplated by the Merger Agreement or
the Stock Option Agreement."
4. This Amendment shall be deemed to be in force and effective
immediately prior to the execution and delivery of the Merger Agreement. Except
as amended hereby, the Renewed Rights Agreement shall remain in full force and
effect and shall be otherwise unaffect ed hereby.
5. Capitalized terms used in this Amendment and not defined
herein shall have the meanings assigned thereto in the Renewed Rights Agreement.
6. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
7. In all respects not inconsistent with the terms and
provisions of this Amendment, the Renewed Rights Agreement is hereby ratified,
adopted, approved and con firmed. In executing and delivering this Amendment,
the Rights Agent shall be entitled to all the privileges and immunities afforded
to the Rights Agent under the terms and conditions of the Renewed Rights
Agreement.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested as of the day and year first above
written.
ATTEST: BANKBOSTON CORPORATION
By:/s/JANICE B. LIVA By:/s/PETER J. MANNING
----------------- ------------------------
Name: Janice B. Liva Name: Peter J. Manning
Title: Assistant General Counsel Title: Executive Vice President,
and Assistant Clerk Mergers and Acquisitions
ATTEST: BANKBOSTON, N.A., as Rights Agent
By Its Agent, Boston EquiServe Division
of EquiServe Limited Partnership
By:/s/DARLENE DIODATO By:/s/CHARLES V. ROSSI
------------------- ----------------------
Name: Darlene DioDato Name: Charles V. Rossi
Title: Managing Director Title: President
4
