<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1994
REGISTRATION NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
FLEET FINANCIAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
RHODE ISLAND 05-0341324 6711
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification No.) Classification Code Number)
</TABLE>
50 KENNEDY PLAZA, PROVIDENCE, RHODE ISLAND 02903
401-278-5800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
WILLIAM C. MUTTERPERL, ESQ.
FLEET FINANCIAL GROUP, INC.
50 Kennedy Plaza, Providence, Rhode Island 02903
(401) 278-5880
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copies to:
LAURA N. WILKINSON, ESQ. PAUL W. LEE, P.C.
EDWARDS & ANGELL GOODWIN, PROCTER & HOAR
2700 Hospital Trust Tower Exchange Place
Providence, Rhode Island 02903 Boston, Massachusetts 02109
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this
Registration Statement and all other conditions precedent to the merger of NBB
Bancorp, Inc. with and into the Registrant have been satisfied or waived as
described in the enclosed Proxy Statement-Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
=======================================================================================================================
PROPOSED
MAXIMUM PROPOSED
AMOUNT OFFERING MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1 par value(1).......................... 7,000,000 shares(2) $47.875(3) $227,147,628(3)(4) $78,327
- -----------------------------------------------------------------------------------------------------------------------
Warrants to Purchase Common Stock...................... 2,500,000 warrants -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Common Stock Issuable upon exercise of the Warrants.... 2,500,000 shares(5) $ 2.15(6) $ 5,375,000(6) $ 1,854
- -----------------------------------------------------------------------------------------------------------------------
Total........................................ $80,181
=======================================================================================================================
<FN>
(1) Including preferred shares purchase rights.
(2) The estimated number of shares of common stock of Fleet Financial Group, Inc. ("Fleet") to be issued to shareholders
of NBB Bancorp., Inc. ("NBB") in the merger of NBB with and into Fleet.
(3) Computed pursuant to Rule 457(f)(l), based on the high and low sales price per share of NBB Common Stock on September
15, 1994 as reported on the New York Stock Exchange.
(4) Computed pursuant to Rule 457(f)(1) and 457(f)(3), based upon the market value of the securities to be cancelled in
the merger (9,043,795 shares of NBB common stock, consisting of 8,662,194 shares of common stock of NBB outstanding at
September 15, 1994 plus 380,601 shares issuable upon exercise of stock options outstanding at September 15, 1994),
less $205,824,058, the amount of cash estimated to be paid by Fleet in the merger.
(5) Pursuant to Rule 416, there are also being registered such additional shares of Common Stock as may become issuable
pursuant to anti-dilution provisions of the Warrants.
(6) Computed pursuant to Rule 457(g), based on the offering price of the warrants as determined by Fleet.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
FLEET FINANCIAL GROUP, INC.
CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4
AND
PROXY STATEMENT-PROSPECTUS.
<TABLE>
<CAPTION>
S-4 ITEM LOCATION IN PROXY STATEMENT-PROSPECTUS
------------------------------------------ ------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration Statement;
Cross-Reference Sheet; Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Table of Contents; Available Information;
Information Incorporated by Reference
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............. Summary of Proxy Statement-Prospectus
4. Terms of the Transaction.................. Summary of Proxy Statement-Prospectus; The
Merger; Comparison of Stockholders' Rights
under Rhode Island and Delaware Law
5. Pro Forma Financial Information........... Not Applicable
6. Material Contacts with the Company being
Acquired.................................. The Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Not Applicable
8. Interests of Named Experts and Counsel.... Legal Opinions
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
10. Information with Respect to S-3
Registrants............................... Information Incorporated by Reference
11. Incorporation of Certain Information by
Reference................................. Information Incorporated by Reference
12. Information with Respect to S-2 or S-3
Registrants............................... Not Applicable
13. Incorporation of Certain Information by
Reference................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants......... Not Applicable
15. Information with Respect to S-3
Companies................................. Information Incorporated by Reference
16. Information with Respect to S-2 or S-3
Companies................................. Not Applicable
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies........... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Cover Page; Summary of Proxy Statement-
Prospectus; Meeting Information; The
Merger; Information Incorporated by
Reference; Experts; Solicitation of
Proxies; Stockholder Proposals
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or
in an Exchange Offer...................... Not Applicable
</TABLE>
<PAGE> 3
NBB BANCORP, INC.
174 UNION STREET
NEW BEDFORD, MASSACHUSETTS 02740
October , 1994
Dear Holder of NBB Common Stock:
You are cordially invited to attend a Special Meeting of the Stockholders
(the "Special Meeting") of NBB Bancorp, Inc., a Delaware corporation ("NBB"), to
be held on November , 1994, at 10:00 am. at .
At the Special Meeting, holders of the outstanding shares of common stock,
par value $.10 per share, of NBB ("NBB Common Stock") will be asked to consider
and vote upon a proposal to approve and adopt an Agreement and Plan of Merger
dated as of May 9, 1994, as amended and restated as of August 26, 1994 (the
"Merger Agreement"), by and between NBB and Fleet Financial Group, Inc., a Rhode
Island corporation ("Fleet"), and each of the transactions contemplated thereby,
pursuant to which NBB will be merged with and into Fleet (the "Merger"), with a
provision for an alternative structure under certain circumstances. A copy of
the Merger Agreement is attached to the accompanying Proxy Statement-Prospectus
as Exhibit A.
At the effective time of the Merger, you will be entitled to receive $48.50
either in cash or Fleet common stock ("Fleet Common Stock") for each share of
NBB Common Stock, plus, in either case, a pro rata portion of warrants to
purchase Fleet Common Stock, as more fully described below:
Fleet Common Stock or Cash. In order to determine the number of
shares of Fleet Common Stock to be exchanged for each share of NBB Common
Stock, the value of Fleet Common Stock will be measured by the average of
Fleet Common Stock's closing price on the New York Stock Exchange over a 10
trading day period which ends 5 business days prior to the closing of the
Merger. If the closing of the Merger does not occur on or before March 31,
1995, you will be entitled to receive an additional amount in cash or Fleet
Common Stock for each share of NBB Common Stock, as is described in the
accompanying Proxy Statement-Prospectus.
Whether you receive Fleet Common Stock or cash in the Merger, or a
combination of both, will depend on (i) your stated preference as indicated
on an election form to be furnished to you shortly after the Merger and
(ii) allocation procedures that Fleet will use if, as expected, the total
number of shares of Fleet Common Stock which NBB stockholders have elected
to receive does not equal the number of shares of Fleet Common Stock to be
issued by Fleet in the Merger.
Except as described below, Fleet is expected to issue between
5,700,000 and 6,300,000 shares of Fleet Common Stock in the Merger but is
obligated to issue additional shares if required in order to ensure that
the Fleet Common Stock represents at least 45% of the total amount paid in
the Merger. If the average closing price of Fleet Common Stock during the
valuation period is $29.50 or less, Fleet has the right to use only cash to
pay the amount payable to NBB stockholders in the Merger but may use Fleet
Common Stock to pay a portion of this amount.
Warrants. Each NBB stockholder and each holder of an option under the
NBB Stock Option Plan who elects to convert his or her options into options
under Fleet's stock option plan will be entitled to receive a pro rata
share of 2,500,000 warrants to purchase Fleet Common Stock (the
"Warrants"). Each Warrant will entitle the holder to purchase one share of
Fleet Common Stock at $43.875 per share at any time during the five-year
period commencing on the first anniversary of the Merger. Based on the
number of shares of NBB Common Stock outstanding on September 15, 1994 and
assuming that all options under the NBB Stock Option Plan are converted
into Fleet options, each NBB stockholder would be entitled to approximately
.276 Warrants for each share of NBB Common Stock.
The Merger is expected to be tax-free to NBB stockholders for federal
income tax purposes with respect to any Fleet Common Stock received in exchange
for NBB Common Stock. However, any cash and Warrants received will likely be
subject to federal income tax, as is more fully described in the accompanying
Proxy Statement-Prospectus. If the average closing price of Fleet Common Stock
during the valuation period is $29.50 or less and the number of shares of Fleet
Common Stock to be issued by Fleet would prevent NBB's counsel from being able
to provide an opinion that the Merger is a tax-free reorganization, then an
alternative
<PAGE> 4
structure will be used for the Merger. Under this alternative structure, a
wholly-owned subsidiary of Fleet will merge with and into NBB. If the
alternative structure is used, the transaction would likely be fully taxable to
NBB stockholders. However, regardless of whether the alternative structure is
used, NBB stockholders are entitled to the consideration described in the Merger
Agreement.
Enclosed are a Notice of Special Meeting of Stockholders and a Proxy
Statement-Prospectus which describe the Merger, the background to the
transaction and the businesses of Fleet and NBB. You are urged to read all of
these materials carefully. The Board of Directors has fixed the close of
business on October , 1994 as the record date for the Special Meeting.
Accordingly, only stockholders of record on that date will be entitled to notice
of, and to vote at, the Special Meeting or any adjournments or postponements
thereof. The affirmative vote of the holders of a majority of the shares of NBB
Common Stock outstanding and entitled to vote is necessary to approve and adopt
the Merger Agreement and each of the transactions contemplated thereby.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY ADOPTED A RESOLUTION APPROVING THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
APPROVING AND ADOPTING THE MERGER AGREEMENT. Salomon Brothers Inc ("Salomon"),
NBB's financial advisor, has rendered a written opinion to the Board of
Directors of NBB that states, among other things, that, as of the date of this
Proxy Statement-Prospectus, the consideration to be received in the Merger by
holders of NBB Common Stock is fair, from a financial point of view, to the
holders of NBB Common Stock. The written opinion of Salomon, dated the date of
this Proxy Statement-Prospectus, is reproduced in full as Exhibit B to the
accompanying Proxy Statement-Prospectus, and I urge you to read the opinion
carefully.
Holders of shares of NBB Common Stock who do not vote to approve and adopt
the Merger Agreement and who comply with the requirements of Section 262 of the
Delaware General Corporation Law (the text of which is set forth in Exhibit C to
the accompanying Proxy Statement-Prospectus) will be entitled, if the Merger is
consummated, to exercise appraisal rights with respect to their shares of NBB
Common Stock. See "THE MERGER -- Appraisal Rights of Dissenting Stockholders" in
the accompanying Proxy Statement-Prospectus for a description of the procedures
to be followed to exercise such rights.
A form of proxy solicited by the Board of Directors is enclosed for your
convenience. YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. If you attend the Special Meeting, you may vote in person if you
wish, even if you have previously returned your proxy card.
Promptly after the Merger, a letter of transmittal and election form will
be mailed to each holder of record of shares of NBB Common Stock to permit such
holder to elect to receive Fleet Common Stock or cash with respect to each share
of NBB Common Stock or to indicate that such holder makes no election. PLEASE DO
NOT SEND YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD OR TO THE EXCHANGE
AGENT UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL AND ELECTION FORM, WHICH WILL
INCLUDE INSTRUCTIONS AS TO THE PROCEDURE TO BE USED IN SENDING YOUR STOCK
CERTIFICATES.
I strongly support the Merger of NBB with Fleet and join with the other
members of the Board in recommending the Merger to you. We urge you to vote in
favor of approval and adoption of the Merger Agreement and each of the
transactions contemplated thereby. If you should have any questions about the
Merger or need assistance in completing your proxy card, please contact Carol E.
Correia at NBB at (508) 996-5000.
Very truly yours,
ROBERT MCCARTER
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 5
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
NBB STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY AND
SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNTIL YOU HAVE RECEIVED A LETTER
OF TRANSMITTAL AND ELECTION FORM.
<PAGE> 6
NBB BANCORP, INC.
174 UNION STREET
NEW BEDFORD, MASSACHUSETTS 02740
TELEPHONE: (508) 996-5000
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER , 1994
A Special Meeting of Stockholders (the "Special Meeting") of NBB Bancorp,
Inc., a Delaware corporation ("NBB"), will be held on , November ,
1994, at 10:00 am. at , for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of May 9, 1994, as amended and
restated as of August 26, 1994 (the "Merger Agreement"), by and between NBB
and Fleet Financial Group, Inc., a Rhode Island corporation ("Fleet"), and
each of the transactions contemplated thereby, pursuant to which NBB will
be merged with and into Fleet, upon the terms (including the provision for
use of an alternative structure under certain circumstances) and subject to
the conditions set forth in the Merger Agreement, as are more fully
described in the enclosed Proxy Statement-Prospectus. A copy of the Merger
Agreement is attached as Exhibit A to the accompanying Proxy
Statement-Prospectus.
2. To transact such other business as may properly be brought before
the Special Meeting, or any adjournments or postponements thereof.
Any action may be taken on the foregoing proposal at the Special Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Special Meeting may be adjourned, or to which the Special
Meeting may be postponed.
The Board of Directors has fixed the close of business on October , 1994
as the record date (the "Record Date") for determination of stockholders
entitled to notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. A list of such stockholders will be available at the main
office of NBB, the address of which is set forth above, for a period of ten days
prior to the date of the Special Meeting. Only holders of shares of common
stock, par value $.10 per share, of NBB ("NBB Common Stock") of record at the
close of business on the Record Date will be entitled to notice of and to vote
at the Special Meeting and any adjournments or postponements thereof.
In the event there are not sufficient votes to approve the foregoing
proposal at the time of the Special Meeting, the Special Meeting may be
adjourned in order to permit further solicitations of proxies by NBB.
A majority of the outstanding shares of NBB Common Stock entitled to vote
must be represented at the Special Meeting, in person or by proxy, to constitute
a quorum for the transaction of business.
Holders of NBB Common Stock who do not vote to approve and adopt the Merger
Agreement and who comply with the requirements of Section 262 of the Delaware
General Corporation Law (the text of which is set forth in Exhibit C of the
accompanying Proxy Statement-Prospectus) will be entitled, if the Merger is
consummated, to exercise appraisal rights with respect to their shares of NBB
Common Stock. See "THE MERGER -- Appraisal Rights of Dissenting Stockholders" in
the accompanying Proxy Statement-Prospectus.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND EACH OF THE TRANSACTIONS
CONTEMPLATED THEREBY.
By Order of the Board of Directors,
CAROL E. CORREIA, Secretary
New Bedford, Massachusetts
October , 1994
<PAGE> 7
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 8
<TABLE>
<S> <C>
NBB BANCORP, INC. FLEET FINANCIAL GROUP, INC.
174 Union Street 50 Kennedy Plaza
New Bedford, Massachusetts 02740 Providence, Rhode Island 02903
(508) 996-5000 (401) 278-5800
</TABLE>
PROXY STATEMENT-PROSPECTUS
SPECIAL MEETING OF STOCKHOLDERS
NBB BANCORP, INC.
NOVEMBER , 1994
This Proxy Statement-Prospectus is furnished in connection with the
solicitation of proxies by the Board of Directors of NBB Bancorp, Inc. ("NBB")
to be used at a Special Meeting of NBB stockholders to be held on November ,
1994 (the "Special Meeting") for the purpose of considering and voting upon a
proposal to approve and adopt an Agreement and Plan of Merger dated as of May 9,
1994, as amended and restated as of August 26, 1994 (the "Merger Agreement") by
and between NBB and Fleet Financial Group, Inc. ("Fleet") providing for the
merger of NBB with and into Fleet, with a provision for use of an alternative
structure under certain circumstances. See "THE MERGER -- Conversion of NBB
Common Stock and Other Matters". The Merger Agreement is attached hereto as
Exhibit A and is incorporated herein by reference. Although not a condition to
the consummation of the Merger, the Merger Agreement also contemplates that
promptly following consummation of the Merger, Fleet intends to cause (i) the
transfer of the ten branches of New Bedford Institution for Savings, a
wholly-owned subsidiary of NBB (the "Bank") located in the State of Rhode Island
and the loans associated therewith, to Fleet National Bank ("Fleet-RI"), a
wholly-owned subsidiary of Fleet (the "Branch Transfer"), and (ii) the merger
(the "Bank Merger") of the Bank with and into Fleet Bank of Massachusetts,
National Association (the "Surviving Bank"), an indirect wholly-owned subsidiary
of Fleet, pursuant to a Bank Agreement and Plan of Merger (the "Bank Merger
Agreement") to be entered into between the Bank and the Surviving Bank. See "THE
MERGER -- Structure of the Bank Merger; Transfer of Rhode Island Branches". This
Proxy Statement-Prospectus and the form of proxy are first being mailed to
stockholders of NBB on or about October , 1994.
At the effective time of the Merger, each NBB stockholder will receive, for
each share of common stock, $0.10 par value of NBB ("NBB Common Stock") held by
such stockholder, except for shares held by dissenting shareholders or shares
held by Fleet or its subsidiaries or by NBB or its subsidiaries (other than in
both cases shares held in a fiduciary capacity or as a result of debts
previously contracted), either $48.50 in Fleet Common Stock, $1.00 par value,
including the associated preferred share purchase rights ("Fleet Common Stock")
or $48.50 in cash. In addition, each NBB stockholder is entitled to receive a
pro rata portion of 2,500,000 warrants to purchase Fleet Common Stock (the
"Warrants"). The number of shares of Fleet Common Stock to be received for each
share of NBB Common Stock will be determined by dividing $48.50 by the average
of Fleet Common Stock's closing price over a 10 trading day period which ends 5
days prior to the effective time of the Merger, rounded to the nearest
thousandth of a share.
The determination of whether an NBB Stockholder will receive Fleet Common
Stock or cash, or a combination of both, will depend on (i) the stated
preference of the NBB stockholder as indicated on a written election form to be
provided to such stockholder shortly after the Merger and (ii) allocation
procedures to be followed by Fleet if the total number of shares of Fleet Common
Stock which NBB stockholders have elected to receive does not equal the total
number of shares which Fleet will issue in the Merger. See "THE MERGER --
Exchange of Certificates; Election Procedure; Fractional Shares." Unless the
alternative structure for the Merger is used, Fleet is expected to issue between
5,700,000 and 6,300,000 shares of Fleet Common Stock in the Merger but is
obligated to issue additional shares in order to ensure that Fleet Common Stock
represents at least 45% of the total amount paid in the Merger.
Each Warrant entitles the holder thereof to purchase Fleet Common Stock at
$43.875 per share at any time during the five-year period commencing on the
first anniversary of the effective time of the Merger.
<PAGE> 9
Fleet has filed a Registration Statement on Form S-4 under the Securities
Act of 1933, as amended (the "Securities Act"), with the Securities and Exchange
Commission (the "Commission") covering a maximum of 2,500,000 Warrants and a
maximum of 9,500,000 shares of Fleet Common Stock, representing shares to be
issued in connection with the Merger and shares issuable upon exercise of the
Warrants to be issued in connection with the Merger (the "Warrant Shares"). This
Proxy Statement-Prospectus also constitutes the Prospectus of Fleet filed as a
part of such Registration Statement.
This Proxy Statement-Prospectus does not cover any resales of Fleet Common
Stock or Warrants received by stockholders of NBB upon consummation of the
Merger or the Warrant Shares, and no person is authorized to make use of this
Proxy Statement-Prospectus in connection with any such resale.
All information contained in this Proxy Statement-Prospectus with respect
to Fleet has been supplied by Fleet and all information with respect to NBB has
been supplied by NBB.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROXY STATEMENT-
PROSPECTUS. THE PROPOSED MERGER IS A COMPLEX TRANSACTION. STOCKHOLDERS ARE
STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS PROXY STATEMENT-PROSPECTUS IN
ITS ENTIRETY.
THE WARRANTS AND SHARES OF FLEET COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
THE SECURITIES OF FLEET OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE HEREIN
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY
DISTRIBUTION OF THE SHARES OF FLEET COMMON STOCK OR WARRANTS HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE AFFAIRS OF FLEET OR NBB SINCE THE DATE HEREOF.
The date of this Proxy Statement-Prospectus is October , 1994
2
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
AVAILABLE INFORMATION................................................................ 4
INFORMATION INCORPORATED BY REFERENCE................................................ 4
SUMMARY OF PROXY STATEMENT-PROSPECTUS................................................ 6
MEETING INFORMATION.................................................................. 20
The Special Meeting............................................................. 20
Record Date..................................................................... 20
Proxies; Voting and Revocation.................................................. 20
Votes Required.................................................................. 21
THE MERGER........................................................................... 21
General......................................................................... 21
Background of the Merger........................................................ 21
Recommendation of the Board of Directors and Reasons for the Merger............. 23
Fairness Opinion of Financial Advisor........................................... 26
Structure of the Merger......................................................... 29
Management and Operations after the Merger...................................... 30
Organization of Merger Subsidiary............................................... 30
Conversion of NBB Common Stock and Other Matters................................ 30
Exchange of Certificates; Election Procedure; Fractional Shares................. 32
Effective Time.................................................................. 34
Representations and Warranties.................................................. 34
Conduct of Business Pending the Merger.......................................... 35
Conditions to the Consummation of the Merger.................................... 37
Structure of the Bank Merger; Transfer of Rhode Island Branches................. 37
NBB Shareholder Rights Agreement................................................ 38
Regulatory Matters.............................................................. 38
Certain Federal Income Tax Consequences......................................... 40
Accounting Treatment............................................................ 42
Termination of the Merger Agreement............................................. 42
Waiver and Amendment of the Merger Agreement.................................... 43
No Solicitation; Expense Fee.................................................... 43
Effect on Employee Benefits..................................................... 44
Interests of Certain Persons in the Merger...................................... 45
Resale of Fleet Common Stock, Warrants and Warrant Shares....................... 46
Dividend Reinvestment and Stock Purchase Plan................................... 47
Appraisal Rights of Dissenting Stockholders..................................... 47
MATERIAL CONTACTS BETWEEN AFFILIATES OF NBB AND FLEET................................ 50
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS............................................. 50
CERTAIN REGULATORY CONSIDERATIONS.................................................... 50
RECENT LEGISLATION AND RELATED MATTERS............................................... 51
DESCRIPTION OF FLEET CAPITAL STOCK AND WARRANTS...................................... 54
COMPARISON OF STOCKHOLDERS' RIGHTS UNDER RHODE ISLAND AND DELAWARE LAW............... 62
COMPARATIVE STOCK PRICES AND DIVIDENDS............................................... 72
EXPERTS.............................................................................. 73
LEGAL OPINIONS....................................................................... 73
SOLICITATION OF PROXIES.............................................................. 73
STOCKHOLDER PROPOSALS................................................................ 74
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
A. Agreement and Plan of Merger...................................................... A-1
B. Opinion of Salomon Brothers Inc to NBB Board of Directors.........................
C. Delaware General Corporation Law Section 262...................................... C-1
</TABLE>
3
<PAGE> 11
AVAILABLE INFORMATION
Each of Fleet and NBB is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Proxy statements, reports and other information concerning
either Fleet or NBB can be inspected and copied at the Commission's office at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
the Commission's Regional Offices in New York (Suite 1300, Seven World Trade
Center, New York, New York 10048) and Chicago (Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661), and copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Fleet
Common Stock and NBB Common Stock are each listed on the New York Stock
Exchange. Reports, proxy materials and other information concerning Fleet and
NBB also may be inspected at the offices of the New York Stock Exchange, Inc.
(the "Stock Exchange"), 20 Broad Street, New York, New York 10005. This Proxy
Statement-Prospectus does not contain all the information set forth in the
Registration Statement and Exhibits thereto which Fleet has filed with the
Commission under the Securities Act, which may be obtained from the Public
Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the prescribed fees, and
to which reference is hereby made.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT-PROSPECTUS IS
DELIVERED UPON WRITTEN OR ORAL REQUEST TO THE FOLLOWING:
<TABLE>
<CAPTION>
FLEET DOCUMENTS NBB DOCUMENTS
- ------------------------------------------ ----------------------------------------------
<S> <C>
Robert W. Lougee, Jr. Carol E. Correia
Director of Corporate Communications Secretary
Fleet Financial Group, Inc. NBB Bancorp, Inc.
50 Kennedy Plaza 174 Union Street
Providence, Rhode Island 02903 New Bedford, Massachusetts 02740
401-278-5879 508-996-5000
</TABLE>
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, A REQUEST MUST BE
RECEIVED NO LATER THAN , 1994.
INFORMATION INCORPORATED BY REFERENCE
The following Fleet documents are incorporated by reference herein:
(1) Fleet's Annual Report on Form 10-K for the year ended December 31,
1993;
(2) Fleet's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994 and June 30, 1994;
(3) Fleet's Current Reports on Form 8-K dated March 10, 1994, May 9,
1994, August 15, 1994 and September 7, 1994;
(4) The description of the Fleet Common Stock contained in a
Registration Statement filed by Industrial National Corporation
(predecessor to Fleet) on Form 8-B dated May 29, 1970, and any amendment or
report filed for the purpose of updating such description; and
(5) The description of the preferred share purchase rights contained
in Fleet's Registration Statement on Form 8-A dated November 29, 1990 (as
amended by an Amendment to Application or Report on Form 8 dated September
6, 1991).
4
<PAGE> 12
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
The following NBB documents are incorporated by reference herein:
(1) NBB's Annual Report on Form 10-K for the year ended December 31,
1993;
(2) NBB's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994 and June 30, 1994;
(3) NBB's Current Report on Form 8-K dated September 12, 1994;
(4) The description of NBB Common Stock contained in NBB's
Registration Statement on Form S-4 (File No. 33-20219) filed with the
Commission on February 19, 1988, as amended by Amendment No. 1 dated March
25, 1988 and Post-Effective Amendment No. 1 dated April 27, 1988; and
(5) The description of certain preferred stock purchase rights granted
to holders of NBB Common Stock pursuant to the NBB Shareholder Rights
Agreement between NBB and The First National Bank of Boston, as Rights
Agent, dated as of November 14, 1989, contained in a Registration Statement
on Form 8-A filed on November 14, 1989.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet and NBB pursuant to
Sections 13, 14 or 15(d) of the Exchange Act subsequent to the date of this
Proxy Statement-Prospectus and prior to the Special Meeting are incorporated
herein by reference and such documents shall be deemed to be a part hereof from
the date of filing of such documents. Any statement contained in this Proxy
Statement-Prospectus or in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement-Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement-Prospectus.
5
<PAGE> 13
SUMMARY OF PROXY STATEMENT-PROSPECTUS
The following is a brief summary, which is necessarily incomplete, of
certain information contained elsewhere in this Proxy Statement-Prospectus or in
documents incorporated herein by reference. Reference is made to, and this
Summary is qualified in its entirety by, the more detailed information contained
herein, the Exhibits hereto and the documents incorporated by reference herein.
Each stockholder is urged to read the Proxy Statement-Prospectus with care.
THE PARTIES
Fleet. Fleet is a diversified financial services company organized under
the laws of the State of Rhode Island. At June 30, 1994, Fleet was the 17th
largest banking institution in the United States in terms of total assets, with
total assets of $48.2 billion, total deposits of $31.8 billion and stockholders'
equity of $3.5 billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of Rhode Island, New York, Connecticut, Massachusetts,
Maine and New Hampshire, through its banking subsidiaries, Fleet Bank
("Fleet-NY"), Fleet-RI, Fleet Bank, National Association ("Fleet-CT"), the
Surviving Bank, Fleet Bank of Maine and Fleet Bank-NH. Fleet provides, through
its nonbanking subsidiaries, a variety of financial services, including mortgage
banking, asset-based lending, equipment leasing, consumer finance, real estate
financing, credit-related life and accident/health insurance, securities
brokerage services, investment banking, investment advice and management, data
processing and student loan servicing. The principal office of Fleet is located
at 50 Kennedy Plaza, Providence, Rhode Island 02903, telephone number (401)
278-5800.
The Surviving Bank is a national banking association with total assets of
$9.2 billion and total deposits of $6.9 billion at June 30, 1994, without giving
effect to the contemplated Bank Merger. The Surviving Bank currently has 154
branches throughout Massachusetts, 34 of which are located in southeastern
Massachusetts and Cape Cod. The principal office of the Surviving Bank is
located at 75 State Street, Boston, Massachusetts 02109, telephone number (617)
346-4000.
NBB. NBB is a Delaware corporation and the holding company for the Bank.
NBB's principal business consists of the business of the Bank. At June 30, 1994,
NBB, on a consolidated basis, had total assets of $2.4 billion and total
deposits of $2.2 billion. NBB's only office and principal place of business is
located at the main office of the Bank at 174 Union Street, New Bedford,
Massachusetts 02740. Its telephone number is (508) 996-5000.
The Bank is a Massachusetts-chartered savings bank serving a market area
including a significant portion of southeastern Massachusetts, Cape Cod and
eastern Rhode Island. The Bank is engaged principally in the business of
attracting deposits from the general public, originating residential and
commercial real estate mortgages, originating construction, commercial and
consumer loans, and investing in various securities. The Bank's main office and
headquarters building is located at 174 Union Street, New Bedford, Massachusetts
02740 and its telephone number is (508) 996-5000. In addition to its main
office, the Bank has a network of 52 offices, 10 of which are located in eastern
Rhode Island, 30 in southeastern Massachusetts and 12 throughout Cape Cod.
DATE, TIME AND PLACE OF SPECIAL MEETING
The Special Meeting will be held at , at 10:00 am. on
, November , 1994.
PURPOSES OF SPECIAL MEETING
The Special Meeting will be held for the purpose of considering and voting
upon a proposal to adopt and approve the Merger Agreement and each of the
transactions contemplated thereby, and to conduct any other business that may
properly come before the Special Meeting, or any adjournments or postponements
thereof. See "MEETING INFORMATION -- The Special Meeting".
6
<PAGE> 14
VOTES REQUIRED
The Board of Directors has fixed the close of business on October , 1994
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Special Meeting. Only the holders of
record of the outstanding shares of NBB Common Stock on the Record Date will be
entitled to notice of, and to vote at, the Special Meeting and any adjournments
or postponements thereof. The presence, in person or by proxy, of a majority of
the aggregate number of shares of NBB Common Stock outstanding and entitled to
vote on the Record Date is necessary to constitute a quorum at the Special
Meeting.
At September 15, 1994, 8,663,194 shares of NBB Common Stock were
outstanding and entitled to vote, of which approximately 263,675 shares, or
approximately 3%, were held by directors and executive officers of NBB, the Bank
and their respective affiliates. Each such director and officer of NBB has
indicated his or her intention to vote the NBB Common Stock beneficially owned
by him or her for approval of the Merger Agreement and each of the transactions
contemplated thereby. The affirmative vote of the holders of a majority of the
shares of NBB Common Stock issued, outstanding and entitled to vote at the
Special Meeting will be required to approve the Merger Agreement and each of the
transactions contemplated thereby. Consequently, assuming, for illustration
purposes only, that the number of outstanding shares of NBB Common Stock and the
number of such shares held by directors and officers of NBB, the Bank and their
affiliates remains unchanged between September 15, 1994 and the Record Date and
that each director and officer of NBB and their respective affiliates votes in
favor of the Merger Agreement, the affirmative vote of holders of approximately
4,067,923 additional shares of NBB Common Stock, representing approximately 47%
of the shares issued and outstanding on September 15, 1994, will be required.
The approval of the Merger Agreement by NBB stockholders is a condition to the
consummation of the Merger.
See "MEETING INFORMATION -- Votes Required".
TERMS OF THE MERGER
At the effective time of the Merger each then outstanding share of NBB
Common Stock (except for shares held by dissenting shareholders or shares held
by Fleet or its subsidiaries, or by NBB or its subsidiaries (other than in both
cases shares held in a fiduciary capacity or as a result of debts previously
contracted)) will be converted into the right to receive either $48.50 in Fleet
Common Stock (the "Per Share Stock Consideration") or $48.50 in cash (the "Per
Share Cash Consideration"). Each NBB stockholder will also be entitled to
receive a pro rata portion of 2,500,000 Warrants. If the Merger has not occurred
on or prior to March 31, 1995, the amount received as Per Share Stock
Consideration and Per Share Cash Consideration will be increased by $0.25 per
share per month for each full month thereafter until the effective time of the
Merger.
The determination of the number of shares of Fleet Common Stock to be
received for each share of NBB Common Stock is based on the average of the
closing sales price (the "Average Closing Price") for Fleet Common Stock on the
Stock Exchange during the ten trading day period which ends on the fifth
business day preceding (but not including) the effective time of the Merger.
Whether an NBB stockholder will receive Fleet Common Stock or cash, or a
combination of both, in the Merger will depend on (i) the stated preference of
the NBB stockholder as indicated on an election form to be furnished to each
stockholder shortly after the Merger and (ii) allocation procedures to be used
by Fleet if the total number of shares which NBB stockholders have elected to
receive does not equal the number of shares of Fleet Common Stock to be issued
by Fleet in the Merger.
Except as described below, Fleet is expected to issue between 5,700,000 and
6,300,000 shares of Fleet Common Stock in the Merger but is required to issue
additional shares in order to ensure that Fleet Common Stock represents at least
45% of the total amount paid in the Merger. Fleet is currently in the process of
repurchasing shares of Fleet Common Stock in the public market, and prior to the
consummation of the Merger, intends to repurchase a total of approximately
6,000,000 shares of Fleet Common Stock to be used for issuance to NBB
stockholders in the Merger.
7
<PAGE> 15
Each Warrant will entitle the holder to purchase one share of Fleet Common
Stock at $43.875 per share at any time during the five-year period commencing on
the first anniversary of the effective time of the Merger.
If the Average Closing Price is equal to or less than $29.50, the
consideration payable in the Merger will consist (in addition to the Warrants)
solely of cash unless Fleet elects to pay part of the consideration using Fleet
Common Stock. If Fleet elects to use Fleet Common Stock under this circumstance,
the Fleet Common Stock will be valued based on the Average Closing Price. If the
number of shares of Fleet Common Stock to be used by Fleet to pay the
consideration in the Merger would prevent NBB's counsel from providing an
opinion in form and substance reasonably satisfactory to Fleet and its counsel
that the Merger would be a tax-free reorganization for federal income tax
purposes, then the Merger will be completed using an alternative structure.
Under the alternative structure, a wholly-owned subsidiary of Fleet organized as
a Delaware corporation ("Merger Subsidiary"), will merge with and into NBB (the
"Alternative Merger"). See "THE MERGER -- Conversion of NBB Common Stock and
Other Matters." As used in this Proxy Statement-Prospectus, the term "Merger"
means either the Merger or the Alternative Merger, whichever is to be
consummated.
No fractional shares of Fleet Common Stock will be issued in the Merger. In
lieu thereof, each holder of NBB Common Stock who otherwise would have been
entitled to a fractional share of Fleet Common Stock will receive cash in an
amount equal to such fraction multiplied by the Average Closing Price.
Calculations will be made to the nearest one-thousandth of a share of Fleet
Common Stock and to the nearest cent.
The Merger will become effective on the date and time (the "Effective
Time") as set forth in the certificate of merger which shall be filed with the
Secretary of State of Delaware and, unless the Alternative Merger is
consummated, the articles of merger which shall be filed with the Secretary of
State of Rhode Island.
Commencing at least 15 days prior to the Effective Time, each stock option
to acquire NBB Common Stock granted under the NBB Stock Option Plan which is
outstanding at such time, whether or not then exercisable, will be immediately
exercisable and if not exercised prior to the Effective Time, the option holder
may elect at or immediately prior to the Effective Time to have such option
cancelled in exchange for cash in an amount equal to the difference between
$48.50 (subject to upward adjustment if the Effective Time has not occurred on
or prior to March 31, 1995) and the per share exercise price, multiplied by the
number of shares covered by the option. Any such options which are not so
exercised or cancelled will be converted at the Effective Time into options
under the Fleet Stock Option Plan to purchase Fleet Common Stock plus their pro
rata portion of Warrants. The rights to Fleet Common Stock to be received by
holders of NBB stock options upon consummation of the Merger will be the same as
the rights such optionees had under the NBB Stock Option Plan immediately prior
to the Effective Time, except that the number of shares of Fleet Common Stock
subject to such options and the exercise price of such options will be adjusted
to give effect to the Per Share Stock Consideration.
Although not a condition to the consummation of the Merger, the Merger
Agreement contemplates that promptly following the consummation of the Merger,
Fleet intends to cause the transfer of the ten branches of the Bank located in
the State of Rhode Island and the loans associated therewith to Fleet-RI, a
wholly-owned subsidiary of Fleet, in exchange for Fleet-RI's assumption of
deposit and other liabilities related thereto, and the merger of the Bank with
and into the Surviving Bank.
See "THE MERGER -- Conversion of NBB Common Stock and Other Matters",
"-- Exchange of Certificates; Election Procedure; Fractional Shares", "--
Effective Time", "-- Structure of the Merger", "-- Structure of the Bank
Merger; Transfer of Rhode Island Branches", "-- Regulatory Matters" and "--
Appraisal Rights of Dissenting Stockholders".
8
<PAGE> 16
RECOMMENDATION OF THE BOARD OF DIRECTORS AND REASONS FOR THE MERGER
THE BOARD OF DIRECTORS OF NBB HAS UNANIMOUSLY ADOPTED A RESOLUTION
APPROVING THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS APPROVAL AND ADOPTION
OF THE MERGER AGREEMENT AND EACH OF THE TRANSACTIONS CONTEMPLATED THEREBY BY
NBB'S STOCKHOLDERS. NBB's Board has adopted that resolution and makes that
recommendation because it believes that the terms of the Merger Agreement are
fair and in the best interests of NBB and its stockholders. The terms of the
Merger Agreement were reached on the basis of arms' length negotiations between
NBB and Fleet. In the course of reaching its decision to approve the Merger
Agreement, the Board of Directors of NBB consulted with its legal advisors
regarding the legal terms of the Merger Agreement and the Board of Directors'
obligations in its consideration thereof and with Salomon Brothers Inc
("Salomon"), its financial advisor, regarding the financial terms and fairness,
from a financial point of view, of the consideration to be received by the
holders of NBB Common Stock in the proposed Merger.
See "THE MERGER -- Background of the Merger" and "-- Recommendation of the
Board of Directors and Reasons for the Merger".
FAIRNESS OPINION OF FINANCIAL ADVISOR
Salomon, NBB's financial advisor, has rendered its written opinion to the
Board of Directors of NBB that, as of May 8, 1994 and as of the date of this
Proxy Statement-Prospectus, the consideration to be received in the Merger by
the holders of NBB Common Stock is fair, from a financial point of view, to the
holders of NBB Common Stock. The opinion, dated the date of this Proxy
Statement-Prospectus, which is attached hereto as Exhibit B, should be read in
its entirety with respect to the assumptions made, matters considered and limits
of the review undertaken by Salomon in rendering its opinion, and for a
description of investment banking and financial advisory services provided in
the past by Salomon for NBB and for Fleet. See "THE MERGER -- Fairness Opinion
of Financial Advisor" for a further description of the opinion of Salomon and of
the fees payable to Salomon by NBB.
See "THE MERGER -- Background of the Merger", "-- Fairness Opinion of
Financial Advisor" and Exhibit B to this Proxy Statement-Prospectus.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions, including the
approval of NBB's stockholders solicited hereby; the effectiveness of the
Registration Statement of which this Proxy Statement-Prospectus forms a part;
approval of the Merger and the Bank Merger by certain federal and Massachusetts
regulatory authorities; receipt by NBB of an opinion of counsel as to the
tax-free nature of the Merger for federal income tax purposes, except for the
Warrants, cash received as Per Share Cash Consideration, cash in lieu of
fractional shares, cash received by dissenting stockholders (except in the event
the Alternative Merger is consummated); the listing, subject to notice of
issuance, on the Stock Exchange of the Fleet Common Stock and Warrants to be
issued in the Merger and the Warrant Shares; and other customary closing
conditions. There is no assurance that the foregoing conditions will be
satisfied or as to the timing of the satisfaction of such conditions.
See "THE MERGER -- Conditions to the Consummation of the Merger" and "--
Regulatory Matters".
TERMINATION OF THE MERGER AGREEMENT; PAYMENT OF EXPENSES
The Merger Agreement may be terminated at any time prior to the Effective
Time by the mutual consent of Fleet, Merger Subsidiary and NBB by a majority
vote of the members of each company's entire Board of Directors. Subject to
certain limitations in cases where the party seeking termination is in breach of
the Merger Agreement, the Merger Agreement may also be terminated by either
Fleet and Merger Subsidiary or NBB, acting individually, (a) 90 days after the
date on which any request or application for regulatory approval required to
consummate the Merger shall have been denied or withdrawn at the request or
9
<PAGE> 17
recommendation of any governmental entity which must grant such regulatory
approval, unless within the 90 day period following such denial or withdrawal a
petition for rehearing or an amended application has been filed with such
governmental entity; (b) if any governmental entity shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by the Merger Agreement; (c) if the Effective
Time has not occurred by May 31, 1995; (d) if there is a material breach by the
other party of any representation, warranty, covenant or agreement contained in
the Merger Agreement which is not timely cured; (e) if the vote of NBB's
stockholders required to approve the Merger Agreement is not obtained; or (f) if
NBB's Board of Directors determines that it will not recommend to its
stockholders approval, or modifies or withdraws its recommendation, of the
Merger Agreement and each of the transactions contemplated thereby and such
other matters as may be submitted to its stockholders in connection with the
Merger Agreement, if the Board shall have concluded with the advice of counsel
that such action is required to prevent such Board from breaching its fiduciary
obligations to NBB's stockholders.
Whether or not the Merger is consummated, all fees and expenses incurred in
connection with the Merger and the transactions contemplated thereby will be
paid by the party incurring such expenses, except as follows:
(i) Fleet will bear the costs and expenses of printing and mailing the
Proxy Statement-Prospectus, and all filing and other fees paid to the
Commission or any other governmental entity in connection with the Merger,
the Bank Merger and the other transactions contemplated thereby;
(ii) In the event that the Merger Agreement is terminated due to the
failure to receive required regulatory approvals described in subsection
(a) of the foregoing paragraph, any governmental entity shall have issued a
final nonappealable order enjoining or otherwise prohibiting the
consummation of any of the transactions contemplated by the Merger
Agreement, the Effective Time has not occurred by May 31, 1995 or the
transactions contemplated by the Merger Agreement otherwise fail to be
consummated, in any such case because of the failure to receive any
required regulatory approval, then NBB will be reimbursed by Fleet for all
of its expenses up to a maximum of $1,500,000.
(iii) In the event that the Merger Agreement is terminated as a result
of a material breach by the other party of its representations, warranties,
covenants or agreements caused by the willful conduct or gross negligence
of such party, then such party will be liable to the other party for all
out-of-pocket costs and expenses.
(iv) In the event that (x)(i) the Merger Agreement is terminated by
NBB due to the failure to receive the requisite approval of the NBB
stockholders, the determination by NBB's Board not to recommend stockholder
approval or modification or withdrawal of its recommendation or (ii) by
Fleet and Merger Subsidiary as a result of a material breach by NBB of its
covenants, agreements or representations and warranties under the Merger
Agreement caused by the willful conduct or gross negligence of NBB and
(y)(1) within six months thereafter NBB enters into an agreement for, or
the NBB Board shall have approved or recommended stockholder approval of, a
merger, consolidation, sale, lease or other disposition of 25% or more of
its assets or a tender or exchange offer for 25% or more of the outstanding
NBB Common Stock with any person other than Fleet or any subsidiary or
affiliate of Fleet or (2) in the case of termination described in (x)(i)
above, a bona fide proposal by any person other than Fleet or an affiliate
or subsidiary of Fleet for any such transaction shall have been publicly
disclosed at the time of such termination, then NBB will make a cash
payment to Fleet of $8,000,000.
See "THE MERGER -- Termination of the Merger Agreement" and "-- No
Solicitation; Expense Fee".
WAIVER
Fleet and NBB, with the authorization of their respective Boards of
Directors, may, to the extent legally allowable, (a) extend the time for the
performance of any of the obligations or other acts required of the other party
contained in the Merger Agreement; (b) waive any inaccuracies in the
representations and warranties of the other party contained in the Merger
Agreement or in any document delivered pursuant to the Merger
10
<PAGE> 18
Agreement; or (c) waive compliance by the other party of any of its agreements
or conditions contained in the Merger Agreement, except that after NBB
stockholder approval, no extension or waiver shall reduce the amount or change
the form of consideration to be delivered to each of NBB's stockholders as
contemplated by the Merger Agreement without further approval of NBB's
stockholders, except as contemplated by the Merger Agreement.
See "THE MERGER -- Waiver and Amendment to the Merger Agreement".
AMENDMENT
Any term or provision of the Merger Agreement may be amended in writing
(subject to compliance with applicable law) at any time, except that after NBB
stockholder approval, no amendment shall reduce the amount or change the form of
the consideration to be delivered to each of NBB's stockholders under the Merger
Agreement other than as contemplated by the Merger Agreement. In addition,
Delaware law prohibits, among other things, any change in any of the terms and
conditions of the Merger Agreement if such change or alteration would adversely
affect any holder of NBB Common Stock.
See "THE MERGER -- Waiver and Amendment of the Merger Agreement".
REGULATORY APPROVALS
As provided in Section 225.12(d)(2) of Regulation Y promulgated by the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
Fleet intends to seek a waiver from the Federal Reserve Board of the requirement
for prior approval of the Merger by the Federal Reserve Board pursuant to
Section 3 of the Bank Holding Company Act, as amended (the "BHC Act"). Since the
Merger consists in substance of bank-to-bank transactions among the Surviving
Bank, Fleet-RI and the Bank, Fleet believes that the Merger qualifies for such a
Federal Reserve Board waiver. If the Federal Reserve Board declines to approve
Fleet's waiver request, Fleet will be required to file an application under the
BHC Act for approval of the Merger. Assuming Fleet obtains the Federal Reserve
Board's waiver, the Merger is subject to approval by the Comptroller of the
Currency (the "Comptroller") pursuant to the Bank Merger Act, which among other
things, amended Section 18(c) of the Federal Deposit Insurance Act (the "Bank
Merger Act") and 12 U.S.C Section 215a, and by the Board of Bank Incorporation
of the Commonwealth of Massachusetts (the "Massachusetts BBI") under Sections 2
and 4 of Chapter 167A of the Massachusetts General Laws. Assuming receipt of the
Federal Reserve Board waiver and the Comptroller approval, the Merger may not be
consummated for 30 days after such approval, during which time the United States
Department of Justice may challenge the Merger on antitrust grounds. Fleet has
filed draft applications with the Comptroller with respect to the Branch
Transfer and the Bank Merger, the request for a waiver with the Federal Reserve
Board and an application with the Massachusetts BBI with respect to the Merger.
The Merger will not proceed until all regulatory approvals required to
consummate the Merger and the Bank Merger have been obtained, such approvals are
in full force and effect and all statutory waiting periods in respect thereof
have expired. There can be no assurance that the Federal Reserve Board waiver
will be obtained or that the Merger will be approved by the Comptroller or the
Massachusetts BBI. If such approvals and waiver are received, there can be no
assurance as to the date of such approvals and waiver or the absence of any
litigation challenging such approvals or waiver.
See "THE MERGER -- Structure of the Bank Merger; Transfer of Rhode Island
Branches" and "-- Regulatory Matters".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Neither Fleet nor NBB has requested or will request an advance ruling from
the Internal Revenue Service as to the tax consequences of the Merger. NBB's
obligation to effect the Merger is conditioned (except in the event that the
Alternative Merger is consummated) on delivery of an opinion from Goodwin,
Procter and Hoar, its counsel, dated as of the Effective Time, based upon
certain customary representations and assumptions set forth therein,
substantially to the effect that for federal income tax purposes the Merger
constitutes a reorganization within the meaning of section 368(a) of the Code,
and Fleet and NBB each will be a party to the reorganization within the meaning
of section 368(b) of the Code (noting, however, that the nontaxability of the
stockholders of NBB resulting from such reorganization does not extend to the
Warrants
11
<PAGE> 19
and any cash received as Per Share Cash Consideration, cash in lieu of a
fractional share interest in Fleet Common Stock or cash received by dissenting
stockholders).
Based on such opinion, the material federal income tax results of the
Merger would be as follows. No gain or loss will be recognized by NBB or by
Fleet as a result of the Merger. An NBB stockholder who receives solely cash and
Warrants in exchange for all of his shares of NBB Common Stock will recognize a
gain or loss for federal income tax purposes equal to the difference between (i)
the sum of the cash and the fair market value of the Warrants, as of the
Effective Time, and (ii) the stockholder's tax basis in the NBB Common Stock
surrendered in exchange therefor. Assuming such NBB stockholder, at the time of
the exchange, holds NBB Common Stock as a capital asset, such gain or loss will
be capital gain or loss, and will be long-term capital gain or loss if the
stockholder's holding period is more than one year. There are limitations on the
extent to which stockholders may deduct capital losses from ordinary income.
If the consideration received in the Merger by an NBB stockholder consists
in part of Fleet Common Stock, and such stockholder's adjusted basis in the
shares of NBB Common Stock surrendered in the transaction is less than the sum
of the fair market value, as of the Effective Time, of the Fleet Common Stock
and Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock), such stockholder will realize a gain on the
transaction (a "Realized Gain"). Such stockholder will recognize a gain equal to
the lesser of (i) such Realized Gain and (ii) the sum of the fair market value
of the Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock). Provided the exchange does not have the effect of
a dividend, the gain so recognized will be characterized as a capital gain
(assuming the NBB Common Stock exchanged was a capital asset in the hands of the
stockholder). If an NBB stockholder who receives part Fleet Common Stock in the
Merger realizes a loss, such loss will not be currently recognized for federal
income tax purposes. Such disallowed loss will be reflected in the adjusted tax
basis of the shares of Fleet Common Stock received in the Merger.
Although no gain or loss would be recognized by NBB or Fleet as a result of
the Alternative Merger, it is anticipated that the Alternative Merger would be a
taxable transaction to NBB stockholders. In such event, NBB stockholders would
recognize a gain or loss for federal income tax purposes equal to the difference
between (a) the sum of the fair market value, as of the Effective Time, of the
Warrants and any Fleet Common Stock received in the Alternative Merger plus any
cash received in the Alternative Merger and (b) the stockholder's tax basis in
the NBB Common Stock surrendered in exchange therefor.
Stockholders should consult their own tax advisors as to the tax
consequences of the Merger or the Alternative Merger to them under Federal,
state, local or any other applicable law.
See "THE MERGER -- Certain Federal Income Tax Consequences".
ACCOUNTING
The Merger is intended to be accounted for as a "purchase" transaction, as
more fully described under "THE MERGER -- Accounting Treatment".
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Except in the event the Alternative Merger is consummated, upon
consummation of the Merger, the directors and officers of Fleet immediately
prior to the Effective Time shall remain the directors and officers of the
surviving corporation, to hold office in accordance with the charter documents
and bylaws of the surviving corporation until their respective successors are
duly elected or appointed and qualified.
See "THE MERGER -- Management and Operations after the Merger".
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
Holders of NBB Common Stock who do not vote to approve and adopt the Merger
Agreement and who comply with the requirements of Section 262 of the Delaware
General Corporation Law will be entitled to appraisal rights. A copy of Section
262 is attached to this Proxy Statement-Prospectus as Exhibit C.
See "THE MERGER -- Appraisal Rights of Dissenting Stockholders".
12
<PAGE> 20
CERTAIN DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS
The rights of stockholders of NBB are currently governed by the Delaware
General Corporation Law, NBB's Certificate of Incorporation and NBB's by-laws.
Upon consummation of the Merger, NBB's stockholders who receive Fleet Common
Stock in the Merger will become stockholders of Fleet, and their rights will be
governed by the Rhode Island Business Corporation Act, the Fleet Restated
Articles of Incorporation and Fleet's by-laws.
See "COMPARISON OF STOCKHOLDERS' RIGHTS UNDER RHODE ISLAND AND DELAWARE
LAW".
COMPARATIVE STOCK PRICES AND DIVIDENDS
The shares of Fleet Common Stock and NBB Common Stock are each listed and
traded on the Stock Exchange. The table below sets forth the high and low sales
prices for Fleet Common Stock and NBB Common Stock as reported on the Stock
Exchange and the cash dividends declared, for the periods indicated, as well as
certain pro forma data per share of NBB Common Stock, assuming consummation of
the Merger:
<TABLE>
<CAPTION>
NBB
FLEET NBB PRO FORMA
--------------------------- --------------------------- EQUIVALENT
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS DIVIDENDS(1)
------- ------- --------- ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1991........................... $26.250 $ 9.625 $ 0.800 $15.125 $ 7.875 $0.64 $ 0.99
1992........................... 33.875 24.250 0.825 29.500 14.375 0.84 $ 1.02
1993........................... 37.875 28.250 1.025 41.250 25.250 1.04 $ 1.27
1994 (through September 15,
1994)........................ 41.375 31.750 1.000 49.000 35.000 0.90 $ 1.24
</TABLE>
(1) Represents data for Fleet Common Stock multiplied by 1.240, which would be
the Per Share Stock Consideration assuming, for illustration purposes only,
that the Average Closing Price is $39.125, the closing price of the Fleet
Common Stock on September 15, 1994. See "THE MERGER -- Conversion of NBB
Common Stock and Other Matters".
On May 6, 1994, the business day immediately preceding the public
announcement of the proposed Merger, the closing sales price for Fleet Common
Stock as reported on the Stock Exchange Composite Tape was $36.875 per share,
and the closing sales price for NBB Common Stock as reported by the Stock
Exchange Composite Tape was $48.125 per share. On September 15, 1994, the
closing sales price for Fleet Common Stock as so reported was $39.125 per share,
and the closing sales price for NBB Common Stock as so reported was $48.000 per
share.
See "COMPARATIVE STOCK PRICES AND DIVIDENDS".
13
<PAGE> 21
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA
The following unaudited information reflects certain comparative per common
share data related to income per share, cash dividends declared per share, book
value per share, and market value per share (i) on an historical basis for Fleet
and NBB; (ii) on a pro forma combined basis per share of Fleet Common Stock
assuming consummation of the Merger and the use of repurchased Fleet Common
Stock to pay the Per Share Stock Consideration; and (iii) on an equivalent pro
forma basis per share of NBB Common Stock assuming consummation of the Merger.
Such pro forma calculations do not include the effect of the Warrants. The
Warrants would not have a dilutive effect on Fleet Common Stock on a pro forma
basis since the average market price of the Fleet Common Stock for each of the
six months ended June 30, 1994 and the year ended December 31, 1993 did not
exceed the exercise price of the Warrants.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Fleet and NBB, including the
respective notes thereto, which are incorporated by reference in this Proxy
Statement-Prospectus. See "INFORMATION INCORPORATED BY REFERENCE".
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1994 1993
-------------- -------------
<S> <C> <C>
FLEET COMMON STOCK:
Income per share from continuing operations:
Primary:
Historical............................................. $ 1.74 $ 3.01
Pro forma -- Fleet and NBB(1).......................... 1.75 3.02
Fully Diluted:
Historical............................................. 1.74 3.01
Pro forma -- Fleet and NBB(1).......................... 1.75 3.02
Cash dividends declared per share:
Historical............................................. .65 1.025
Pro forma -- Fleet and NBB(2).......................... .65 1.025
Book value per share at period end:
Historical(3).......................................... 22.82 22.84
Pro forma -- Fleet and NBB(4).......................... 22.82 22.84
NBB COMMON STOCK:
Income per share from continuing operations:
Primary:
Historical............................................. 1.71 3.26
Pro forma equivalent -- Fleet and NBB(5)............... 2.17 3.74
Fully Diluted:
Historical............................................. 1.71 3.26
Pro forma equivalent -- Fleet and NBB(5)............... 2.17 3.74
Cash dividends declared per share:
Historical............................................. .60 1.04
Pro forma equivalent -- Fleet and NBB(5)............... .81 1.27
Book value per share at period end:
Historical(3).......................................... 28.85 29.45
Pro forma equivalent -- Fleet and NBB(4)............... 28.28 28.32
</TABLE>
<TABLE>
<CAPTION>
CLOSING SALES PRICE
--------------------------- NBB
FLEET NBB EQUIVALENT
COMMON STOCK COMMON STOCK PER SHARE (5)
------------ ------------ -------------
<S> <C> <C> <C>
Market value per share:
May 6, 1994(6)................................. $ 36.875 $ 48.125 $ 48.50
September 15, 1994(5).......................... $ 39.125 $ 48.000 $ 48.50
</TABLE>
(1) Pro forma combined primary and fully diluted income per share data has been
computed based on the pro forma net income available to holders of Fleet
Common Stock and NBB Common Stock, using the historical weighted average
shares outstanding and common stock equivalents relating to stock options,
14
<PAGE> 22
Fleet's Dual Convertible Preferred Stock, $1.00 par value (the "Dual
Convertible Preferred Stock") and rights to acquire Fleet Common Stock
issued to holders of the Dual Convertible Preferred Stock, each outstanding
at period end, and the exercise of stock options as may be appropriate as of
the beginning of the earliest period presented, adjusted to the equivalent
number of shares of Fleet Common Stock. These calculations assume the
exchange of 1.240 shares of Fleet Common Stock for each share of NBB Common
Stock which would represent the Per Share Stock Consideration, assuming, for
illustration purposes only, that the Average Closing Price is $39.125, the
closing price for Fleet Common Stock on September 15, 1994, that an
aggregate of 6,000,000 shares of Fleet Common Stock are issued in the Merger
and that Fleet has repurchased all of such 6,000,000 shares in the open
market prior to the Effective Time. Earnings used in the calculation of pro
forma primary and fully diluted income per share data are adjusted by the
dividend requirements of all preferred stock.
(2) Pro forma combined cash dividends declared per share of Fleet Common Stock
amounts are determined by dividing aggregate pro forma cash dividends
declared by the equivalent pro forma combined average outstanding shares of
Fleet Common Stock giving effect to the Merger and the exchange of 1.240
shares of Fleet Common Stock for each share of NBB Common Stock which would
represent the Per Share Stock Consideration, assuming, for illustration
purposes only, that the Average Closing Price is $39.125, the closing price
for Fleet Common Stock on September 15, 1994, that an aggregate of 6,000,000
shares of Fleet Common Stock are issued in the Merger and that Fleet has
repurchased all of such 6,000,000 shares in the open market prior to the
Effective Time.
(3) Effective January 1, 1994 and December 31, 1993, respectively, Fleet and NBB
adopted Financial Accounting Standards Board (FASB) Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
standard requires that securities available for sale be reported at fair
value, with unrealized gains or losses reflected as a separate component of
stockholders' equity net of related tax. Previously, these securities were
recorded at the lower of aggregate cost or market value with any net
unrealized loss included in earnings. Historical book value per common share
at December 31, 1993 and June 30, 1994 for NBB and at June 30, 1994 for
Fleet includes any adjustments for unrealized gains or losses relating to
securities available for sale.
(4) Pro forma combined book values per share represent the book values per share
giving effect to the Merger and the exchange of 1.240 shares of Fleet Common
Stock for each share of NBB Common Stock which would represent the Per Share
Stock Consideration, assuming, for illustration purposes only, that the
Average Closing Price is $39.125, the closing price for Fleet Common Stock
on September 15, 1994, that an aggregate of 6,000,000 shares of Fleet Common
Stock are issued in the Merger and that Fleet has repurchased all of such
6,000,000 shares in the open market prior to the Effective Time.
(5) Equivalent pro forma income, cash dividends declared, and book value per
share of NBB Common Stock represent the income, cash dividends declared, and
book value per share amounts of Fleet Common Stock on a pro forma combined
basis multiplied by 1.240, which would represent the Per Share Stock
Consideration, assuming, for illustration purposes only, that the Average
Closing Price is $39.125, the closing price for Fleet Common Stock on
September 15, 1994, that an aggregate of 6,000,000 shares of Fleet Common
Stock are issued in the Merger and that Fleet has repurchased all of such
6,000,000 shares in the open market prior to the Effective Time. Equivalent
market value per share of NBB Common Stock represents the closing sales
price of Fleet Common Stock, as reported in The Wall Street Journal, on May
6, 1994 (the business day immediately preceding the public announcement of
the proposed Merger) and September 15, 1994 multiplied by 1.315 and 1.240,
respectively, which would represent the Per Share Stock Consideration,
assuming, for illustration purposes only, that the Average Closing Price is
$36.875 and $39.125, the closing prices for Fleet Common Stock on May 6,
1994 and September 15, 1994, respectively.
(6) The business day immediately preceding the public announcement of the
proposed Merger.
15
<PAGE> 23
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain unaudited historical consolidated
financial data for each of Fleet and NBB. This data is based on the respective
consolidated financial statements of Fleet and NBB, including the respective
notes thereto, which are incorporated by reference in this Proxy
Statement-Prospectus and should be read in conjunction therewith. See
"INFORMATION INCORPORATED BY REFERENCE". The summary data for the six months
ended June 30, 1994 and 1993 of Fleet and NBB, respectively, is based on
unaudited financial statements which include all adjustments (consisting of
normal recurring items) that, in the opinion of the respective managements of
Fleet and NBB, are necessary for a fair presentation of the results of the
respective interim periods. The results of operations for the six months ended
June 30, 1994 and June 30, 1993 are not necessarily indicative of the results
for any other period. Certain amounts in prior periods have been reclassified to
conform to current-year presentation.
SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
(HISTORICAL)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1994(1) 1993 1993 1992 1991(2) 1990(3) 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Summary of Operations:
Interest income.................. $1,565 $1,616 $3,212 $3,416 $3,329 $3,279 $3,068
Interest expense................. 575 601 1,161 1,463 1,930 2,126 1,816
Net interest income.............. 990 1,015 2,051 1,953 1,399 1,153 1,252
Provision for credit losses...... 34 155 271 486 509 762 160
Net interest income after
provision for credit losses.... 956 860 1,780 1,467 890 391 1,092
Noninterest income............... 575 700 1,465 1,368 1,082 735 576
Noninterest expense.............. 1,050 1,184 2,424 2,318 1,819 1,289 1,128
Income (loss) before income
taxes.......................... 481 376 821 517 153 (163) 540
Income tax expense (benefit)..... 191 153 327 228 55 (89) 169
Net income (loss) before minority
interest....................... 290 223 494 289 98 (74) 371
Minority interest in FMG (after-
tax)(4)........................ 5 (2) 6 9 0 0 0
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)................ $285 $225 $488 $280 $98 $(74) $371
========== ========== ========== ========== ========== ========== ==========
Earnings (loss) per common share
(5):
Primary.......................... $1.74 $1.39 $3.01 $1.78 $.67 $(.75) $3.34
Fully diluted.................... 1.74 1.38 3.01 1.77 .67 (.75) 3.30
Weighted average primary shares
outstanding.................. 157,920,587 152,621,535 154,666,307 141,469,658 124,966,226 109,415,386 108,706,377
Weighted average fully diluted
shares outstanding........... 158,139,767 152,936,904 154,899,995 142,778,665 127,092,029 111,259,336 111,025,858
Book value per common share(6).. $22.82 $21.50 $22.84 $19.50 $18.15 $17.65 $19.87
Cash dividends declared per
common share................. .65 .475 1.025 .825 .80 1.25 1.31
Common dividend payout
ratio(7)..................... 31.4% 28.8% 28.7% 36.1% 96.7% --(7) 38.3%
Ratio of Earnings to Fixed
Charges(8):
Excluding interest on deposits... 2.80x 2.73x 2.81x 2.22x 1.32x --(8) 1.93x
Including interest on deposits... 1.80 1.61 1.68 1.34 1.08 --(8) 1.29
Ratio of Earnings to Fixed Charges
and Dividends on Preferred
Stock(9):
Excluding interest on deposits... 2.73 2.62 2.67 2.09 1.31 --(9) 1.91
Including interest on deposits... 1.79 1.60 1.66 1.33 1.08 --(9) 1.29
Consolidated Balance Sheet --
Average Balances:
Total assets..................... $47,636 $45,207 $45,966 $45,166 $38,839 $34,363 $29,798
Securities held to
maturity(10)................... 855 1,969 2,496 650 6,787 7,127 4,894
Securities available for sale.... 14,334 10,482 10,442 11,059 1,376 -- --
Loans and leases, net of unearned
income......................... 25,823 26,127 26,144 26,615 23,995 21,027 20,371
</TABLE>
16
<PAGE> 24
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1994(1) 1993 1993 1992 1991(2) 1990(3) 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits........ 24,487 25,411 25,173 26,551 24,248 18,607 16,914
Short-term borrowings(11)........ 8,002 5,141 5,971 4,753 3,284 6,366 4,260
Long-term debt/subordinated notes
and debentures(12)............. 3,364 3,788 3,718 3,127 3,020 2,544 1,809
Dual Convertible Preferred
Stock(13)...................... -- -- -- 283 134 -- --
Stockholders' equity............. 3,634 3,375 3,453 2,611 2,269 2,197 2,182
Consolidated Ratios(14):
Net interest margin (fully
taxable equivalent)............ 4.74% 5.05% 5.02% 4.80% 4.09% 3.92% 4.96%
Return (loss) on average
assets......................... 1.21 1.00 1.06 .62 .25 (.21) 1.25
Return (loss) on average common
stockholders' equity........... 17.25(15) 15.38 16.07 11.01 4.02 (3.93) 17.70
Return (loss) on average
stockholders' equity........... 15.83(15) 13.44 14.14 10.72 4.31 (3.35) 17.02
Average stockholders' equity to
average assets................. 7.63(15)(16) 7.47(16) 7.51(16) 5.78(16) 5.84(16) 6.39 7.32
Tier 1 risk-based capital
ratio(17)...................... 11.82 11.57 11.76 10.44 9.77 7.58 7.26
Total risk-based capital
ratio(17)...................... 16.59 16.70 16.62 15.38 13.79 11.19 10.70
Period-end reserve for possible
loan and lease losses to
period-end loans and leases,
net of unearned income......... 3.69 3.94 3.80 3.86 3.81 3.42 1.58
Net charge-offs to average loans
and leases, net of unearned
income......................... .41 1.17 1.11 2.05 1.65 1.92 .72
Period-end nonperforming assets
to period-end loans and leases,
net of unearned income, and
other real estate owned(18).... 2.12 3.24 2.27 3.68 5.89 6.64 1.84
</TABLE>
- ---------------
(1) Effective January 1, 1994, Fleet adopted FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
standard requires that securities available for sale be reported at fair
value, with unrealized gains or losses reflected as a separate component of
stockholders' equity. In connection with the adoption of FASB Statement No.
115, Fleet transferred securities netting to $767 million from the held to
maturity portfolio to the available for sale portfolio. Fleet's Tier I
capital and total capital ratios do not include any adjustments for
unrealized gains or losses relating to securities available for sale.
(2) Data for the year ended December 31, 1991 includes results of the banks
acquired in the Bank of New England acquisition from July 14, 1991.
(3) Results for the year ended December 31, 1990 reflect the restatement of
earnings relating to Fleet's accounting for declines in the market value of
its marketable equity securities discussed in Fleet's Current Reports on
Form 8-K dated May 3, 1991 and August 16, 1991 and its Annual Report on
Form 10-K for the year ended December 31, 1991.
(4) For the year ended December 31, 1992, the minority interest deduction for
Fleet Mortgage Group, Inc. ("FMG") totalled approximately 19% of FMG's
earnings from the date of the initial public offering (August 7, 1992) to
the end of the period.
(5) Earnings (losses) used in the calculation of primary and fully diluted
earnings per share are adjusted by the dividend requirements of all
outstanding preferred stock. Weighted average primary shares outstanding
have been computed using the historical weighted average shares outstanding
and common stock equivalents relating to stock options, Fleet's Dual
Convertible Preferred Stock and rights to acquire Fleet Common Stock issued
to holders of the Dual Convertible Preferred Stock, each outstanding at
period end, and the exercise of stock options as may be appropriate as of
the beginning of the earliest period presented, adjusted to the equivalent
number of shares of Fleet Common Stock using the average closing price of
Fleet Common Stock for the respective periods presented. Weighted average
fully diluted shares outstanding have been computed as described above
using the higher of the average closing price for the respective periods or
closing price at the respective period end, in each case of Fleet Common
Stock, to compute the equivalent number of shares of Fleet Common Stock.
(6) Common stockholders' equity (used to compute book value per common share)
is equal to the difference between total assets and total liabilities less
total preferred stockholders' equity. Total assets of Fleet for each
relevant period-end include goodwill and core deposit intangible. Such
goodwill and core deposit intangible amounted to $331 million, $361
million, $341 million, $212 million and $229 million, at December 31, 1993,
1992, 1991, 1990 and 1989, respectively, and $336 million and $354 million
at June 30, 1994 and 1993, respectively. Fleet adopted FASB Statement No.
115 effective January 1, 1994. Fleet's book value per common share for the
six months ended June 30, 1994 includes the average unrealized gains and
losses on securities available for sale. Excluding the impact of FASB
Statement No. 115, Fleet's book value per common share would have been
$24.20 for the six months ended June 30, 1994.
(7) The common dividend payout ratio is equal to the ratio of aggregate common
dividends declared during the indicated period to the consolidated net
income of Fleet during such period. For the year ended December 31, 1990,
common dividends aggregated $137 million and the net loss was $74 million.
(8) Earnings consist of income before income taxes plus fixed charges
(excluding capitalized interest). Fixed charges consist of interest on
short-term debt and long-term debt (including interest related to
capitalized leases and capitalized interest) and one-third of rent expense,
which approximates the interest component of such expense. In addition,
where indicated, fixed charges include interest on deposits. Fixed charges
exceeded earnings by $164 million (excluding interest on deposits) and by
$164 million (including interest on deposits) for the year ended December
31, 1990.
17
<PAGE> 25
(9) Earnings consist of income before income taxes plus fixed charges
(excluding capitalized interest) and the pretax equivalent of dividends on
preferred stock. Fixed charges and dividends on preferred stock consist of
interest on short-term debt and long-term debt (including interest related
to capitalized leases and capitalized interest) and one-third of rent
expense, which approximates the interest component of such expense, plus
the pretax equivalent of dividends on preferred stock. In addition, where
indicated, fixed charges include interest on deposits. The sum of fixed
charges and dividends exceeded earnings by $164 million (excluding interest
on deposits) and by $164 million (including interest on deposits) for the
year ended December 31, 1990.
(10) For a discussion of Fleet's reclassification in 1992 of its "portfolio
securities" to "securities held for sale", see Fleet's Current Report on
Form 8-K dated October 21, 1992.
(11) Short-term borrowings consist mainly of federal funds purchased, securities
sold under agreements to repurchase, commercial paper and bank debt.
(12) Fleet issued $200 million of 7 1/4% Notes due 1999 on September 7, 1994,
the proceeds of which are intended to be used for general corporate
purposes, including the repurchase of Fleet Common Stock from time to time
in connection with the Merger.
(13) The Dual Convertible Preferred Stock was issued in 1991 and reclassified to
stockholders' equity as of December 31, 1992.
(14) Interim financial percentages have been annualized, where appropriate.
(15) Fleet adopted FASB Statement No. 115 effective January 1, 1994. Fleet's
return on average common stockholders' equity, return on average
stockholders' equity and average stockholders' equity to average assets
ratios include the average unrealized gains and losses on securities
available for sale. Excluding the impact of FASB Statement No. 115, Fleet's
return on average common stockholders' equity, return on average
stockholders' equity and average stockholders' equity to average assets
ratios would have been 17.31%, 15.88% and 7.61%, respectively for the six
months ended June 30, 1994.
(16) Excludes $283 million of Fleet's Dual Convertible Preferred Stock at
December 31, 1992 and December 31, 1991 and includes $283 million of
Fleet's Dual Convertible Preferred Stock at June 30, 1994, June 30, 1993
and December 31, 1993. Including the $283 million of Dual Convertible
Preferred Stock, this ratio would be 6.41% and 6.19% at December 31, 1992
and December 31, 1991, respectively. The Dual Convertible Preferred Stock
was reclassified to stockholders' equity as of December 31, 1992.
(17) Calculated using final 1992 risk-based capital guidelines.
(18) Nonperforming assets include loans and leases on a nonaccrual basis, loans
renegotiated due to the financial deterioration of the borrower and OREO,
defined as insubstance foreclosures and other real estate owned.
18
<PAGE> 26
SELECTED CONSOLIDATED FINANCIAL DATA
NBB BANCORP, INC.
(HISTORICAL)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------------
1994 1993 1993 1992(1) 1991(2) 1990 1989
------- ------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Summary of Operations:
Interest and dividend income.............. $82,658 $85,918 $170,344 $151,340 $126,994 $112,300 $110,173
Interest expense.......................... 33,593 38,044 73,733 76,595 78,568 72,553 69,001
Net interest income....................... 49,065 47,874 96,611 74,745 48,426 39,747 41,172
Provision for loan losses................. 350 2,200 3,300 6,215 9,496 10,659 4,385
Gain (loss) on sales of securities, net... (389) 1,527 3,859 5,377 9,647 1,594 1,833
Non-interest income....................... 3,437 3,263 7,469 5,184 4,025 2,152 2,278
Operating expenses........................ 24,160 24,533 48,962 36,220 25,501 21,018 20,320
Provisions/write-down of OREO............. 1,019 1,468 3,685 977 3,754 3,999 847
Other real estate owned expense........... 1,169 712 1,614 619 955 179 19
Equity in loss (income) of unconsolidated
subsidiary.............................. (22) (112) (519) 211 86 170 --
Income before income taxes................ 25,437 23,863 50,897 41,064 22,306 7,468 19,712
Provision for income taxes................ 10,593 10,662 22,805 18,136 9,415 5,155 8,025
Change in accounting principle............ -- -- -- 5,000 -- -- --
------- ------- -------- -------- -------- -------- --------
Net income.................................. $14,844 $13,201 $ 28,092 $ 27,928 $ 12,891 $ 2,313 $ 11,687
======= ======= ======== ======== ======== ======== ========
Earnings per share -- operations............ $1.71 $1.53 $3.26 $2.68 $1.51 $0.26 $1.24
Cumulative effect of change in accounting
for income taxes.......................... -- -- -- 0.58 -- -- --
Net income per share........................ 1.71 1.53 3.26 3.26 1.51 0.26 1.24
Weighted average common shares
outstanding............................... 8,659,610 8,603,447 8,615,399 8,585,279 8,559,995 8,908,993 9,416,113
Book value per common share (3)............. $28.85 $27.52 $29.45 $26.52 $24.11 $23.13 $22.69
Cash dividends declared per common share.... 0.60 0.50 1.04 0.84 0.64 0.92 0.89
Common dividend payout ratio................ 35.09% 32.68% 31.90% 25.77% 42.38% 353.85% 71.77%
Consolidated Balance Sheet -- Average
Balances:
Total assets.............................. $2,447,789 $2,380,319 $2,407,632 $1,964,437 $1,472,139 $1,213,549 $1,171,250
Investment securities..................... 417,432 466,667 480,325 314,621 147,748 152,396 128,888
Securities available for sale............. 559,116 426,363 452,027 378,233 208,938 -- --
Loans and leases, net of unearned
income.................................. 1,333,239 1,344,027 1,332,974 1,144,565 979,805 942,797 917,763
Interest-bearing deposits................. 2,101,058 2,060,597 2,079,713 1,688,688 1,227,979 978,971 922,676
Long-term debt............................ -- 283 236 519 825 2,235 5,455
Stockholders' equity(3)................... 251,726 230,872 235,866 216,879 200,903 208,178 213,316
Consolidated Ratios:
Net interest margin....................... 4.21% 4.23% 4.24% 4.03% 3.53% 3.47% 3.75%
Return on average assets.................. 1.22 1.12 1.17 1.42 0.88 0.19 1.00
Return on average common stockholders'
equity(3)............................... 11.89 11.53 11.91 12.88 6.42 1.11 5.48
Average stockholders' equity to average
assets.................................. 10.28 9.70 9.80 11.04 13.65 17.15 18.21
Tier 1 risk-based capital ratio........... 20.41 17.41 19.23 16.94 18.88 24.92 28.34
Total risk-based capital ratio............ 21.39 18.39 20.31 17.84 20.04 26.00 28.97
Period-end reserve for possible loan and
lease losses to period-end loans and
leases, net of unearned income.......... 2.12 2.52 2.24 2.55 1.65 1.01 0.67
Net charge-offs to average loans and
leases, net of unearned income.......... 0.17 0.43 0.61 0.42 0.62 0.80 0.03
Period-end nonperforming assets to
period-end loans and leases, net of
unearned income, and other real estate
owned................................... 2.32 3.60 2.74 4.11 4.76 4.93 1.54
</TABLE>
- ---------------
(1) Reflects the acquisition of deposits and certain assets from the Federal
Deposit Insurance Corporation during 1992.
(2) Reflects the acquisition of deposits and certain assets from the Resolution
Trust Corporation during 1991.
(3) NBB adopted FASB Statement No. 115 effective December 31, 1993. NBB's return
on average common stockholders' equity and average stockholders' equity to
average assets ratios and its book value include the average unrealized
gains and losses on securities available for sale. Excluding the impact of
FASB Statement No. 115, NBB's return on common stockholders' equity and
average stockholders' equity to average assets ratios and its book value
would have been 11.89%, 10.53% and $29.77, and 11.91%, 10.18% and $28.67,
respectively, for the six months ended June 30, 1994 and the year ended
December 31, 1993.
19
<PAGE> 27
MEETING INFORMATION
THE SPECIAL MEETING
This Proxy Statement-Prospectus is being furnished in connection with the
solicitation of proxies by the Board of Directors of NBB for use at the Special
Meeting. The Special Meeting will be held at , at 10:00 am. on
November , 1994.
The Special Meeting will be held for the purpose of considering and voting
upon a proposal to approve and adopt the Merger Agreement and each of the
transactions contemplated thereby, and to conduct any other business that may
properly come before the Special Meeting, or any adjournments or postponements
thereof. Any action may be taken on the foregoing proposal at the Special
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Special Meeting may be adjourned, or to which
the Special Meeting may be postponed.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND EACH OF THE TRANSACTIONS CONTEMPLATED
THEREBY.
RECORD DATE
The Board of Directors has fixed the close of business on October , 1994
as the Record Date. Only the holders of record of the outstanding shares of NBB
Common Stock on the Record Date will be entitled to notice of, and to vote at,
the Special Meeting and any adjournments or postponements thereof. At the Record
Date, shares of NBB Common Stock were outstanding and entitled to
vote. The presence, in person or by proxy, of a majority of the aggregate number
of shares of NBB Common Stock outstanding and entitled to vote on the Record
Date is necessary to constitute a quorum at the Special Meeting.
PROXIES; VOTING AND REVOCATION
Shares represented by a properly executed proxy received prior to the vote
at the Special Meeting and not revoked will be voted at the Special Meeting as
directed in the proxy. IF A PROXY IS SUBMITTED AND NO DIRECTIONS ARE GIVEN, THE
PROXY WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
EACH OF THE TRANSACTIONS CONTEMPLATED THEREBY. NBB intends to count shares of
NBB Common Stock present in person at the Special Meeting but not voting, and
shares of NBB Common Stock for which it has received proxies but with respect to
which holders of shares have abstained on any matter, as present at the Special
Meeting for purposes of determining the presence or absence of a quorum for the
transaction of business. Since the affirmative vote of the holders of a majority
of the outstanding shares of NBB Common Stock entitled to vote on the Merger is
required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, such non-voting shares and abstentions will have the
effect of a negative vote. In addition, under the rules of the Stock Exchange,
brokers who hold shares in street name for customers who are the beneficial
owners of such shares are prohibited from giving a proxy to vote shares held for
such customers on the approval and adoption of the Merger Agreement without
specific instructions from such customers. Given that Delaware law requires the
affirmative vote of the holders of a majority of the outstanding shares of NBB
Common Stock entitled to vote on the Merger Agreement in order to approve and
adopt the Merger Agreement, the failure of such customers to provide specific
instructions with respect to their shares of NBB Common Stock to their broker
will have the effect of a negative vote.
Each share of NBB Common Stock is entitled to one vote on each matter voted
upon at the Special Meeting. The persons named as proxies by a stockholder may
propose and vote for one or more adjournments or postponements of the Special
Meeting to permit further solicitation of proxies in favor of such proposal.
A stockholder of record may revoke a proxy by filing an instrument of
revocation with Carol E. Correia, Secretary of NBB (174 Union Street, New
Bedford, Massachusetts 02740), by filing a duly executed proxy bearing a later
date, or by appearing at the Special Meeting in person, notifying the Secretary,
and voting by ballot at the Special Meeting. Any stockholder of record attending
the Special Meeting may vote in person
20
<PAGE> 28
whether or not a proxy has been previously given, but the mere presence (without
notifying the Secretary) of a stockholder at the Special Meeting will not
constitute revocation of a previously given proxy.
VOTES REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares
of NBB Common Stock is necessary to approve and adopt the Merger Agreement and
the transactions contemplated thereby. The approval of the Merger Agreement by
NBB's stockholders is a condition to the consummation of the Merger.
At September 15, 1994, 8,663,194 shares of NBB Common Stock were
outstanding and entitled to vote, of which approximately 263,675 shares, or
approximately 3% were held by directors and executive officers of NBB, the Bank
and their respective affiliates. Each such director and officer of NBB has
indicated his or her intention to vote the NBB Common Stock beneficially owned
by him or her for approval of the Merger Agreement and each of the transactions
contemplated thereby. The affirmative vote of the holders of a majority of the
shares of NBB Common Stock issued, outstanding and entitled to vote at the
Special Meeting will be required to approve the Merger Agreement and each of the
transactions contemplated thereby. Consequently, assuming, for illustration
purposes only, that the number of outstanding shares of NBB Common Stock and the
number of such shares held by directors and officers of NBB, the Bank and their
affiliates remains unchanged between September 15, 1994 and the Record Date and
that each director and officer of NBB, the Bank and their respective affiliates
votes in favor of the Merger Agreement, the affirmative vote of holders of
approximately 4,067,923 additional shares of NBB Common Stock, representing
approximately 47% of the shares issued and outstanding on September 15, 1994,
will be required. The approval of the Merger Agreement by the NBB stockholders
is a condition to the consummation of the Merger.
THE MERGER
GENERAL
This section of the Proxy Statement-Prospectus describes certain aspects of
the proposed Merger, including the principal provisions of the Merger Agreement.
A copy of the Merger Agreement is attached to this Proxy Statement-Prospectus as
Exhibit A. All stockholders of NBB are urged to read the Merger Agreement in its
entirety.
The Merger Agreement has been unanimously approved by the Board of
Directors of NBB. The Board of Directors of NBB believes that the terms of the
Merger Agreement are fair and in the best interest of NBB and its stockholders
and recommends that the stockholders vote to approve and adopt the Merger
Agreement and each of the transactions contemplated thereby.
BACKGROUND OF THE MERGER
Commencing in September 1993, the Mergers and Acquisitions Committee (the
"M&A Committee") of NBB's Board of Directors, which consists of Messrs. Ades,
Downey, McCarter and Tuttle, held a series of meetings to discuss NBB's
long-term strategic options, including continued internal growth while remaining
independent, acquisitions by NBB of smaller financial institutions, a
"merger-of-equals" transaction with an institution of comparable size, and the
acquisition of NBB by a larger institution. The discussions included management
succession issues and an analysis of the extent to which the various options
would expand the financial products and services available to both NBB customers
and to the communities served by NBB in order to meet the economic development
requirements of those communities. In furtherance of this analysis, the M&A
Committee authorized management to have exploratory discussions with a potential
acquirer that had contacted NBB in order to obtain more information relating to
the alternatives of either remaining independent or entering into an acquisition
transaction. In the fall of 1993, NBB provided certain summary information
concerning NBB to that financial institution. NBB elected not to continue
further discussions with that institution following receipt of an indication of
interest which NBB determined to be inadequate.
Commencing on February 15, 1994, discussions were held between Robert
McCarter, Chief Executive Officer of NBB, and Terrence Murray, Chief Executive
Officer of Fleet and H. Jay Sarles, Vice Chairman of Fleet, concerning the
compatibility of the two banking organizations, business philosophies and
operations,
21
<PAGE> 29
and a possible acquisition of NBB by Fleet. During the preliminary discussions,
certain due diligence materials consisting primarily of publicly available
filings and other summary information were exchanged.
On March 23, 1994, the M&A Committee, following interviews of
representatives of five investment banking firms, engaged Salomon to render
financial advisory and investment banking services to NBB in connection with the
possible sale of NBB to another business entity.
On April 11, 1994, Fleet entered into a confidentiality agreement with NBB,
and on April 21, 1994, Fleet commenced a formal due diligence review of the
business operations and legal affairs of NBB and the Bank. This review included
interviews and meetings with management of the Bank as well as on-site
documentary review of Bank materials, including loan files. Fleet indicated that
it expected to complete its due diligence review by the weekend of April 30 and
would then be in a position to determine whether to make a formal proposal to
acquire NBB in a part stock-part cash merger.
On April 28, 1994, a representative of another financial institution
contacted NBB with a preliminary indication of interest in acquiring NBB in an
all-cash merger. During the course of discussions, NBB indicated that
discussions concerning the possible acquisition of NBB were already in progress
with another institution. The other institution stated that its interest was
very serious and it would be prepared to commence due diligence immediately.
On April 30, 1994, the Board of Directors held a telephonic meeting at
which the Board reviewed the course of Fleet's due diligence during the two
weeks and the expression of interest from the other financial institution. At
the meeting, the Board of Directors authorized management to invite the other
financial institution to perform a due diligence review of NBB and to take all
necessary steps to provide the other institution with a comparable opportunity
to accomplish the due diligence process in order to permit the other institution
to submit a formal proposal if it so desired. On May 2, 1994, the other
institution entered into a confidentiality agreement with NBB and commenced its
on-site due diligence.
During the week of May 2, 1994, NBB distributed to Fleet and the other
institution an outline of certain business issues and proposed forms of a merger
agreement. Management of NBB met with managements of Fleet and the other
institution to negotiate certain business issues and Goodwin, Procter & Hoar,
counsel for NBB, negotiated the merger agreement with counsel for each of Fleet
and the other institution. During these negotiations, counsel for Fleet and
counsel for the other institution each proposed the inclusion of a lock-up
option in order to protect the integrity of its agreement with NBB should it be
the prevailing party. Counsel for NBB rejected the proposed lock-up option and
alternatives were discussed. As a result of these discussions, NBB advised each
party to submit its formal proposal on the basis of a termination fee of $8
million and that any additional provisions in this area would be reviewed by the
Board of Directors. NBB also informed Fleet and the other institution that
formal proposals should be submitted to NBB no later than Saturday, May 7, 1994
at 8:00 a.m.
On the morning of May 7, 1994, NBB received Fleet's proposal, which stated,
among other things, that Fleet was offering to acquire all of the outstanding
stock of NBB in exchange for a combination of Fleet Common Stock and cash, based
on a value of $48.50 per share of NBB Common Stock, plus the issuance of
warrants to acquire 2,500,000 shares of Fleet Common Stock which Fleet valued at
between $2.00 and $4.00 per share of NBB Common Stock. Fleet also proposed the
issuance of 6,000,000 shares of Fleet Common Stock (which could consist of
shares repurchased by Fleet in the public market), plus a sufficient number of
additional shares to preserve the tax-free status of the transaction to NBB
stockholders receiving Fleet Common Stock. The exact number of shares to be
issued per share of NBB Common Stock would be determined using a floating
exchange ratio based on the average closing price of Fleet Common Stock during a
ten-day valuation period. The Fleet proposal provided that the warrants would be
exercisable for a four-year period, commencing one year from the closing of the
proposed merger, with an exercise price for the warrants set at a specified
amount above the price of Fleet Common Stock on the closing date of the merger.
The Fleet proposal also stated that either Fleet or NBB would be permitted to
terminate the transaction in the event of a 20% decrease in the price of Fleet
Common Stock and that a termination fee of at least $8,000,000 would be payable
if the deal were terminated under certain circumstances.
22
<PAGE> 30
On the morning of May 7, 1994, the other financial institution submitted a
letter to the effect it was not prepared to submit a proposal in excess of what
it believed to be a minimum price requirement of $50.00. In a written response
sent that same morning, NBB stated that in fact there was no minimum price
requirement and indicated that any proposal received prior to the scheduled
meeting of NBB's Board of Directors at 4:00 p.m. that day would be considered
by the Board of Directors. During that day and the following day, NBB's counsel
received several telephone calls from counsel for the other institution
inquiring as to the status of the process. These telephone conversations led
NBB's counsel to believe that the other institution might submit a proposal,
but at no time during that day or the next day did the other financial
institution respond with a proposal.
At an afternoon meeting of the Board of Directors of NBB on May 7, 1994,
management reviewed the activities of the M&A Committee, the communications with
Fleet and the other institution and the status of due diligence, which was
completed by Fleet on May 1 and by the other financial institution on May 6. The
Board of Directors reviewed Fleet's proposal and was presented with Salomon's
analysis of the Fleet proposal. See "-- Fairness Opinion of Financial Advisor".
At the meeting, the Board of Directors authorized management to continue
negotiating with Fleet to resolve outstanding issues, including trying to obtain
a higher price, eliminating Fleet's right to terminate the transaction in the
event of a 20% decrease in the price of Fleet Common Stock, and establishing a
firm exercise price for the warrants so that the NBB stockholders could better
assess the Fleet offer.
As a result of negotiations which followed the May 7, 1994 meeting, Fleet
agreed, among other things, to provide for a five-year term for exercise of the
Warrants and a fixed exercise price for the warrants of $43.875 based on a $7.00
premium over the closing sale price of Fleet Common Stock on May 6, 1994.
Instead of the termination right contained in its original offer, Fleet agreed
that if the price of Fleet Common Stock fell to $29.50 or less, the transaction
would convert to an all-cash transaction, with Fleet retaining the option to use
repurchased Fleet Common Stock as part of the consideration. Fleet also
requested that the aggregate number of shares of Fleet Common Stock to be issued
in the proposed merger be revised from 6,000,000 to permit a range of between
5,700,000 and 6,300,000 shares.
At a meeting of the Board of Directors on May 8, 1994, management reviewed
with the Board the course of negotiations with Fleet, and Goodwin, Procter &
Hoar reviewed the terms of the proposed Merger Agreement, including the
conditions to the Merger. The Board of Directors was advised that Fleet had
agreed to a fixed exercise price for the warrants. Salomon advised the Board of
Directors of its opinion that as of May 8, 1994 the warrants were worth at least
$2.00 per share of NBB Common Stock. The Board of Directors was also informed
that investment bankers retained by Fleet had also expressed a similar opinion.
The Board of Directors decided to engage Salomon to provide a written opinion
dated as of May 8, 1994, that the value of the Warrants was at least $2.00 per
share of NBB Common Stock on such date.
After consideration of the factors described below under "Recommendation of
the Board of Directors and Reasons for the Merger," the Board unanimously
approved and adopted the Merger Agreement. The Merger Agreement was entered into
on May 9, 1994.
RECOMMENDATION OF THE NBB BOARD OF DIRECTORS AND REASONS FOR THE MERGER
NBB
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND EACH OF THE TRANSACTIONS
CONTEMPLATED THEREBY.
In the course of reaching its decision to approve the Merger Agreement, the
Board of Directors of NBB consulted with its legal advisors regarding the legal
terms of the Merger Agreement and the Board of Directors' obligations in its
consideration thereof, its financial advisor regarding the financial terms and
fairness, from a financial point of view, of the consideration to be received by
holders of NBB Common Stock in the proposed Merger, and the management of NBB.
Without assigning any relative or specific weights thereto, the Board of
Directors considered the factors outlined below, among others, that it believed
relevant to reaching its determination.
23
<PAGE> 31
The terms of the Merger Agreement, including the consideration to be
received by holders of NBB Common Stock, were reached on the basis of arms'
length negotiations between NBB and Fleet. In reaching the conclusion that the
consideration to be received by NBB stockholders is fair, the Board of Directors
considered, among other things, the market value, book value, and earnings per
share of NBB Common Stock. The Merger provides an opportunity for the
stockholders of NBB to receive consideration for their shares having a value in
excess of the book value of the NBB Common Stock. At March 31, 1994, the book
value per share of NBB Common Stock was $28.92 (including the effect of
Statement of Financial Accounting Standards No. 115). The per share
consideration to be received by holders of NBB Common Stock of $50.50 (using an
assumed value of the Warrants of $2.00 per share of NBB Common Stock) represents
a premium of $6.875 over the closing per share sales price for NBB Common Stock
of $43.625 on May 2, 1994 (one week prior to the date of announcement of the
proposed Merger) as reported on the New York Stock Exchange Composite Tape and a
premium of $2.375 over the closing per share sales price of NBB Common Stock of
$48.125 on May 6, 1994 (the last full trading day prior to the date of
announcement of the proposed Merger) as so reported. Since January 1, 1994, NBB
Common Stock had traded as low as $35.00 per share. See "COMPARATIVE STOCK
PRICES AND DIVIDENDS".
In reaching its conclusion, the Board of Directors took into consideration
and relied upon the opinions of Salomon, NBB's financial advisor. At the May 7,
1994 meeting of NBB's Board of Directors, Salomon made a presentation regarding
the financial aspects of the Merger and on May 8, 1994 Salomon rendered its
written opinion to the effect that, as of such date, the consideration to be
received in the Merger by the holders of NBB Common Stock was fair to such
stockholders from a financial point of view. That opinion was rendered again in
writing in substantially identical form as of the date of this Proxy
Statement-Prospectus. A copy of the written opinion, dated the date of this
Proxy Statement-Prospectus, rendered by Salomon to the Board of Directors is
attached as Exhibit B to this Proxy Statement-Prospectus. NBB's Board of
Directors considered the analyses presented to it by Salomon relating to
selected financial and stock market data concerning NBB and Fleet and other
publicly-held thrift institutions, certain financial analyses of the terms of
the Merger, including a discounted cash flow analysis, and a comparison to the
terms of other recent business combinations involving thrift institutions which
are described below under "THE MERGER -- Fairness Opinion of Financial Advisor".
The Board of Directors considered the total value of the cash and Fleet
Common Stock portion of the Fleet proposal at $48.50 per share plus Warrants
having a current value of at least $2.00 per share of NBB Common Stock and
concluded that the value of the Fleet proposal was at least $50.50 per share.
The Board of Directors considered the fact that the other institution that had
conducted formal due diligence had decided not to submit a proposal at this or
any other price and that in the fall of 1993, NBB received a price range
indication from another institution which was considerably below the value of
the Fleet proposal.
The Board of Directors considered the strategic alternatives available to
NBB, including the possibility of remaining independent (and continuing with no
acquisitions, acquisitions of smaller institutions, or a "merger-of-equals"),
seeking further to solicit competing proposals, and accepting Fleet's proposal,
before concluding, for the reasons discussed in this section, that the Merger
represented the best available alternative to enhance stockholder value and that
the consideration to be received by holders of NBB Common Stock was fair to the
stockholders.
In assessing the alternatives for remaining independent, the Board of
Directors considered the long-range business prospects and risks of NBB's
business, financial condition and results of operations. In this regard the
Board of Directors considered that although NBB's financial condition and
results of operations had improved significantly during the past two years and
management believed that continued improvement was possible, comparable future
growth could not be assured. In assessing the long-range prospects and risks of
NBB's business, the Board of Directors considered the risks posed by uncertainty
concerning the depth and likely duration of the economic recovery in New
England, the recent upward trend in interest rates, as well as the fact that the
banking markets in which NBB operates are becoming increasingly concentrated and
competitive. The Board also considered NBB's need to expand the services offered
to its customers and the communities served by NBB and the start-up costs,
including the hiring of qualified personnel, which would be associated with such
expanded services under the strategic option of NBB remaining independent.
24
<PAGE> 32
In considering the competitive pressures in the financial services industry
in general and the banking industry in particular, the Board of Directors of NBB
recognized that the banking industry is in the midst of a major transformation
and restructuring. In particular, the Board of Directors believes that the
banking industry is experiencing significant pressure for consolidation as a
result of many factors, including industry overcapacity, increased competition
from non-bank financial services competitors, technological change and the
evolving legislative environment. NBB's Board of Directors believes that the
proposed business combination with Fleet could lead to competitive advantages
through greater diversity in product offerings, cost-savings through integration
of operations, improved access to capital and funding, and geographic expansion
of operations.
The Board of Directors concluded that it was not in the best interests of
stockholders to solicit competing proposals based on the financial terms of
Fleet's offer, the fact that the other financial institution which had conducted
formal due diligence had decided not to submit a proposal at this level or any
other level and that the price level associated with the indication of interest
received from another institution in the fall of 1993 was significantly below
Fleet's proposal. The Board of Directors also considered the fact that Fleet had
stated that its offer would remain open only until May 9, 1994, the risk that
Fleet might, as it had indicated, withdraw its offer if NBB were to solicit
other offers, and the disruption and potential harm to NBB that could result
from a public auction process.
The Board of Directors considered the historical growth in Fleet's earnings
per share and book value. The Board of Directors also considered the historical
dividends paid on NBB Common Stock and Fleet Common Stock, respectively, and the
significant increase in dividends to NBB stockholders which could result from
the Merger. The Board of Directors also considered the expectation that the
Merger will be a tax-free transaction to NBB stockholders to the extent they
received Fleet Common Stock in exchange for their shares of NBB Common Stock and
the price of Fleet Common Stock remains above $29.50 per share.
The Board of Directors considered the conditions to the Merger and the
risks to NBB if the Merger was not consummated. The Board of Directors was
advised that the conditions to the Merger included, among other things, (a) that
the representations and warranties contained in the Merger Agreement shall be
true and correct in all material respects as of the date of the Merger Agreement
and as of the closing date of the Merger and (b) that all regulatory approvals
required to consummate the Merger and the Bank Merger shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired. The Board of Directors also considered the
risks to NBB of non-consummation of the transaction, including that the
termination of the Merger Agreement might result in a decline in the market
price of NBB Common Stock and might have other adverse operational consequences
for NBB and its subsidiaries.
The Board of Directors considered the fact that approval of the Merger
Agreement requires the affirmative vote of a majority of the shares of NBB
Common Stock outstanding and entitled to vote and that the Board of Directors'
decision to approve the Merger Agreement would empower the stockholders as a
group to decide whether or not to accept Fleet's proposal to acquire NBB.
The Board of Directors considered the possible impact of the Merger on
NBB's and the Bank's employees, customers and community. NBB's Certificate of
Incorporation requires the Board of Directors to consider a variety of factors,
including, without limitation, the social and economic effects of a transaction
on the employees, depositors, borrowers and other customers of NBB and its
subsidiaries, and on the communities served by NBB and its subsidiaries.
Delaware law permits the Board of Directors to consider these factors, at least
to the extent that there are rationally related benefits accruing to
stockholders. The Board of Directors believes that the Merger, if consummated,
will provide expanded services, greater ability to grow and diversify, and
access to the resources of a strong financial parent. Additionally, the Board of
Directors believes that, while there will be some consolidation as a result of
the Merger, the employees who are retained by Fleet may experience greater job
opportunities within the Fleet organization. The Board also considered the fact
that terminated employees will receive severance benefits provided for in the
Merger Agreement. See "THE MERGER -- Effect on Employee Benefits".
25
<PAGE> 33
In reviewing the terms of the $8,000,000 termination fee which is payable
by NBB to Fleet following termination of the Merger Agreement under certain
circumstances, the Board of Directors was aware that the existence of the
termination fee would make it more expensive for a third party to offer a price
that was in excess of Fleet's proposal and could therefore deter a potential
competing acquiror from making an offer. The Board was also aware, however, that
Fleet agreed to the termination fee after having initially proposed a lock-up
option, which was rejected by counsel for NBB. See "THE MERGER -- No
Solicitation; Expense Fee".
If the NBB stockholders do not approve and adopt the Merger Agreement or
the Merger is not consummated for any other reason, the Board of Directors
expects to continue to operate NBB as an ongoing business.
FLEET
Fleet has entered into the Merger Agreement because it views the merger as
an opportunity to further expand its banking presence in southeastern
Massachusetts and Rhode Island.
FAIRNESS OPINION OF FINANCIAL ADVISOR
Salomon has delivered its written opinions to the Board of Directors of NBB
that, as of May 8, 1994 and as of the date of this Proxy Statement-Prospectus,
the consideration to be received in the Merger by the holders of NBB Common
Stock is fair, from a financial point of view, to the holders of NBB Common
Stock.
THE FULL TEXT OF THE OPINION OF SALOMON DATED AS OF THE DATE OF THIS PROXY
STATEMENT-PROSPECTUS, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS ON THE REVIEW UNDERTAKEN BY SALOMON, IS ATTACHED HERETO AS EXHIBIT B.
STOCKHOLDERS ARE URGED TO READ THIS OPINION IN ITS ENTIRETY. SALOMON'S OPINIONS
ARE DIRECTED ONLY TO THE CONSIDERATION TO BE RECEIVED IN THE MERGER BY THE
HOLDERS OF NBB COMMON STOCK AND DO NOT CONSTITUTE A RECOMMENDATION TO ANY
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING. THE
SUMMARY OF THE OPINIONS OF SALOMON SET FORTH IN THIS PROXY STATEMENT-PROSPECTUS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINIONS. THE
MAY 8, 1994 OPINION IS SUBSTANTIALLY IDENTICAL TO THE OPINION ATTACHED HERETO.
In connection with its opinion dated the date hereof, Salomon reviewed and
analyzed, among other things: (a) the Merger Agreement; (b) this Proxy
Statement-Prospectus in substantially the form to be sent to NBB's stockholders;
(c) certain publicly available reports filed with the Commission by NBB and by
Fleet; (d) certain other publicly available financial and other information
concerning NBB and Fleet and the trading markets for the publicly-traded
securities of NBB and Fleet; (e) certain other internal information, including
projections, relating to NBB and Fleet, prepared by the management of each of
NBB and Fleet and furnished to Salomon for the purposes of its analysis; and (f)
certain publicly available information concerning certain other depository
institutions and holding companies, the trading markets for their securities and
the nature and terms of certain other merger and acquisition transactions
Salomon believed relevant to its inquiry. Salomon also met with certain officers
and representatives of NBB and Fleet to discuss the foregoing as well as other
matters Salomon believed relevant to its inquiry. Salomon also considered such
financial and other factors as it deemed appropriate under the circumstances and
took into account its assessment of general economic, market and financial
conditions and its experience in other transactions, as well as its experience
in securities valuation and its knowledge of depository institutions and holding
companies generally. Salomon's opinions were necessarily based upon conditions
as they existed and could be evaluated on the date thereof and the information
made available to Salomon through the date thereof. No limitations were imposed
by the Board of Directors upon Salomon with respect to the investigations made
or procedures followed by Salomon in rendering its opinions.
In conducting its review and arriving at its opinions, Salomon relied upon
and assumed the accuracy and completeness of the financial and other information
provided to it or publicly available and did not attempt independently to verify
the same. Salomon relied upon the management of each of NBB and Fleet as to the
reasonableness and achievability of the projections (and the assumptions and
bases therefor) provided to Salomon, and assumed that such projections reflected
the best currently available estimates and judgments of the management of each
of NBB and Fleet and that such projections would be realized in the amount and
in
26
<PAGE> 34
the time periods estimated by the management of each of NBB and Fleet. Salomon
also assumed, without independent verification, that the aggregate allowances
for loan losses for NBB and Fleet were adequate to cover such losses. Salomon
did not make or obtain any evaluations or appraisals of the properties or assets
of NBB or Fleet, nor did Salomon examine any individual loan credit files.
Salomon was retained by the Board of Directors of NBB to express an opinion as
to the fairness, from a financial point of view, to the holders of NBB Common
Stock of the consideration to be received in the Merger. Salomon did not address
NBB's underlying business decision to proceed with the Merger and did not make
any recommendation to the Board of Directors of NBB or to the stockholders of
NBB with respect to any approval of the Merger.
In connection with rendering its opinions to the Board of Directors of NBB,
Salomon performed a variety of financial analyses which are summarized below.
Salomon believes that its analyses must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and the processes underlying Salomon's opinions. The preparation of a
fairness opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analyses or summary description. In its
analyses, Salomon made numerous assumptions with respect to industry
performance, business and economic conditions and other matters, many of which
are beyond NBB's or Fleet's control. Any estimates contained in Salomon's
analyses are not necessarily indicative of future results or values, which may
be significantly more or less favorable than such estimates. Estimates of values
of companies do not purport to be appraisals or necessarily reflect the prices
at which companies or their securities actually may be sold. None of the
analyses performed by Salomon was assigned a greater significance by Salomon
than any other.
The projections reviewed by Salomon were prepared by the management of each
of NBB and Fleet. NBB and Fleet do not publicly disclose internal management
projections of the type provided to Salomon in connection with the review of the
Merger. Such projections were not prepared with a view towards public
disclosure. The projections were based on numerous variables and assumptions
which are inherently uncertain, including without limitation factors related to
general economic and competitive conditions. Accordingly, actual results could
vary significantly from those set forth in such projections.
The following is a brief summary of the analyses performed by Salomon in
connection with its opinion dated May 8, 1994:
(a) Valuation Summary. Salomon analyzed the Merger consideration of
$50.50 per share of NBB Common Stock and the total transaction value of
$456 million (based on 8,660,394 shares of NBB Common Stock outstanding and
assuming the exercise prior to the Effective Time of 368,701 options with
an average strike price of $23.08). Salomon determined that as of May 8,
1994 the value of the Warrants was at least $2.00 per share of NBB Common
Stock, which when added to the $48.50 payable by Fleet in cash or Fleet
Common Stock resulted in total Merger consideration of $50.50 per share of
NBB Common Stock. Salomon noted that the Merger consideration represented a
multiple of 14.8x earnings per share (based on fully diluted earnings of
NBB of $3.42 per share for the twelve months ended March 31, 1994) and
14.4x projected 1994 earnings per share (based on fully diluted 1994
earnings projected by management of NBB of $3.50 per share) and a multiple
of 1.76x fully diluted book value per share and 1.87x fully diluted
tangible book value per share at March 31, 1994. Salomon also noted that
the Merger consideration represented a premium of 4.9% to the market price
of the NBB Common Stock one day prior to announcement of the Merger and
21.0% to the market price of the NBB Common Stock one month prior to such
announcement.
(b) Mark-to-Market Analysis. Salomon analyzed key balance sheet items
for NBB, adjusting for cash proceeds resulting from the exercise of
outstanding stock options, adjusting securities held-to-maturity for
unrealized gains, eliminating intangibles and creating deferred tax assets
due to the net effect of the write-up of securities and elimination of
intangibles. This analysis showed that, marked to market, NBB's net worth
at March 31, 1994 was $246.4 million. Salomon then adjusted NBB's net worth
to include core deposit premiums of 2.0% (low case) and 4.0% (high case),
resulting in total economic net
27
<PAGE> 35
worth of NBB of $272.4 million (low case), or $30.17 per fully diluted
share, and $298.4 million (high case), or $33.05 per fully diluted share,
respectively.
(c) Comparable Transaction Analysis. Salomon analyzed certain other
thrift merger and acquisition transactions throughout the United States as
a whole for the period from January 1, 1993 to May 6, 1994 in which (i) the
total consideration paid was at least $150 million, (ii) the return on
average assets of the acquired company was greater than 1.00%, or (iii) the
tangible common equity as a percentage of tangible assets of the acquired
company was greater than 10%. Salomon also analyzed certain other thrift
merger and acquisition transactions in the New England states for the
period from January 1, 1993 to May 6, 1994. Salomon then compared the
multiples implied by the Merger consideration of $50.50 per share with
high, low and median deal multiples for the thrift merger and acquisition
transactions analyzed. This analysis compared the price/latest twelve
months' earnings per share, price/fully diluted book value and price/fully
diluted tangible book value multiples implied by the Merger consideration
to the high, low and median multiples for the transactions analyzed, and
calculated the premiums to market prices, the latest twelve months'
earnings per share dilution and the target percentage overhead reduction
needed for zero percent dilution. Set forth below are the high, low and
median deal multiples presented to the Board of Directors of NBB, compared
to the multiples implied by the Merger consideration:
TRANSACTIONS THROUGHOUT THE U.S.
<TABLE>
<CAPTION>
TARGET
TANGIBLE
TRANSACTIONS TARGET COMMON
MERGER IN EXCESS OF ROAA EQUITY NEW ENGLAND
CONSIDERATION $150 MILLION > 1.00% > 10% TRANSACTIONS
------------- ------------ ------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Price/Latest Twelve Months' Earnings:
High............................ 36.8x 20.0x 20.0x 35.9x
Median.......................... 14.8x 16.6 13.3 14.6 17.5
Low............................. 8.1 3.7 3.7 7.4
Price/Fully Diluted Book Value:
High............................ 2.04x 2.29x 2.29x 2.62x
Median.......................... 1.76x 1.69 1.68 1.65 1.74
Low............................. 0.85 0.97 0.97 1.19
Price/Fully Diluted Tangible Book
Value:
High............................ 2.11x 2.60x 2.29x 2.63x
Median.......................... 1.87x 1.76 1.70 1.65 1.78
Low............................. 1.12 0.98 0.98 1.28
</TABLE>
The results produced in this analysis do not purport to be indicative of
actual values or expected values of NBB or the shares of NBB Common Stock.
(d) Discounted Cash Flow Analysis. Salomon performed a discounted
cash flow analysis using the growth rate in earnings per share projected by
management of NBB, discount rates of 12.0%, 14.0% and 16.0%, terminal value
per share multiples ranging from 8x to 18x to apply to 1998 forecasted
earnings and projecting per share dividends of 34.3% of projected earnings
per share. This analysis showed a range of present values per share of NBB
Common Stock from $22.50 to $52.53. The results produced in this analysis
did not purport to be indicative of actual values or expected values of the
shares of the NBB Common Stock before or after the Merger. Salomon noted
that the discounted cash flow analysis was included because it is a widely
used valuation methodology, but noted that it relies on numerous
assumptions, including earnings growth rates, dividend payout rates,
terminal values and discount rates.
(e) Financial Impact to Fleet Shareholders. Salomon analyzed the
financial impact of the Merger consideration to Fleet shareholders, noting
that on a pro forma basis (also giving effect to other pending Fleet
acquisitions) the Merger would have resulted in 3.4% earnings per share
dilution to Fleet stockholders for the 12 months ended March 31, 1994, and
on the basis of the projections furnished by the management of each of NBB
and Fleet would result in earnings per share dilution of 2.3% and 1.7%,
respectively, for 1994 and 1995. In arriving at these calculations, Salomon
assumed, among other things,
28
<PAGE> 36
that the shares of Fleet Common Stock to be issued in the Merger would have
been purchased by Fleet in the open market, that average fully diluted
shares outstanding of Fleet would be increased by 2,500,000 giving effect
to the exercise of the Warrants and did not take into consideration any
potential cost savings or revenue enhancements resulting from the Merger.
(f) Historical Performance. Salomon reviewed certain operating
statistics for NBB over the period from January 1, 1989 through December
31, 1993. This review compared NBB's earnings per share growth, net
interest margin, ratio of noninterest income to net operating revenue,
overhead ratio, ratio of loan loss provision to average loans, return on
average assets, return on average common equity, total asset growth, total
loan growth and ratio of tangible common equity to tangible assets with
comparable data for an index of New England thrifts and to the Salomon
Thrift Index. This review also compared such data for Fleet to pro forma
data for Fleet and NBB combined and to the Salomon Superregional Bank
Index.
(g) Stock Market Performance. Salomon reviewed the historical
performance of the NBB Common Stock. This review showed a compound annual
growth rate for the period from January 1, 1989 through March 31, 1994 in
NBB's earnings per share of 27.0%, of 5.7% in NBB's book value per share,
and of 4.2% in dividends per share of NBB Common Stock.
In connection with its opinion dated the date of this Proxy
Statement-Prospectus, Salomon also confirmed the appropriateness of its reliance
on the analyses used to render its May 8, 1994 opinion by performing procedures
to update certain of such analyses and by reviewing the assumptions on which
such analyses were based and the factors considered in connection therewith.
Salomon is a nationally recognized investment banking firm and is
continually engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwriting, competitive bidding,
secondary distributions of listed and unlisted securities and valuations for
estate, corporate and other purposes. NBB selected Salomon as its financial
advisor because of its reputation and because of its substantial experience in
transactions such as the Merger.
In addition to the financial advisory services referred to above, Salomon
has from time to time provided investment banking and financial advisory
services to NBB for which Salomon has received customary compensation. Such
services have included acting as a manager in the initial public offering of NBB
Common Stock on March 12, 1987. Salomon also has provided investment banking and
financial advisory services to Fleet for which Salomon has received customary
compensation. Such services have included (i) acting as a managing underwriter
of offerings of common stock, subordinated debt and senior debt by Fleet, (ii)
acting as an agent for Fleet's medium term note program, (iii) acting as a
managing underwriter for the initial public offering of common stock of Fleet
Mortgage Group, Inc., a subsidiary of Fleet ("FMG"), and (iv) acting as agent
for FMG's medium term note program. In the ordinary course of business, Salomon
actively trades the debt and equity securities of Fleet and FMG and the equity
securities of NBB for its own account and for the accounts of its customers and,
accordingly, at any time may hold a long or short position in such securities.
NBB and Salomon have entered into a letter agreement, dated March 29, 1994
and amended by a letter agreement dated May 8, 1994 (collectively, the "Salomon
Engagement Letter"), relating to the services to be provided by Salomon in
connection with the Merger. NBB has agreed to pay Salomon's fees for all
services rendered in connection with the Merger as follows: (a) $50,000 payable
following NBB's execution of the Salomon Engagement Letter (which has been
paid); (b) an additional fee of $300,000, payable upon execution of the Merger
Agreement (which has been paid); and (c) an additional fee of $650,000, payable
upon consummation of the Merger. In the Salomon Engagement Letter, NBB also has
agreed to reimburse Salomon for its reasonable fees and disbursements of
Salomon's counsel and all of Salomon's reasonable travel and other out-of-pocket
expenses, in an amount not to exceed $30,000 without the consent of NBB.
Pursuant to an additional letter agreement dated March 29, 1994, NBB also has
agreed to indemnify Salomon against certain liabilities, including liabilities
under the federal securities laws.
29
<PAGE> 37
STRUCTURE OF THE MERGER
Subject to the terms and conditions of the Merger Agreement and in
accordance with the Delaware General Corporation Law ("Delaware law") and the
Rhode Island Business Corporation Law ("Rhode Island law"), at the Effective
Time, unless the Alternative Merger is consummated, NBB will merge with and into
Fleet. Except in the event that the Alternative Merger is consummated, Fleet
will be the surviving corporation in the Merger, and will continue its corporate
existence under Rhode Island law under the name Fleet Financial Group, Inc. and
at the Effective Time, the separate corporate existence of NBB will terminate.
Except in the event that the Alternative Merger is consummated, the articles of
incorporation of Fleet, as in effect at the Effective Time, will be the articles
of incorporation of the surviving corporation and the by-laws of Fleet, as in
effect immediately prior to the Effective Time, will be the by-laws of the
surviving corporation.
If the Alternative Merger is consummated, then, subject to the terms and
conditions of the Merger Agreement, in accordance with Delaware law, at the
Effective Time, Merger Subsidiary, a wholly-owned subsidiary of Fleet organized
as a Delaware corporation, will merge with and into NBB, with NBB the surviving
corporation in the Alternative Merger. In the Alternative Merger, each share of
the common stock of Merger Subsidiary will be converted into and exchanged for
one share of common stock of NBB. See "-- Conversion of NBB Common Stock and
Other Matters" for a discussion of the circumstances under which the Alternative
Merger will be consummated. Immediately following the Alternative Merger, Fleet
would cause the merger of NBB with and into Fleet. As used in this Proxy
Statement-Prospectus, the term "Surviving Corporation" means Fleet, if the
Merger is consummated, and NBB, if the Alternative Merger is consummated.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Except in the event that the Alternative Merger is consummated, upon
consummation of the Merger, the directors and officers of Fleet immediately
prior to the Effective Time will remain the directors and officers of the
Surviving Corporation, each to hold office in accordance with the articles of
incorporation and bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
If the Alternative Merger is consummated, the directors and officers of
Merger Subsidiary immediately prior to the Effective Time will be the directors
and officers of the Surviving Corporation, to hold office in accordance with the
charter documents and bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
ORGANIZATION OF MERGER SUBSIDIARY
Merger Subsidiary is a Delaware corporation with minimum capitalization
organized solely to effect the Alternative Merger. The directors of Merger
Subsidiary, and Fleet, in its capacity as sole stockholder of Merger Subsidiary,
have approved the Merger Agreement and consummation of the transactions
contemplated thereby.
CONVERSION OF NBB COMMON STOCK AND OTHER MATTERS
In the Merger, each share of NBB Common Stock outstanding (other than
shares (a) held by NBB as treasury stock or (b) held by Fleet or NBB or any
subsidiary thereof (other than in both cases shares 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 ("Trust Account
Shares") or as a result of debts previously contracted ("DPC Shares") or (c)
held by dissenting stockholders) will be converted into and exchangeable for (i)
the number of Warrants determined by dividing 2,500,000 by the sum of the number
of shares of NBB Common Stock outstanding at the Effective Time which are being
converted plus the number of shares of NBB Common Stock underlying outstanding
options under the NBB Stock Option Plan which are being converted into stock
options under the Fleet Stock Option Plan at the Effective Time and (ii) at the
election of the NBB stockholder, subject to the allocation procedures discussed
below, either the Per Share Stock Consideration which is equal to the number of
shares of Fleet Common Stock determined by dividing $48.50 plus, if the
Effective Time has not occurred on or prior to March 31, 1995, an additional
$0.25 per share per month for each full month (prorated on a daily basis for
each partial month) thereafter until the Effective
30
<PAGE> 38
Time (the "Merger Consideration") by the Average Closing Price, rounded to the
nearest thousandth of a share or the Per Share Cash Consideration which consists
of cash in the amount of the Merger Consideration. The aggregate number of
shares of Fleet Common Stock issued in the Merger (the "Aggregate Parent Stock
Amount") will not be less than 5,700,000 shares (or a lesser number of shares
under the limited circumstances in which Fleet would be able to pay the total
consideration for the Merger (other than the Warrants) solely through the
issuance of Fleet Common Stock) and not more than 6,300,000 shares plus such
additional number of shares so that the Fleet Common Stock represents at least
45% of the total Merger consideration, calculated based on the closing sales
price of Fleet Common Stock on the Stock Exchange on the date of the Effective
Time. For purposes of the percentage calculation of the total Merger
consideration, cash paid to dissenting stockholders, cash received in lieu of
fractional shares and the fair market value of the Warrants will each be taken
into account as part of the cash portion of the total Merger consideration. The
"Average Closing Price" is the average closing sale price per share of Fleet
Common Stock on the Stock Exchange (as reported by The Wall Street Journal or,
if not reported thereby, another authoritative source), for the ten Stock
Exchange trading days ending on the fifth trading day immediately preceding (but
not including) the Effective Time. Fleet is currently in the process of
repurchasing shares of Fleet Common Stock in the public market, and prior to the
consummation of the Merger, intends to repurchase a total of approximately
6,000,000 shares of Fleet Common Stock which will then be issued to the NBB
shareholders pursuant to the Merger.
Notwithstanding the previous paragraph, in the event that the Average
Closing Price is equal to or less than $29.50, then the consideration payable
pursuant to the Merger Agreement will consist (in addition to the Warrants)
solely of cash in the amount of the Per Share Cash Consideration, unless Fleet
elects at its option to pay part of such consideration using shares of Fleet
Common Stock previously repurchased by Fleet which would be valued at the
Average Closing Price. In the event the Average Closing Price is equal to or
less than $29.50, Fleet will provide written notice (the "Parent Notice") to NBB
no later than 5:00 p.m. on the first business day following the last Stock
Exchange trading day of the period during which the Average Closing Price is
calculated which contains its calculation of the Average Closing Price and which
specifies the number of shares of Fleet Common Stock, if any, which Fleet has
elected to use to pay part of such consideration. NBB will in turn notify Fleet
no later than 5:00 p.m. on the first business day following receipt of the
Parent Notice as to whether NBB has been advised by its counsel that such
counsel would be able, under then applicable law, to deliver to NBB an opinion
in form and substance reasonably satisfactory to Fleet and its counsel (the "Tax
Opinion") that if the Merger were to be consummated using the number of shares
of Fleet Common Stock specified in the Parent Notice (and assuming no decline in
the fair market value of Fleet Common Stock between the date of the Parent
Notice and the Effective Time), for federal income tax purposes the Merger would
constitute a reorganization within the meaning of section 368(a) of the Code. If
counsel has advised NBB that it is unable to deliver the Tax Opinion, then the
Merger Agreement provides that the Alternative Merger will be consummated and
Fleet will pay the consideration payable under the Merger Agreement in cash,
Warrants and the number of shares of Fleet Common Stock specified in the Parent
Notice. If counsel has advised NBB that it would be able, under then applicable
law, to deliver to NBB the Tax Opinion, then the Merger will be consummated and
Fleet will pay the consideration payable in the Merger in cash, Warrants and the
number of shares of Fleet Common Stock specified in the Parent Notice.
Each Warrant will entitle the holder to purchase one share of Fleet Common
Stock at $43.875 per share at any time during the five year period commencing on
the first anniversary of the Effective Time. See "DESCRIPTION OF FLEET CAPITAL
STOCK AND WARRANTS".
The Merger Agreement provides that, in the event that Fleet changes the
number or kind of shares of Fleet Common Stock issued and outstanding between
May 9, 1994 and the Effective Time as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, or other like
changes in Fleet's capitalization, the Per Share Stock Consideration the Per
Share Cash Consideration, the Aggregate Parent Stock Amount and the number of
Warrants to be issued will be adjusted proportionately.
Each outstanding share of NBB Common Stock owned by Fleet and its
subsidiaries or NBB and its subsidiaries (other than Trust Account Shares or DPC
Shares) or by NBB as treasury stock will be cancelled at the Effective Time and
shall cease to exist, and no Fleet Common Stock, cash, Warrants or other
31
<PAGE> 39
consideration will be delivered in exchange therefor. Each outstanding share of
Fleet Common Stock or Fleet preferred stock that is owned by NBB (other than
Trust Account Shares and DPC Shares) will become treasury stock of Fleet.
Shares of NBB Common Stock which are issued and outstanding immediately
prior to the Effective Time and which are owned by NBB stockholders who,
pursuant to applicable law, (a) deliver to NBB, before the taking of the vote of
the NBB stockholders on the Merger Agreement and each of the transactions
contemplated thereby, written demand for the appraisal of their shares, and (b)
whose shares are not voted in favor of the Merger Agreement and each of the
transactions contemplated thereby, nor consented thereto in writing (the
"Dissenting Shares"), will not be converted into Fleet Common Stock and/or cash
and Warrants, unless and until such holders shall have failed to perfect or
shall have effectively withdrawn or lost their right of appraisal and payment
under applicable law. If any such holder fails to perfect or shall have
effectively withdrawn or lost such right of appraisal, the NBB Common Stock of
such holder will thereupon be deemed to have been converted into the right to
receive and become exchangeable for, at the Effective Time, that number of whole
shares of Fleet Common Stock and/or cash and Warrants determined pursuant to the
Merger Agreement. Holders of NBB Common Stock who become entitled pursuant to
the provisions of Section 262 of Delaware law to payment for their shares of NBB
Common Stock under the provisions thereof will receive payment therefor from the
Surviving Corporation and such shares of NBB Common Stock will be cancelled. See
"-- Appraisal Rights of Dissenting Stockholders".
In addition, commencing at least 15 days prior to the Effective Time each
stock option with respect to NBB Common Stock granted under the NBB Stock Option
Plan, which is then outstanding and unexercised, whether or not then
exercisable, will be immediately exercisable and if not exercised prior to the
Effective Time, the option holder may elect at or immediately prior to the
Effective Time to have such option cancelled in exchange for cash in an amount
equal to the difference between the Per Share Cash Consideration and the per
share exercise price multiplied by the number of shares covered by the option.
Any such options which are not so exercised or cancelled will be converted at
the Effective Time into and will become stock options under the Fleet Stock
Option Plan to purchase Fleet Common Stock plus their pro rata share of the
Warrants. The rights to Fleet Common Stock to be received by holders of NBB
stock options which are so converted upon consummation of the Merger will be the
same as the rights such optionees had under the NBB Stock Option Plan
immediately prior to the Effective Time, except that (a) the number of shares of
Fleet Common Stock subject to the new option shall be equal to the product of
the number of shares of NBB Common Stock subject to the original option and the
Per Share Stock Consideration, rounded to the nearest share, and (b) the
exercise price per share of Fleet Common Stock subject to the new option will be
equal to the exercise price per share of NBB Common Stock under the original
option divided by the Per Share Stock Consideration, rounded to the nearest
cent. The duration and other terms of each new option shall be the same as the
original option except that all references in such option to NBB shall be deemed
to be references to Fleet.
As of the Effective Time (or as soon thereafter as practicable), the New
Bedford Institution for Savings Employee Stock Ownership Plan and Trust (the
"Bank ESOP") will be terminated.
Shares of Fleet capital stock (including Fleet Common Stock) issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding immediately after the Merger.
EXCHANGE OF CERTIFICATES; ELECTION PROCEDURE; FRACTIONAL SHARES
The conversion of NBB Common Stock into Fleet Common Stock and/or cash and
Warrants will occur automatically at the Effective Time. At or prior to the
Effective Time, Fleet will deposit, or cause to be deposited, with Fleet-RI (the
"Exchange Agent"), for the benefit of the holders of certificates of NBB Common
Stock, certificates representing the shares of Fleet Common Stock and the
Warrants, and cash, which together constitute the consideration for the Merger
(such cash and certificates for shares of Fleet Common Stock and Warrants,
together with any dividends or distributions with respect thereto, being
referred to as the "Exchange Fund") to be issued and paid, respectively,
pursuant to the Merger Agreement in exchange for outstanding shares of NBB
Common Stock. As soon as practicable after the Effective Time, and
32
<PAGE> 40
in no event later than three business days thereafter, transmittal and election
forms will be mailed to NBB stockholders by the Exchange Agent. The transmittal
form will contain instructions with respect to the surrender of certificates
representing NBB Common Stock. The election form will permit each NBB
stockholder, with respect to each share of NBB Common Stock, to elect to receive
Fleet Common Stock, cash or to make no election. ANY SUCH ELECTION SHALL HAVE
BEEN PROPERLY MADE ONLY IF THE EXCHANGE AGENT SHALL HAVE ACTUALLY RECEIVED A
PROPERLY COMPLETED ELECTION FORM BY 5:00 P.M. ON THE 20TH DAY FOLLOWING THE
MAILING DATE OF THE ELECTION FORM (OR SUCH OTHER TIME AND DATE AS FLEET AND NBB
MAY MUTUALLY AGREE) (THE "ELECTION DEADLINE"). AN ELECTION FORM SHALL BE DEEMED
PROPERLY COMPLETED ONLY IF ACCOMPANIED BY ONE OR MORE CERTIFICATES REPRESENTING
ALL SHARES OF NBB COMMON STOCK COVERED BY SUCH ELECTION FORM, TOGETHER WITH DULY
EXECUTED TRANSMITTAL MATERIALS INCLUDED WITH THE ELECTION FORM. ANY HOLDER OF
NBB COMMON STOCK WHO SHALL NOT HAVE SUBMITTED TO THE EXCHANGE AGENT AN
EFFECTIVE, PROPERLY COMPLETED ELECTION FORM ON OR BEFORE THE ELECTION DEADLINE
WILL BE DEEMED TO HAVE MADE NO ELECTION.
Any election form may be revoked or changed by the person submitting such
election form at or prior to the Election Deadline by written notice to the
Exchange Agent, which notice must be received by the Exchange Agent at or prior
to the Election Deadline. In the event an election form is revoked prior to the
Election Deadline, the shares of NBB Common Stock represented by such election
form shall be deemed to have made no election.
Notwithstanding the elections made, upon consummation of the Merger, shares
of Fleet Common Stock will be issued in exchange for a number of shares of NBB
Common Stock (the "Stock Conversion Number") equal to the Aggregate Parent Stock
Amount divided by the Per Share Stock Consideration. In the event that the
number of shares held by NBB stockholders that elect to receive Fleet Common
Stock is less than the Stock Conversion Number, then all shares electing to
receive Fleet Common Stock will be converted into the right to receive Fleet
Common Stock and the Exchange Agent will select on a pro rata basis, first from
the holders who made no election and then if necessary from those electing to
receive cash, a sufficient number of shares of NBB Common Stock such that the
number of such selected shares will, when added to the number of shares electing
to receive Fleet Common Stock, equal as closely as practicable the Stock
Conversion Number. Under such circumstances, such selected shares will be
converted into the right to receive Fleet Common Stock and any shares not so
selected will be converted into the right to receive cash.
On the other hand, in the event that the number of shares held by NBB
stockholders that elect to receive Fleet Common Stock is more than the Stock
Conversion Number, then all shares electing to receive cash and all shares for
which no election was made will be converted into the right to receive cash, and
the Exchange Agent will select on a pro rata basis from those electing to
receive Fleet Common Stock, a sufficient number of shares of NBB Common Stock
such that the number of such selected shares will, when added to the number of
shares electing to receive cash and no-election shares, equal the difference
between the number of shares of NBB Common Stock outstanding as of the Effective
Time which are being converted and the Stock Conversion Number. Any shares which
are not so selected will be converted into the right to receive Fleet Common
Stock.
NEITHER NBB NOR FLEET MAKES ANY RECOMMENDATION AS TO THE MANNER IN WHICH
EACH INDIVIDUAL NBB STOCKHOLDER'S ELECTION SHOULD BE MADE. EACH NBB STOCKHOLDER
SHOULD CONSIDER, AMONG OTHER THINGS, HIS OR HER DESIRE TO RECEIVE CASH, THE
RISKS RELATED TO THE FLEET COMMON STOCK, HIS OR HER DESIRE TO ASSUME THOSE RISKS
AND THE RESPECTIVE TAX CONSEQUENCES OF RECEIVING CASH OR FLEET COMMON STOCK. SEE
"-- CERTAIN FEDERAL INCOME TAX CONSEQUENCES".
NBB STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY AND
SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNTIL THE NBB STOCKHOLDER HAS
RECEIVED A LETTER OF TRANSMITTAL AND ELECTION FORM.
33
<PAGE> 41
Until the certificates representing NBB Common Stock are surrendered for
exchange after the Effective Time of the Merger, holders of such certificates
will accrue but will not be paid dividends or other distributions on the Fleet
Common Stock into which their shares have been converted. When such certificates
are surrendered, any unpaid dividends or other distributions will be paid,
without interest. No interest will be paid or accrued on the cash into which
their shares have been converted or the cash in lieu of fractional shares
payable to holders of such certificates. For all other purposes, however, each
certificate which represents outstanding shares of NBB Common Stock outstanding
at the Effective Time of the Merger will be deemed to evidence ownership of the
Warrants, shares of Fleet Common Stock and/or cash into which those shares have
been converted pursuant to the Merger.
No fractional shares of Fleet Common Stock will be issued to any NBB
stockholder upon consummation of the Merger. For each fractional share that
would otherwise be issued, Fleet will pay cash in an amount equal to such
fraction multiplied by the Average Closing Price. Calculations will be made to
the nearest one-thousandth of a share of Fleet Common Stock and to the nearest
cent.
Fleet will pay all stock transfer taxes, if any, owing in connection with
the exchange of shares of NBB Common Stock for Warrants, shares of Fleet Common
Stock and/or cash. Fleet will not pay any stock transfer taxes resulting from
such issuances and/or payment to any person other than a registered holder.
For a description of the differences between the rights of the holders of
NBB Common Stock and Fleet Common Stock, see "COMPARISON OF STOCKHOLDERS' RIGHTS
UNDER RHODE ISLAND AND DELAWARE LAW". For a description of the capital stock and
Warrants of Fleet, see "DESCRIPTION OF FLEET CAPITAL STOCK AND WARRANTS".
EFFECTIVE TIME
The Effective Time will be as set forth in the Certificate of Merger (the
"Certificate of Merger") which shall be filed with the Secretary of State of the
State of Delaware, and, unless the Alternative Merger is consummated, in the
Articles of Merger (the "Articles of Merger") which shall be filed with the
Secretary of State of the State of Rhode Island, each on the closing date of the
Merger (the "Closing Date"). The Closing Date will occur not more than five
business days following the satisfaction of the conditions set forth in Section
7.01 of the Merger Agreement which include, among other things, stockholder
approval and adoption of the Merger Agreement and the receipt of regulatory
approvals required to consummate the Merger and the Bank Merger (including
expiration of all applicable waiting periods in respect thereof). NBB and Fleet
each anticipate that the Merger will be consummated during the first quarter of
1995. However, the consummation of the Merger could be delayed as a result of
delays in obtaining the necessary governmental and regulatory approvals. There
can be no assurances given that such approvals will be obtained or that the
Merger will be completed at any time. See "THE MERGER -- Conditions to the
Consummation of the Merger" and "-- Regulatory Matters".
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of NBB as to,
among other things, (i) the corporate organization and existence of NBB and the
Bank; (ii) the capitalization of NBB and the Bank; (iii) the corporate power and
authority of NBB and the Bank; (iv) the compliance of the Merger Agreement and
the Bank Merger Agreement with (a) the charter and by-laws of NBB and the Bank,
(b) law, and (c) certain agreements; (v) governmental and third party approvals;
(vi) the classification of NBB's loan portfolio; (vii) NBB's financial
statements and filings with the Commission; (viii) the absence of certain
changes in NBB's business since December 31, 1993; (ix) the absence of certain
legal proceedings; (x) the filing and accuracy of NBB's tax returns; (xi) NBB's
employee benefit plans and related matters; (xii) the accuracy of information
provided in writing by NBB for inclusion in this Proxy Statement-Prospectus;
(xiii) the absence of material defaults under certain contracts; (xiv) NBB's
compliance with applicable law, including environmental laws; (xv) agreements
between NBB and regulatory agencies; (xvi) title to NBB's properties; and (xvii)
NBB's maintenance of insurance.
34
<PAGE> 42
The Merger Agreement also includes representations and warranties by Fleet
and Merger Subsidiary as to (i) the corporate organization and existence of
Fleet, the Surviving Bank and Merger Subsidiary; (ii) the capitalization of
Fleet, the Surviving Bank and Merger Subsidiary; (iii) the corporate power and
authority of Fleet, the Surviving Bank and Merger Subsidiary; (iv) the
compliance of the Merger Agreement and the Bank Merger Agreement with (a) the
charter and by-laws of Fleet, the Surviving Bank and Merger Subsidiary, (b) law,
and (c) agreements; (v) governmental and third party approvals; (vi) Fleet's
financial statements and filings with the Commission; (vii) the absence of
certain changes in Fleet's business since December 31, 1993; (viii) the absence
of certain legal proceedings; (ix) the accuracy of information provided by Fleet
for inclusion in this Proxy Statement-Prospectus; (x) Fleet's compliance with
applicable laws; (xi) Fleet's ownership of NBB Common Stock; and (xii)
agreements between Fleet and regulatory agencies.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, prior to the Effective Time, NBB and
Fleet have each agreed to carry on their respective businesses and those of
their respective subsidiaries in the ordinary course consistent with past
practices except as is contemplated by the Merger Agreement or with the prior
written consent of the other party. NBB and Fleet have also agreed, subject to
the terms and conditions of the Merger Agreement, to use their best efforts to
consummate the Merger.
NBB has agreed to give Fleet access to all of its properties, books,
contracts, commitments and records and to furnish information concerning its
businesses, properties and personnel, subject to the restrictions set forth in
the Merger Agreement.
Fleet has agreed to give NBB access to such information regarding Fleet and
its subsidiaries as shall be reasonably necessary for NBB to prepare this Proxy
Statement-Prospectus, and for NBB to verify that Fleet's representations and
warranties under the Merger Agreement are true and correct and that Fleet's
covenants contained therein have been performed in all material respects,
subject to the restrictions set forth in the Merger Agreement.
In addition, except as contemplated by the Merger Agreement, NBB has agreed
that, without the consent of Fleet, it will not, among other things:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock, except (i) for the declaration and
payment of regular quarterly cash dividends in an amount not to exceed
$0.30 per share of NBB Common Stock; provided, however, that NBB's regular
quarterly cash dividend may be increased by up to 10% per share beginning
in the first quarter of 1995, and (ii that NBB and Fleet have agreed (x) to
consult with respect to the amount of the last NBB quarterly dividend
payable prior to the Effective Time with the objective of assuring that the
stockholders of NBB do not receive a shortfall based on the record and
payment dates of their last dividend prior to the Merger and (y) that NBB
may pay a special dividend to holders of record of NBB Common Stock
immediately prior to the Effective Time consistent with the objective
described in clause (x) above;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
except upon the exercise or fulfillment of rights or options issued or
existing pursuant to employee benefit plans, programs or arrangements, all
to the extent outstanding and in existence on May 9, 1994, or (ii)
repurchase, redeem or otherwise acquire (except for the acquisition of
shares pursuant to the Bank ESOP, or of Trust Account Shares and DPC
Shares), any shares of the capital stock of NBB or any of its consolidated
subsidiaries or any securities convertible into or exercisable for any
shares of the capital stock of NBB or any of its consolidated subsidiaries;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any
of the foregoing, other than (i) the issuance of NBB Common Stock pursuant
to stock options or similar rights to acquire NBB Common Stock granted
pursuant to the NBB Stock Option Plan and outstanding prior to May 9, 1994
35
<PAGE> 43
and the issuance of NBB Common Stock pursuant to a grant of options to
acquire shares issued to directors of NBB and the Bank on May 18, 1994
pursuant to the NBB Stock Option Plan or (ii) the sale of NBB Common Stock
under the Bank ESOP, in each case in accordance with the terms in effect on
May 9, 1994;
(d) amend its Certificate of Incorporation or By-laws;
(e) enter into any real property lease for a term longer than one
year;
(f) make any capital expenditures in excess of $500,000 in the
aggregate;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire any assets, other than in connection with
foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business, which would be material
to NBB;
(i) take any action that is intended or would result in any of its
representations and warranties set forth in the Merger Agreement being or
becoming untrue in any material respect, or in any of the conditions to the
Merger not being satisfied, or in a violation of any provision of the
Merger Agreement or the Bank Merger Agreement, except, in every case, as
may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1993,
except as required by changes in generally accepted accounting principles
or regulatory accounting principles as concurred to by NBB's independent
auditors;
(k) except as required by applicable law or to maintain qualification
pursuant to the Code, (i) adopt, amend, renew or terminate any employee
benefit plan or any agreement, arrangement, plan or policy between NBB or
any NBB subsidiary and one or more of its current or former directors,
officers or employees or (ii) except for normal increases in the ordinary
course of business consistent with past practice or as set forth in the
Merger Agreement, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the date of the Merger
Agreement (including, without limitation, the granting of stock options,
stock appreciation rights, restricted stock, restricted stock units or
performance units or shares);
(l) except in the case that the Alternative Merger is to be
consummated, knowingly take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368 of the
Code;
(m) other than activities in the ordinary course of business
consistent with prior practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose
of, any of its material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(o) file any application to open, relocate or terminate the operations
of any banking office of the Bank;
(p) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of business;
(q) purchase or sell loans in bulk;
(r) foreclose upon or take deed or title to any commercial real estate
without first conducting a Phase I environmental assessment of the
property; or foreclose upon such commercial real estate if such
36
<PAGE> 44
environmental assessment indicates the presence of hazardous material in
amounts which, if such foreclosure were to occur, would be reasonably
likely to result in a Material Adverse Effect (as hereinafter defined;
(s) change NBB's policies and practices with respect to asset
liability management in any material respect, other than the development
and implementation of a program to manage its interest rate sensitive
assets and liabilities in consultation and cooperation with Fleet, as
agreed to by NBB pursuant to the Merger Agreement; or
(t) agree to do any of the foregoing.
As used in the Merger Agreement, a Material Adverse Effect is defined as a
change in or effect on the business, financial condition or results of
operations of NBB or Fleet, as the case may be, and its subsidiaries taken as a
whole, other than any such effect attributable to or resulting from changes in
interest rates or general economic conditions.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject to various
conditions, unless waived, which include, in addition to other customary closing
conditions, the following:
(a) Approval and adoption of the Merger Agreement by the affirmative
vote of the holders of at least a majority of the outstanding shares of the
NBB Common Stock entitled to vote thereon;
(b) The Warrants, the shares of Fleet Common Stock which are to be
issued to NBB stockholders upon consummation of the Merger and the Warrant
Shares shall have been authorized for listing on the Stock Exchange,
subject to official notice of issuance;
(c) All regulatory approvals required to consummate the Merger and the
Bank Merger shall have been obtained, and such approvals shall be in full
force and effect and all statutory waiting periods with respect to such
approvals shall have expired;
(d) The registration statement of which this Proxy
Statement-Prospectus forms a part shall have become effective and shall not
be subject to an actual or threatened stop order;
(e) No order, injunction or decree issued by any court or agency of
competent jurisdiction preventing the consummation of the Merger or the
other transactions contemplated by the Merger Agreement shall be in effect
and no statute, rule, regulation, order, injunction or decree shall have
been enacted or enforced by any court, administrative agency or commission
or other governmental authority or instrumentality which prohibits or makes
illegal consummation of the Merger; and
(f) The representations and warranties of the other party to the
Merger Agreement shall be true and correct in all material respects (such
representations and warranties to be deemed true and correct unless the
failure of such representations and warranties to be true and correct
represents in the aggregate, a Material Adverse Effect) and each party
shall have performed its obligations under the Merger Agreement.
In addition, NBB's obligations to effect the Merger is subject, unless the
Alternative Merger is consummated, to, among other conditions, the satisfaction
or waiver of the following condition: NBB shall have received an opinion of its
counsel, dated as of the Effective Time, that (i) the Merger will constitute a
"reorganization" under Section 368(a) of the Code; and (ii) Fleet and NBB each
will be a party to the reorganization within the meaning of Section 368(b) of
the Code (noting, however, that the nontaxability of the stockholders of NBB
resulting from such reorganization does not extend to the Warrants, cash
received as Per Share Cash Consideration, cash in lieu of a fractional share
interest in Fleet Common Stock, or cash received upon exercise of dissenter's
rights) (see "-- Certain Federal Income Tax Consequences").
37
<PAGE> 45
STRUCTURE OF THE BANK MERGER; TRANSFER OF RHODE ISLAND BRANCHES
Although not a condition to the consummation of the Merger or the Bank
Merger, the Merger Agreement contemplates that immediately following the
consummation of the Merger but prior to the Bank Merger, and subject to
requisite regulatory approvals, Fleet will cause the Bank to transfer to
Fleet-RI in the Branch Transfer the ten branches of the Bank located in the
State of Rhode Island and the loans associated therewith in consideration of
Fleet-RI's assumption of deposit and other liabilities related thereto.
Following the Branch Transfer and subject to requisite regulatory approvals, the
Bank will merge with and into the Surviving Bank pursuant to the Bank Merger
Agreement. Although consummation of the Bank Merger is not a condition to
consummation of the Merger, the Merger Agreement provides that it is a condition
to each party's obligation to effect the Merger that all regulatory approvals
required to consummate the Bank Merger shall have been obtained, remain in full
force and effect and all applicable waiting periods shall have expired. In the
Bank Merger, Fleet will cause the outstanding shares of common stock of the Bank
to be exchanged for certain preferred stock of Fleet Banking Group, Inc. ("Fleet
Banking Group"), a wholly-owned subsidiary of Fleet and the holder of all of the
outstanding stock of each of Surviving Bank and Fleet-CT.
NBB SHAREHOLDER RIGHTS AGREEMENT
On November 14, 1989, the Board of Directors of NBB declared a dividend
distribution of one right (a "Right") for each outstanding share of NBB Common
Stock to stockholders of record as of the close of business on November 27,
1989. Each Right entitles the registered holder to purchase from NBB one-
hundredth of a share of Series A Junior Participating Cumulative Preferred Stock
at a cash exercise price of $60.00 per one-hundredth of a share, subject to
adjustment. The description and terms of the Rights are set forth in the Rights
Agreement.
Immediately prior to the execution of the Merger Agreement, NBB amended the
Rights Agreement (the "Amendment"). The Amendment provides, among other things,
that neither Fleet nor any of its Affiliates or Associates (as such terms are
defined in the Rights Agreement) shall be deemed an Acquiring Person (as defined
in the Rights Agreement) and no "Stock Acquisition Date", "Distribution Date",
"Section 11(a) (ii) Event" or "Section 13 Event" (as such terms are defined in
the Rights Agreement) shall occur as a result of (a) the execution and delivery
of the Merger Agreement as the same may be amended from time to time; (b) any
action taken by Fleet or any of its Affiliates or Associates in accordance with
the provisions of the Merger Agreement; or (c) the consummation of the Merger in
accordance with the provisions of the Merger Agreement. The Amendment also
provides that the Expiration Date (as such term is defined in the Rights
Agreement) shall be the earliest of (a) the close of business on November 14,
1999; (b) the time at which the Rights are redeemed as provided in the Rights
Agreement; or (c) the Effective Time.
REGULATORY MATTERS
Under the Merger Agreement, it is a condition to each party's obligation to
effect the Merger that all regulatory approvals required to consummate the
Merger and Bank Merger shall have been obtained and shall be in full force and
effect and all statutory waiting periods in respect thereof shall have expired.
Fleet and NBB have agreed to use their best efforts to obtain the approvals
discussed below. There can be no assurance that such regulatory approvals will
be obtained, and, if obtained, there can be no assurance as to the date of any
such approvals or the absence of any litigation challenging such approvals.
Federal Reserve Board. As provided in Section 225.12(d)(2) of Regulation Y
promulgated by the Federal Reserve Board, Fleet intends to seek a waiver from
the Federal Reserve Board of the requirement for prior approval of the Merger by
the Federal Reserve Board pursuant to Section 3 of the BHC Act. Since the Merger
consists in substance of bank-to-bank transactions among the Surviving Bank,
Fleet-RI and the Bank, Fleet believes that the Merger qualifies for such a
Federal Reserve Board waiver. Fleet has filed the request for a waiver with the
Federal Reserve Board. If the Federal Reserve Board declines to approve Fleet's
waiver request, Fleet will be required to file an application under the BHC Act
for approval of the Merger. In considering whether to approve any such
application, the Federal Reserve Board would consider factors similar to those
considered by the Comptroller in connection with the application under the Bank
Merger Act. If an application is filed with the Federal Reserve Board,
consummation of the Merger would be subject to the
38
<PAGE> 46
same thirty day waiting period described below for the Bank Merger, during which
period of time the Department of Justice could challenge the Merger on antitrust
grounds.
Comptroller. Assuming Fleet obtains the Federal Reserve Board's waiver,
the Bank Merger and the Branch Transfer are subject to approval by the
Comptroller pursuant to the Bank Merger Act and, in the case of the Bank Merger,
12 U.S.C Section 215a. Fleet has filed applications with the Comptroller with
respect to the Branch Transfer and the Bank Merger. Assuming receipt of the
Federal Reserve Board waiver and Comptroller approval, the Bank Merger and the
Branch Transfer may not be consummated until 30 days after such approval, during
which time the Department of Justice may challenge the Bank Merger or the Branch
Transfer on antitrust grounds. Because the expiration of all statutory waiting
periods with respect to the Bank Merger is a condition to each party's
obligations to consummate the Merger, the expiration of the Department of
Justice's 30-day waiting period for the Bank Merger is a condition to
consummation of the Merger.
The Comptroller is prohibited from approving any application under the Bank
Merger Act: (a) which would result in a monopoly or which would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United States; or (b) the
effect of which in any section of the United States may be substantially to
lessen competition, or to tend to create a monopoly, or result in a restraint of
trade, unless the Comptroller finds that the anti-competitive effects of the
transaction are clearly outweighed in the public interest by the probable effect
of the transaction in meeting the convenience and needs of the communities to be
served.
Additionally, in reviewing an application under the Bank Merger Act, the
Comptroller will consider the convenience and needs of the communities to be
served; the financial history of the Surviving Bank and the Bank; the condition
of the Surviving Bank and the Bank, including capital, management and earnings
prospects; the existence of insider transactions; and the adequacy of disclosure
to NBB's stockholders. As part of, or in addition to, consideration of the above
factors, it is anticipated that the Comptroller will consider the regulatory
status of the Surviving Bank and the Bank, current and projected economic
conditions in the New England region and the overall capital and safety and
soundness standards established by the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") and the regulations promulgated thereunder.
In addition, under the Community Reinvestment Act of 1977, as amended (the
"CRA"), the Comptroller must take into account the record of performance of each
of the Surviving Bank and the Bank in meeting the credit needs of the entire
community, including low and moderate income neighborhoods, served by each of
such institutions.
Furthermore, the Bank Merger Act and Comptroller regulations require
publication of notice of, and the opportunity for public comment on, the
application submitted for approval of the Bank Merger and Branch Transfer and
authorize the Comptroller to permit interested parties to intervene in the
proceedings and to hold a public hearing in connection therewith if the
Comptroller determines that such a hearing would be appropriate. Any such
intervention by third parties could prolong the period during which the
application is subject to review by the Comptroller. Finally, as noted above,
the Bank Merger and Branch Transfer may not be consummated until 30 days after
Comptroller approval, during which time the Department of Justice may challenge
the Bank Merger and Branch Transfer on antitrust grounds. The commencement of an
antitrust action by the Department of Justice would stay the effectiveness of
Comptroller approval unless a court specifically orders otherwise. In reviewing
the Bank Merger and Branch Transfer, the Department of Justice could analyze the
Bank Merger's and Branch Transfer's effect on competition differently than the
Comptroller, and thus it is possible that the Department of Justice could reach
a different conclusion than the Comptroller regarding the Bank Merger's and
Branch Transfer's competitive effects. Failure of the Department of Justice to
object to the Bank Merger and Branch Transfer does not prevent the filing of
antitrust actions by private persons.
Massachusetts BBI. The Merger requires the approval of the Massachusetts
BBI, under Sections 2 and 4 of Chapter 167A of the Massachusetts General Laws.
In determining whether or not to approve the Merger, the Massachusetts BBI's
approval is essentially based upon its determination that such proposed
acquisition does not unreasonably affect competition among Massachusetts banking
institutions and that it promotes public convenience and advantage. In making
such a determination, the BBI must consider, but is not limited
39
<PAGE> 47
to, a showing of net new benefits including initial capital investments, job
creation plans, consumer and business services and commitments to maintain and
open branch offices within a bank's statutorily-delineated local community.
Section 2 also requires that the Massachusetts BBI receive notice from the
Massachusetts Housing Partnership Fund (the "MHPF") that arrangements
satisfactory to the MHPF have been made for the proposed acquiror to make 0.9%
of its assets located in Massachusetts available for call by MHPF for a period
of ten years for purposes of funding various affordable housing programs. Under
the statute, Surviving Bank also would be required to maintain, for a period of
two years following the consummation of the Bank Merger, the asset base of the
Bank at a level equal to or greater than the total assets of the Bank on the
date of consummation of the Bank Merger. In addition, the BBI may not approve
any proposed acquisition or merger if such acquisition or merger would result in
a bank holding company holding or controlling in excess of twenty-five percent
of the total deposits, exclusive of foreign deposits, of all state and federally
chartered banks in Massachusetts and all Massachusetts branches existing by
authority of a foreign country. Since it is estimated that the Bank Merger will
result in the Surviving Bank controlling no more than 8.27% of such total
deposits, the twenty-five percent limit on deposits will not be exceeded.
Fleet has filed an application with the Massachusetts BBI with respect to
the Merger.
Fleet and NBB are not aware of any other governmental approvals or actions
that are required prior to the parties' consummation of the Merger. It is
presently contemplated that if any such additional governmental approvals or
actions are required, such approvals or actions will be sought. There can be no
assurance, however, that any such additional approvals or actions will be
obtained.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of the material federal
income tax consequences of the Merger and the Alternative Merger. This summary
is not a complete description of all of the consequences of the Merger and the
Alternative Merger and, in particular, may not address federal income tax
considerations that may affect the treatment of a stockholder which, at the
Effective Time, already owns some Fleet capital stock, is a foreign corporation,
a tax exempt entity, or an individual who acquired NBB Common Stock pursuant to
an employee stock option, or exercises some form of control over NBB. In
addition, no information is provided herein with respect to the tax consequences
of the Merger or the Alternative Merger under applicable foreign, state or local
laws. Consequently, each NBB stockholder is advised to consult a tax advisor as
to the specific tax consequences of the transaction to that stockholder. The
following discussion is included for general information only and is based on
the Code, as in effect on the date of this Proxy Statement-Prospectus without
consideration of the particular facts or circumstances of any holder of NBB
Common Stock.
Unless an exemption applies, the Exchange Agent will be required to
withhold, and will withhold, 31% of any cash payments to which a NBB stockholder
or other payee is entitled pursuant to the Merger Agreement unless the NBB
stockholder or other payee provides his tax identification number (social
security number or employer identification number) and certifies that such
number is correct. Each NBB stockholder and, if applicable, each other payee
should complete and sign the substitute Form W-9 that will be included as part
of the transmittal letter to avoid back-up withholding, unless an applicable
exemption exists and is proved in a manner satisfactory to Fleet and the
Exchange Agent.
The Merger. Neither Fleet nor NBB has requested or will request an advance
ruling from the Internal Revenue Service as to the tax consequences of the
Merger. NBB's obligation to effect the Merger is conditioned on delivery of an
opinion from Goodwin, Procter and Hoar, its counsel, dated as of the Effective
Time, based upon certain customary representations and assumptions set forth
therein, substantially to the effect that for federal income tax purposes the
Merger constitutes a reorganization within the meaning of Section 368(a) of the
Code, and Fleet and NBB each will be a party to the reorganization within the
meaning of Section 368(b) of the Code (noting, however, that the nontaxability
of the stockholders of NBB resulting from such reorganization does not extend to
the Warrants or to any cash received as Per Share Cash
40
<PAGE> 48
Consideration, cash in lieu of a fractional share interest in Fleet Common Stock
or cash received by dissenting stockholders).
Based on such opinion, the material federal income tax results of the
Merger would be as follows. No gain or loss will be recognized by NBB or by
Fleet as a result of the Merger. An NBB stockholder who receives solely cash and
Warrants in exchange for all of his shares of NBB Common Stock will recognize a
gain or loss for federal income tax purposes equal to the difference between (i)
the sum of the cash and the fair market value of the Warrants as of the
Effective Time and (ii) the stockholder's tax basis in the NBB Common Stock
surrendered in exchange therefor. Assuming such NBB stockholder, at the time of
the exchange, holds NBB Common Stock as a capital asset, such gain or loss will
be capital gain or loss, and will be long-term capital gain or loss if the
stockholder's holding period is more than one year. There are limitations on the
extent to which stockholders may deduct capital losses from ordinary income.
If the consideration received in the Merger by an NBB stockholder consists
in part of Fleet Common Stock, and such stockholder's adjusted basis in the
shares of NBB Common Stock surrendered in the transaction is less than the sum
of the fair market value, as of the Effective Time, of the Fleet Common Stock
and Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock), such stockholder will realize a gain on the
transaction (a "Realized Gain"). Such stockholder will recognize a gain equal to
the lesser of (i) such Realized Gain and (ii) the sum of the fair market value
of the Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock). Provided the exchange does not have the effect of
a dividend, the gain so recognized will be characterized as a capital gain
(assuming the NBB Common Stock exchanged was a capital asset in the hands of the
stockholder). If an NBB stockholder who receives part Fleet Common Stock in the
Merger realizes a loss, such loss will not be currently recognized for federal
income tax purposes. Such disallowed loss will be reflected in the adjusted tax
basis of the shares of Fleet Common Stock received in the Merger. If an NBB
stockholder who receives part Fleet Common Stock in the Merger acquired his NBB
Common Stock at different times at different prices, the foregoing calculations
must be done on a block-by-block-basis, allocating a proportionate part of the
Fleet Common Stock, the Warrants and any cash received among the various blocks
based upon the relative value of each such block. (Cash received in lieu of a
fractional share is subject to different treatment, described below.)
The determination of whether the Warrants and any cash received in the
Merger by an NBB stockholder has the effect of the distribution of a dividend
will be made by comparing the proportionate interest of such stockholder after
the Merger with the proportionate interest the stockholder would have had if the
stockholder had received solely Fleet Common Stock in the Merger. This
comparison is made as though Fleet had issued in the Merger to such stockholder
solely Fleet Common Stock and, in a hypothetical redemption under the rules of
section 302 of the Code, Fleet had redeemed such portion of Fleet Common Stock
as represented in value, at the time of the Merger, the amount of any cash and
the fair market value of the Warrants the stockholder received. For this
purpose, the constructive ownership rules in section 318 of the Code apply.
These rules apply in certain specified circumstances to attribute ownership of
shares of a corporation from the stockholder actually owning the shares, whether
an individual, a trust, a partnership or a corporation, to certain members of
the individual's family or to certain individuals, trusts, partnerships or
corporations in which that stockholder has an ownership or beneficial interest,
or which have an ownership or beneficial interest in that stockholder. A
stockholder is also considered under these rules to own any shares with respect
to which he holds exercisable options. The amount of any such dividend, so
determined, is limited to that stockholder's ratable share of the accumulated
earnings and profits of NBB at the Effective Time.
Under IRS guidelines interpreting the rules of Section 302(b)(1) of the
Code, if a hypothetical redemption involves a minority Fleet stockholder whose
relative stock interest in Fleet is minimal, who exercises no control over the
affairs of Fleet and who experiences a reduction in his proportionate stock
interest, such stockholder will not receive dividend treatment on the Warrants
and any cash received. Because the determination of whether the receipt of
Warrants or any cash will be treated as having the effect of the distribution of
a dividend generally will depend in part upon the facts and circumstances of
each NBB stockholder, such stockholders are strongly advised to consult their
own tax advisors regarding the tax treatment of the Warrants and any cash
received in the Merger.
41
<PAGE> 49
If an NBB stockholder receives part Fleet Common Stock in the Merger, the
stockholder's basis in the Fleet Common Stock received will equal his basis in
the NBB Common Stock surrendered in exchange therefor less the fair market value
of the Warrants and any cash received, increased by any gain recognized.
Provided the NBB Common Stock surrendered was held as a capital asset at the
time of the exchange, the holding period of the Fleet Common Stock received will
include the holding period of the shares of NBB Common Stock surrendered.
The tax basis of a Warrant in the hands of an NBB stockholder will be equal
to the fair market value of the Warrant at the Effective Time of the Merger.
Holders of NBB Common Stock who receive cash in lieu of fractional share
interests of Fleet Common Stock will be treated as having received such fraction
of a share of Fleet Common Stock and then as having received cash in redemption
of the fractional share interest, subject to the provisions of section 302 of
the Code.
The transaction will be a fully taxable event for federal income tax
purposes for holders of shares of NBB Common Stock who seek appraisal and
receive solely cash in exchange for their shares. An NBB stockholder who
receives solely cash through the exercise of rights of appraisal and, as a
result of the surrender of all of his shares, owns no shares either directly or
through the constructive ownership rules of section 318 of the Code, would
recognize capital gain or loss (assuming that the shares are held by such
stockholder as a capital asset) equal to the difference between the amount of
cash received and the stockholder's tax basis in the shares.
Warrants received by holders of options issued under the NBB Stock Option
Plan which are being converted into stock options under the Fleet Stock Option
Plan are also subject to federal income tax.
The Alternative Merger. Neither Fleet nor NBB has requested or will
request an advance ruling from the Internal Revenue Service as to the tax
consequences of the Alternative Merger. As discussed under the caption "The
Merger-Alternative Merger," if (i) the Average Closing Price of Fleet Common
Stock is equal to or less than $29.50 and (ii) counsel for NBB is unable to
deliver the Tax Opinion, then the Merger Agreement provides for use of the
Alternative Merger.
Although no gain or loss would be recognized by NBB or Fleet as a result of
the Alternative Merger, it is anticipated that the Alternative Merger would be a
taxable transaction to NBB stockholders. In such event, NBB stockholders would
recognize a gain or loss for federal income tax purposes equal to the difference
between (a) the sum of the fair market value, as of the Effective Time, of the
Warrants and any Fleet Common Stock received in the Alternative Merger plus any
cash received in the Alternative Merger and (b) the stockholder's tax basis in
the NBB Common Stock surrendered in exchange therefor. However, it is possible
that the Alternative Merger will still qualify as a tax-free reorganization with
the tax treatment for the NBB stockholders being the same as that described
above in the case of the Merger. Since the determination of whether the
Alternative Merger would qualify as a tax-free reorganization depends in part on
the aggregate fair market value of the shares of Fleet Common Stock used as
consideration in the Alternative Merger compared to the total amount of
consideration received by NBB stockholders as well as on whether and how Fleet
takes certain subsequent steps to integrate NBB and the Bank into the Fleet
corporate structure, facts which are unknown as of the date of this Proxy
Statement-Prospectus, the tax treatment of the Alternative Merger cannot now be
determined. Consequently, NBB stockholders are urged to consult a tax advisor as
to the tax consequences of the Alternative Merger in the event that the
Alternative Merger is implemented.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "purchase"
transaction. Under such method of accounting, the book value of the assets and
liabilities of NBB, as reported on its balance sheet, will be increased or
decreased to their fair market value at the Effective Time and goodwill will be
recorded to the extent that the purchase price exceeds the fair market value of
the net assets and liabilities. The income of NBB will be included in the
consolidated income of Fleet from the Effective Time, and not for the entire
fiscal year.
42
<PAGE> 50
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement provides that the Merger may be terminated at any time
prior to the Effective Time (whether before or after stockholder approval) by
mutual consent of Fleet, Merger Subsidiary and NBB by a majority vote of each
company's entire Board of Directors. Subject to certain limitations in cases
where the party seeking termination is in breach of the Merger Agreement, the
Merger Agreement may also be terminated by Fleet and Merger Subsidiary or NBB
(a) 90 days after the date on which any request or application for a regulatory
approval required to consummate the Merger shall have been denied or withdrawn
at the request or recommendation of any governmental entity which must grant
such regulatory approval, unless within the 90 day period following such denial
or withdrawal, a petition for rehearing or an amended application has been filed
with such governmental entity; (b) if any governmental entity shall have issued
a final nonappealable order enjoining or otherwise prohibiting the consummation
of any of the transactions contemplated by the Merger Agreement; (c) if the
Effective Time has not occurred by May 31, 1995; (d) if there is a material
breach by the other party of any representation, warranty, covenant or agreement
contained in the Merger Agreement which is not timely cured; (e) if the vote of
NBB's stockholders shall not be sufficient to approve the Merger Agreement; or
(f) if NBB's Board of Directors determines that it will not recommend to its
stockholders approval, or modifies or withdraws its recommendation, of the
Merger Agreement and the transactions contemplated thereby and such other
matters as may be submitted to its stockholders in connection with the Merger
Agreement, if the Board shall have concluded with the advice of counsel that
such action is required to prevent such Board from breaching its fiduciary
obligations to NBB's stockholders.
Whether or not the Merger is consummated, all fees and expenses incurred in
connection with the Merger and the transactions contemplated thereby will be
paid by the party incurring such expenses, except as follows: (i) Fleet will
bear the costs and expenses of printing and mailing the Proxy
Statement-Prospectus, and all filing and other fees paid to the Commission or
any other governmental entity in connection with the Merger, the Bank Merger and
the other transactions contemplated thereby; (ii) in the event that the Merger
Agreement is terminated due to the failure to receive required regulatory
approvals discussed in subsection (a) of the foregoing paragraph, any
governmental entity shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of any of the transactions contemplated
by the Merger Agreement, or if the Effective Time has not occurred by May 31,
1995, or the transactions contemplated by the Merger Agreement otherwise fail to
be consummated in any such case because of the failure to receive any required
regulatory approval, then NBB will be reimbursed by Fleet for all of its
expenses up to a maximum of $1,500,000; and (iii) in the event that the Merger
Agreement is terminated as a result of a material breach by the other party of
its representations, warranties, covenants or agreements caused the willful
conduct or gross negligence of such party, then such party will be liable to the
other party for all out-of-pocket costs and expenses. NBB is also obligated to
pay an expense fee of $8,000,000 under the circumstances described below under
"-- No Solicitation; Expense Fee".
WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Waiver. Fleet and NBB, with the authorization of their respective Boards
of Directors, may to the extent legally allowable, (a) extend the time for the
performance of any of the obligations or other acts required of the other party
contained in the Merger Agreement; (b) waive any inaccuracies in the
representations and warranties of the other party contained in the Merger
Agreement or in any document delivered pursuant to the Merger Agreement; or (c)
waive compliance by the other party of any of its agreements or conditions
contained in the Merger Agreement, except that after NBB stockholder approval,
no extension or waiver shall reduce the amount or change the form of
consideration to be delivered to each of NBB's stockholders as contemplated by
the Merger Agreement without further approval of NBB's stockholders, except as
contemplated by the Merger Agreement.
Amendment. Any term or provision of the Merger Agreement may be amended in
writing (subject to compliance with applicable law) at any time, except that
after NBB stockholder approval, no amendment shall reduce the amount or change
the form of the consideration to be delivered to each of NBB's stockholders
under the Merger Agreement without further approval of NBB's stockholders, other
than as contemplated by
43
<PAGE> 51
the Merger Agreement. In addition, Delaware law prohibits, among other things,
any change in any of the terms and conditions of the Merger Agreement if such
change or alteration would adversely effect any holder of NBB Common Stock.
NO SOLICITATION; EXPENSE FEE
Under the Merger Agreement, NBB has agreed that neither it, any of its
subsidiaries nor any of the directors, officers, employees, representatives or
agents of NBB or other persons controlled by NBB shall, except to the extent
required by applicable law relating to fiduciary obligations of directors, upon
advice of counsel, solicit or hold discussions or negotiations with, or assist
or provide any information to, any person, entity, or group (other than Fleet)
concerning any merger, disposition of a significant portion of its assets, or
acquisition of a significant portion of its capital stock or similar transaction
involving NBB or any of its subsidiaries.
In the event that (x) (i) the Merger Agreement is terminated by NBB due to
the failure to receive the requisite approval of the NBB stockholders, the
determination by NBB's Board not to recommend stockholder approval or
modification or withdrawal of its recommendation, or (ii) by Fleet and Merger
Subsidiary as a result of a material breach by NBB of its covenants, agreements
or representations and warranties under the Merger Agreement caused by the
willful conduct or gross negligence of NBB and (y)(1) within six months
thereafter NBB enters into an agreement, or the NBB Board shall have approved or
recommended stockholders approval of, a merger, consolidation, sale, lease or
other disposition of 25% of more of its assets or a tender or exchange offer for
25% or more of the outstanding NBB Common Stock with any person other than Fleet
or an affiliate or subsidiary of Fleet or (2) in the case of termination for the
reasons set forth in (x)(i) above, a bona fide proposal by any person other than
Fleet or an affiliate or subsidiary of Fleet for any such transaction shall have
been publicly disclosed at the time of such termination, then NBB will make a
cash payment to Fleet of $8,000,000, net of any payments made by NBB in the
event of termination by Fleet as a result of a material breach by NBB of NBB's
representations, warranties, covenants or agreements caused by the willful
conduct or gross negligence. Such cash payment will be payable within five days
after demand by Fleet.
EFFECT ON EMPLOYEE BENEFITS
The Merger Agreement requires Fleet and the Surviving Bank to offer
employment to all employees of NBB and its subsidiaries and to honor all
employment, severance and other compensation agreements disclosed to Fleet in
the Merger Agreement in accordance with their terms. See "-- Interests of
Certain Persons in the Merger". The Merger Agreement also provides that, after
the Merger, Fleet and the Surviving Bank will provide NBB employees with the
same employee benefit plans provided to Fleet's own employees, and to credit NBB
employees that become participants in any employee benefit plans of the
Surviving Bank, Fleet or any of its subsidiaries with all prior years of service
with NBB or any of its subsidiaries (and any entities acquired by NBB or the
Bank to the same extent as NBB or the Bank recognizes such service) to the
extent such service was recognized by NBB or any of its subsidiaries under any
of its plans.
In addition to the severance and benefit arrangements discussed above,
Fleet has also agreed to provide employees of NBB and its subsidiaries who are
terminated on or within two years after the Effective Time: (a) the greater or
more favorable of the severance and other benefits set forth in (x) Fleet's
Severance Pay and Benefits Plan as in effect on the date of the Merger Agreement
(as disclosed to NBB), or (y) Fleet's severance pay and benefits plan policy
existing on the date of termination; and (b) continuation of health benefits for
one year after termination on the same terms and conditions as though they had
remained active employees, as well as continuation benefits (such as COBRA)
thereafter for an additional 18 month period.
In addition, Fleet has agreed that, commencing at least 15 days prior to
the Effective Time, each option held by optionees under the NBB Stock Option
Plan which is then outstanding and unexercised will become immediately
exercisable and, if not exercised prior to the Effective Time, the option holder
may elect at or immediately prior to the Effective Time to have such option
cancelled in exchange for cash in an amount equal to the difference between the
Per Share Cash Consideration and the per share exercise price multiplied by the
number of shares covered by the option. Any such option which is not so
exercised or cancelled will, at
44
<PAGE> 52
the Effective Time, be converted into (i) an option under the Fleet Stock Option
Plan on the same terms and conditions as the NBB Stock Option Plan, except that
the number of shares subject to such Fleet option shall be the number of shares
subject to the NBB option multiplied by the Per Share Stock Consideration and
that the exercise price per share under the Fleet option shall be equal to the
exercise price per share under the NBB option divided by the Per Share Stock
Consideration, and (ii) a pro rata share of the Warrants.
The Merger Agreement provides that, effective as of the Effective Time (or
as soon thereafter as practicable), the Bank ESOP will be terminated in
accordance with applicable law and regulations.
The Merger Agreement provides that NBB, and after the Effective Time,
Fleet, shall indemnify and hold harmless, as and to the fullest extent permitted
by applicable law, each person who was at the date of the Merger Agreement, or
has been at any time prior to the date of the Merger Agreement, or who becomes
prior to the Effective Time, a director, officer or employee of NBB or any of
its subsidiaries (the "Indemnified Parties") against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), whether civil,
criminal or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which each such Indemnified Party
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 (a) the fact that he is or
was a director, officer or employee of NBB, any of its subsidiaries or any of
their respective predecessors or (b) the Merger Agreement or any of the
transactions contemplated thereby. Fleet has also agreed that all rights to
indemnification existing in favor of and limitations on the personal liability
of the Indemnified Parties in such companies' respective charter documents or
by-laws or similar organizational document, as in effect on May 9, 1994, will
survive the Merger and continue in full force and effect for a period of not
less than six years from the Effective Time with respect to matters occurring
prior to the Effective Time. See "-- Interests of Certain Persons in the
Merger".
Retention Bonus Pool. In connection with the Merger, NBB has established a
retention bonus pool of up to $500,000 to be paid to certain employees of NBB
(other than those officers with which NBB and the Bank have special termination
agreements). Payments from the retention bonus pool have been allocated among
such employees as has been mutually agreed upon by Fleet and NBB.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In connection with the Merger, Fleet has agreed to provide certain benefits
and make certain severance payments to all employees of NBB and its
subsidiaries. See "-- Effect on Employee Benefits". Fleet also has agreed to
take certain actions regarding the existing employment and severance
arrangements of certain officers of NBB and the Bank. The following section
describes certain arrangements that NBB and the Bank had entered into prior to
the execution of the Merger Agreement with its executive officers and further
describes the actions that Fleet has agreed to take in connection with these
pre-existing agreements. The following section also describes other actions
Fleet has agreed to take with respect to certain officers of NBB and the Bank.
Fleet will take the actions described below upon the consummation of the Merger.
Employment Agreement. NBB and the Bank (collectively, the "Employers") are
parties to an employment agreement with Irving J. Goss (the "Employment
Agreement") which became effective as of December 22, 1992. The Employment
Agreement provides that Mr. Goss will receive annual compensation at a rate of
$145,000 per year, subject to increase in accordance with the usual practice of
the Employers with respect to review of compensation of senior executives. The
Employment Agreement had an initial one year term which has been renewed
pursuant to a provision which provides for automatic renewals for additional
periods of one year, unless Mr. Goss or the Employers give written notice to the
other prior to the end of any term. The respective Employers, by two-thirds vote
of all the members of the respective Employer's Board of Directors, may
terminate Mr. Goss's employment without further liability for "cause" as defined
in the respective Employment Agreement. In the event of termination of
employment by the Employers without cause, Mr. Goss would be entitled to receive
his salary at the rate in effect on the date of termination for one year.
Pursuant to the Merger Agreement, Fleet has agreed to honor the Employment
Agreement. However,
45
<PAGE> 53
Mr. Goss has indicated that, in the event of termination of his employment under
the circumstances triggering termination benefits, he intends to elect to
receive the severance benefits pursuant to the Special Termination Agreement to
which he is a party, as described below, in lieu of any termination benefits
under his Employment Agreement.
Termination Agreements. The Employers are also parties to special
termination agreements with each of Robert McCarter, William A. Flaherty, George
J. Charette III and Paul A. Lamoureux effective as of October 31, 1989; with
Gayle A. Johnson, effective as of November 10, 1989; with Mr. Goss, effective as
of December 22, 1992; with Frederick D. Healey, effective as of October 31,
1993; and with Carol E. Correia, Jane M. Jacobsen and Charles P. O'Brien,
effective as of May 26, 1994 (collectively, the "Special Termination
Agreements"). The Special Termination Agreements define a "Change in Control" of
the Employers to mean (i) a Change in Control that NBB would be required to
report in Item 6(e) of Schedule 14A under the Exchange Act; (ii) the acquisition
by a person of beneficial ownership of stock of either of the Employers
representing 25% or more of the total number of votes that may be cast for the
election of directors of either of the Employers; (iii) during any period of
thirty consecutive months (not including any period prior to the execution of
the Termination Agreement), individuals who at the beginning of such period
constitute the Board of Directors of NBB, and any new director whose election by
the Board or nomination for election by NBB's stockholders was approved by a
vote of at least two-thirds ( 2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors of NBB; or (iv) the
stockholders of NBB approve a merger or consolidation of NBB with any other
corporation, other than a merger or consolidation which would result in the
voting securities of NBB outstanding immediately prior thereto continuing to
represent more than 50% of the combined voting power of the voting securities of
NBB or such surviving entity outstanding immediately after such merger or
consolidation; or (v) the stockholders of NBB approve a plan of complete
liquidation of NBB or an agreement for the sale or disposition by NBB of all or
substantially all of NBB's assets.
If at any time during the three year period following the Change in
Control, either of the Employers were to terminate the officer's employment for
any reason other than for death, deliberate dishonesty with respect to either
Employer or any subsidiary or affiliate thereof or conviction of a crime
involving moral turpitude, or the officer were to resign from his or her own
employment following (i) a significant change in the nature or scope of such
officer's responsibilities, authorities, powers, functions or duties from the
responsibilities, authorities, powers, functions or duties exercised by such
officer immediately prior to the Change in Control; (ii) a determination by such
officer that, as a result of a Change in Control, he or she is unable to
exercise the responsibilities, authorities, powers, functions or duties
exercised by such officer immediately prior to such Change in Control; (iii) a
reduction in such officer's annual base salary as in effect on the date of the
Termination Agreement or as the same may be increased from time to time; or (iv)
certain other events as described in the Special Termination Agreement (each a
"Termination Event"), then the Employers would be obligated to pay to such
officer a lump sum payment in an amount equal to approximately three times the
"base amount" (defined in Section 280G(b)(3) of the Code to generally mean an
individual's average annual compensation for the five taxable years preceding
the Change in Control) payable in one lump sum payment on the date of such
termination or resignation.
Fleet has agreed in the Merger Agreement to honor the Special Termination
Agreements in accordance with their terms, and has also agreed for itself and
its subsidiaries that the consummation of the transactions contemplated by the
Merger Agreement is a "Change of Control" as defined in the Special Termination
Agreements.
Continuation of Rights to Indemnification, Limitation of Liability, D & O
Insurance. In addition to the continuation of indemnification rights and
limitations on the personal liability of the Indemnified Parties described above
under "-- Effect on Employee Benefits", Fleet has also agreed to maintain in
effect for not less than three years from the Effective Time, policies of
directors' and officers' liability insurance maintained by NBB or to substitute
comparable policies, covering officers and directors of NBB immediately prior to
the Effective Time with respect to acts or omissions occurring at or prior to
the Effective Time which were
46
<PAGE> 54
committed by such officers and directors in their capacity as such, except that
Fleet is not required to expend more than 200% of the amount currently expended
by NBB and the Bank on such insurance.
RESALE OF FLEET COMMON STOCK, WARRANTS AND WARRANT SHARES
The Fleet Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares issued to any NBB
stockholder who may be deemed to be an affiliate of Fleet for purposes of Rule
144 promulgated under the Securities Act ("Rule 144") or an affiliate of NBB for
purposes of Rule 145 promulgated under the Securities Act ("Rule 145") (each an
"Affiliate"). Affiliates are generally defined as persons (generally executive
officers, directors and ten percent stockholders) who control, are controlled
by, or are under common control with (a) Fleet or NBB at the time of the Special
Meeting or (b) Fleet at or after the Effective Time.
Rules 144 and 145 will restrict the sale of Fleet Common Stock received in
the Merger by Affiliates and certain of their family members and related
interests. Generally speaking, during the two years following the Effective
Time, Affiliates of NBB, provided they are not Affiliates of Fleet, may publicly
resell the Fleet Common Stock received by them in the Merger, subject to certain
limitations as to the amount of Fleet Common Stock sold by them in any
three-month period and as to the manner of sale. After the two-year period, such
Affiliates of NBB who are not Affiliates of Fleet may resell their shares
without such restrictions so long as there is adequate current public
information with respect to Fleet as required by Rule 144. Persons who become
Affiliates of Fleet prior to, at or after the Effective Time may publicly resell
the Fleet Common Stock received by them in the Merger subject to similar
limitations and subject to certain filing requirements specified in Rule 144.
The ability of Affiliates to resell shares of Fleet Common Stock received
in the Merger under Rule 144 or 145 as summarized herein generally will be
subject to Fleet's having satisfied its Exchange Act reporting requirements for
specified periods prior to the time of sale. Affiliates also would be permitted
to resell Fleet Common Stock received in the Merger pursuant to an effective
registration statement under the Securities Act or another available exemption
from the Securities Act registration requirements.
Resales of the Warrants and Warrant Shares would be governed by resale
restrictions under Rule 144 and 145 which are similar to those described for
Fleet Common Stock, except that in the case of the Warrant Shares, the two year
period commences on the date of exercise of the applicable Warrant.
This Proxy Statement-Prospectus does not cover any resales of Fleet Common
Stock, Warrants or the Warrant Shares received by persons who may be deemed to
be Affiliates of Fleet or NBB. The Merger Agreement provides that NBB shall use
all reasonable efforts to cause each such Affiliate of NBB who has indicated to
NBB that such Affiliate intends to elect to receive Fleet Common Stock pursuant
to the Merger to deliver to Fleet prior to the date of the Special Meeting an
agreement providing that such Affiliate will not sell, pledge, transfer or
otherwise dispose of any Fleet Common Stock received in the Merger except in
compliance with the Securities Act.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Fleet has an automatic Dividend Reinvestment and Stock Purchase Plan (the
"Plan"). Effective as of January 1, 1994, the Plan provides, in substance, for
those stockholders who elect to participate, that dividends on Fleet Common
Stock and optional cash payments of not less than $10 per month, up to a maximum
of $10,000 for each quarter, will be invested in shares of Fleet Common Stock.
The purchase price for Fleet Common Stock purchased with reinvested cash
dividends is 97% of the market price and for purchases with optional cash
payments is 100% of the market price. In each case, the Plan provides for the
payment by Fleet of any brokerage commissions or service charges with respect to
such purchases. After the Effective Time, stockholders of NBB who receive Fleet
Common Stock in the Merger will have the right to participate in the Plan.
47
<PAGE> 55
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
If the Merger is consummated, a holder of record of NBB Common Stock on the
date of making a demand for appraisal, as described below, who continues to hold
such shares through the Effective Time and who strictly complies with the
procedures set forth under Section 262 of the Delaware General Corporation Law
("Section 262") will be entitled to have such shares appraised by the Delaware
Court of Chancery under Section 262 and to receive payment of the "fair value"
of such shares in lieu of the consideration provided for in the Merger
Agreement. This Proxy Statement-Prospectus is being sent to all holders of
record of NBB Common Stock at the Record Date and constitutes notice of the
appraisal rights available to such holders under Section 262. THE STATUTORY
RIGHT OF APPRAISAL GRANTED BY SECTION 262 REQUIRES STRICT COMPLIANCE WITH THE
PROCEDURES SET FORTH IN SECTION 262. FAILURE TO FOLLOW ANY OF SUCH PROCEDURES
MAY RESULT IN A TERMINATION OR WAIVER OF DISSENTERS' RIGHTS UNDER SECTION 262.
The following is a summary of certain of the provisions of Section 262 and is
qualified in its entirety by reference to the full text of Section 262, a copy
of which is attached to this Proxy Statement-Prospectus as Exhibit C.
A stockholder of NBB electing to exercise dissenters' rights under Section
262 must deliver a written demand for appraisal of such stockholder's shares to
NBB prior to the vote on the approval of the Merger Agreement, and must not vote
for approval of the Merger Agreement. A proxy or vote against the Merger is not
sufficient to constitute such a demand. Such written demand must be in addition
to and separate from any proxy or vote against the Merger and must reasonably
inform NBB of the identity of the stockholder of record and of such
stockholder's intention to demand appraisal of his shares. All such demands
should be delivered to NBB Bancorp, Inc., Attention: Carol E. Correia,
Secretary, at 174 Union Street, New Bedford, Massachusetts 02740. Because a
proxy signed and left blank will, unless revoked, be voted for approval of the
Merger Agreement, to be assured that shares are not voted for approval of the
Merger Agreement a stockholder electing to exercise dissenters' rights who votes
by proxy must vote against the approval of the Merger Agreement or mark a proxy
to indicate that such stockholder is abstaining from voting.
Only a holder of shares of NBB Common Stock on the date of making such
written demand for appraisal who continuously holds such shares through the
Effective Time is entitled to seek appraisal. Demand for appraisal must be
executed by or for the holder of record, fully and correctly, as such holder's
name appears on the holder's stock certificates representing shares of NBB
Common Stock. If NBB Common Stock is owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, the demand should be made in that
capacity, and if NBB Common Stock is owned of record by more than one person, as
in a joint tenancy or tenancy in common, the demand should be made by or for all
owners of record. An authorized agent, including one or more joint owners, may
execute the demand for appraisal for a holder of record; however, such agent
must identify the record owner or owners and expressly disclose in such demand
that the agent is acting as agent for the record owner or owners of such shares.
A record holder such as a broker who holds shares of NBB Common Stock as a
nominee for beneficial owners, some of whom desire to demand appraisal, must
exercise dissenters' rights on behalf of such beneficial owners with respect to
the shares of NBB Common Stock held for such beneficial owners. In such case,
the written demand for appraisal should set forth the number of shares of NBB
Common Stock covered by it. Unless a demand for appraisal specifies a number of
shares, such demand will be presumed to cover all shares of NBB Common Stock
held in the name of such record owner. BENEFICIAL OWNERS WHO ARE NOT RECORD
OWNERS AND WHO INTEND TO EXERCISE DISSENTERS' RIGHTS SHOULD INSTRUCT THE RECORD
OWNER TO COMPLY WITH THE STATUTORY REQUIREMENTS WITH RESPECT TO THE EXERCISE OF
DISSENTERS' RIGHTS BEFORE THE DATE OF THE SPECIAL MEETING. BANK ESOP
PARTICIPANTS DESIRING TO EXERCISE THEIR RIGHT TO APPRAISAL WITH RESPECT TO
SHARES OF NBB COMMON STOCK HELD FOR THEIR ACCOUNT IN THE BANK ESOP SHOULD NOTIFY
THE TRUSTEE AT INVESTORS BANK & TRUST CO., TAD 58, P.O. BOX 1537, BOSTON,
MASSACHUSETTS 02205-1537, IN WRITING NO LATER THAN , SO THAT A
TIMELY DEMAND FOR APPRAISAL CAN BE SUBMITTED ON THEIR BEHALF.
48
<PAGE> 56
Within ten days after the Effective Time, The Surviving Corporation is
required to send notice of the effectiveness of the Merger to each stockholder
of NBB who prior to the Effective Time complied with the requirements of Section
262.
Within 120 days after the Effective Time, the Surviving Corporation or any
stockholder who has complied with the requirements of Section 262 may file a
petition in the Delaware Court of Chancery demanding a determination of the fair
value of the shares of NBB Common Stock held by all stockholders seeking
appraisal. A dissenting stockholder must serve a copy of such petition on the
Surviving Corporation. If no petition is filed by either the Surviving
Corporation or a dissenting stockholder within such 120 day period, the rights
of all dissenting stockholders to appraisal shall cease. NBB stockholders
seeking to exercise dissenters' rights should not assume that the Surviving
Corporation will file a petition with respect to the appraisal of the fair value
of their shares or that the Surviving Corporation will initiate any negotiations
with respect to the appraisal of the fair value of their shares or that the
Surviving Corporation will initiate any negotiations with respect to the fair
value of such shares. The Surviving Corporation is under no obligation to and
has no present intention to take any action in this regard. Accordingly, NBB
stockholders who wish to seek appraisal of their shares should initiate all
necessary action with respect to the perfection of their dissenters' rights
within the time periods and in the manner prescribed in Section 262. FAILURE TO
FILE THE PETITION ON A TIMELY BASIS WILL CAUSE THE STOCKHOLDERS' RIGHT TO AN
APPRAISAL TO CEASE.
Within 120 days after the Effective Time, any stockholder who has complied
with subsections (a) and (d) of Section 262 is entitled, upon written request,
to receive from NBB a statement setting forth the aggregate number of shares of
NBB Common Stock not voted in favor of adoption of the Merger Agreement and with
respect to which demands for appraisal have been received by NBB and the number
of holders of such shares. Such statement must be mailed within 10 days after
the written request therefor has been received by the Surviving Corporation or
within 10 days after expiration of the time for delivery of demands for
appraisal under Section 262, whichever is later.
If a petition for an appraisal is timely filed, at the hearing on such
petition, the Delaware Court of Chancery will determine which stockholders are
entitled to dissenters' rights and will appraise the shares of NBB Common Stock
owned by such stockholders, determining the fair value of such shares, exclusive
of any element of value arising from the accomplishment or expectation of the
Merger, together with a fair rate of interest to be paid, if any, upon the
amount determined to be the fair value. In determining fair value, the court is
to take into account all relevant factors. The Delaware Supreme Court has stated
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in the appraisal proceedings. The Delaware Supreme Court has
stated that, in making this determination of fair value, the court must consider
"market value, asset value, dividends, earnings prospects, the nature of the
enterprise and any other facts which were known or which could be ascertained as
of the date of the merger which throw any light on future prospects of the
merged corporation." Section 262 provides that fair value is to be "exclusive of
any element of value arising from the accomplishment or expectation of the
merger." The Delaware Supreme Court has also held that "elements of future
value, including the nature of the enterprise, which are known or susceptible of
proof as of the date of the merger and not the product of speculation, may be
considered." In addition, Delaware courts have decided that the statutory
appraisal remedy, depending on factual circumstances, may or may not be a
dissenter's exclusive remedy.
Stockholders considering seeking appraisal should consider that the fair
value of their shares determined under Section 262 could be more, the same, or
less than the value of the consideration to be received pursuant to the Merger
Agreement without the exercise of dissenters' rights, and that investment
banking opinions as to fairness from a financial point of view are not
necessarily opinions as to fair value on Section 262. The cost of the appraisal
proceeding may be determined by the Court of Chancery and assessed against the
parties as the Court deems equitable in the circumstances. Upon application of a
dissenting stockholder, the court may order that all or a portion of the
expenses incurred by any dissenting stockholder in connection with the appraisal
proceeding (including without limitation reasonable attorney's fees and the fees
and expenses of experts) be
49
<PAGE> 57
charged pro rata against the value of all shares of NBB Common Stock entitled to
appraisal. In the absence of such a determination or assessment, each party
bears its own expenses.
Any stockholder who has fully demanded appraisal in compliance with Section
262 will not, after the Effective Time, be entitled to vote for any purpose the
shares of NBB Common Stock subject to such demand or to receive payment of
dividends or other distributions on such shares, except for dividends or
distributions payable to stockholders of record at a date prior to the Effective
Time.
A NBB stockholder may withdraw a demand for appraisal and accept the terms
of the Merger at any time within 60 days after the Effective Time, or thereafter
may withdraw such demand with the written approval of NBB. In the event an
appraisal proceeding is properly instituted, such proceeding may not be
dismissed as to any stockholder without the approval of the Delaware Court of
Chancery, and any such approval may be conditioned on the terms the Court of
Chancery deems just.
See "THE MERGER -- Certain Federal Income Tax Consequences" below for a
brief description of certain federal income tax consequences resulting from the
receipt of the fair value of appraised shares.
MATERIAL CONTACTS BETWEEN AFFILIATES OF NBB AND FLEET
Irving J. Goss, Senior Vice President and Chief Financial Officer of NBB
and the Bank, served as Comptroller of Fleet from 1983 to December 1992.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
John A. Reeves, a Director of Fleet, is an executive officer and
stockholder of Mid-Continent Minerals Corporation ("MCM"). One of MCM's
wholly-owned subsidiaries, Mid-continent Reserves, Inc., filed for
reorganization under Chapter 11 of the Federal Bankruptcy Code in 1993. A plan
under Chapter 11 has been approved.
John S. Scott, a Director of Fleet, is Chairman of Cambridge Biotech
Corporation, which filed for reorganization under Chapter 11 of the Federal
Bankruptcy Code in July, 1994.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, Fleet is subject to regulation by the Federal
Reserve Board. Fleet Bank of Maine, Fleet Bank-NH and Fleet-NY are
state-chartered banks that are members of the Federal Reserve System; as such,
they are subject to regulation by the Federal Reserve Board and bank regulators
in their respective states. Fleet-RI, Fleet-CT and the Surviving Bank are
national banks subject to regulation and supervision by the OCC. Each subsidiary
bank's deposits are insured by the FDIC and is therefore subject to FDIC
supervision and regulation. Fleet is also subject to the reporting and other
requirements of the Exchange Act.
As a bank holding company, NBB is subject to regulation, supervision and
examination by the Federal Reserve Board under the BHCA. As a Delaware
corporation, NBB must comply with the general corporation law of Delaware. As a
Massachusetts chartered, FDIC-insured savings bank, the Bank is subject to
regulation, examination and supervision by the FDIC and the Commissioner of
Banks of the Commonwealth of Massachusetts.
The credit quality of the assets held by certain of Fleet's subsidiaries is
subject to periodic review by the state and federal bank regulatory agencies
noted above. While Fleet believes its present reserve for credit losses is
adequate in light of prevailing economic conditions and the current regulatory
environment, there can be no assurance that Fleet's subsidiaries will not be
required to make certain adjustments to their reserves for credit losses and
charge-off policies in response to changing economic conditions or regulatory
examinations.
50
<PAGE> 58
Neither Fleet nor any of its subsidiaries has entered into formal written
agreements with state and federal regulators. At the request of its regulators,
Fleet and its subsidiaries continue to evaluate and refine oversight and
reporting systems and procedures to enhance the ability of such companies to
respond to the changing economic environment.
PAYMENT OF DIVIDENDS
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including NBB
stockholders who will become holders of Fleet Common Stock upon consummation of
the Merger, to benefit from the distribution of assets of a subsidiary upon the
liquidation or reorganization of such subsidiary is subordinate to prior claims
of creditors of the subsidiary (including depositors, in the case of banking
subsidiaries) except to the extent that a claim of Fleet as a creditor may be
recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices. Under applicable banking statutes, at June 30,
1994, Fleet's banking subsidiaries could have declared additional dividends of
approximately $528 million, of which $264 million could have been declared by
the Surviving Bank and Fleet-CT. Federal and state regulatory agencies also have
the authority to limit further Fleet's banking subsidiaries' payment of
dividends based on other factors, such as the maintenance of adequate capital
for such subsidiary bank. Further, holders of Fleet's Dual Convertible Preferred
Stock are entitled to dividends equal to one-half of the total dividends
declared (after the first $15 million in dividends) to Fleet, if any, on the
common stock of Fleet Banking Group. As of the date of this Proxy
Statement-Prospectus, Fleet Banking Group has not paid any dividends on its
common stock to Fleet. Federal and state regulatory agencies also have the
authority to limit further Fleet's banking subsidiaries' payment of dividends
based on other factors, such as the maintenance of adequate capital for such
subsidiary bank.
Under the policies of the Federal Reserve Board, Fleet is expected to act
as a source of financial strength to each subsidiary bank and to commit
resources to support such subsidiary bank in circumstances where it might not do
so absent such policy. In addition, any subordinated loans by Fleet to any of
the subsidiary banks would also be subordinate in right of payment to deposits
and obligations to general creditors of such subsidiary bank. Further, the Crime
Control Act of 1990 provides that in the event of the bankruptcy of Fleet, any
commitment by Fleet to its regulators to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
RECENT LEGISLATION AND RELATED MATTERS
In addition to extensive existing government regulation, Federal and state
statutes and regulations are subject to changes that may have significant impact
on the way in which banks may conduct business. The likelihood and potential
effects of any such changes cannot be predicted. Legislation enacted in recent
years has substantially increased the level of competition among commercial
banks, thrift institutions and non-banking institutions, including insurance
companies, brokerage firms, mutual funds, investment banks and major retailers.
In addition, the enactment of recent banking legislation such as the Financial
Institutions Reform, Recovery and Enforcement Act ("FIRREA") and the FDICIA have
affected the banking industry by, among other things, broadening the regulatory
powers of the federal banking agencies in a number of areas. The following
summary is qualified in its entirety by the text of the relevant statutes and
regulations.
51
<PAGE> 59
FIRREA
As a result of the enactment of FIRREA on August 9, 1989, any or all of
Fleet's subsidiary banks can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (a) the default of any other of Fleet's subsidiary banks or (b)
any assistance provided by the FDIC to any other of Fleet's subsidiary banks in
danger of default. "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a "default" is likely to occur
without regulatory assistance.
FDICIA
The FDICIA, which was enacted on December 19, 1991, provides for, among
other things, increased funding for the Bank Insurance Fund (the "BIF") of the
FDIC and expanded regulation of depository institutions and their affiliates,
including parent holding companies. A summary of certain provisions of FDICIA
and its implementing regulations is provided below.
Risk Based Deposit Insurance Assessments. A significant portion of the
additional funding to BIF is in the form of borrowings to be repaid by insurance
premiums assessed on BIF members. In addition, the FDICIA provides for an
increase in the ratio of the reserves to insured deposits of the BIF to 1.25% by
the end of the 15-year period that began with the semi-annual assessment period
ending December 31, 1991, also to be financed by insurance premiums. The FDICIA
also provides authority for special assessments against insured deposits and for
the development of a general risk-based assessment system. The FDIC has set
assessment rates for BIF-insured institutions ranging from 0.23% to 0.31%, based
on a risk assessment of the institution. Each financial institution is assigned
to one of three capital groups -- "well capitalized", "adequately capitalized"
or "undercapitalized" -- and further assigned to one of three subgroups within
each capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and other information
relevant to the institution's financial condition and the risk posed to the
applicable insurance fund. For purposes of the risk-based assessment system, a
well-capitalized institution is one that has a total risk-based capital ratio of
10% or more, a Tier 1 risk-based capital of 6% or more, and a leverage ratio of
5% or more. An adequately capitalized institution has a total risk-based capital
ratio of 8% or more, a Tier 1 risk-based capital ratio of 4% or more, and a
leverage ratio of 4% or more.
An undercapitalized institution is one that does not meet either of the
foregoing definitions. The actual assessment rate applicable to a particular
institution, therefore, depends in part upon the risk assessment classification
so assigned to the institution by the FDIC. As of June 30, 1994, each of Fleet's
banking subsidiaries was classified as "well-capitalized" under these
provisions.
Prompt Corrective Action. The FDICIA also provides the federal banking
agencies with broad powers to take prompt corrective action to resolve problems
of insured depository institutions, depending upon a particular institution's
level of capital. The FDICIA establishes five tiers of capital measurement for
regulatory purposes ranging from "well-capitalized" to "critically
undercapitalized." Under prompt corrective action regulations adopted by the
federal banking agencies in December 1992, a depository institution is (a)
"well-capitalized" if it has a total risk-based capital ratio of 10% or more, a
Tier 1 risk-based ratio of 6% or more, a leverage ratio of 5% or more and is not
subject to any written agreement, order or capital directive or prompt
corrective action directive issued by the primary regulator to meet and maintain
a specific capital measure; (b) "adequately capitalized" if it has a total
risk-based capital ratio of 8% or more, a Tier 1 risk-based capital ratio of 4%
or more and a leverage ratio of 4% or more (3% if the bank is rated composite 1
under the CAMEL rating system in its most recent examination and is not
experiencing or anticipating significant growth) and does not qualify as
"well-capitalized"; (c) "undercapitalized" if it has a total risk-based capital
ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than
4% or a leverage ratio that is less than 4% (3% if the bank is rated composite 1
under the CAMEL rating system in its most recent examination and is not
experiencing or anticipating significant growth); (d) "significantly
undercapitalized" if the bank has a total risk-based capital ratio that is less
than 6%, a Tier 1 risk-based capital ratio that is less than 3% or a leverage
ratio that is less than 3%; and (e) "critically undercapitalized" if the
depository institution has a ratio of tangible equity to total assets that is
equal to or less than 2% of total assets, or otherwise fails to meet certain
established critical capital levels. A depository institution may be deemed to
be
52
<PAGE> 60
in a capitalization category that is lower than is indicated by its actual
capital position under certain circumstances. At March 31, 1994, each of Fleet's
subsidiary depository institutions was classified as "well-capitalized" under
the prompt corrective action regulations described above.
Any depository institution that is undercapitalized and which fails to meet
regulatory capital requirements specified in the FDICIA must submit a capital
restoration plan guaranteed by the bank holding company controlling such
institution, and the regulatory agencies may place limits on the asset growth
and restrict activities of the institution (including transactions with
affiliates), require the institution to raise additional capital, dispose of
subsidiaries or assets or to be acquired and, ultimately, require the
appointment of a receiver. The guarantee of a controlling bank holding company
under the FDICIA of performance of a capital restoration plan is limited to the
lower of 5% of an undercapitalized banking subsidiary's assets or the amount
required for the bank to be classified as adequately capitalized. Federal
banking agencies may not accept a capital restoration plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. If a
depository institution fails to submit an acceptable plan within the time
required (generally 45 days after receiving notice that the institution is
undercapitalized, significantly undercapitalized or critically
undercapitalized), it is treated as if it is significantly undercapitalized. If
the controlling bank holding company fails to fulfill its guaranty obligations
under the FDICIA and files (or has filed against it) a petition under the
federal Bankruptcy Code, the applicable regulatory agency would have a claim as
a general creditor of the bank holding company and, if the capital restoration
plan were deemed to be a commitment to maintain capital under the Federal
Bankruptcy Code, the claim would be entitled to a priority in such bankruptcy
proceeding over unsecured third party creditors of the bank holding company.
In addition to the requirement of mandatory submission of a capital
restoration plan, under the FDICIA, an undercapitalized institution may not pay
management fees to any person having control of the institution nor may an
institution, except under certain circumstances and with prior regulatory
approval, make any capital distribution if, after making such payment or
distribution, the institution would be undercapitalized. Further,
undercapitalized depository institutions are subject to restrictions on
borrowing from the Federal Reserve System.
Undercapitalized and significantly undercapitalized depository institutions
may be subject to a number of requirements and restrictions, including orders to
sell sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cessation of receipt of deposits from correspondent
banks. In addition, significantly undercapitalized depository institutions also
are prohibited from awarding bonuses or increasing compensation of senior
executive officers until approval of a capital restoration plan. Critically
undercapitalized depository institutions are subject to appointment of a
receiver or conservator.
Brokered Deposits and Pass-Through Deposit Insurance Limitation. Under the
FDICIA, a depository institution that is well-capitalized may accept brokered
deposits and offer interest rates on deposits "significantly higher" than the
prevailing rate in its market. A depository institution that is adequately
capitalized may accept brokered deposits if it obtains the prior approval of the
FDIC. An undercapitalized depository institution may not accept brokered
deposits. The definitions of "well-capitalized", "adequately capitalized" and
"undercapitalized" conform to the definitions described above for prompt
corrective action, except that the term "undercapitalized" also includes an
institution that is "significantly undercapitalized" or "critically
undercapitalized" under the prompt corrective action requirements. In addition,
"pass-through" insurance coverage may not be available for certain employee
benefit accounts. In Fleet's opinion, these limitations do not have a material
effect on Fleet.
Safety and Soundness Standards. The FDICIA directs each federal banking
agency to prescribe safety and soundness standards for depository institutions
and depository institution holding companies relating to internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation, a maximum
ratio of classified assets to capital, minimum earnings sufficient to absorb
losses without impairing capital and, to the extent feasible, a minimum ratio of
market value to book value for publicly traded shares. Proposed regulations to
implement the safety and
53
<PAGE> 61
soundness standards were issued in November 1993. The ultimate cumulative effect
of these standards cannot currently be forecast.
The FDICIA also contains a variety of other provisions that may affect
Fleet's and NBB's respective operations, including new reporting requirements,
regulatory standards for real estate lending, "truth in savings" provisions, and
the requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch. Many of the
provisions in the FDICIA have recently been or will be implemented through the
adoption of regulations by the various federal banking agencies and, therefore,
the precise impact on Fleet cannot be assessed at this time.
Capital Guidelines. In January 1989, the Federal Reserve Board issued
final risk-based capital guidelines for bank holding companies such as Fleet and
state-chartered member banks. The new regulatory minimum capital requirements,
which became effective in March 1989, have been phased in over the past four
years. Under the requirements as fully phased in, the minimum ratio of total
capital to risk-adjusted assets (including certain off-balance sheet items, such
as standby letters of credit) is 8%. At least half of the total capital is to be
comprised of common equity, retained earnings, minority interests in the equity
accounts of consolidated subsidiaries and a limited amount of perpetual
preferred stock, less goodwill ("Tier 1 capital"). The remainder may consist of
perpetual debt, mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of loan loss
reserves ("Tier 2 capital"). In addition, on August 2, 1990, the Federal Reserve
Board adopted a leverage ratio (Tier 1 capital to total assets, net of goodwill)
of 3% for bank holding companies that meet certain specified criteria, including
that they have the highest regulatory rating. The rule indicates that the
minimum leverage ratio should be 1% to 2% higher for holding companies
undertaking major expansion programs or that do not have the highest regulatory
rating. Fleet's national banking subsidiaries, including the Surviving Bank, are
subject to similar capital requirements adopted by the OCC.
The federal banking agencies continue to indicate their desire to raise
capital requirements applicable to banking organizations, and recently proposed
amendments to their risk-based capital regulations to provide for the
consideration of interest rate risk in the determination of a bank's minimum
capital requirements. The proposed amendments are intended to require that banks
effectively measure and monitor their interest rate risk and that they maintain
capital adequate for that risk. Under the proposed amendments, banks with
interest rate risk in excess of a defined supervisory threshold would be
required to maintain additional capital beyond that generally required. In
addition, the federal banking agencies recently proposed amendments to their
risk-based capital standards to provide for the concentration of credit risk and
certain risks arising from nontraditional activities, as well as a bank's
ability to manage these risks, as important factors in assessing a bank's
overall capital adequacy.
As of June 30, 1994, Fleet's and NBB's capital ratios on a historical basis
exceeded all minimum regulatory capital requirements.
Under FIRREA and the FDICIA, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including the termination
of deposit insurance by the FDIC and seizure of the institution.
INTERSTATE BANKING LEGISLATION
On August 8, 1994, the U.S. House of Representatives passed the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Act")
as reported by the House and Senate Conferees. The Interstate Act was passed by
the U.S. Senate on September 13, 1994 and is expected to be signed into law. The
Interstate Act generally authorizes bank holding companies to acquire banks
located in any state commencing one year after its enactment. In addition, it
generally authorizes national and state chartered banks to merge across state
lines (and to thereby create interstate branches) commencing June 1, 1997. Under
the provisions of the Interstate Act, states are permitted to opt out of this
latter interstate branching authority by taking action prior to the commencement
date. States may also "opt in" early (i.e., prior to June 1, 1997) to the
interstate merger provisions. Fleet does not currently have any plans generally
to
54
<PAGE> 62
consolidate its banking subsidiaries or to take any other actions that would be
contingent on the enactment of this legislation.
DESCRIPTION OF FLEET CAPITAL STOCK AND WARRANTS
GENERAL
Fleet's Restated Articles of Incorporation (the "Fleet Restated Articles")
currently authorize the issuance of 300,000,000 shares of Fleet Common Stock,
16,000,000 shares of Preferred Stock, $1.00 par value (the "Fleet $1 Par
Preferred Stock"), issuable in one or more series from time to time by action of
the Board of Directors, and 1,500,000 shares of Preferred Stock with Cumulative
and Adjustable Dividends, $20.00 par value (the "Fleet $20 Par Adjustable Rate
Preferred Stock" and, together with any series of issued and outstanding Fleet
$1 Par Preferred Stock, the "Preferred Stock").
At June 30, 1994, 137,757,719 shares of Fleet Common Stock were issued and
outstanding. In addition, as of June 30, 1994, the Board of Directors of Fleet
had established seven series of Fleet $1 Par Preferred Stock, of which, as of
such date, (i) no shares of Preferred Stock with Cumulative and Adjustable
Dividends were issued and outstanding, (ii) no shares of Series I 12% Cumulative
Convertible Preferred Stock were issued and outstanding, (iii) no shares of
Series II 6 1/2% Cumulative Convertible Preferred Stock were issued and
outstanding, (iv) 1,100,000 shares of Series III 10.12% Perpetual Preferred
Stock (the "Series III Preferred"), having a liquidation value of $100 per
share, plus accrued and unpaid dividends, were designated and 519,758 shares
were issued and outstanding, (v) 1,000,000 shares of Series IV 9.375% Perpetual
Preferred Stock (the "Series IV Preferred"), having a liquidation value of $100
per share, plus accrued and unpaid dividends, were designated and 478,838 shares
were issued and outstanding, (vi) 1,415,000 shares of Dual Convertible Preferred
Stock (the "Dual Convertible Preferred Stock"), having a liquidation preference
of $200 per share, plus accrued and unpaid dividends, were designated and
1,415,000 shares were issued and outstanding and (vii) 1,500,000 shares of
Cumulative Participating Junior Preferred Stock, par value $1 per share (the
"Junior Preferred Stock") issuable upon exercise of the Preferred Share Purchase
Rights described below were designated and no shares were issued and
outstanding. As of June 30, 1994, Fleet also had authorized 1,500,000 shares of
a separate class of Preferred Stock with Cumulative and Adjustable Dividends,
$20 par value (the "Fleet $20 Par Adjustable Rate Preferred Stock"), having a
liquidation value of $50 per share, plus accrued and unpaid dividends, none of
which were issued and outstanding as of June 30, 1994. Each such outstanding
series and class is described below under "Description of Existing Preferred
Stock".
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island Business Corporation
Act ("Rhode Island law") and the Fleet Restated Articles and Fleet By-Laws.
FLEET COMMON STOCK
General. Holders of the Fleet Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of any funds
legally available therefor, and are entitled upon liquidation, after claims of
creditors and preferences of the Preferred Stock, and any other series of
preferred stock at the time outstanding, to receive pro rata the net assets of
Fleet. Dividends are paid on the Fleet Common Stock only if all dividends on the
outstanding classes or series of Preferred Stock for the then-current period
and, in the case of cumulative Preferred Stock, all prior periods have been paid
or provided for.
Fleet $1 Par Preferred Stock and any other class of preferred stock
(including Fleet $20 Par Adjustable Rate Preferred Stock) have, or upon issuance
will have, preference over the Fleet Common Stock with respect to the payment of
dividends and the distribution of assets in the event of liquidation or
dissolution of Fleet and such other preferences as may be fixed by the Board of
Directors.
The holders of the Fleet Common Stock are entitled to one vote for each
share held and are vested with all of the voting power except as the Board of
Directors has provided with respect to the Preferred Stock or may provide, in
the future, with respect to any other series of preferred stock which it may
hereafter authorize.
55
<PAGE> 63
See "-- Preferred Stock". Shares of Fleet Common Stock are not redeemable and
have no subscription, conversion or preemptive rights.
The affirmative vote of not less than 80% of Fleet's outstanding voting
stock, voting separately as a class, is required for certain Business
Combinations between Fleet and/or its subsidiaries and persons owning 10% or
more of its voting stock. See "-- Selected Provisions in the Restated Articles
of Fleet; Business Combinations with Related Persons".
The Fleet Common Stock is listed on the Stock Exchange. The outstanding
shares of Fleet Common Stock are, and the shares to be issued to NBB
stockholders upon consummation of the Merger will be, validly issued, fully paid
and non-assessable and the holders thereof are not, and will not be, subject to
any liability as stockholders.
Restrictions on Ownership. The BHCA requires any "bank holding company",
as such term is defined therein, to obtain the approval of the Federal Reserve
Board prior to the acquisition of 5% or more of the Fleet Common Stock. Any
person other than a bank holding company is required to obtain prior approval of
the Federal Reserve Board to acquire 10% or more of the Fleet Common Stock under
the Change in Bank Control Act (the "CBCA"). The partnerships which purchased
the Dual Convertible Preferred Stock (the "Partnerships") made a filing under
the CBCA because of their acquisition of such stock. Any holder of 25% or more
of the Fleet Common Stock (or a holder of 5% or more if such holder otherwise
exercises a "controlling influence" over Fleet) is subject to regulation as a
bank holding company under the BHCA.
Preferred Share Purchase Rights. On November 21, 1990, the Board of
Directors of Fleet declared a dividend of one preferred share purchase right
("Right") for each outstanding share of Fleet Common Stock. The dividend was
paid on December 4, 1990 to the shareholders of record on that date. Each Right,
when exercisable, will entitle the registered holder to purchase from Fleet one
one-hundredth of a share of the Junior Preferred Stock of Fleet, at an exercise
price of $50 per one one-hundredth of a share of Junior Preferred Stock (the
"Purchase Price"), subject to certain adjustments. Until the earlier to occur of
the Distribution Date and the Expiration Date (each as hereinafter defined),
Fleet will issue one Right with each share of Fleet Common Stock; accordingly,
each stockholder of NBB who receives Fleet Common Stock upon consummation of the
Merger shall automatically receive one Right with each such share issued. The
following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the Rights
Agreement dated as of November 21, 1990 between Fleet and Fleet National Bank,
as Rights Agent, a copy of which was filed as an exhibit to the Registration
Statement on Form 8-A dated November 29, 1990, as amended by a First Amendment
to Rights Agreement dated March 28, 1991 and a Second Amendment to Rights
Agreement dated July 12, 1991, copies of which were filed as exhibits to Fleet's
Amendment to Application or Report on Form 8 dated September 6, 1991 (as
amended, the "Rights Agreement").
The Rights are not represented by separate certificates and are not
exercisable or transferable apart from the Fleet Common Stock until the earlier
to occur of (i) the tenth day after a public announcement by Fleet (x) that a
person or group of affiliated or associated persons has, subsequent to November
21, 1990 (the "Declaration Date") acquired, or obtained the right to acquire,
beneficial ownership (as defined in the Rights Agreement) of 10% or more (or, in
the case of a qualifying institutional investor, acting in the ordinary course
of business and not with the purpose of changing or influencing control of Fleet
(a "Qualifying Investor"), 15% or more) of the outstanding shares of Fleet
Common Stock, (y) that any person or group of Affiliated or associated persons,
which beneficially owned 10% or more (or, in the case of a Qualifying Investor,
15% or more) of the outstanding shares on the Declaration Date, or which
acquired beneficial ownership of 10% or more (or, in the case of a Qualifying
Investor, 15% or more) of the outstanding shares as a result of any repurchase
of shares by Fleet, thereafter acquired beneficial ownership of additional
shares constituting 1% or more of the outstanding shares, or (z) that any person
who was a Qualifying Investor owning 10% or more of the outstanding shares of
Fleet Common Stock ceased to qualify as a Qualifying Investor and thereafter
acquired beneficial ownership of additional shares constituting 1% or more of
the outstanding shares (any person described in clause (x), (y) or (z) being an
"Acquiring Person"); and (ii) the tenth day (or such later day as may be
determined by action of the Board of Directors of Fleet prior to such time as
any person
56
<PAGE> 64
becomes an Acquiring Person) after the date of the commencement of a tender or
exchange offer by any person (other than Fleet) to acquire (when added to any
shares as to which such person is the beneficial owner immediately prior to such
commencement) beneficial ownership of 10% or more of the issued and outstanding
shares of Fleet Common Stock (the earlier of such dates being called the
"Distribution Date"). On March 28, 1991 and July 12, 1991 the Rights Agreement
was amended to change the definition of an "Acquiring Person" (i) to permit the
sale of the Dual Convertible Preferred Stock and issuance of rights to purchase
Fleet Common Stock to the Partnerships and (ii) to permit the Board of Directors
of Fleet to determine that a person who would otherwise be an "Acquiring Person"
had become such inadvertently and therefore allow divestiture of a sufficient
number of shares to avoid such designation.
The Rights will first become exercisable on the Distribution Date and could
then begin trading separately from the Fleet Common Stock. The Rights will
expire on the earliest of November 21, 2000 (the "Final Expiration Date"), the
date on which the Rights are earlier redeemed by Fleet or the date on which the
Rights are exchanged (such earliest date being referred to as the "Expiration
Date").
In the event any person becomes an Acquiring Person, the Rights would give
holders (other than such Acquiring Person and its transferees) the right to buy,
for the Purchase Price (and in lieu of Junior Preferred Stock), Fleet Common
Stock (or, under certain circumstances, cash, property or other debt or equity
securities ("Fleet Common Stock equivalents")) with a market value of twice the
Purchase Price. In addition, at any time after any person becomes an Acquiring
Person, the Board may, at its option and in lieu of any transaction described in
the preceding sentence, exchange the outstanding and exercisable Rights (other
than Rights held by any such Acquiring Person and its transferees) for shares of
Fleet Common Stock or Fleet Common Stock equivalents at an exchange ratio of one
share of Fleet Common Stock per Right, subject to certain adjustments.
In any merger or consolidation involving Fleet after the Rights become
exercisable, each Right will be converted into the right to purchase, for the
Purchase Price, common stock of the surviving corporation (which may be Fleet)
with a market value of twice the Purchase Price.
The Board of Directors of Fleet may amend the Rights Agreement or redeem
the Rights for $.01 each at any time until the date of a public announcement by
Fleet that there is an Acquiring Person. Thereafter, the Board of Directors may
amend the Rights Agreement only to eliminate ambiguities or to provide
additional benefits to, and if the amendment would not adversely affect, the
holders of the Rights (other than the Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of Fleet, including, without limitation, the right to
vote or to receive dividends.
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights, and
the number of outstanding Rights, are subject to customary antidilution
adjustments.
The Rights have certain "anti-takeover" effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Fleet on
terms not approved by the Board of Directors of Fleet, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors prior to the time that there is an Acquiring Person (at
which time holders of the Rights become entitled to exercise their Rights for
shares of Fleet Common Stock at one-half the market price), since until such
time the Rights generally may be redeemed by the Board of Directors of Fleet at
$.01 per Right.
Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Fleet Common Stock is Fleet-RI.
WARRANTS
The Warrants are to be issued under a Warrant Agreement, to be dated as of
the Effective Time (the "Warrant Agreement"), between the Company and Fleet-RI,,
as Warrant Agent (the "Warrant Agent"), a
57
<PAGE> 65
copy of which is filed as an exhibit to the Registration Statement of which this
Proxy Statement-Prospectus is a part. The following summaries of certain
provisions of the Warrant Agreement do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Warrants and the Warrant Agreement, including the definitions
therein of certain terms.
Each whole Warrant will entitle the registered holder thereof (the
"holder"), subject to and upon compliance with the provisions thereof and of the
Warrant Agreement, at such holder's option at any time from 9:00 A.M., New York
City time, on the first anniversary of the Effective Time until 5:00 P.M., New
York City time on the day prior to the sixth anniversary of the Effective Time,
to purchase from Fleet one share of Fleet Common Stock at a purchase price of
$43.875 per share (the "Exercise Price"). The Exercise Price is subject to
adjustment as discussed below.
Warrants may be exercised by surrendering the Warrant certificate
evidencing such Warrants with the form of election to purchase shares set forth
on the reverse side thereof duly completed and executed by the holder thereof
and paying in full the Exercise Price for each such Warrant at the office or
agency designated for such purpose, which will initially be the corporate trust
office of the Warrant Agent in New York, New York and Providence, Rhode Island.
Each Warrant may only be exercised in whole. The Exercise Price must be paid in
cash or by certified or official bank check.
The Warrant certificates evidencing the Warrants may be surrendered for
exercise, exchange or registration of transfer at the office or agency of Fleet
maintained for such purpose, which initially will be the corporate trust office
of the Warrant Agent in New York, New York and Providence, Rhode Island. The
Warrant certificates will be issued only in fully registered form in
denominations of whole numbers of Warrants. No service charge will be made for
any exercise, exchange or registration of transfer of Warrant certificates, but
Fleet may require payment of a sum sufficient to cover any stamp or other tax or
other governmental charge payable in connection therewith.
Holders of Warrants will not be entitled, by virtue of being such holders,
to receive dividends, vote, receive notice of any meetings of stockholders or
otherwise have any right of stockholders of Fleet.
The Exercise Price of a Warrant is subject to adjustment from time to time
upon the occurrence of certain events, including (a) dividends or distributions
on Fleet Common Stock payable in Fleet Common Stock or certain other capital
stock; (b) subdivisions, combinations or certain reclassifications of Fleet
Common Stock; (c) distributions to all holders of Fleet Common Stock of certain
rights, warrants or options to purchase Fleet Common Stock expiring within 60
days at a price per share less than the Quoted Price (defined in the Warrant
Agreement as the average of the closing prices of the Fleet Common Stock as
reported by the New York Stock Exchange over a specified period of time at the
time; and (d) distributions to such holders of assets or debt securities of
Fleet or certain rights, warrants or options to purchase securities of Fleet
(excluding cash dividends or other cash distributions from current or retained
earnings other than any Extraordinary Cash Dividend (as defined in the Warrant
Agreement)). In cases where the fair market value of the assets, debt securities
or certain rights, warrants or options to purchase securities of Fleet
distributed to stockholders equals or exceeds the Quoted Price of the Fleet
Common Stock or such Quoted Price exceeds the value of the assets, debt
securities or rights, warrants or options so distributed, by less than $1.00,
rather than being entitled to an adjustment in the Exercise Price, the holder of
a Warrant upon exercise thereof will be entitled to receive, in addition to the
shares of Fleet Common Stock for which the Warrant is exercisable, the kind and
amount of securities, cash or other assets comprising the distribution that such
holder would have received if such holder had exercised such Warrant immediately
prior to the record date for determining the stockholders entitled to receive
the distribution. The Warrant Agreement permits Fleet voluntarily to reduce the
Exercise Price from time to time for a period of time not less than 20 business
days.
If Fleet is a party to a consolidation, merger or binding share exchange,
or certain transfers of all or substantially all of its assets occur, the right
to exercise a Warrant for Fleet Common Stock may be changed into a right to
receive securities, cash or other assets of Fleet or another person.
In the event of a taxable distribution to holders of Fleet Common Stock
which results in an adjustment to the Exercise Price at which a Warrant may be
exercised, the holders of the Warrants may, in certain
58
<PAGE> 66
circumstances, be deemed to have received a distribution subject to United
States Federal income tax as a dividend.
Fractional shares of Fleet Common Stock are not required to be issued upon
exercise of Warrants, but in lieu thereof Fleet will pay a cash adjustment.
The Warrant Agreement permits, with certain exceptions, the amendment
thereof and the modification of the rights and obligations of Fleet and the
rights of the holders of Warrants under the Warrant Agreement at any time by
Fleet and the Warrant Agent with the consent of the holders of Warrants
representing a majority in number of the then outstanding Warrants.
The Warrants will be listed on the Stock Exchange, and will be freely
transferable subject to the restrictions discussed under "THE MERGER -- Resale
of Fleet Common Stock, Warrants and Warrant Shares".
PREFERRED STOCK
Fleet $1 Par Preferred Stock
Fleet $1 Par Preferred Stock is issuable in series, with such relative
rights, preferences and limitations of each series (including dividend rights,
dividend rate, liquidation preference, voting rights, conversion rights and term
of redemption (including sinking fund provisions), redemption price or prices
and the number of shares constituting any series) as may be fixed by the Board
of Directors of Fleet.
As of the date of this Proxy Statement-Prospectus, Fleet has three series
of Fleet $1 Par Preferred Stock outstanding.
Series III Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series III Preferred
are entitled to receive a distribution of $100 per share, plus accrued and
unpaid dividends, if any.
The holders of Series III Preferred are entitled to receive dividends at
the rate of 10.12% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Fleet Common Stock or the Junior Preferred Stock. The dividends on
Series III Preferred are cumulative. The Series III Preferred is redeemable, in
whole or in part, at Fleet's option, on and after June 1, 1996, commencing at
$105.06 per share and declining ratably on June 1 of each year to $100 per share
on or after June 1, 2001, plus, in each case, accrued and unpaid dividends, if
any.
Except as indicated below or except as expressly required by applicable
law, the holders of the Series III Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series III Preferred or any
other class or series of preferred stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) are in default, the number of directors of Fleet will be
increased by two (without duplication of any increase made pursuant to the terms
of any other series of preferred stock of Fleet), and the holders of the Series
III Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series III Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect two directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
III Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series III Preferred is required for any amendment of
the Fleet Restated Articles (or any certificate supplemental thereto) which will
adversely affect the powers, preferences, privileges or rights of the Series III
Preferred.
59
<PAGE> 67
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series III Preferred and any other series of Fleet $1
Par Preferred Stock ranking on a parity with the Series III Preferred either as
to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a
right to purchase, any additional class or series of stock ranking prior to the
Series III Preferred as to dividends or upon liquidation, or to reclassify any
authorized stock of Fleet into such prior shares.
Series IV Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series IV Preferred
are entitled to receive a distribution of $100 per share, plus accrued and
unpaid dividends, if any.
The holders of Series IV Preferred are entitled to receive dividends at the
rate of 9.375% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Fleet Common Stock or the Junior Preferred Stock. The dividends on
Series IV Preferred are cumulative. The Series IV Preferred is redeemable, in
whole or in part, at Fleet's option, on and after December 1, 1996, at $100 per
share, plus accrued and unpaid dividends, if any.
Except as indicated below or except as expressly required by applicable
law, the holders of the Series IV Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series IV Preferred or any
other class or series of preferred stock are in default (other than any other
class of preferred stock expressly entitled to elect additional directors by a
separate and distinct vote), the number of directors of Fleet will be increased
by two (without duplication of any increase made pursuant to the terms of any
other series of preferred stock of Fleet), and the holders of the Series IV
Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series IV Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect such directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
IV Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred is required for any amendment of
the Fleet Restated Articles (or any certificate supplemental thereto) which will
adversely affect the powers, preferences, privileges or rights of the Series IV
Preferred. The affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of the Series IV Preferred and any other series of Fleet
$1 Par Preferred Stock ranking on a parity with the Series IV Preferred either
as to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a
right to purchase, any additional class or series of stock ranking prior to the
Series IV Preferred as to dividends or upon liquidation, or to reclassify any
authorized stock of Fleet into such prior shares.
Dual Convertible Preferred Stock. The Dual Convertible Preferred Stock has
no voting rights except as provided by Rhode Island law or as indicated below.
The Dual Convertible Preferred Stock is not entitled to vote for the election of
directors in any circumstances, including dividend arrearages, and the holders
thereof have agreed to vote the Dual Convertible Preferred Stock as directed by
Fleet's board of directors on any matters upon which the shares are entitled to
vote under Rhode Island law, except on those matters adversely affecting the
rights of holders of Dual Convertible Preferred Stock. The affirmative vote or
consent of the holders of at least 66 2/3% of the outstanding shares of Dual
Convertible Preferred Stock, voting as a class, given in person or by proxy,
either in writing or by resolution adopted at a special meeting called for the
purpose, is
60
<PAGE> 68
required to authorize any new class of equity securities of Fleet to which the
Dual Convertible Preferred Stock ranks junior, whether with respect to dividends
or upon liquidation, dissolution, winding up or otherwise. In addition, the
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of Dual Convertible Preferred Stock, voting as a class, given
in person or by proxy, either in writing or by resolution adopted at a special
meeting called for the purpose, shall be required for any amendment of Fleet's
Restated Articles (or the certificate of designation of the Dual Convertible
Preferred Stock), which would affect materially and adversely the specified
rights, preferences, privileges or voting rights of shares of Dual Convertible
Preferred Stock.
The holders of Dual Convertible Preferred Stock are entitled to dividends
equal to one-half of the total dividends declared (after the first $15 million
in dividends), if any, by Fleet Banking Group on its common stock. Such
dividends, if accrued and unpaid, will be cumulative. In the event of the
liquidation, dissolution or winding up of Fleet, the holders of the outstanding
Dual Convertible Preferred Stock are entitled to receive a distribution of $200
per share, plus accrued and unpaid dividends, if any.
On July 31, 1991, the date of issuance of the Dual Convertible Preferred
Stock, Fleet granted to the Partnerships which purchased the Dual Convertible
Preferred Stock rights (the "DCP Rights") to purchase 6,500,000 shares of Fleet
Common Stock at $17.65 per share.
The Dual Convertible Preferred Stock is convertible into Fleet Common Stock
at a conversion price of $17.65 per share at any time. The total number of
shares issuable upon such conversion is 16,033,994 shares, subject to customary
anti-dilution adjustments. If any of such stock is converted prior to July 12,
2001, all of such stock must be converted. After July 12, 2001, any holder of
Dual Convertible Preferred Stock may convert its stock into Fleet Common Stock
independently of any other holder.
The Dual Convertible Preferred Stock is also convertible into 50% of the
common stock of Fleet Banking Group at any time after the later of (i) July 12,
1995 and (ii) the date on which the Partnerships distribute all the shares of
Dual Convertible Preferred Stock then held by them to the partners therein
(which distribution date will be July 12, 1997 unless the Federal Reserve Board
consents to an alternative distribution date, but in no event earlier than July
12, 1995). The Dual Convertible Preferred Stock is also convertible into Fleet
Banking Group common stock on an earlier date in the event that the quotient of
(i) Fleet's Tier 1 capital as of the date of determination (adjusted to include
goodwill of Fleet as of July 12, 1991) divided by (ii) total assets, falls below
3%. The Dual Convertible Preferred Stock is not convertible into Fleet Banking
Group common stock after July 12, 2001 or at any time while it is held by the
Partnerships. After the Dual Convertible Preferred Stock becomes convertible
into Fleet Banking Group common stock, the holders of the Dual Convertible
Preferred Stock will have the right to obtain an appraisal of the fair value of
the common stock of Fleet Banking Group (the "Appraisal") as if all such shares
were to be sold to a third party in a transaction reflecting a control premium.
If such Appraisal is acceptable to the holders of the Dual Convertible Preferred
Stock, the Dual Convertible Preferred Stock may be converted into 50% of the
common stock of Fleet Banking Group on or after the date that is six months
after such acceptance or, in the case of the earlier date due to the capital
deficiency described above, on or after the date that is 60 days after the
notice of such deficiency. During the period after acceptance but prior to the
date on which such shares become convertible, Fleet will have the option to
redeem the Dual Convertible Preferred Stock at a redemption price equal to 50%
of the Appraisal price less the sum of (i) the market value of the shares of
Fleet Common Stock into which the Dual Convertible Preferred Stock are then
convertible (and such shares of Fleet Common Stock shall be distributed to the
holders of Dual Convertible Preferred Stock) and (ii) the value of the DCP
Rights. Fleet has the option to pay such redemption price in cash or in any
combination of Fleet securities having a realizable market value equal to such
redemption price. If Fleet does not exercise this option, the holders of the
Dual Convertible Preferred Stock may convert their shares into 50% of the common
stock of Fleet Banking Group. Any such conversion must be for all of the Dual
Convertible Preferred Stock.
Junior Preferred Stock. The Junior Preferred Stock will be issued upon the
exercise of a Right issued to holders of the Fleet Common Stock. As of the date
of this Prospectus, there were 1,500,000 shares of Fleet $1 Par Preferred Stock
reserved for issuance upon the exercise of the Rights. See "-- Common Stock --
Preferred Share Purchase Rights". Shares of Junior Preferred Stock purchasable
upon exercise of the Rights
61
<PAGE> 69
will rank junior to the Fleet $1 Par Preferred Stock and the Fleet $20 Par
Adjustable Rate Preferred Stock and will not be redeemable. Each share of Junior
Preferred Stock will, subject to the rights of such senior securities of Fleet,
be entitled to a preferential cumulative quarterly dividend payment equal to the
greater of $1.00 per share or, subject to certain adjustments, 100 times the
dividend declared per share of Fleet Common Stock. Upon the liquidation,
dissolution or winding up of Fleet, the holders of the Junior Preferred Stock
will, subject to the rights of such senior securities, be entitled to a
preferential liquidation payment equal to the greater of $1.00 per share plus
all accrued and unpaid dividends or 100 times the payment made per share of
Fleet Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Fleet Common Stock are exchanged, each share of
Junior Preferred Stock will, subject to the rights of such senior securities, be
entitled to receive 100 times the amount received per share of Fleet Common
Stock. Each share of Junior Preferred Stock will have 100 votes, voting together
with the Fleet Common Stock. The rights of the Junior Preferred Stock are
protected by customary antidilution provisions.
SELECTED PROVISIONS IN THE FLEET RESTATED ARTICLES
Business Combinations with Related Persons. The Fleet Restated Articles
require that neither Fleet nor any of its subsidiaries may engage in a Business
Combination with a Related Person unless such Business Combination (a) was
approved by an 80% vote of the Board of Directors prior to the time the Related
Person became such; (b) is approved by a vote of 80% of the Continuing Directors
and a majority of the entire Board and certain conditions as to price and
procedure are complied with; or (c) is approved by a vote of 80% of Fleet's
outstanding shares of Fleet capital stock entitled to vote generally in the
election of directors, voting as a single class. Under the Fleet Restated
Articles, a "Business Combination" includes any merger or consolidation of Fleet
or any of its subsidiaries into or with a Related Person or any of its
affiliates or associates; any sale, exchange, lease, transfer or other
disposition to or with a Related Person or any of its affiliates or associates
of all, substantially all or any Substantial Part (defined as assets having a
value of more than 5% of the total consolidated assets of Fleet and its
subsidiaries) of the assets of Fleet or any of its subsidiaries; any purchase,
exchange, lease or other acquisition by Fleet or any of its subsidiaries of all
or any Substantial Part of the assets or business of a Related Person or any of
its affiliates or associates; any reclassification of securities,
recapitalization or other transaction which has the effect, directly or
indirectly, of increasing the proportionate amount of voting shares of Fleet or
any subsidiary which are beneficially owned by a Related Person; and the
acquisition by a Related Person of beneficial ownership of voting securities,
securities convertible into voting securities or any rights, warrants or options
to acquire voting securities of a subsidiary of Fleet; a "Related Person"
includes any person who is the beneficial owner of 10% or more of Fleet's voting
shares, as of the date on which a binding agreement providing for a Business
Combination is authorized by the Board of Directors or prior to the consummation
of a Business Combination or any person who is an affiliate of Fleet and was the
beneficial owner of 10% or more of Fleet's then outstanding voting shares at any
time within the five years preceding the date on which a binding agreement
providing for a Business Combination is authorized by the Board of Directors;
and the "Continuing Directors" are those individuals who were members of the
Fleet Board of Directors prior to the time a Related Person became the
beneficial owner of 10% or more of Fleet's voting stock or those individuals
designated as Continuing Directors (prior to their initial election as
directors) by a majority of the then Continuing Directors. To amend these
provisions, a super majority vote (80%) of the Board of Directors, a majority
vote of the Continuing Directors and a super majority vote (80%) of the
stockholders is required unless the amendment is recommended to the stockholders
by a majority of the Board of Directors and not less than 80% of the Continuing
Directors, in which event only the vote provided under Rhode Island law is
required.
Directors. The Fleet Restated Articles contain a number of additional
provisions which are intended to delay an insurgent's ability to take control of
Fleet's Board of Directors, even after an insurgent has obtained majority
ownership of the Fleet Common Stock. The Fleet Restated Articles provide for a
classified Board of Directors, consisting of three classes of directors serving
staggered three-year terms. Directors of Fleet may only be removed for cause and
only (a) by a vote of the holders of 80% of the outstanding shares of Fleet
stock entitled to vote thereon voting separately as a class at a meeting called
for that purpose or (b) by a vote of a majority of the Continuing Directors and
a majority of the Board of Directors as constituted at that time. Vacancies on
the Board of Directors, whether due to resignation, death, incapacity or an
increase in the
62
<PAGE> 70
number of directors, may only be filled by the Board, acting by a vote of 80% of
the directors then in office. The Fleet Restated Articles provide that the
number of directors of Fleet (exclusive of directors to be elected by the
holders of any one or more series of the Preferred Stock voting separately as a
class or classes) that shall constitute the Board of Directors shall be 13,
unless otherwise determined by resolution adopted by a super majority vote (80%)
of the Board of Directors and a majority of the Continuing Directors. Pursuant
to such an adopted resolution, the number of directors that may serve is
currently fixed at twenty-two, except in the event that quarterly dividends are
not paid on non-voting Preferred Stock as described above, and may only be
increased by the affirmative vote of 80% of the Board of Directors and a
majority of the Continuing Directors. A super majority vote (80%) of the Board
of Directors, a majority vote of the Continuing Directors and a super majority
vote (80%) of the outstanding shares of Fleet stock entitled to vote thereon
voting separately as a class are required to amend any of these provisions.
COMPARISON OF STOCKHOLDERS' RIGHTS
UNDER RHODE ISLAND AND DELAWARE LAW
GENERAL
Fleet and NBB are incorporated in Rhode Island and Delaware, respectively.
Stockholders of NBB receiving Per Share Stock Consideration in connection with
the Merger, whose rights as stockholders are currently governed by the Delaware
General Corporation Law ("Delaware Law"), NBB's Certificate of Incorporation
(the "NBB Certificate"), and NBB's by-laws (the "NBB By-laws") will, upon
consummation of the Merger, automatically become stockholders of Fleet, and
their rights will be governed by Rhode Island law, the Fleet Restated Articles
and Fleet's by-laws (the "Fleet By-laws"). Although it is impractical to note
all of the differences, the following is a summary of certain significant
differences between the rights of holders of Fleet Common Stock and those of NBB
Common Stock. The following does not purport to be a complete description of the
differences between the rights of Fleet and NBB stockholders. Such differences
may be determined in full by reference to Rhode Island law, Delaware law, the
Fleet Restated Articles, the NBB Certificate and the respective Fleet By-laws
and NBB By-laws.
VOTING RIGHTS
Required Vote For Certain Business Combinations. Both Rhode Island and
Delaware law generally require approval of a merger, consolidation, dissolution
or sale of all or substantially all of a corporation's assets by the affirmative
vote of the holders of a majority of the outstanding shares of the corporation
entitled to vote thereon, unless otherwise provided in the corporation's
charter. In addition, under Rhode Island law, if any class of stock is entitled
to vote separately, approval of the plan of merger or consolidation, dissolution
or sale of all or substantially all assets also requires the affirmative vote of
the holders of a majority of the shares of each class of stock entitled to vote
as a class thereon. Delaware law, absent a charter provision to the contrary,
does not require such a class vote.
Pursuant to Delaware law, unless the corporate charter provides otherwise,
no vote of the stockholders of a surviving corporation is required to approve a
merger if: (a) the agreement of merger does not amend in any respect, the
corporation's charter; (b) each share of the corporation's stock outstanding
immediately prior to the effective date of the merger is to be an identical
outstanding or treasury share of the surviving corporation after the effective
date of the merger; and (c) either no shares of common stock of the surviving
corporation and no shares, securities or obligations convertible into such stock
are to be issued or delivered under the plan of merger, or the number of
authorized unissued shares or treasury stock of the surviving corporation's
common stock to be issued or delivered under the plan of merger plus the number
of shares of common stock into which any other shares, securities or obligations
to be issued or delivered in the plan of merger are initially convertible does
not exceed 20% of the surviving corporation's common stock outstanding
immediately prior to the effective date of the merger.
Rhode Island law provides that unless the corporate charter provides
otherwise, the vote of the stockholders of a surviving corporation is not
required to approve a merger if: (a) the plan of merger does not
63
<PAGE> 71
amend the corporation's charter and (b) the number of shares of common stock to
be issued or transferred in the merger plus the number of shares of common stock
into which any other securities to be issued in the merger are convertible
within one year does not exceed one-third of the total combined voting power of
all classes of stock then entitled to vote for the election of directors which
would be outstanding immediately after the merger.
No provisions relating to the approval of mergers with unrelated third
parties by holders of the respective corporation's common stock are contained in
the corporate charters of either Fleet or NBB.
The Fleet Restated Articles provide that with regard to: (a) the sale,
exchange, lease, transfer or other disposition by Fleet or any of its
subsidiaries of all or substantially all of its assets or businesses (including,
without limitation any securities issued by a subsidiary) to or with a person
who is the beneficial owner of 10% or more of Fleet's voting stock or any
affiliate of Fleet who within the five years preceding the date on which a
binding agreement is entered into by Fleet as authorized by its Board of
Directors owned 10% or more of Fleet's outstanding voting stock ("Related
Person") or with any affiliate or associate or such Related Person; (b) the
purchase, exchange, lease or other acquisition by Fleet or any of its
subsidiaries (in a single transaction or series of related transactions) of all,
substantially all or a substantial part (as defined in the Fleet Restated
Articles) of the assets or businesses of a Related Person or any affiliate or
associate of such Related Person; (c) any merger or consolidation of Fleet or
any subsidiary thereof into or with a Related Person or any affiliate or
associate of a Related Person irrespective of which person is the surviving
entity in such merger or consolidation; (d) any reclassification of securities,
recapitalization or other transaction (other than redemption in accordance with
the terms of the security redeemed) which has the effect, directly or
indirectly, of increasing the proportionate amount of voting shares of Fleet or
any subsidiary thereof which are beneficially owned by a Related Person, or any
partial or complete liquidation, spin-off, split-off or split up of Fleet or any
of its subsidiaries if such transaction has not been approved by a majority of
the Board of Directors and 80% of the Continuing Directors; or (e) the
acquisition upon issuance thereof of beneficial ownership by a Related Person of
voting shares or securities convertible into voting shares or any voting
securities or securities convertible into voting securities of any subsidiary of
Fleet or the acquisition upon the issuance thereof of beneficial ownership by a
Related Person of any rights, warrants or options to acquire any of the
foregoing or any combination of the foregoing voting shares or voting securities
of a subsidiary of Fleet (the transactions described in clauses (a) through (e)
are each hereinafter referred to as a "Fleet Business Combination"), if the
proposed Fleet Business Combination does not (x) receive the prior approval of
80% of the Board of Directors, (y) receive the approval of 80% of the Continuing
Directors and a majority of the Board of Directors and satisfy certain
enumerated qualification tests regarding adequacy of price and procedure
including solicitation of stockholder approval of the Fleet Business Combination
pursuant to a proxy statement complying with the requirements of the Exchange
Act which are specified in Fleet's Restated Articles, or (z) receive the
affirmative vote of holders of 80% of the outstanding shares entitled to vote
thereon to approve a Fleet Business Combination. See "DESCRIPTION OF FLEET
CAPITAL STOCK AND WARRANTS -- Selected Provisions in the Fleet Restated
Articles".
The NBB Certificate contains comparable provisions. Pursuant to the NBB
Certificate, if a proposed NBB Business Combination (as hereinafter defined)
does not satisfy certain enumerated qualification criteria regarding the
adequacy of price and procedure or the NBB Business Combination is not approved
by the affirmative vote of a majority of NBB's Continuing Directors, then the
affirmative vote of holders of 80% of the voting power of the then outstanding
shares of capital stock entitled, at the time, to vote in the election of any
directors ("NBB Voting Stock") is required to approve a NBB Business Combination
involving any person who: (a) beneficially owns more than 10% of the outstanding
voting power of the NBB Voting Stock; (b) is an affiliate of NBB and who has at
any time within the two year period immediately prior to and including the
transaction date been the beneficial owner of 10% or more of the voting power of
the then outstanding NBB voting stock; or (c) is the assignee of or has
otherwise succeeded to the beneficial ownership of any shares of NBB Voting
Stock which were at any time within the two year period immediately prior to and
including the transaction date beneficially owned by an Interested Stockholder
(as hereinafter defined), if such assignment or succession occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act, and such assignment or
succession was not approved
64
<PAGE> 72
by a majority of the Continuing Directors (the persons referred to in clauses
(a), (b) and (c) are each hereinafter referred to as an "Interested
Stockholder"). A NBB Business Combination means (a) any merger or consolidation
of NBB or any subsidiary with any Interested Stockholder or any other
corporation or entity which is or after the merger or consolidation would be an
affiliate of any Interested Stockholder; (b) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder or an affiliate of any
Interested Stockholder of any assets of NBB or any subsidiary thereof having an
aggregate fair market value of $1,000,000 or more; (c) the issuance or transfer
by NBB or any subsidiary (in one transaction or a series of transactions) of any
securities of NBB or any subsidiary to any Interested Stockholder or any
affiliate of any Interested Stockholder in exchange for cash, securities or
other property having an aggregate fair market value of $1,000,000 or more; (d)
the adoption of any plan or proposal for the liquidation, dissolution or winding
up of NBB proposed by or on behalf of any Interested Stockholder or any
affiliate of any Interested Stockholder; or (e) any reclassification of
securities (including any reverse stock split) or recapitalization of NBB or any
merger or consolidation of NBB with any of its subsidiaries or any other
transaction (whether or not with or into or otherwise involving any interested
stockholder) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of NBB or any subsidiary which is directly or indirectly
owned by any Interested Stockholder or any affiliate of any Interested
Stockholder. See "-- State Anti-Takeover Statutes".
Charter and By-Law Amendments. To authorize an amendment to the corporate
charter, both Delaware and Rhode Island law generally require the affirmative
vote of the holders of a majority of the outstanding shares entitled to vote
thereon. Both Delaware and Rhode Island law also provide for any class of stock
or series to vote as a class on the proposed amendment if the amendment would
change the number or par value of the aggregate authorized shares of a class.
Delaware law also provides for class voting if the amendment would alter or
modify the powers, preferences or special rights of the shares of such class to
affect such class adversely. Rhode Island law also requires separate class
voting if the amendment would, among other things, change the designations,
preferences, limitations or relative rights of the class, effect an exchange or
create a right of exchange of all or any part of the shares of another class
into shares of the class, or create a new class of shares having rights and
preferences prior and superior to the shares of the class.
Rhode Island law generally, and Delaware law, if so provided in the
charter, provide that the by-laws of a corporation may be amended by the vote of
a majority of the board of directors. The board of directors' authority to
adopt, amend or repeal the by-laws of a corporation does not divest nor limit
the power of stockholders to adopt, amend or repeal by-laws. Any amendment by
the Board of Directors to the by-laws may be subsequently changed by the
affirmative vote of holders of a majority of the shares entitled to vote
thereon.
The NBB Certificate provides that any repeal, alteration or amendment to
such charter requires the approval of the stockholders subsequent to approval by
a majority of the Board of Directors, provided that if at any time within the 60
day period immediately preceding the meeting at which the stockholder vote is to
be taken there is an Interested Stockholder, such repeal, alteration or
amendment also requires the affirmative vote of a majority of the Continuing
Directors then in office prior to approval by the stockholders. The NBB
Certificate further provides that any repeal, alteration or amendment to such
charter relating to any provision other than the corporate name, purpose,
registered office or agent and number of authorized shares requires the
affirmative vote of holders of at least two-thirds of the total votes eligible
to be cast therefor by stockholders voting together as a single class at a duly
constituted meeting of stockholders called expressly for such purpose.
The NBB Certificate provides that the NBB By-laws may be adopted, amended,
altered or repealed by the affirmative vote of a majority of the corporation's
directors at a duly constituted meeting of the Board of Directors, provided that
if at the time of such action there is an Interested Stockholder, the
affirmative vote of a majority of the Continuing Directors then in office shall
also be required. Any action by stockholders of NBB to adopt, amend, alter or
repeal the NBB By-laws requires the affirmative vote of holders of at least 80%
of the total votes eligible to vote thereon, voting together as a single class
at a duly constituted meeting of stockholders called expressly for such purpose.
65
<PAGE> 73
The Fleet Restated Articles provides that any amendment, alteration, change
or repeal of the provisions in such charter relating to directors, business
combinations and amendments to the Fleet Restated Articles requires the
affirmative vote of 80% of the Board of Directors and a majority of the
Continuing Directors and by the holders of 80% or more of the outstanding shares
of capital stock entitled to vote generally in the election of directors voting
separately as a class.
The Fleet By-laws provide that such by-laws may be altered, amended,
changed or repealed in whole or in part and new By-laws may be adopted in whole
or in part only by the affirmative vote of 80% of the Board of Directors and a
majority of the Continuing Directors or by an affirmative vote of the
stockholders entitled to vote thereon.
Voting Rights of Preferred Stockholders. The Fleet Restated Articles
provide that the affirmative vote of two-thirds of certain series of the
outstanding Fleet $1 Par Preferred Stock and the Fleet $20 Par Adjustable Rate
Preferred Stock is required to authorize any amendment to the Fleet Restated
Articles which would adversely affect such stockholders or create a class or
series of stock which has preference over the existing series of stock. The
Fleet Restated Articles also provide that, on all matters submitted to a vote of
stockholders (including, without limitation, the election of directors), each
holder of Junior Preferred Stock shall be entitled to 100 votes for each share
of Junior Preferred Stock held. Except as otherwise provided in the Fleet
Restated Articles, Fleet By-laws or a certificate of designation, the holders of
Junior Preferred Stock are entitled to vote together with the Fleet Common Stock
as one class on all matters submitted to a vote of Fleet stockholders.
The NBB Certificate provides that holders of Series A Preferred Stock are
entitled to 100 votes on all matters submitted to a vote of the stockholders of
the corporation for each share of Series A Preferred Stock which they hold,
subject to adjustment in the event of (i) payment of a common stock dividend in
shares of NBB Common Stock or (ii) a decrease in the number of shares of NBB
Common Stock outstanding due to a subdivision or combination of outstanding NBB
Common Stock into a smaller number of shares. Such holders of Series A Preferred
Stock vote together with the holders of shares of Common Stock except as
otherwise provided by law or the NBB Certificate.
SPECIAL MEETINGS; CORPORATE ACTION WITHOUT A MEETING
Special Meetings. Under Delaware law, a special meeting of stockholders
may be called by the board of directors or such other persons as are authorized
by the certificate of incorporation or by-laws. The NBB Certificate provides
that special meetings may be called only by the Chairman of the Board, the
President or by the Board of Directors pursuant to resolutions approved by the
affirmative vote of a majority of directors, provided that if there is an
Interested Stockholder, the affirmative vote of a majority of the Continuing
Directors then in office is also required. Additionally, pursuant to the NBB
Certificate if dividends payable on the Series A Preferred Stock are in default
for six calendar quarters and the holders of the Series A Preferred Stock have
not exercised their right to elect two directors to NBB's Board of Directors,
the Board may order, or any holder owning in the aggregate not less than 10% of
the total number of shares of preferred stock outstanding may request, the
calling of a special meeting of holders of preferred stock. Upon such a request,
such a meeting shall be called by the President, a Vice President or the
Secretary of NBB provided no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next annual
meeting of stockholders. The NBB By-laws do not contain any additional
provisions relating to the calling of special meetings of stockholders.
Rhode Island law permits a special meeting of stockholders to be called by
the president, board of directors or by the holders of 10% or more of the shares
entitled to vote at such meeting, or such other officers or persons specified in
the charter or by-laws. The Fleet By-laws permit special meetings of
stockholders to be called by the Board of Directors pursuant to resolutions
adopted by the majority of the Board, the Chairman of the Board or the
president. In addition, the Fleet By-laws require that the Secretary of Fleet
must call a special meeting of stockholders upon written request of three or
more stockholders holding at least 80% of the outstanding shares of stock of
Fleet entitled to vote at such meeting.
66
<PAGE> 74
Corporate Action Without a Meeting. Delaware law permits corporate action
without a stockholder's meeting, without prior notice and without a vote of
stockholders upon receipt of written consent of that number of shares that would
be necessary to authorize the proposed corporate action at a meeting at which
all shares entitled to vote thereon were present and voting, unless the charter
expressly provides otherwise. Prompt notice of the taking of action without a
meeting by less than unanimous written consent must be given to all stockholders
who have not consented in writing. The NBB Certificate permits corporate action
without a meeting of the stockholders only if the written consent of the holders
of all of the shares entitled to vote thereon is obtained.
Except for corporate action relating to a merger or consolidation,
acquisition or disposition, Rhode Island law permits corporate action without a
meeting if the charter or by-laws of a corporation authorizes such action and
the shareholders consenting to such action would be entitled to cast, at a
meeting at which all stockholders entitled to vote thereon were present, at
least the minimum number of votes which would be required to take such action.
Rhode Island law further provides that corporate action relating to a merger,
consolidation, acquisition or disposition may be taken without a meeting if all
stockholders entitled to vote thereon consent in writing. The Fleet Restated
Articles authorize such action by stockholders if the written consent of
stockholders having not less than the minimum percentage of the total vote
statutorily required for the proposed corporate action is obtained.
DIVIDENDS
Under Rhode Island law, the board of directors has the power to declare and
pay dividends in cash, property or securities of the corporation unless (a) such
corporation is or would be thereby made insolvent or (b) the declaration or
payment of such dividend would be contrary to any restrictions contained in the
charter. Rhode Island law further provides that no distribution may be made (i)
if the corporation would become unable to pay its debts as they become due in
the usual course of business or (ii) the corporation's total assets would be
less than the sum of its liabilities plus, unless the articles of incorporation
permit otherwise, the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
Under Delaware law, the directors of a corporation are generally permitted
to declare and pay dividends out of surplus or out of net profits for the
current and/or preceding fiscal year, provided that such dividends will not
reduce capital below the amount of capital represented by all classes of issued
and outstanding stock having a preference upon the distribution of assets. Also
under Delaware law, a corporation may generally redeem or purchase shares of its
stock if such redemption or purchase will not impair the capital of the
corporation.
LIQUIDATION
Pursuant to both Rhode Island and Delaware law, upon the winding up,
dissolution or liquidation of a corporation, the stockholders of such
corporation are entitled to share in any of the assets distributable to the
holders of the respective corporation's stock upon such liquidation, dissolution
or winding up in accordance with their respective rights and interests. The
Fleet Restated Articles provide that the holders of the Fleet $1 Par Preferred
Stock and the Fleet $20 Par Adjustable Rate Preferred Stock are entitled to a
preference, prior to any payment to the holders of Fleet Common Stock, upon the
liquidation, dissolution or winding up of the corporation.
Similarly, holders of the NBB Series A Preferred Stock, none of which is
issued or outstanding, are entitled to a preference upon liquidation,
dissolution or winding up of NBB. Specifically, upon any voluntary liquidation,
dissolution or winding up and before any payment or distribution of assets to
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock, the
holders of such Series A Preferred Stock are entitled to receive an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, plus an amount equal to the greater of
(a) $6,000 per share or (b) an aggregate amount per share, subject to
67
<PAGE> 75
adjustment, equal to 100 times the aggregate amount to be distributed per share
to holders of NBB Common Stock. Upon any voluntary liquidation, dissolution or
winding up, any payments or distribution of assets to holders of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Stock shall be made ratably on the Series A
Preferred Stock and all such other parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. The Merger Agreement provides that the
NBB Board of Directors has approved and will keep in effect an amendment to the
Rights Agreement which provides, among other things, that no "Distribution
Date", as such term is defined in the Rights Agreement, shall have occurred and,
therefore, the Rights shall not have become nonredeemable and the Rights shall
not have become exercisable for the capital stock of Fleet upon consummation of
the Merger.
APPRAISAL RIGHTS
Under Delaware law, appraisal rights are available in connection with a
statutory merger or consolidation in certain specified situations. Appraisal
rights are not available when a corporation is to be the surviving corporation
and no vote of its stockholders is required to approve the merger. In addition,
unless otherwise provided in the charter, no appraisal rights are available to
holders of shares of any class of stock which is either: (a) listed on a
national securities exchange or designated as a national market system security
on an inter-dealer quotation system by the National Association of Securities
Dealers, Inc. or (b) held of record by more than 2,000 stockholders, unless such
stockholders are required by the terms of the merger to accept anything other
than: (i) shares of stock of the surviving corporation; (ii) shares of stock of
another corporation which are or will be so listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. or held
of record by more that 2,000 stockholders; (iii) cash in lieu of fractional
shares of such stock; or (iv) any combination thereof. The NBB Certificate has
no provisions for appraisal rights. Given that holders of NBB Common Stock will
be receiving Warrants and, in certain cases, cash in the Merger, appraisal
rights are available to NBB stockholders in connection with the Merger. See "THE
MERGER -- Appraisal Rights of Dissenting Stockholders."
Under Rhode Island law, appraisal rights are available only in connection
with (a) a statutory merger or consolidation (unless the corporation is to be
the surviving corporation and no vote of its stockholders is required to approve
the merger); (b) acquisitions which require shareholder approval; and (c) sales
or exchanges of all or substantially all of the property and assets of a
corporation in a transaction requiring stockholder approval. In addition, unless
otherwise provided in the charter, no appraisal rights are available to holders
of shares of any class of stock which, as of the date fixed to determine the
stockholders entitled to receive notice of the proposed transaction, are (i)
registered on a national securities exchange or included as national market
securities in the National Association of Securities Dealer's automated
quotation system or (ii) held of record by not less than 2,000 stockholders.
There are no provisions in the Fleet Restated Articles providing for appraisal
rights.
PROVISIONS RELATING TO DIRECTORS AND OFFICERS
Number of Directors. Under both Rhode Island and Delaware law a
corporation must have a board of directors consisting of at least one director.
The Fleet Restated Articles provide that the Board of Directors shall consist of
13 members (exclusive of directors to be elected by holders of any one or more
series or classes of the Preferred Stock voting separately as a class or
classes) unless otherwise determined from time to time by resolution adopted by
a super majority (80%) vote of the Board of Directors and a majority of the
Continuing Directors. Pursuant to such an adopted resolution, the number of
directors that may serve is currently fixed at twenty-two. The NBB Certificate
provides that the number of directors shall be fixed by the NBB By-laws; the NBB
By-laws provide that the Board of Directors shall fix the number of directors by
resolution duly adopted by the Board, provided that if at the time of such
action there is an Interested Stockholder, such action shall require a majority
vote of the Continuing Directors then in office. Pursuant to a duly adopted
resolution, the number of directors that may serve is currently fixed at six.
68
<PAGE> 76
Classification. Rhode Island and Delaware law both permit classification
of the board of directors if the corporate charter so provides. Delaware law
also permits classification of directors if an initial by-law so provides, or by
by-law adopted by a vote of the stockholders. The charter and by-laws of both
Fleet and NBB provide for classification of the Board into three classes as
nearly equal in number as possible, with one class being elected annually.
Cumulative Voting. Both Delaware and Rhode Island law permit cumulative
voting for the election of directors, if the corporate charter provides for
cumulative voting. The charter of neither Fleet nor NBB provides for cumulative
voting for the election of directors.
Class Voting. Under Delaware and Rhode Island law, a corporation's charter
may confer upon holders of any class or series of stock the right to elect one
or more directors to serve for such term and to have such voting powers as may
be specified therein. The terms of office and voting powers of directors elected
in the manner so provided in the charter may be either greater or less than
those of any other director or class of directors. The Fleet Restated Articles
and the NBB Certificate permit class voting by holders of preferred stock only
in the event of certain dividend arrearages. See "-- Rights of Preferred
Stockholders to Elect Directors".
Stockholder Nominations. The holders of Fleet Common Stock may nominate
individuals for election to the Board of Directors of Fleet. The procedure
pursuant to which such nomination must occur is set forth in the Fleet By-laws.
The Fleet By-laws specify that nominations of persons for election as director
may be made at a meeting of stockholders by or at the direction of the board of
directors, or by any holder of stock entitled to vote thereon who complies with
the requisite notice procedure. The notice procedure requires that a
stockholder's nomination of a person for election as a director must be made in
writing and received by the Secretary of Fleet not less than 30 days prior to
the date of the meeting of stockholders, provided, however, that if fewer than
40 days notice or prior public disclosure of the date of the meeting is given to
stockholders, the stockholder's nomination notice must be received not later
than the close of business on the seventh day following the first to occur of
the publication or mailing of the notice of the meeting date. The Fleet By-laws
set forth specific requirements as to the content of the nomination notice.
Similarly, the NBB By-laws set forth procedures that must be followed for
stockholders to nominate individuals to the Board of Directors. The NBB By-laws
provide that any holder of record (both as of the time notice of such nomination
is given by the stockholder and as of the record date for the annual meeting in
question) of NBB's capital stock entitled to vote for the election of directors
who complies with the notice procedures specified in the NBB By-laws may
nominate candidates for election as directors. The NBB By-laws require that
stockholder nominations of persons for election as director must be made in
writing and received at NBB's principal executive offices not less than 60 nor
more than 150 days prior to the scheduled date of the annual stockholder meeting
regardless of postponements, deferrals or adjournments of that meeting to a
later date; provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the stockholder will be deemed to be timely if received by NBB not later than
the 10th day following the earlier of (a) the day on which notice of the date of
the scheduled annual meeting was mailed; or (b) the day on which public
disclosure was made.
Rights of Preferred Stockholders to Elect Directors. Pursuant to the Fleet
Restated Articles, the number of directors on Fleet's Board of Directors will
increase and holders of certain series of outstanding Fleet $1 Par Preferred
Stock and the Fleet $20 Par Adjustable Rate Preferred Stock will be entitled
(without duplication of any increase made pursuant to the terms of any other
series of outstanding Fleet Preferred Stock) as a single class to elect such
additional directors if, at the time of an annual meeting of Fleet, dividends on
such series of preferred stock are in default as a result of not having been
paid or declared and a sum sufficient for the payment thereof irrevocably set
aside in trust for the holders of such shares for six calendar quarters. The
directors so elected by the holders of the series or class of Preferred Stock
upon which the dividend payment is in default will hold such positions for the
full term for which they shall have been elected, notwithstanding that prior to
the end of such term a default in preference dividends shall cease to exist.
Pursuant to the NBB Certificate, if dividends payable on the Series A
Preferred Stock are in default for six calendar quarters, the holders of Series
A Preferred Stock have the right to call a special meeting (or, if
69
<PAGE> 77
such holders desire, to cause an election at an annual meeting) and elect two
directors to NBB's Board of Directors who shall serve until the dividends in
default are paid or duly provided for.
Removal. Under Delaware law, any director or the entire board of directors
of a corporation may be removed, with or without cause, by the holders of a
majority of the shares then entitled to elect directors. In the case of a
corporation whose board is classified, stockholders may effect such removal only
for cause unless the charter provides otherwise. In the case of a corporation
having cumulative voting, if less than the entire board is to be removed, no
director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire board of directors, or if there are classes of directors, at an
election of the class of directors of which he is a part. Under Rhode Island
law, a director may be removed by the stockholders without cause, if the charter
or by-laws so provide but, in the case of a corporation permitting cumulative
voting for the election of directors, only if the number of shares voted against
removal would not be sufficient to elect the director if voted cumulatively. For
a discussion of provisions regarding the removal of directors in the Fleet
Restated Articles, see "DESCRIPTION OF FLEET CAPITAL STOCK AND
WARRANTS -- Selected Provisions in the Fleet Restated Articles". The NBB
Certificate provides that, subject to the rights of any class or series of
preferred stock to elect directors, any director may be removed from office only
with cause and by the affirmative vote of (a) at least 80% of the total votes
which would be eligible to be cast by stockholders in the election of such
director at a duly constituted meeting of stockholders called expressly for such
purpose (the director whose removal is being considered at such meeting being
entitled to at least 30 days' written notice of such meeting), or (b) a majority
of the directors then in office, unless at the time of such removal there is an
Interested Stockholder, in which case the affirmative vote of a majority of the
Continuing Directors then in office shall also be required.
DERIVATIVE SUITS
Under both Rhode Island and Delaware law, stockholders may bring suits on
behalf of the corporation to enforce the rights of a corporation. Under both
Rhode Island and Delaware law, a person may institute and maintain a suit only
if such person was a stockholder at the time of the transaction which is the
subject of the suit. Under Rhode Island law, upon final judgment and a finding
that the commencement of a derivative action by a stockholder was without
reasonable cause, a court may require the plaintiff(s) to pay to the parties
named as defendant(s) the reasonable expenses including legal fees incurred by
them in defense of such action.
Additionally, under Delaware law, the plaintiff generally must be a
stockholder not only at the time of the transaction which is the subject of the
action but also throughout the duration of the derivative suit. Delaware law
also requires that the derivative plaintiff make demand on the directors of the
corporation to assert the corporate claim unless such demand would be futile
before the suit may be prosecuted by the derivative plaintiff.
CONFLICT OF INTEREST TRANSACTIONS
Both Rhode Island and Delaware law provide that contracts or other
transactions between a corporation and one or more of its directors or officers
or between a corporation and any other corporation or other entity with respect
to which any of the corporation's directors or officers are directors, officers
or financially interested persons, are permitted if: (a) the material facts as
to the contract or transaction and the director's relationship or interest are
disclosed to the board of directors or committee and the board of directors or
committee authorizes the contract in good faith by the affirmative vote of a
majority of disinterested directors (even though less than a quorum); (b) if the
material facts as to the contract or transaction and the director's relationship
or interest are disclosed to the stockholders entitled to vote thereon and it is
approved in good faith by vote of the stockholders, or (c) if the contract or
transaction is fair and reasonable as to the corporation as of the time it is
approved by the board of directors, a committee, or the stockholders. Neither
the Fleet Restated Articles or Fleet By-Laws nor the NBB Certificate or NBB
By-Laws contain additional provisions governing transactions involving
interested directors.
70
<PAGE> 78
STATE ANTI-TAKEOVER STATUTES
Pursuant to Delaware law, a corporation shall not engage in any business
combination with an interested stockholder (generally defined as the holder of
15% or more of the corporation's voting stock) for a period of three years
following the date that such stockholder became an interested stockholder,
unless (a) the board of directors approved either the business combination or
transaction prior to the date that the interested stockholder became an
interested stockholder; (b) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by (i) any
persons who are directors and also officers and (ii) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer; or (c) on or subsequent to the date the stockholder became an interested
stockholder, the board of directors approved the transaction and the
stockholders approved the transaction, not by written consent, but at an annual
or special meeting of shareholders, with an affirmative vote of two-thirds of
the outstanding voting stock, excluding any stock owned by the interested
stockholder. The restrictions prescribed by the statute will not be applicable
if (a) a corporation's charter or by-laws contain a provision expressly
providing that the corporation shall not be subject to such statutory
restrictions; (b) if the corporation does not have a class of voting stock that
is (i) listed on a national securities exchange; (ii) authorized for quotation
on an inter-dealer quotation system of a registered national securities
association; or (iii) held of record by more than 2,000 stockholders, unless any
of the foregoing results from action taken directly or indirectly by an
interested stockholder or from a transaction in which a person becomes an
interested stockholder; or (c) a stockholder becomes an interested stockholder
inadvertently and divests sufficient shares so that the stockholder ceases to be
an interested stockholder and would not at any time during the three year period
immediately prior to a business combination between the corporation and the
interested stockholder have been an interested stockholder but for the
inadvertent acquisition; or (d) the business combination is proposed prior to
the consummation or abandonment of and subsequent to the earlier of the public
announcement or required notice to interested stockholders of a proposed
transaction: (i) involving (A) a merger or consolidation (except a merger in
respect of which no vote of the stockholders of the corporation is required);
(B) a sale, lease, exchange, mortgage, pledge, transfer or other disposition of
assets of the corporation or of any direct or indirect majority-owned subsidiary
of the corporation having an aggregate market value equal to 50% or more of
either the aggregate market value of all the assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of the corporation; or (C) a proposed tender offer or exchange
offer for 50% or more of the outstanding voting stock of the corporation; (ii)
is with or by a person who either was not an interested stockholder during the
previous 3 years or who became an interested stockholder with the approval of
the corporation's board of directors; and (iii) is approved or not opposed by a
majority of the members of the board of directors who were directors prior to
any person becoming an interested stockholder during the previous 3 years or
were recommended for election or elected to succeed such directors by a majority
of directors. Neither the NBB Certificate nor the NBB By-Laws contain any
provision expressly providing that the corporation will not be subject to the
restrictions prescribed by the statute. See "-- Voting Rights -- Required Vote
for Certain Business Combinations".
Pursuant to Rhode Island law, a corporation shall not engage in any
business combination with an interested stockholder (generally defined as the
beneficial owner of 10% or more of the corporation's outstanding voting stock or
an affiliate of the corporation who within five years prior to the date in
question was the beneficial owner of 10% or more of the corporation's
outstanding voting stock) for a period of five years following the date the
stockholder became an interested stockholder unless either (a) the board of
directors of the corporation approved the business combination or transaction
prior to the date the stockholder became an interested stockholder; (b) holders
of two-thirds of the outstanding voting stock, excluding any stock owned by the
interested stockholder or any affiliate or associate of the interested
stockholder, have approved the business combination at a meeting called for such
purpose no earlier than five years after the interested stockholder's stock
acquisition date; or (c) the business combination meets each of the following
conditions: (i) the nature, form and adequacy of the consideration to be
received by the corporation's stockholders in the business combination
transaction satisfies certain specific enumerated criteria; (ii) the holders of
all the outstanding
71
<PAGE> 79
shares of stock of the corporation not beneficially owned by the interested
stockholder are entitled to receive the specified consideration in the business
combination transaction; and (iii) the interested stockholder shall not acquire
additional shares of voting stock of the corporation except in certain
specifically identified transactions.
The restrictions prescribed by the statute will not be applicable to any
business combination (a) involving a corporation that does not have a class of
voting stock registered under the Exchange Act, unless the charter provides
otherwise; (b) involving a corporation which did not have a class of voting
stock registered under the Exchange Act at the time corporation's charter was
amended to provide that the corporation shall be subject to the statutory
restriction provisions and the interested stockholder's stock acquisition date
is prior to the effective date of the charter amendment; (c) involving a
corporation whose original charter contains a provision expressly electing not
to be subject to the statutory restrictions or which adopted an amendment
expressly electing not to be subject to the statutory restrictions either to its
by-laws prior to March 31, 1991 or to its charter if such charter amendment is
approved by the affirmative vote of holders, other than the interested
stockholders, and their affiliates and associates, of two-thirds of the
outstanding voting stock, excluding the voting stock of the interested
stockholders; provided, that the amendment to the charter shall not be effective
until 12 months after the vote of the stockholders and shall not apply to any
business combination of the corporation with an interested stockholder whose
stock acquisition date is on or prior to the effective date of the amendment; or
(d) involving a corporation with an interested stockholder who became an
interested stockholder inadvertently, if the interested stockholder divests
itself of such number of shares so that it is no longer the beneficial owner of
10% of the outstanding voting stock and, but for such inadvertent ownership, was
not an interested stockholder within the five-year period preceding the
announcement of the business combination. Neither the Fleet Restated Articles
nor the original Fleet charter contain any provisions expressly relating to the
non-applicability of the statute.
COMPARATIVE STOCK PRICES AND DIVIDENDS
Fleet. Fleet Common Stock is listed on the Stock Exchange under the symbol
FLT. The following table sets forth the high and low sales prices for Fleet
Common Stock as reported on the New York Stock Exchange Composite Tape, and the
cash dividends declared, for the calendar periods indicated.
<TABLE>
<CAPTION>
PRICE CASH
------------------- DIVIDENDS
YEAR HIGH LOW DECLARED
---------------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
1991
First Quarter..................................... $18.000 $ 9.625 $.200
Second Quarter.................................... 25.875 15.500 .200
Third Quarter..................................... 26.250 21.500 .200
Fourth Quarter.................................... 25.500 20.125 .200
1992
First Quarter..................................... $30.750 $24.250 $.200
Second Quarter.................................... 31.000 26.750 .200
Third Quarter..................................... 30.875 25.750 .200
Fourth Quarter.................................... 33.875 27.500 .225
1993
First Quarter..................................... $37.875 $30.250 $.225
Second Quarter.................................... 37.625 28.250 .250
Third Quarter..................................... 35.500 30.375 .250
Fourth Quarter.................................... 35.625 29.500 .300
</TABLE>
72
<PAGE> 80
<TABLE>
<CAPTION>
PRICE CASH
------------------- DIVIDENDS
YEAR HIGH LOW DECLARED
---------------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
1994
First Quarter..................................... $38.000 $31.750 $.300
Second Quarter.................................... 41.375 34.375 .350
Third Quarter (through September 15, 1994)........ 40.500 34.875 .350
</TABLE>
NBB. NBB Common Stock is listed on the Stock Exchange under the symbol
NBB. The following table sets forth the high and low sales prices for NBB Common
Stock as reported on the New York Stock Exchange Composite Tape, and the cash
dividends declared, for the calendar periods indicated.
<TABLE>
<CAPTION>
PRICE CASH
------------------- DIVIDENDS
YEAR HIGH LOW DECLARED
---------------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
1991
First Quarter..................................... $12.250 $ 7.875 $ .16
Second Quarter.................................... 11.750 10.250 .16
Third Quarter..................................... 13.500 10.250 .16
Fourth Quarter.................................... 15.125 11.625 .16
1992
First Quarter..................................... $19.125 $14.375 $ .18
Second Quarter.................................... 20.375 17.625 .21
Third Quarter..................................... 21.625 18.250 .21
Fourth Quarter.................................... 29.500 19.500 .24
1993
First Quarter..................................... $31.750 $25.250 $ .24
Second Quarter.................................... 31.000 25.750 .26
Third Quarter..................................... 38.625 28.875 .26
Fourth Quarter.................................... 41.250 33.500 .28
1994
First Quarter..................................... $43.875 $35.000 $ .30
Second Quarter.................................... 49.000 38.500 .30
Third Quarter (through September 15, 1994)........ 48.000 46.750 .30
</TABLE>
On September 15, 1994, the closing sales price for Fleet Common Stock as
reported on the New York Stock Exchange Composite Tape was $39.125 per share and
the closing sales price for NBB Common Stock as reported on the New York Stock
Exchange Composite Tape was $48.000 per share. On May 6, 1994, the last full
trading day prior to the announcement of the proposed Merger, the closing sales
price of Fleet Common Stock as so reported was $36.875 per share, and the
closing sales price of NBB Common Stock as so reported was $48.125 per share.
EXPERTS
The consolidated financial statements of Fleet appearing in Fleet's 1993
Annual Report to Stockholders and incorporated by reference in Fleet's 1993
Annual Report on Form 10-K for the year ended December 31, 1993, incorporated by
reference herein (and elsewhere in the Registration Statement) have been
incorporated by reference herein (and elsewhere in the Registration Statement)
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of NBB appearing in NBB's Annual
Report on Form 10-K for the year ended December 31, 1993 incorporated by
reference herein (and elsewhere in the Registration
73
<PAGE> 81
Statement) have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing. The report of KPMG Peat Marwick LLP covering the
December 31, 1993, consolidated financial statements refers to a change in NBB's
method of accounting for securities and income taxes.
LEGAL OPINIONS
The legality of the shares of Fleet Common Stock to be issued to the NBB
stockholders pursuant to the Merger, the Warrants and Warrant Shares and certain
other legal matters in connection with the Merger, will be passed upon by
Edwards & Angell, 2700 Hospital Trust Tower, Providence, Rhode Island 02903. V.
Duncan Johnson, a partner of Edwards & Angell, is a director of Fleet National
Bank and beneficially owns 4,052 shares of Fleet Common Stock. Edwards & Angell
has from time to time acted as counsel in advising NBB and its affiliates with
respect to certain regulatory and labor matters and in connection with various
transactions. Edwards & Angell did not act as counsel to NBB or its affiliates
with respect to the Merger or any transaction in connection therewith.
The Merger Agreement provides as a condition to NBB's obligation to
consummate the Merger, except if the Alternative Merger is to be consummated,
that it receive the opinion of Goodwin, Procter & Hoar, Boston, Massachusetts,
substantially to the effect that the Merger will constitute a "reorganization"
under Section 368(a) of the Code and Fleet and NBB will be a party to the
reorganization within Section 368(b) of the Code. Goodwin, Procter & Hoar,
counsel to NBB, has from time to time acted as counsel in advising Fleet and its
affiliates with respect to certain regulatory matters and in connection with
various transactions. Goodwin, Procter & Hoar did not act as counsel to Fleet or
its affiliates in regard to the Merger or any transaction in connection
therewith.
SOLICITATION OF PROXIES
The cost of solicitation of proxies from NBB stockholders, including the
cost of reimbursing brokerage houses and other custodians, nominees or
fiduciaries for forwarding proxies and proxy statements to their principals,
will be borne by Fleet. Fleet will not seek reimbursement from NBB of such
costs. Morrow & Co. has been retained by NBB to assist in the solicitation of
proxies and will be compensated in the estimated amount of $ plus reasonable
out-of-pocket expenses. In addition to such solicitation and solicitation by use
of the mails, solicitation may be made in person or by telephone or telegraph by
certain directors, officers and regular employees of NBB who will not receive
additional compensation therefor. Fleet and NBB estimate the total cost to
solicit proxies to be $ . No amounts have been incurred through September
15, 1994.
STOCKHOLDER PROPOSALS
NBB intends to hold an annual meeting of stockholders in 1995 only if the
Merger is not consummated on or before May 31, 1995. To the extent that an
annual meeting of stockholders in 1995 is scheduled, NBB will inform its
stockholders of the date by which proposals of stockholders intended to be
presented at such an annual meeting must be received in writing by NBB in order
to be included in the proxy statement and form of proxy relating to such
meeting. The NBB By-laws provide that notice of any director nominations or new
business submitted by stockholders (which notice must satisfy the informational
requirements set forth in the NBB By-laws) must be filed with the Secretary of
NBB at least 60 days, but not more than 150 days, prior to the scheduled annual
meetings of stockholders, regardless of any postponements, deferrals or
adjournments to a later date (except that if less than 70 days' notice or prior
public disclosure of the date of the scheduled annual meeting is given or made,
notice by the stockholder to be timely must be so delivered or received not
later than the close of business on the 10th day following the earlier of (a)
the day on which such notice of the date of the scheduled annual meeting was
mailed or (b) the day on which public disclosure was made), in order to be acted
upon at an annual meeting, and that no other nominations or proposals by
stockholders shall be acted upon at an annual meeting. Any such proposal or
nomination should be mailed to NBB Bancorp, Inc., 174 Union Street, New Bedford,
Massachusetts 02740, Attention: Secretary.
74
<PAGE> 82
EXHIBIT A
AMENDED AND RESTATED
AS OF AUGUST 26, 1994
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FLEET FINANCIAL GROUP, INC.
AND
NBB BANCORP, INC.
DATED AS OF MAY 9, 1994
<PAGE> 83
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ARTICLE I............................................................................ A-5
THE MERGER........................................................................... A-5
1.01 .......................................................................... A-5
(a) The Merger............................................................ A-5
(b) Alternative Merger.................................................... A-5
(c) Terminology........................................................... A-5
1.02 Effective Time............................................................ A-6
1.03 Effects of the Merger..................................................... A-6
1.04 Conversion of Company Common Stock........................................ A-6
1.05 Dissenters' Rights........................................................ A-8
1.06 Options................................................................... A-8
1.07 Rights.................................................................... A-9
1.08 ESOP...................................................................... A-9
1.09 Articles of Incorporation................................................. A-9
1.10 By-Laws................................................................... A-9
1.11 Directors and Officers.................................................... A-9
1.12 Tax Consequences.......................................................... A-10
1.13 Conversion of Merger Subsidiary Common Stock.............................. A-10
ARTICLE II........................................................................... A-10
EXCHANGE OF SHARES................................................................... A-10
2.01 Parent to Make Shares and Cash Available.................................. A-10
2.02 Election and Exchange Procedures.......................................... A-10
ARTICLE III.......................................................................... A-12
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................ A-12
3.01 Corporate Organization.................................................... A-12
3.02 Capitalization............................................................ A-13
3.03 Authority; No Violation................................................... A-14
3.04 Consents and Approvals.................................................... A-15
3.05 Loan Portfolio............................................................ A-15
3.06 Financial Statements...................................................... A-15
3.07 Broker's Fees............................................................. A-16
3.08 Absence of Certain Changes or Events...................................... A-16
3.09 Legal Proceedings......................................................... A-16
3.10 Taxes and Tax Returns..................................................... A-16
3.11 Employees................................................................. A-17
3.12 SEC Reports............................................................... A-17
3.13 Company Information....................................................... A-18
3.14 Compliance with Applicable Law............................................ A-18
3.15 Certain Contracts......................................................... A-18
3.16 Agreements with Regulatory Agencies....................................... A-18
3.17 Investment Securities..................................................... A-18
3.18 Environmental Matters..................................................... A-18
3.19 Assistance Agreements..................................................... A-19
3.20 Properties................................................................ A-19
3.21 Insurance................................................................. A-19
3.22 Material Interests of Certain Persons..................................... A-19
</TABLE>
A-2
<PAGE> 84
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
3.23 Regulatory Approvals...................................................... A-19
ARTICLE IV........................................................................... A-20
REPRESENTATIONS AND WARRANTIES OF PARENT............................................. A-20
4.01 Corporate Organization.................................................... A-20
4.02 Capitalization............................................................ A-20
4.03 Authority; No Violation................................................... A-21
4.04 Consents and Approvals.................................................... A-22
4.05 Financial Statements...................................................... A-22
4.06 Broker's Fees............................................................. A-22
4.07 Absence of Certain Changes or Events...................................... A-23
4.08 Legal Proceedings......................................................... A-23
4.09 SEC Reports............................................................... A-23
4.10 Parent and Merger Subsidiary Information.................................. A-23
4.11 Compliance with Applicable Law............................................ A-23
4.12 Ownership of Company Common Stock; Affiliates and Associates.............. A-23
4.13 Agreements with Regulatory Agencies....................................... A-23
4.14 Regulatory Approvals...................................................... A-24
ARTICLE V............................................................................ A-24
COVENANTS RELATING TO CONDUCT OF BUSINESS............................................ A-24
5.01 Covenants of the Company.................................................. A-24
5.02 No Solicitation........................................................... A-26
5.03 Covenants of Parent....................................................... A-26
ARTICLE VI........................................................................... A-26
ADDITIONAL AGREEMENTS................................................................ A-26
6.01 Regulatory Matters........................................................ A-26
6.02 Access to Information..................................................... A-27
6.03 Shareholder Meeting....................................................... A-28
6.04 Legal Conditions to Merger................................................ A-28
6.05 Restrictions on Resale.................................................... A-29
6.06 Stock Exchange Listing.................................................... A-29
6.07 Employee Benefit Plans.................................................... A-29
6.08 Employee Termination And Other Benefits................................... A-29
6.09 Indemnification; Directors' and Officers' Insurance....................... A-29
6.10 Subsequent Interim and Annual Financial Statements........................ A-31
6.11 Additional Agreements..................................................... A-31
6.12 Disclosure Supplements.................................................... A-31
6.13 Current Information....................................................... A-31
6.14 ALCO Management........................................................... A-32
6.15 Execution and Authorization of Bank Merger Agreement...................... A-32
ARTICLE VII.......................................................................... A-32
CONDITIONS PRECEDENT................................................................. A-32
7.01 Conditions to Each Party's Obligation to Effect the Merger................ A-33
(a) Shareholder Approval.................................................. A-33
(b) Stock Exchange Listing................................................ A-33
(c) Other Approvals....................................................... A-33
(d) S-4................................................................... A-33
(e) No Injunctions or Restraints; Illegality.............................. A-33
7.02 Conditions to Obligations of Parent and Merger Subsidiary................. A-33
</TABLE>
A-3
<PAGE> 85
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
(a) Representations and Warranties........................................ A-33
(b) Performance of Obligations of the Company............................. A-33
(c) Consents Under Agreements............................................. A-33
(d) Legal Opinion......................................................... A-34
(e) Accountant's Letter................................................... A-34
7.03 Conditions to Obligations of the Company.................................. A-34
(a) Representations and Warranties........................................ A-34
(b) Performance of Obligations of Parent.................................. A-34
(c) Consents Under Agreements............................................. A-34
(d) Federal Tax Opinion................................................... A-34
(e) Legal Opinion......................................................... A-35
(f) Opinion of Financial Advisor.......................................... A-35
ARTICLE VIII......................................................................... A-35
TERMINATION AND AMENDMENT............................................................ A-35
8.01 Termination............................................................... A-35
8.02 Effect of Termination; Expenses........................................... A-36
8.03 Amendment................................................................. A-37
8.04 Extension; Waiver......................................................... A-37
ARTICLE IX........................................................................... A-37
GENERAL PROVISIONS................................................................... A-37
9.01 Closing................................................................... A-37
9.02 Non-Survival of Representations, Warranties and Agreements................ A-37
9.03 Expenses.................................................................. A-38
9.04 Notices................................................................... A-38
9.05 Interpretation............................................................ A-38
9.06 Counterparts.............................................................. A-38
9.07 Entire Agreement.......................................................... A-38
9.08 Governing Law............................................................. A-39
9.09 Jurisdiction and Venue.................................................... A-39
9.10 Enforcement of Agreement.................................................. A-39
9.11 Severability.............................................................. A-39
9.12 Publicity................................................................. A-39
9.13 Assignment................................................................ A-39
</TABLE>
A-4
<PAGE> 86
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 9, 1994, as amended and
restated as of August 26, 1994 by and between NBB BANCORP, INC., a Delaware
corporation (the "Company") and FLEET FINANCIAL GROUP, INC., a Rhode Island
corporation ("Parent").
WHEREAS, the Board of Directors of Parent and the Company have determined
that it is in the best interests of their respective companies and their
stockholders to consummate a business combination transaction provided for
herein in which (i) except under the circumstances set forth in Section 1.04(a)
of this Agreement, the Company will, subject to the terms and conditions set
forth herein, merge with and into Parent, with Parent as the surviving
corporation or (ii) under the circumstances set forth in Section 1.04(a) of this
Agreement, Parent will organize a wholly-owned subsidiary of Parent as a
Delaware corporation ("Merger Subsidiary") which, subject to the terms and
conditions set forth herein, will merge with and into the Company (the
"Alternative Merger") (the term "Merger" referring to the transaction described
in (i) or (ii) above, whichever is to be consummated); and
WHEREAS, Parent will cause Merger Subsidiary to become a party to this
Agreement prior to the mailing of the Proxy Statement (as hereinafter defined)
to be sent to stockholders of the Company to seek their approval of this
Agreement; and
WHEREAS, as soon as practicable after the execution and delivery of this
Agreement, Fleet Bank of Massachusetts, N.A., a national banking association and
an indirect wholly-owned subsidiary of Parent ("Massachusetts Bank," and
sometimes referred to herein as the "Surviving Bank"), and New Bedford
Institution for Savings, a Massachusetts savings bank and a wholly-owned
subsidiary of the Company (the "Bank"), will enter into a Bank Agreement and
Plan of Merger (the "Bank Merger Agreement"), providing for the merger (the
"Bank Merger") of the Bank with and into Massachusetts Bank; and
WHEREAS, Parent, promptly following the consummation of the Merger, intends
to cause (i) if the Alternative Merger is consummated, the merger of the Company
with and into Parent, (ii) the sale of certain assets and liabilities of the
Bank in exchange for cash and (iii) the Bank Merger to be consummated.
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:
ARTICLE I
THE MERGER
1.01 (a) THE MERGER. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the "DGCL")
and the Rhode Island Business Corporation Law (the "RIBCL"), at the Effective
Time (as defined in Section 1.02 hereof), unless the Alternative Merger is
consummated pursuant to Sections 1.01(b) and 1.04(a)), the Company shall merge
with and into Parent. Except in the event that the Alternative Merger is
consummated, Parent shall be the surviving corporation in the Merger, shall
continue its corporate existence under the laws of the State of Rhode Island
under the name of Fleet Financial Group, Inc. and upon consummation of the
Merger, the separate corporate existence of the Company shall terminate.
(b) ALTERNATIVE MERGER. If the Alternative Merger is consummated pursuant
to Section 1.04(a), then, subject to the terms and conditions of this Agreement,
in accordance with the DGCL, at the Effective Time (as defined in Section 1.02
hereof), Merger Subsidiary shall merge with and into the Company. The Company
shall be the surviving corporation in the Alternative Merger and shall continue
its corporate existence under the laws of the State of Delaware under the name
NBB Bancorp, Inc. Upon consummation of the Alternative Merger, the separate
corporate existence of Merger Subsidiary shall terminate.
(c) TERMINOLOGY. As used in this Agreement, the term "Merger" means the
Merger or the Alternative Merger, whichever is to be consummated. As used in
this Agreement, the term "Surviving Corporation"
A-5
<PAGE> 87
means Parent, if the Merger is to be consummated, and the Company, if the
Alternative Merger is to be consummated.
1.02 EFFECTIVE TIME. Except in the event that the Alternative Merger is
consummated, the Merger shall become effective as set forth in the certificate
of merger (the "Certificate of Merger") which shall be filed with the Secretary
of State of the State of Delaware (the "Delaware Secretary") and the 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"), in each case
on the Closing Date (as defined in Section 9.01 hereof). If the Alternative
Merger is consummated, the Merger shall become effective as set forth in the
Certificate of Merger which shall be filed with the Delaware 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 Certificate of Merger and, except
in the event that the Alternative Merger is consummated, the Articles of Merger.
1.03 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL and, except
in the event that the Alternative Merger is consummated, Section 7-1.1-69 of the
RIBCL.
1.04 CONVERSION OF COMPANY COMMON STOCK.
(a) At the Effective Time, subject to Sections 2.02(b) and (d) hereof, each
share of the common stock, par value $0.10 per share, of the Company (the
"Company Common Stock") issued and outstanding immediately prior to the
Effective Time and all rights attached thereto (other than shares of Company
Common Stock (x) held in the Company's treasury, (y) held directly or indirectly
by Parent or the Company or any of their respective Subsidiaries (as defined
below) (except for Trust Account Shares and DPC Shares (as such terms are
defined in Section 1.04(c) hereof)) or (z) which are Dissenting Shares (as such
term is defined in Section 1.05 hereof) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into and
exchangeable for the right to receive (i) the number of Warrants (as defined in
Section 1.04(d)) determined in accordance with Section 1.04(d) and (ii) at the
election of the holder thereof as provided in Section 2.02, either:
(x) a number of shares of the common stock of Parent, par value $1.00
per share (the "Parent Common Stock") (together with the number of Parent
Rights (as defined in Section 4.02(a) hereof) associated therewith),
rounded to the nearest thousandth of a share, determined by dividing the
Merger Consideration, as defined below, by the Average Closing Price, as
defined below (the "Per Share Stock Consideration"), or
(y) cash in the amount of the Merger Consideration, as defined below
(the "Per Share Cash Consideration"),
provided, that, the aggregate number of shares of Parent Common Stock that shall
be issued in the Merger pursuant to Section 1.04(a)(ii)(x) shall be equal to the
"Aggregate Parent Stock Amount" as defined below. Accordingly, consideration
pursuant to Section 1.04(a)(ii)(y) shall be available to holders of Company
Common Stock only to the extent the consideration pursuant to Section
1.04(a)(ii)(x) is not sufficient to pay the entire consideration due under
Section 1.04(a)(ii).
The "Merger Consideration" shall be equal to $48.50, provided, however,
that in the event that the Effective Time has not occurred on or prior to March
31, 1995, this amount shall be increased at the rate of $0.25 per share per
month for each full month (prorated on a daily basis for each partial month)
thereafter until the Effective Time. The "Average Closing Price" shall mean the
average closing sale price per share of Parent Common Stock on the New York
Stock Exchange (the "Stock Exchange") (as reported by the Wall Street Journal
or, if not reported thereby, another authoritative source), for the 10
consecutive Stock Exchange trading days ending on and including the fifth
trading day immediately preceding (but not including) the Effective Time.
Notwithstanding the foregoing, if the Average Closing Price is equal to or
less than $29.50, then the consideration payable pursuant to Section 1.04(a)(ii)
shall consist solely of cash in the amount of the Per Share Cash Consideration,
provided that Parent may, at its option, pay part of such consideration in the
form
A-6
<PAGE> 88
of Parent Common Stock valued at the Average Closing Price up to the number of
shares which Parent previously repurchased to be used in payment of the Merger
Consideration under Section 1.04(a)(ii)(x). If the Average Closing Price is
equal to or less than $29.50, Parent shall provide a written notice (the "Parent
Notice") to the Company no later than 5:00 p.m. on the first business day
following the last Stock Exchange trading day of the period during which the
Average Closing Price is calculated, indicating its calculation of the Average
Closing Price and specifying the number of shares of Parent Common Stock, if
any, which Parent has elected to use to pay part of the consideration pursuant
to Section 1.04(a)(ii). The Company in turn shall notify Parent no later than
5:00 p.m. on the first business day following receipt of the Parent Notice as to
whether the Company has been advised by its counsel that such counsel would be
able, under the applicable law, to deliver to the Company an opinion, in form
and substance reasonably satisfactory to Parent and its counsel (the "Tax
Opinion") that, if the Merger were to be consummated using the number of shares
of Parent Common Stock specified in the Parent Notice (and assuming no decline
in the fair market value of Parent Common Stock between the date of the Parent
Notice and the Effective Time), for federal income tax purposes the Merger would
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). If counsel has advised the
Company that it is unable to deliver the Tax Opinion, then Parent, the Company
and Merger Subsidiary agree to consummate the Alternative Merger and Parent
shall (x) pay the consideration payable pursuant to Section 1.04(a)(i) and (y)
pay the consideration payable pursuant to Section 1.04(a)(ii) in cash plus the
number of shares of Parent Common Stock specified in the Parent Notice. If
counsel has advised the Company that it would be able, under then applicable
law, to deliver to the Company the Tax Opinion of the Merger were to be so
consummated, then the Merger shall be consummated pursuant to Section 1.01(a)
and Parent shall (x) pay the consideration payable pursuant to Section
1.04(a)(i) and (y) pay the consideration payable pursuant to Section 1.04(a)(ii)
in cash and the number of shares of Parent Common Stock specified in the Parent
Notice.
The "Aggregate Parent Stock Amount" shall equal (i) if the Average Closing
Price is greater than $29.50, such number of shares of Parent Common Stock not
less than 5,700,000 (or such lesser number of shares that would enable Parent to
pay the total consideration for the Merger pursuant to Section 1.04(a)(ii)) and
not more than 6,300,000 as shall be determined by Parent prior to the Effective
Time (Parent to notify the Company no later than 5:00 p.m. on the first business
day following the last Stock Exchange trading day of the period during which the
Average Closing Price is calculated indicating its calculation of the Average
Closing Price and specifying the exact number of shares), plus such additional
number of shares of Parent Common Stock as may be required so that the aggregate
portion of the consideration for the Merger attributable to Parent Common Stock
is equal to at least 45% of the total consideration for the Merger, it being
understood that for purposes of calculating the total consideration for the
Merger, Dissenting Shares, cash received in lieu of fractional shares and the
Warrants shall each be deemed the receipt of cash and the value of the Parent
Common Stock shall be calculated using the closing sales price of Parent Common
Stock on the Stock Exchange on the date of the Effective Time; or (ii) if the
Average Closing Price is equal to or less than $29.50, the number of shares of
Parent Common Stock specified in the Parent Notice.
(b) The Per Share Stock Consideration, the Per Share Cash Consideration,
the Aggregate Parent Stock Amount and the number of Warrants to be issued
pursuant to Section 1.04(d) shall be subject to appropriate adjustments in the
event that, subsequent to the date of this Agreement but prior to the Effective
Time, the outstanding Parent Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
through reorganization, recapitalization, reclassification, stock dividend,
stock split, or other like changes in Parent's capitalization.
(c) At the Effective Time, all shares of Company Common Stock that are
owned by the Company as treasury stock and all shares of Company Common Stock
that are owned directly or indirectly by Parent or the Company or any of their
respective Subsidiaries (other than shares of Company 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, and shares of Parent Common Stock which are similarly held, whether held
directly or indirectly by Parent or the Company, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of
Company Common Stock held by Parent or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such
A-7
<PAGE> 89
shares of Company Common Stock, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or the Company,
being referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no Parent Common Stock, cash, Warrants or other consideration shall be
delivered in exchange therefor. All shares of Parent Common Stock and Parent
Preferred Stock that are owned by the Company or any of its Subsidiaries (other
than Trust Account Shares and DPC Shares) shall become treasury stock of Parent.
(d) At the Effective Time, Parent shall issue and deliver in accordance
with the provisions of Article II a total of 2,500,000 warrants (the "Warrants")
as follows:
(i) Each holder of a share of Company Common Stock which is being
converted in accordance with Section 1.04(a) shall have the right to
receive a number of Warrants equal to the Warrant Amount, and
(ii) Each holder of a stock option issued under the Company Stock Plan
(as defined in Section 1.06) (a "Company Stock Option") which is converted
into a stock option under the Parent Stock Plan pursuant to Section 1.06
shall have the right to receive a number of Warrants equal to the Warrant
Amount multiplied by the number of shares of Company Common Stock
underlying such Company Stock Option.
Each Warrant shall entitle the holder thereof to purchase one share of
Parent Common Stock at a price of $43.875 per share at any time during the
period beginning on the first anniversary of the Effective Time and ending on
the sixth anniversary of the Effective Time. The Warrant Amount means a
fraction, the numerator of which is 2,500,000, and the denominator of which is
the sum of the number of shares of Company Common Stock which are being
converted in accordance with Section 1.04(a) plus the number of shares of
Company Common Stock underlying the Company Stock Options. For purposes of this
Agreement, the "Warrant Shares" shall mean the shares of Parent Common Stock
issuable upon exercise of the Warrants.
1.05 DISSENTERS' RIGHTS. Notwithstanding anything in this Agreement to the
contrary and unless otherwise provided by applicable law, shares of Company
Common Stock which are issued and outstanding immediately prior to the Effective
Time and which are owned by shareholders who, pursuant to applicable law, (a)
deliver to the Company, before the taking of the vote of the Company's
shareholders on the Merger, written demand for the appraisal of their shares,
and (b) whose shares are not voted in favor of the Merger, nor consented thereto
in writing (the "Dissenting Shares"), shall not be converted into Parent Common
Stock and/or cash and Warrants, unless and until such holders shall have failed
to perfect or shall have effectively withdrawn or lost their right of appraisal
and payment under applicable law. If any such holder shall have failed to
perfect or shall have effectively withdrawn or lost such right of appraisal, the
Company Common Stock of such holder shall thereupon be deemed to have been
converted into the right to receive and become exchangeable for, at the
Effective Time, that number of whole shares of Parent Common Stock and/or cash
and Warrants determined pursuant to Section 1.04 and Section 2.02(c) hereof.
Holders of Company Common Stock who become entitled pursuant to the provisions
of Section 262 of the DGCL to payment for their shares of Company Common Stock
under the provisions thereof shall receive payment therefor from the Surviving
Corporation and such shares of Company Common Stock shall be cancelled.
1.06 OPTIONS. Commencing at least 15 days prior to the Effective Time,
each holder of a then outstanding stock option to purchase shares of Company
Common Stock pursuant to the NBB Bancorp, Inc. Stock Option Plan (the "Company
Stock Plan") shall be entitled to exercise such option (whether or not such
option would otherwise have been exercisable) at the exercise price therefor,
and if such options are not so exercised prior to the Effective Time, at or
immediately prior to the Effective Time each such holder shall be entitled, upon
election, to receive from the Company in cancellation of such option a cash
payment from the Company in an amount equal to the excess of the Per Share Cash
Consideration over the per share exercise price of such option, multiplied by
the number of shares covered by such option, subject to any required withholding
of taxes. At the Effective Time, any option which has not been so exercised or
cancelled shall be converted automatically into (a) the number of Warrants
determined in accordance with Section 1.04(d) and (b) an option under the Fleet
Financial Group, Inc. 1992 Employee Stock Option and Restricted Stock Plan (the
"Parent Stock Plan") to purchase shares of Parent Common Stock in an amount
A-8
<PAGE> 90
and at an exercise price determined as provided below and otherwise subject to
the terms of the Parent Stock Plan and the provisions of the Company Stock Plan
providing for immediate vesting as a result of the Merger:
(a) The number of shares of Parent Common Stock to be subject to the
new option shall be equal to the product of the number of shares of Company
Common Stock subject to the original option and the Per Share Stock
Consideration, provided, that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded to the nearest share;
and
(b) The exercise price per share of Parent Common Stock under the new
option shall be equal to the exercise price per share of Company Common
Stock under the original option divided by the Per Share Stock
Consideration, provided, that such exercise price shall be rounded up to
the nearest cent.
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 the Company shall be deemed
to be references to Parent.
1.07 RIGHTS. The Board of Directors of the Company has approved, and shall
enter into and keep in effect, an amendment to the Shareholder Rights Agreement
dated as of November 14, 1989, between the Company and The First National Bank
of Boston, as Rights Agent (the "Company Rights Agreement"), which, among other
things, shall provide that a Distribution Date, as such term is defined in the
Company Rights Agreement, shall not have occurred, and, as a consequence of
which the Company Rights shall not have become nonredeemable and the Company
Rights shall not become exercisable for capital stock of Parent upon
consummation of the Merger (the "Rights Amendment").
1.08 ESOP. The parties hereto agree that, effective as of the Effective
Time (or as soon thereafter as practicable), the New Bedford Institution for
Savings Employee Stock Ownership Plan and Trust (the "Bank ESOP") will be
terminated in accordance with applicable law and regulations.
1.09 ARTICLES OF INCORPORATION.
(a) Except in the event that the Alternative Merger is consummated, at the
Effective Time, the Articles of Incorporation of Parent, as in effect at the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
(b) If the Alternative Merger is consummated, unless otherwise determined
by Parent prior to the Effective Time, at the Effective Time, the Certificate of
Incorporation of the Company, as amended and restated in the form acceptable to
Parent in its sole judgment, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter further amended as provided by law and
such Certificate of Incorporation.
1.10 BY-LAWS.
(a) Except in the event that the Alternative Merger is consummated, at the
Effective Time, the By-Laws of Parent, 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.
(b) If the Alternative Merger is consummated, unless otherwise determined
by Parent prior to the Effective Time, the By-Laws of the Company, as amended
and restated in the form acceptable to Parent in its sole judgment, shall be the
By-Laws of the Surviving Corporation until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
By-Laws.
1.11 DIRECTORS AND OFFICERS.
(a) Except in the event that the Alternative Merger is consummated, the
directors and officers of Parent immediately prior to the Effective Time shall
be the directors and officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and By-Laws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
A-9
<PAGE> 91
(b) If the Alternative Merger is consummated, the directors of Merger
Subsidiary immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-Laws of the Surviving Corporation, and
the officers of the Merger Subsidiary immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified.
1.12 TAX CONSEQUENCES. Except in the event that the Alternative Merger is
consummated, it is intended that the Merger shall constitute a reorganization
within the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section 368 of the
Code.
1.13 CONVERSION OF MERGER SUBSIDIARY COMMON STOCK. If the Alternative
Merger is consummated, at the Effective Time, each share of the common stock of
Merger Subsidiary issued and outstanding immediately prior to the Effective Time
shall, by virtue of this Agreement and without any action on the part of the
holder thereof, be converted into and exchanged for one share of common stock of
the Surviving Corporation.
ARTICLE II
EXCHANGE OF SHARES
2.01 PARENT TO MAKE SHARES AND CASH AVAILABLE. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be deposited, with a
bank or trust company selected by Parent (and reasonably acceptable to the
Company) (the "Exchange Agent"), for the benefit of the holders of certificates
of Company Common Stock (the "Certificates"), for exchange in accordance with
this Article II, certificates representing the shares of Parent Common Stock and
the Warrants and cash which together constitute the consideration for the Merger
(such cash and certificates for shares of Parent Common Stock and Warrants,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued and paid,
respectively, pursuant to Section 1.04 and Section 2.02 in exchange for
outstanding shares of Company Common Stock.
2.02 ELECTION AND EXCHANGE PROCEDURES.
(a) As soon as practicable after the Effective Time, and in no event later
than three business days thereafter (which date shall be referred to as the
"Mailing Date"), Parent shall cause the Exchange Agent to mail to each holder of
record of a Certificate or Certificates at the Effective Time (1) a form 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) containing instructions for use in effecting
the surrender of the Certificates and (2) an election form (the "Election
Form"). The Company shall have the right to approve the form of both the letter
of transmittal and the Election Form.
(b) Each Election Form shall permit the holder (or in the case of nominee
record holders, the beneficial owner through appropriate and customary
documentation and instructions) to elect to receive Parent Common Stock with
respect to each share of such holder's Company Common Stock ("Stock Election
Shares"), to elect to receive cash with respect to each share of such holder's
Company Common Stock ("Cash Election Shares") or to indicate that such holder
makes no election ("No Election Shares"). Any shares of Company Common Stock
with respect to which the holder (or the beneficial owner, as the case may be)
shall not have submitted to the Exchange Agent, an effective, properly completed
Election Form on or before 5:00 p.m., on the 20th day following the Mailing Date
(or such other time and date as Parent and the Company may mutually agree) (the
"Election Deadline") shall also be deemed to be "No Election Shares".
Any such election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the Election
Deadline. An Election Form shall be deemed properly completed only if
accompanied by one or more Certificates representing all shares of Company
Common Stock covered by such Election Form, together with duly executed
transmittal materials included with the Election Form. Any Election Form may be
revoked or changed by the person submitting such Election Form at or prior to
the Election Deadline by written notice to the Exchange Agent, which notice must
be received
A-10
<PAGE> 92
by the Exchange Agent at or prior to the Election Deadline. In the event an
Election Form is revoked prior to the Election Deadline, the shares of Company
Common Stock represented by such Election Form shall become No Election Shares.
Subject to the terms of this Agreement and of the Election Form, Parent or the
Exchange Agent shall have reasonable discretion to determine whether any
election, revocation or change has been properly or timely made and to disregard
immaterial defects in the Election Forms, and any good faith decisions of Parent
or the Exchange Agent regarding such matters shall be binding and conclusive.
Neither Parent nor the Exchange Agent shall be under any obligation to notify
any person of any defect in an Election Form.
If the aggregate number of Stock Election Shares does not equal the Stock
Conversion Number (as defined below), within five business days after the
Election Deadline, Parent shall cause the Exchange Agent to allocate among
holders of Company Common Stock the right to receive, with respect to each such
share, Parent Common Stock or cash in the Merger as follows:
(i) if the number of Stock Election Shares is less than the Stock
Conversion Number, then
(A) all Stock Election Shares shall be converted into the right to
receive Parent Common Stock,
(B) the Exchange Agent will select, on a pro rata basis, first from
among the holders of No-Election Shares and then (if necessary) from
among the holders of Cash Election Shares, a sufficient number of such
shares ("Stock Designee Shares") such that the number of Stock Designee
Shares shall, when added to the number of Stock Election Shares, equal
as closely as practicable the Stock Conversion Number, and all Stock
Designee Shares shall be converted into the right to receive Parent
Common Stock, and
(C) any Cash Election Shares and any No-Election Shares not so
selected as Stock Designee Shares shall be converted into the right to
receive cash; or
(ii) if the aggregate number of Stock Election Shares is greater than
the Stock Conversion Number, then
(A) all Cash Election Shares shall be converted into the right to
receive cash,
(B) the Exchange Agent will select, on a pro rata basis, first from
among the holders of No-Election Shares and then (if necessary) from
among the holders of Stock Election Shares, a sufficient number of such
shares ("Cash Designee Shares") such that the number of Cash Designee
Shares shall, when added to the number of Cash Election Shares, equal as
closely as practicable the Cash Conversion Number (as defined below),
and all Cash Designee Shares shall be converted into the right to
receive cash, and
(C) any Stock Election Shares and any No-Election Shares not so
selected as Cash Designee Shares shall be converted into the right to
receive Parent Common Stock.
"Stock Conversion Number" means the Aggregate Parent Stock Amount divided
by the Per Share Stock Consideration. "Cash Conversion Number" means the
difference between the number of shares of Company Common Stock outstanding as
of the Effective Time which are being converted pursuant to Section 1.04(a) and
the Stock Conversion Number.
The selection process to be used by the Exchange Agent shall consist of
such processes as shall be mutually determined by the Company and Parent as
shall be further described in the Election Form.
Upon surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with the Election Form, duly executed, the holder of
such Certificates shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole shares of Parent Common Stock, if
any, to which such holder of Company Common Stock shall have become entitled
pursuant to the provisions of Articles I and II hereof, (y) a check representing
the amount of cash, if any, which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of Articles I
and II, and (z) a certificate representing the number of Warrants to which such
holder is entitled pursuant to the provisions of Article I
A-11
<PAGE> 93
and the Certificate so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on the cash and unpaid dividends and distributions, if
any, payable to holders of Certificates.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which 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 Parent Common Stock and/or cash and certificates
representing Warrants as provided in this Article II.
(d) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent 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 shareholder of the
Company. In lieu of the issuance of any such fractional share, Parent shall pay
to each former shareholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock, an amount in cash determined
by multiplying (i) the Average Closing Price by (ii) the fraction of a share of
Parent Common Stock to which such holder would otherwise be entitled to receive
pursuant to Articles I and II hereof.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of the Company for twelve months after the Effective Time shall be
paid to Parent. Any shareholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their Warrants, shares of Parent Common Stock, cash and unpaid dividends and
distributions of the Parent Common Stock deliverable in respect of each share of
Company Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of Parent, the Company, the Exchange Agent nor any other person
shall be liable to any former holder of shares of Company Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) 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 required by Parent, the
posting by such person of a bond in such amount as Parent may direct 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 Warrants, shares of Parent Common Stock and cash
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Subsidiary
as follows:
3.01 CORPORATE ORGANIZATION.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company 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 have a
Material Adverse Effect (as defined below) on the Company and its Subsidiaries
taken as a whole. As used in this Agreement, the term "Material Adverse Effect"
means, with respect to Parent or the Company, as the case may be, a material
adverse change in or effect on the business, financial condition or results of
operations of such party and its subsidiaries taken as a whole, other than any
such effect attributable to or resulting from changes in interest rates or
general economic conditions. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is
A-12
<PAGE> 94
consolidated with such party for financial purposes. The Company is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHC Act"). The Certificate of Incorporation and By-laws of the
Company, copies of which have previously been made available to Parent, are true
and complete copies of such documents as in effect as of the date of this
Agreement.
(b) The Bank is a savings bank duly organized, validly existing and in good
standing under the laws of The Commonwealth of Massachusetts. The deposit
accounts of the Bank are insured by the Federal Deposit Insurance Corporation
(the "FDIC") through the Bank Insurance Fund (the "BIF") or the Savings
Association Insurance Fund (the "SAIF") and by the Mutual Savings Central Fund,
Inc. (the "Central Fund"), through the Deposit Insurance Fund, to the fullest
extent permitted by law, and all premiums and assessments required in connection
therewith have been paid by the Bank. Each of the Company's other Subsidiaries
that is a "Significant Subsidiary" (defined for purposes of this Agreement to
mean subsidiaries other than those that are either inactive or have an
immaterial amount of assets) is a corporation, partnership or business trust
duly organized and, in the case of any such corporation, is validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each
Significant Subsidiary of the Company has the 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 the 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 have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole. The Amended and Restated Charter and
By-laws of the Bank and the Articles of Organization and By-laws of each other
Significant Subsidiary of the Company, copies of which have previously been made
available to Parent, are true and complete copies of such documents as in effect
as of the date of this Agreement.
(c) The minute books of the Company and the Bank contain true and complete
records in all material respects of all meetings since January 1, 1988 of their
respective shareholders and Boards of Directors.
3.02 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 40,000,000
shares of Company Common Stock and 10,000,000 shares of preferred stock, par
value $0.10 per share (the "Company Preferred Stock"). As of the date of this
Agreement, there are (x) 8,660,394 shares of Company Common Stock issued and
outstanding and 873,433 shares of Company Common Stock held in the Company's
treasury, (y) no shares of Company Common Stock reserved for issuance, except
for 686,701 shares of Company Common Stock reserved for issuance upon exercise
of stock options (368,701 with respect to outstanding stock options as of the
date hereof) pursuant to the Company Stock Plan, and (z) no shares of Company
Preferred Stock issued or outstanding, held in the Company's treasury or
reserved for issuance, except for 150,000 shares of Company Series A Junior
Participating Cumulative Preferred Stock reserved for issuance upon exercise of
the rights (the "Company Rights") distributed to holders of Company Common Stock
pursuant to the Company Rights Agreement. All of the issued and outstanding
shares of Company Common Stock have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. Except as referred
to above or reflected in Section 3.02 of the Disclosure Schedule which is being
delivered to Parent concurrently herewith (the "Company Disclosure Schedule"),
and except for the Company Stock Plan and the Company Rights Agreement, the
Company 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 Company Common Stock or Company
Preferred Stock or any other equity security of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Common Stock, Company Preferred Stock or any other equity security of the
Company. The names of the optionees, the date of each option to purchase Company
Common Stock granted, the number of shares subject to each such option, and the
price at which each such option may be exercised under the Company Stock Plan
are set forth in Section 3.02 of the Company Disclosure Schedule.
(b) The authorized capital stock of the Bank consists of 40,000,000 shares
of common stock, par value $0.10 per share (the "Bank Common Stock") and
10,000,000 shares of preferred stock, par value $0.10 per share (the "Bank
Preferred Stock"). As of the date of this Agreement, there are (x) 10,000 shares
of Bank
A-13
<PAGE> 95
Common Stock issued and outstanding and no shares of Bank Common Stock held in
the Bank's treasury, (y) no shares of Bank Common Stock reserved for issuance,
and (z) no shares of Bank Preferred Stock issued or outstanding. Section 3.02 of
the Company Disclosure Schedule sets forth a true and correct list of all of the
Company Subsidiaries as of the date of this Agreement. Except as set forth in
Section 3.02 of the Company Disclosure Schedule, the Company owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each of
the Company Subsidiaries (or, in the case of Company Subsidiaries that are not
corporations, all of the outstanding partnership interests or beneficial
interests, as the case may be), free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares of
capital stock are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. No Company 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 of 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. Assuming
compliance with Sections 1.06 and 1.07 hereof, at the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any of its Subsidiaries will
be bound calling for the purchase or issuance of any shares of the capital stock
of the Company or any of its Subsidiaries, other than shares reserved for
issuance under the Company Rights.
3.03 AUTHORITY; NO VIOLATION.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's shareholders for consideration
at a meeting of such shareholders and, except for the adoption of this Agreement
by the requisite vote of the Company's shareholders, no other corporate
proceedings on the part of the Company are necessary to approve this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and (assuming adoption of
the Agreement by the requisite vote of the Company's shareholders and the due
authorization, execution and delivery by Parent) constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) The Bank has all necessary corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. Upon the due and valid approval of the Bank Merger
Agreement by the Board of Directors of the Bank and by the shareholders of the
Bank, no other corporate proceedings on the part of the Bank will be necessary
to consummate the transactions contemplated thereby. The Bank Merger Agreement,
upon execution and delivery by the Bank, will be duly and validly executed and
delivered by the Bank and will (assuming adoption of the Bank Merger Agreement
by the requisite vote of the shareholders of the Bank and Massachusetts Bank and
the due authorization, execution and delivery by Massachusetts Bank) constitute
a valid and binding obligation of the Bank, enforceable against the Bank in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
(c) Except as set forth in Section 3.03 of the Company Disclosure Schedule,
neither the execution and delivery of this Agreement by the Company or the Bank
Merger Agreement by the Bank, nor the consummation by the Company or the Bank,
as the case may be, of the transactions contemplated hereby or thereby, nor
compliance by the Company or the Bank with any of the terms or provisions hereof
or thereof, will (i) violate any provision of the Certificate of Incorporation
or By-Laws of the Company or the Amended and Restated Charter or By-laws of the
Bank, (ii) assuming that the consents and approvals referred to in Section 3.04
hereof are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company or the Bank, or (y) violate, result in a breach of
A-14
<PAGE> 96
any provision of, constitute a default under, or result in the creation of any
material lien, pledge, security interest, charge or other encumbrance upon any
of the respective properties or assets of the Company or any of its Significant
Subsidiaries 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 the Company or any of its Significant
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except with respect to clause ii(x) and (y)
above, for such violations, breaches, defaults or creation of encumbrances which
would not have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
3.04 CONSENTS AND APPROVALS. Except for (A) the filing of applications and
notices with, and the consents and approvals of, as applicable, (i) the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), (ii) the
Office of the Comptroller of the Currency (the "Comptroller"), (iii) the Board
of Bank Incorporation of The Commonwealth of Massachusetts (the "Massachusetts
Board" or the "State Banking Approval"), (iv) the Central Fund, (v) the
Commissioner of Banks of The Commonwealth of Massachusetts (the "Commissioner"),
and (vi) the Massachusetts Housing Partnership Fund (the "MHP Consent"), (B) the
filing with the Securities and Exchange Commission (the "SEC") of a registration
statement on Form S-4 (the "S-4") of which the proxy statement in definitive
form relating to the meeting of the Company's shareholders to be held in
connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement") will be included as a prospectus, (C) the approval of this
Agreement by the requisite vote of the shareholders of the Company, (D) the
filing of the Certificate of Merger with the Delaware Secretary pursuant to the
DGCL and the Articles of Merger with the Rhode Island Secretary pursuant to the
RIBCL, and (E) the approval of the Bank Merger Agreement by the requisite vote
of the Board of Directors and the shareholders of the Bank, and except for such
filings, authorizations or approvals as may be set forth in Section 3.04 of the
Company Disclosure Schedule, 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") or with
any third party are necessary in connection with (1) the execution and delivery
by the Company of this Agreement and the consummation by the Company of the
Merger and the other transactions contemplated hereby, and (2) the execution and
delivery by the Bank of the Bank Merger Agreement and the consummation by the
Bank of the transactions contemplated thereby, except where the failure to
obtain such consents or approvals, or to make such filings or registrations,
would not prevent or significantly delay the Merger or the Bank Merger or
otherwise prevent the Company or the Bank from performing their respective
obligations under this Agreement, or would not have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole.
3.05 LOAN PORTFOLIO. Section 3.05 of the Company Disclosure Schedule sets
forth all of the Loans in original principal amount in excess of $100,000 of the
Company or any of its Subsidiaries that as of the date of this Agreement are
classified by the Bank or any bank regulatory examiner as "Special Mention",
"Substandard", "Doubtful", "Loss" or "Classified," together with the aggregate
principal amount of and accrued and unpaid interest on such loans by category.
Except for normal examinations conducted by (i) the Federal Reserve Board, (ii)
the FDIC, and (iii) the Commissioner or any other state bank regulatory
authority (collectively, "Regulatory Agencies"), in the regular course of the
business of the Company and its Subsidiaries, no Regulatory Agency has initiated
any proceeding into the business or operations of the Company or any of its
Subsidiaries during the last two years.
3.06 FINANCIAL STATEMENTS. The Company has previously made available to
Parent copies of the consolidated balance sheets of the Company and its
Subsidiaries as of December 31 for the fiscal years 1992 and 1993, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1991 through 1993, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The December 31, 1993 consolidated balance sheet of the Company
(including the related notes, where applicable) fairly presents in all material
respects the consolidated financial position of the Company and its Subsidiaries
as of the date thereof, and the other financial statements referred to in this
Section 3.06 (including the related notes, where applicable) fairly present in
all material respects, and the financial statements referred to in Section 6.10
hereof will fairly present (subject, in the case
A-15
<PAGE> 97
of the unaudited statements, to recurring audit adjustments normal in nature and
amount) in all material respects, the results of the consolidated operations and
changes in shareholders' equity and consolidated financial position of the
Company and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth and each of such statements (including the
related notes, where applicable) has been, and the financial statements referred
to in Section 6.10 hereof will be, prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q.
3.07 BROKER'S FEES. Neither the Company nor any Company 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 any of the transactions contemplated by this Agreement or the
Bank Merger Agreement, except that the Company has engaged, and will pay a fee
or commission to Salomon Brothers Inc in accordance with the terms of a letter
agreement between Salomon Brothers Inc and the Company.
3.08 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as may be set forth in Section 3.08 of the Company Disclosure
Schedule or otherwise disclosed herein or in the Company Reports, since December
31, 1993:
(i) there has not been any Material Adverse Effect on the Company and
its Subsidiaries taken as a whole;
(ii) there has not been any incurrence by the Company of any liability
that has had, or to the knowledge of the Company any liability that could
reasonably be expected to have, a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole;
(iii) there has not been any agreement, contract or commitment entered
into, or agreed to be entered into, except for those in the ordinary course
of business, none of which has had a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole;
(iv) there has not been any change in any of the accounting methods or
practices of the Company or any of its Subsidiaries other than changes
required by applicable law or generally accepted accounting principles.
(b) Except as set forth in Sections 3.08 or 5.01 of the Company Disclosure
Schedule, or as consented to by Parent, and except for any increase, grant,
payment or arrangement that, if effected after the date hereof, would be
permitted pursuant to Section 5.01, since December 31, 1993, neither the Company
nor any of its Subsidiaries has (i) 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, 1993 (which amounts have been previously disclosed to Parent), granted any
severance or termination pay, entered into or amended any contract to make or
grant any employment, severance or termination pay, or paid any bonus or (ii)
suffered any material strike, work stoppage, slow-down, or other labor
disturbance.
3.09 LEGAL PROCEEDINGS. Except as set forth in Section 3.09 of the Company
Disclosure Schedule, there are no pending or to the knowledge of the Company,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature against the Company or any
Significant Subsidiary of the Company, as to which there is a reasonable
likelihood of adverse determination and which if adversely determined, would (i)
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole, or (ii) as of the date hereof, prevent or materially and adversely affect
the Company's ability to consummate the transactions contemplated hereby.
3.10 TAXES AND TAX RETURNS. Each of the Company and its Subsidiaries has
filed all Federal, state and, to the best of the Company's knowledge, material
local, information returns and tax returns required to be filed by it on or
prior to the date hereof (all such returns being true and complete in all
material respects) and has paid or made provisions for the payment of all taxes
and other governmental charges, except where the non-filing of which or the
non-payment of which would not have a Material Adverse Effect on the Company and
A-16
<PAGE> 98
its Subsidiaries taken as a whole, and which have been incurred or are due or
claimed to be due from it by Federal, state, county or local taxing authorities
on or prior to the date hereof other than taxes or other charges which (i) are
not yet delinquent or are being contested in good faith and (ii) have not been
finally determined. The amounts set up as reserves for taxes on the consolidated
balance sheet of the Company included in its Form 10-K for the period ended
December 31, 1993 for the payment of all unpaid Federal, state, county and local
taxes (including any interest or penalties thereon), whether or not disputed,
accrued or applicable, for the period ended December 31, 1993 or for any year or
period prior thereto, and for which the Company or any of its Subsidiaries may
be liable in its own right or as transferee of the assets of, or successor to,
any corporation, person, association, partnership, joint venture or other
entity, are adequate under GAAP and are sufficient to cover all such taxes due,
except where the failure to so accrue would not have a Material Adverse Effect
on the Company and its Subsidiaries taken as a whole. The Company has not
received any written notice of any pending tax examinations or audits, material
disputes or claims asserted for taxes or assessments upon the Company or any of
its Subsidiaries, nor has the Company or any of its Subsidiaries been requested
to give any currently effective waivers extending the statutory period of
limitation applicable to any Federal, state, county or local income tax return
for any period.
3.11 EMPLOYEES.
(a) Section 3.11 of the Company Disclosure Schedule sets forth a true and
complete list of each employee benefit plan, arrangement or agreement that is
maintained as of the date of this Agreement (the "Plans") by the Company, any of
its Significant Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), all of which together with the Company
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) The Company has heretofore made available to Parent true and complete,
in all material respects, copies of each of the Plans and all related documents,
including but not limited to (i) the most recent actuarial report for such Plan
(if applicable), and (ii) the most recent determination letter from the Internal
Revenue Service (if applicable) for such Plan.
(c) Each of the Plans has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code, (ii) each of the Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, (iii) with respect to
each Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Plan, based upon reasonable actuarial assumptions used for
funding purposes, did not, as of its latest valuation date, exceed the then
current value of the assets of such Plan allocable to such accrued benefits,
(iv) no liability under Title IV of ERISA has been incurred by the Company, its
Significant Subsidiaries or any ERISA Affiliate that has not been satisfied in
full, (v) no Plan is a "multiemployer pension plan," as such term is defined in
Section 3(37) of ERISA, (vi) all contributions or other amounts payable by the
Company or its Significant Subsidiaries as of the Effective Time with respect to
each Plan in respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of the
Code, and (vii) neither the Company, its Significant Subsidiaries nor any ERISA
Affiliate has engaged in a transaction in connection with which the Company, its
Significant Subsidiaries or any ERISA Affiliate could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code, except in each case above,
where the failure to do so would not have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
3.12 SEC REPORTS. The Company has previously made available to Parent a
true and complete, in all material respects, copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
since January 1, 1990 by the Company with the SEC pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), or the Exchange Act (the "Company
Reports"), and (b) communication mailed by the Company to its shareholders since
January 1, 1990, and, as of their respective dates, no such Company Reports
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.
A-17
<PAGE> 99
3.13 COMPANY INFORMATION. The information provided in writing by the
Company for inclusion in the Proxy Statement and the S-4 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.
3.14 COMPLIANCE WITH APPLICABLE LAW. The Company and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in default under any, applicable law, statute, order, rule or regulation of
any Governmental Entity relating to the Company or any of its Subsidiaries,
except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole, and neither the
Company nor any of its Subsidiaries has received notice of any material
violations of any of the above.
3.15 CERTAIN CONTRACTS.
(a) Except as set forth in Sections 6.07, 6.08, 6.09 of this Agreement or
in Sections 3.15 or 5.01 of the Company Disclosure Schedule or in the Company
Reports, neither the Company nor any of its Subsidiaries is a party to or bound
by any contract, arrangement, commitment or understanding (i) with respect to
the employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement will result in any payment becoming due from Parent, the
Company, the Surviving Corporation, the Surviving Bank or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
material contract (as 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 Company Reports, (iv) which is a consulting or
other agreement (including agreements entered into in the ordinary course and
data processing, software programming and licensing contracts) not terminable on
60 days or less notice involving the payment of more than $250,000 per annum,
(v) which materially restricts the conduct of any line of business by the
Company or any of its Significant Subsidiaries, or (vi) with or to a labor union
or guild (including any collective bargaining agreement). Each contract,
arrangement, commitment or understanding of the type described in this Section
3.15(a), whether or not set forth in Section 3.15 of the Company Disclosure
Schedule, is referred to herein as a "Company Contract".
(b) Each of the Company and its Subsidiaries has performed in all material
respects all obligations required to be performed by it to date under each
Company Contract, except where such noncompliance would not have a Material
Adverse Effect on the Company and it Subsidiaries taken as a whole, and no event
or condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a material default on the part of the Company or any of its
Subsidiaries under any such Company Contract, except where such default would
not have a Material Adverse Effect on the Company and its Subsidiaries taken as
a whole.
3.16 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in Section
3.16 of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding (each a "Regulatory Agreement"), with any Regulatory Agency or
other Governmental Entity that restricts in any material respect the conduct of
its business or that relates to its capital adequacy, its credit policies or its
management, nor has the Company or any of its Subsidiaries been notified by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
3.17 INVESTMENT SECURITIES. Section 3.17 of the Company Disclosure
Schedule sets forth the book and market value as of April 30, 1994 of the
investment securities, mortgage backed securities and securities held for sale
of the Company and its Subsidiaries.
3.18 ENVIRONMENTAL MATTERS. Except as set forth in Section 3.18 of the
Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries is in compliance, and for the
last three years has been in compliance, with all applicable laws, rules,
regulations, standards and requirements adopted or enforced by the United States
Environmental Protection Agency (the "EPA") and of state and local agencies with
A-18
<PAGE> 100
jurisdiction over pollution or protection of the environment, except where such
noncompliance or violations would not have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole; and
(b) There is no suit, claim, action or proceeding pending before any court
or Governmental Entity in which the Company or any of its Subsidiaries has been
named as a defendant (x) for alleged noncompliance with any environmental law,
rule or regulation or (y) relating to the release into the environment of any
Hazardous Material (as hereinafter defined) or oil at or on a site presently or
formerly owned, leased or operated by the Company or any of its Subsidiaries or,
to the knowledge of the senior officers of the Company, on a site with respect
to which the Company has made a commercial real estate loan and has a mortgage
or security interest in, except where such noncompliance or release would not
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole. "Hazardous Material" means any pollutant, contaminant, or hazardous
substance under the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. sec.9601 et seq., or any similar state law. With
respect to the items described in Section 3.18 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary has taken any action which
would result in any of them being deemed to be "owners" or "operators" under any
environmental law, rule or regulation, except where any such action would not
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole.
3.19 ASSISTANCE AGREEMENTS. Except as set forth in Section 3.19 of the
Company Disclosure Schedule or in the Company Reports, neither the Company nor
any of its Subsidiaries is a party to any agreement or arrangement entered into
in connection with the consummation of a federally assisted acquisition of a
depository institution pursuant to which the Company or any of its Subsidiaries
is entitled to receive financial assistance or indemnification from any
governmental agency.
3.20 PROPERTIES. The Company and each Company Subsidiary has good and
marketable title to all the real property and all other property owned by it and
included in the December 31, 1993 consolidated balance sheet of the Company (the
"Balance Sheet"), other than property disposed of in the ordinary course of
business after December 31, 1993, except where the failure to so have title
would not have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole, and owns such property subject to no encumbrances, liens,
mortgages, security interests or pledges, except (a) those items that secure
liabilities that are reflected in the Balance Sheet or the notes thereto or
incurred in the ordinary course of business after the date of the Balance Sheet,
(b) statutory liens for amounts not yet delinquent or which are being contested
in good faith, (c) those items that secure public or statutory obligations or
any discount with, borrowing from, or other obligations to, any Federal Reserve
Bank or Federal Home Loan Bank, inter-bank credit facilities, or any transaction
by a subsidiary acting in a fiduciary capacity, and (d) such encumbrances,
liens, mortgages, security interests, and pledges that do not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. Neither the
Company nor any Company Subsidiary has received any notice of violation of any
applicable zoning regulation, ordinance or other law, order, regulation or
requirement relating to its properties, except such violations which would not
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole.
3.21 INSURANCE. To the knowledge of the Company, all of the policies
relating to insurance maintained by the Company or any Significant Subsidiary
with respect to its property and the conduct of its business (or any comparable
policies entered into as a replacement therefor) are in full force and effect
and neither the Company nor any Significant Subsidiary has received any notice
of cancellation with respect thereto.
3.22 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in the
Company's proxy statement for its 1994 annual meeting of shareholders, no
officer or director of the Company, or any "associate" (as such term is defined
in Rule 14a-1 under the Exchange Act) of any such officer or director, has any
material interest in any material contract or property (real or personal),
tangible or intangible, used in or pertaining to the business of the Company or
any of the Company's Subsidiaries that would be required to be disclosed in a
proxy statement to shareholders under Regulation 14A of the Exchange Act.
3.23 REGULATORY APPROVALS. The Company is not, as of the date hereof,
aware of any reason why the regulatory approvals required to be obtained by it
or any of its Subsidiaries to consummate the Merger and the
A-19
<PAGE> 101
Bank Merger would not be satisfied within the time frame customary for
transactions of the nature contemplated thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
4.01 CORPORATE ORGANIZATION.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Rhode Island. Parent 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 have a
Material Adverse Effect on Parent. Parent is duly registered as a bank holding
company under the BHC Act. The Restated Articles of Incorporation and By-laws of
Parent, copies of which have previously been made available to the Company, are
true and complete copies of such documents as in effect as of the date of this
Agreement.
(b) Massachusetts Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States. The
deposit accounts of the Bank are insured by the FDIC through the BIF to the
fullest extent permitted by law, and all premiums and assessments required in
connection therewith have been paid by Massachusetts Bank. Massachusetts Bank
has the 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 the 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 have a
Material Adverse Effect on Massachusetts Bank. The Articles of Association and
By-laws of Massachusetts Bank, copies of which have previously been made
available to the Company, are true and complete copies of such documents as in
effect as of the date of this Agreement.
4.02 CAPITALIZATION.
(a) The authorized capitalized stock of Parent consists of: (i) 300,000,000
shares of Parent Common Stock, of which at March 31, 1994, 137,617,952 shares
were issued and outstanding, (ii) 16,000,000 shares of Preferred Stock, par
value $1.00 per share, ("Parent Preferred Stock"), of which at March 31, 1994,
(A) with respect to Cumulative and Adjustable Dividends, 1,000,000 shares were
designated and no shares were issued and outstanding, (B) 12,553 shares were
designated and 2,155 shares were issued and outstanding as Series I 12%
Cumulative Convertible Preferred Stock, (C) 96,000 shares were designated and no
shares were issued and outstanding as Series II 6 1/2% Cumulative Convertible
Preferred Stock, (D) 1,100,000 shares were designated and 519,758 shares were
issued and outstanding as Series III 10.12% Perpetual Preferred Stock, (E)
1,000,000 shares were designated and 478,838 shares were issued and outstanding
as Series IV 9.375% Preferred Stock, (F) 1,500,000 shares were designated and no
shares were issued and outstanding as Cumulative Participating Junior Preferred
Stock pursuant to the Parent's Shareholder Rights Agreement ("Parent Rights"),
and (G) 1,415,000 shares were designated and outstanding as Dual Convertible
Preferred Stock and (iii) 1,500,000 shares of Preferred Stock, par value $20.00
(the "Parent $20 Par Value Preferred Stock"), with Cumulative and Adjustable
Dividends, of which at such date, no shares were issued and outstanding. As of
March 31, 1994, there were 32,522,975 shares reserved for issuance in connection
with employee benefit, stock option, dividend reinvestment, and stock purchase
plans, warrants, the 6 1/2% Cumulative Convertible Preferred Stock, the 12%
Convertible Preferred Stock and the Dual Convertible Preferred Stock. All of the
issued and outstanding shares of Parent Common Stock and Parent Preferred Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights. As of the date of this Agreement, except as
referred to above or reflected in Parent's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 filed with the SEC under the Exchange Act
(the
A-20
<PAGE> 102
"Parent 1993 10-K"), Parent 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 Parent Common
Stock, Parent Preferred Stock or Parent $20 Par Value Preferred Stock or any
other equity security of Parent or any securities representing the right to
purchase or otherwise receive any shares of Parent Common Stock, Parent
Preferred Stock or Parent $20 Par Value Preferred Stock or any other equity
security of Parent. The shares of Parent Common Stock to be issued pursuant to
the Merger will be duly authorized and validly issued and, at the Effective
Time, all such shares will be fully paid, nonassessable and free of preemptive
rights. The Warrants and Warrant Shares have been duly authorized and when
issued will be fully paid, nonassessable and free of preemptive rights. As of
the Effective Time, Parent will have reserved 2,500,000 authorized but unissued
shares of Parent Common Stock for issuance upon exercise of the Warrants.
(b) The authorized capital stock of Massachusetts Bank consists of
1,000,000 shares of common stock, par value $15.00 per share, 1,000,000 of which
are issued and outstanding. Fleet Banking Group, Inc., a wholly-owned subsidiary
of Parent, owns all of the issued and outstanding shares of capital stock of
Massachusetts Bank, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares of capital stock are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Massachusetts Bank does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character with any party that is not a direct or indirect Subsidiary of
Parent calling for the purchase or issuance of any shares of capital stock or
any other equity security of Massachusetts Bank or any securities representing
the right to purchase or otherwise receive any shares of capital stock or any
other equity security of Massachusetts Bank.
4.03 AUTHORITY; NO VIOLATION.
(a) Parent has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and the consummation by
Parent of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Parent, and no other corporate proceedings
on the part of Parent are necessary to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and (assuming adoption of the Agreement by the requisite vote of the
Company's shareholders and the due authorization, execution and delivery by the
Company) constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) Massachusetts Bank has all necessary corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. Upon the due and valid approval of the Bank Merger
Agreement by Parent as the sole shareholder of Massachusetts Bank, and by the
Board of Directors of Massachusetts Bank, no other corporate proceedings on the
part of Massachusetts Bank will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon execution and delivery by
Massachusetts Bank will be duly and validly executed and delivered by
Massachusetts Bank and will (assuming adoption of the Bank Merger Agreement by
the requisite vote of the shareholders of the Bank and Massachusetts Bank and
the due authorization, execution and delivery by the Bank) constitute a valid
and binding obligation of Massachusetts Bank, enforceable against Massachusetts
Bank in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(c) Neither the execution and delivery of this Agreement by Parent or the
Bank Merger Agreement by Massachusetts Bank, nor the consummation by Parent or
Massachusetts Bank, as the case may be, of the transactions contemplated hereby
or thereby, nor compliance by Parent or Massachusetts Bank with any of the terms
or provisions hereof or thereof, will (i) violate any provision of the Restated
Articles of Incorporation or By-Laws of Parent or the Articles of Association or
By-laws or similar governing documents of Massachusetts Bank, as the case may
be, or (ii) assuming that the consents and approvals referred to in
A-21
<PAGE> 103
Section 4.04 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Parent or
Massachusetts Bank or any of Parent's Significant Subsidiaries, or (y) violate,
result in a breach of any provision of, constitute a default under, or result in
the creation of any material lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Parent or
Massachusetts Bank or any of Parent's Significant Subsidiaries 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
Parent or Massachusetts Bank or any of Parent's Significant Subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except with respect to clause ii(x) and (y) above, for such
violations, breaches or defaults which would not have a Material Adverse Effect
on Parent.
4.04 CONSENTS AND APPROVALS. Except for (A) the filing of applications and
notices with, and the consents and approvals of, as applicable (i) the Federal
Reserve Board, (ii) the Comptroller, (iii) the State Banking Approval, (iv) the
Commissioner, (v) the Central Fund, (vi) the MHP Consent, (B) the filing with
the SEC of the S-4 of which the Proxy Statement will be included as a
prospectus, (C) the filing of the Certificate of Merger with the Delaware
Secretary and the filing of Articles of Merger with the Rhode Island Secretary,
(D) the approval of the Bank Merger Agreement by the requisite vote of the Board
of Directors and sole shareholder of Massachusetts Bank, and except for 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 Parent Common Stock, Warrants and Warrant Shares pursuant to
this Agreement and such filings, authorizations or approvals as may be set forth
in Section 4.04 of the Disclosure Schedule which is being delivered by Parent to
the Company herewith (the "Parent Disclosure Schedule"), no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (1) the execution and delivery
by Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the Merger and the other transactions contemplated
hereby, and (2) the execution and delivery by Massachusetts Bank of the Bank
Merger Agreement and the consummation by Massachusetts Bank of the transactions
contemplated thereby, except where the failure to obtain such consents or
approvals, or to make such filings or registrations, would not prevent or delay
the Merger or the Bank Merger or otherwise prevent Parent or Merger Subsidiary
from performing their respective obligations under this Agreement or prevent
Massachusetts Bank from performing its obligations under the Bank Merger
Agreement, or would not have a Material Adverse Effect on Parent. The vote of
the holders of the outstanding shares of Parent Common Stock is not required to
approve this Agreement or the transactions contemplated hereby.
4.05 FINANCIAL STATEMENTS. Parent has previously made available to the
Company copies of the consolidated balance sheets of Parent and its Subsidiaries
as of December 31 for the fiscal years 1992 and 1993 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the fiscal years 1991 through 1993, inclusive, as reported in the
Parent 1993 10-K. The December 31, 1993 consolidated balance sheet of Parent
(including the related notes, where applicable) fairly presents in all material
respects the consolidated financial position of Parent and its Subsidiaries as
of the date thereof, and the other financial statements referred to in this
Section 4.05 (including the related notes where applicable) fairly present in
all material respects, and the financial statements referred to in Section 6.10
hereof will fairly present (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) in all material
respects, the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of Parent and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth and each of such statements (including the related notes,
where applicable) has been, and the financial statements referred to in Section
6.10 hereof will be, prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q.
4.06 BROKER'S FEES. Neither Parent, Massachusetts Bank or any Parent
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 any of the transactions contemplated by this
Agreement or the Bank Merger Agreement.
A-22
<PAGE> 104
4.07 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Since December 31, 1993:
(i) there has not been any Material Adverse Effect on Parent and its
Subsidiaries taken as a whole;
(ii) there has not been any incurrence by Parent of any liability that
has had, or to the knowledge of Parent could reasonably be expected to
have, a Material Adverse Effect on Parent and its Subsidiaries taken as a
whole;
(iii) there has not been any agreement, contract or commitment entered
into, or agreed to be entered into, except for those in the ordinary course
of business none of which has had a Material Adverse Effect on Parent and
its Subsidiaries taken as a whole;
(iv) there has not been any change in any of the accounting methods or
practices of Parent or any of its Subsidiaries other than changes required
by applicable law or generally accepted accounting principles.
4.08 LEGAL PROCEEDINGS. There are no pending or to the knowledge of
Parent, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against Parent or
any Significant Subsidiary of Parent, as to which there is a reasonable
likelihood of adverse determination and which if adversely determined, would (i)
have a Material Adverse Effect on Parent and its Subsidiaries taken as a whole,
or (ii) as of the date hereof, prevent or materially and adversely affect
Parent's ability to consummate the transactions contemplated hereby.
4.09 SEC REPORTS. Parent has previously made available to the Company a
true and complete, in all material respects, copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
since January 1, 1990 by Parent with the SEC pursuant to the Securities Act or
the Exchange Act (the "Parent Reports") and (b) communication mailed by Parent
to its shareholders since January 1, 1990, and, as of their respective dates, no
such Parent Reports 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.
4.10 PARENT AND MERGER SUBSIDIARY INFORMATION. The information provided in
writing by Parent or Merger Subsidiary for inclusion in the Proxy Statement and
the S-4 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.
4.11 COMPLIANCE WITH APPLICABLE LAW. Parent and each of its Subsidiaries
holds, and have at all times held, all material licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default under any, applicable law, statute, order, rule or regulation of any
Governmental Entity relating to Parent or any of its Subsidiaries, except where
the failure to hold such license, franchise, permit or authorization or such
noncompliance or default would not have a Material Adverse Effect on Parent, and
neither Parent nor any of its Subsidiaries has received notice of any material
violations of any of the above.
4.12 OWNERSHIP OF COMPANY COMMON STOCK; AFFILIATES AND ASSOCIATES. Neither
Parent nor any of its affiliates or associates (as such terms are defined under
the Exchange Act), (i) beneficially own, directly or indirectly, or (ii) is a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of capital
stock of the Company (other than Trust Account Shares and DPC Shares). Neither
Parent nor any of its Subsidiaries is an "affiliate" (as such term is defined in
DGCL sec.202(c)(1)) or an "associate" (as such term is defined in DGCL
sec.203(C)(2)) of the Company.
4.13 AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in Section
4.13 of the Parent Disclosure Schedule or as disclosed in Parent's Annual Report
on Form 10-K for the year ended December 31, 1993, neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any Regulatory Agreement with any Regulatory Agency or other
Governmental
A-23
<PAGE> 105
Entity that restricts in any material respect the conduct of its business or
that relates in any manner to its capital adequacy, its credit policies or its
management, nor has Parent or any of its Subsidiaries been notified by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.14 REGULATORY APPROVALS. Parent is not, as of the date hereof, aware of
any reason why the regulatory approvals required to be obtained by it or any of
its Subsidiaries to consummate the Merger and the Bank Merger would not be
satisfied within the time frame customary for transactions of the nature
contemplated thereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.01 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or the Bank Merger Agreement or with
the prior written consent of Parent, the Company and its Subsidiaries shall
carry on their respective businesses in the ordinary course consistent with past
practice. The Company will use all reasonable efforts to (x) preserve its
business organization and that of its Significant Subsidiaries intact, (y) keep
available to itself and Parent the present services of the employees of the
Company and its Significant Subsidiaries and (z) preserve for itself and Parent
the goodwill of the customers of the Company and its Significant Subsidiaries
and others with whom business relationships exist. Without limiting the
generality of the foregoing, and except as set forth in Section 5.01 of the
Company Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by Parent, the Company shall not, and shall not permit
any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends
on, or make other distributions in respect of, any of its capital stock,
except (i) for the declaration and payment of regular quarterly cash
dividends in an amount not to exceed $0.30 per share of Company Common
Stock, provided, however, that the Company's regular quarterly cash
dividend may be increased by up to ten percent per share beginning in the
first quarter of 1995, and (ii) that the parties agree (x) to consult with
respect to the amount of the last Company quarterly dividend payable prior
to the Effective Time with the objective of assuring that the shareholders
of the Company do not experience a shortfall based on the record and
payment dates of their last dividend prior to the Merger and (y) that the
Company may pay a special dividend to holders of record of Company Common
Stock immediately prior to the Effective Time consistent with the objective
described in clause (x) above;
(b) (i) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
except upon the exercise or fulfillment of rights or options issued or
existing pursuant to employee benefit plans, programs or arrangements, all
to the extent outstanding and in existence on the date of this Agreement,
or (ii) repurchase, redeem or otherwise acquire (except for the acquisition
of shares pursuant to the Bank ESOP or of Trust Account Shares and DPC
Shares), any shares of the capital stock of the Company or any Company
Subsidiary, or any securities convertible into or exercisable for any
shares of the capital stock of the Company or any Company Subsidiary;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any
of the foregoing, other than (i) the issuance of Company Common Stock
pursuant to stock options or similar rights to acquire Company Common Stock
granted pursuant to the Company Stock Plan and outstanding prior to the
date of this Agreement, or (ii) the sale of Company Common Stock under the
Bank ESOP, in accordance with their present terms;
(d) amend its Certificate of Incorporation or By-laws;
A-24
<PAGE> 106
(e) enter into any real property lease for a term longer than one
year;
(f) make any capital expenditures in excess of $500,000 in the
aggregate;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof
or otherwise acquire any assets, other than in connection with
foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business, which would be material
to the Company;
(i) take any action that is intended or would result in any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect, 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 or the Bank Merger Agreement, except, in
every case, as may be required by applicable law;
(j) change its methods of accounting in effect at December 31, 1993,
except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Company's independent auditors;
(k) except as required by applicable law or to maintain qualification
pursuant to the Code, (i) adopt, amend, renew or terminate any Plan or any
agreement, arrangement, plan or policy between the Company or any Company
Subsidiary and one or more of its current or former directors, officers or
employees or (ii) except for normal increases in the ordinary course of
business consistent with past practice or as set forth in Section 5.01 of
the Company Disclosure Schedule, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares);
(l) except in the case that the Alternative Merger is to be
consummated, knowingly take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368 of the
Code;
(m) other than activities in the ordinary course of business
consistent with prior practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose
of, any of its material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(o) file any application to open, relocate or terminate the operations
of any banking office of the Bank;
(p) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of business;
(q) purchase or sell loans in bulk;
(r) foreclose upon or take deed or title to any commercial real estate
without first conducting a Phase I environmental assessment of the
property; or foreclose upon such commercial real estate if such
environmental assessment indicates the presence of hazardous material in
amounts which, if such foreclosure were to occur, would be reasonably
likely to result in a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole;
(s) subject to Section 6.14, change the Company's policies and
practices with respect to asset liability management in any material
respect; or
A-25
<PAGE> 107
(t) agree to do any of the foregoing.
5.02 NO SOLICITATION. Neither the Company nor any Company Subsidiary nor
any of the directors, officers, employees, representatives or agents of the
Company or other persons controlled by the Company shall, except to the extent
required by applicable law relating to fiduciary obligations of directors, upon
advice of counsel, solicit or hold discussions or negotiations with, or assist
or provide any information to, any person, entity, or group (other than Parent)
concerning any merger, disposition of a significant portion of its assets, or
acquisition of a significant portion of its capital stock or similar
transactions involving the Company or any Company Subsidiary. Nothing contained
in this Section 5.02 shall prohibit the Company or its Board of Directors from
taking and disclosing to the Company's shareholders a position with respect to a
tender offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act or making such other disclosure to the Company's
shareholders which, in the judgment of the Board of Directors, based upon the
advice of counsel, may be required under applicable law. The Company will
promptly communicate to Parent the terms of any proposal, discussion,
negotiation, or inquiry relating to a merger or disposition of a significant
portion of its capital stock or similar transaction involving the Company or any
Company Subsidiary and the identity of the party making such proposal or
inquiry, which it receives with respect to any such transaction.
5.03 COVENANTS OF PARENT. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
the Company, Parent and its Subsidiaries shall carry on their respective
businesses in the ordinary course consistent with past practice and use all
reasonable efforts to preserve intact their present business organizations and
relationships. Without limiting the generality of the foregoing and as otherwise
contemplated by this Agreement or consented to in writing by the Company, Parent
shall not, and shall not permit any of its Subsidiaries to:
(a) take any action that is intended or would result in any of its
representations and warranties set forth in this Agreement being or
becoming untrue in any material respect, 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 or the Bank Merger Agreement, except, in
every case, as may be required by applicable law;
(b) change its methods of accounting in effect at December 31, 1993,
except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Parent's independent auditors;
(c) except in the case that the Alternative Merger is to be
consummated, knowingly take or cause to be taken any action which would
disqualify the Merger as a tax free reorganization under Section 368 of the
Code;
(d) take or cause to be taken any action which would, or may
reasonably be expected to, significantly delay or otherwise adversely
affect the regulatory approvals required to consummate the Merger; or
(e) agree to do any of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 REGULATORY MATTERS.
(a) The Company shall promptly prepare the Proxy Statement and Parent shall
promptly prepare and file with the SEC the S-4, in which the Proxy Statement
will be included as a prospectus. The S-4 will constitute the Registration
Statement registering the issuance of the Warrants and Parent Common Stock
pursuant to this Agreement and the issuance of the Warrant Shares upon exercise
of the Warrants. Each of the Parent and the Company shall use their best efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and the Company shall thereafter promptly mail
the Proxy Statement to its shareholders. Parent shall also use its 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
A-26
<PAGE> 108
the Bank Merger Agreement, and the Company shall furnish all information
concerning the Company and the holders of the Company Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, and 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 the Bank Merger). The Company and Parent shall have the right to
review in advance, and to the extent practicable each will consult with the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to the Company or Parent, 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) Parent and the Company shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, the
Company or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated hereby.
(d) Parent and the Company shall promptly furnish each other with copies of
written communications received by Parent or the Company, as the case may be, or
any of their respective Subsidiaries from, or delivered by any of the foregoing
to, any Governmental Entity in respect of the transactions contemplated hereby.
6.02 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws relating to the
exchange of information, the Company shall, and shall cause each of its
Subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of Parent, 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, the Company shall, and shall
cause its Subsidiaries to, make available to Parent (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 securities laws or
Federal or state banking laws (other than reports or documents which the Company
is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as Parent may
reasonably request (other than information which the Company is not permitted to
disclose under applicable law). Neither the Company nor any of its Subsidiaries
shall be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of the Company's
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. Parent will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the confidentiality agreement, dated April 11, 1994, between
Parent and the Company (the "Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable laws relating to the
exchange of information, Parent shall, and shall cause its Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the Company and the Bank, access, during normal business
hours during the period prior to the Effective Time, to such information
regarding Parent and its Subsidiaries as shall be reasonably
A-27
<PAGE> 109
necessary for the Company to fulfill its obligations pursuant to this Agreement
to prepare the Proxy Statement or which may be reasonably necessary for the
Company to confirm that the representations and warranties of Parent contained
herein are true and correct and that the covenants of Parent contained herein
have been performed in all material respects. Neither Parent nor any of its
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of
Parent's 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. During the period from the date of
this Agreement to the Effective Time, Parent will cause one or more of its
designated representatives to confer on a regular and frequent basis (not less
than monthly) with representatives of the Company and the Bank and to report the
general status of the ongoing operations of Parent and its Subsidiaries.
(c) All information furnished by Parent to the Company or its
representatives pursuant hereto shall be treated as the sole property of Parent
and, if the Merger shall not occur, the Company and its representatives shall
return to Parent or destroy all of such written information and all documents,
notes, summaries or other materials containing, reflecting or referring to, or
derived from, such information. The Company shall, and shall use its reasonable
efforts to cause its representatives to, keep confidential all such information,
and shall not directly or indirectly use such information for any competitive or
other commercial purpose. The obligation to keep such information confidential
shall continue from the date the proposed Merger is abandoned and shall not
apply to (i) any information which (x) was already in the Company's possession
prior to the disclosure thereof by Parent; (y) was then generally known to the
public; or (z) was disclosed to the Company by a third party not bound by an
obligation of confidentiality or (ii) disclosures made as required by law. It is
further agreed that, if in the absence of a protective order or the receipt of a
waiver hereunder the Company is nonetheless, in the opinion of its counsel,
compelled to disclose information concerning Parent to any tribunal or
governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, the Company may disclose such information to such tribunal
or governmental body or agency without liability hereunder.
6.03 SHAREHOLDER MEETING. The Company shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its shareholders to be
held as soon as is reasonably practicable after the date on which the S-4
becomes effective for the purpose of voting upon the approval of this Agreement.
The Company will, through its Board of Directors, recommend to its shareholders
approval of this Agreement and the transactions contemplated hereby and such
other matters as may be submitted to its shareholders in connection with this
Agreement; provided, however, that nothing contained in this Section 6.03 or
elsewhere in this Agreement shall prohibit the Company's Board of Directors from
failing to make such recommendation or modifying or withdrawing its
recommendation, if such Board shall have concluded in good faith with the advice
of counsel that such action is required to prevent such Board from breaching its
fiduciary duties to the shareholders of the Company, and no such action shall
constitute a breach of this Agreement.
6.04 LEGAL CONDITIONS TO MERGER. Each of Parent and the Company shall, and
shall cause each of its Subsidiaries to, use its best efforts (a) to take, or
cause to be taken, all actions necessary, proper or advisable to comply promptly
with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger or the Bank 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 consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Company or Parent or any of their respective
Subsidiaries in connection with the Merger and the Bank Merger and the other
transactions contemplated by this Agreement. Parent also agrees to accept any
conditions related to savings bank life insurance, the discontinuation of
impermissible activities or the divestiture of the Company's or the Bank's
direct or indirect interests in real estate or other investments which are
required by any Regulatory Agency in connection with procuring the regulatory
approvals required to consummate the Merger and the Bank Merger.
A-28
<PAGE> 110
6.05 RESTRICTIONS ON RESALE. The Company shall use all reasonable efforts
to cause each director, executive officer and other person of the Company who,
at the time of the shareholder's meeting called by the Company to approve this
Agreement, is an "affiliate" of the Company (for purposes of Rule 145 under the
Securities Act) and who has indicated to the Company that such person intends to
elect to receive Parent Common Stock pursuant to the Merger, to execute
"affiliate letters" prior to the Effective Time providing that such person will
not sell, pledge, transfer or otherwise dispose of any shares of Parent Common
Stock received by such person in the Merger except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder. Parent shall use all reasonable efforts to comply with Rule 144(c)
under the Securities Act in order that all such persons may resell such Parent
Common Stock pursuant to Rule 145(d) under the Securities Act.
6.06 STOCK EXCHANGE LISTING. Parent shall cause the Warrants and the
shares of Parent Common Stock to be issued in the Merger and the Warrant Shares
to be approved for listing on the Stock Exchange, subject to official notice of
issuance, prior to the Effective Time.
6.07 EMPLOYEE BENEFIT PLANS.
(a) From and after the Effective Time and subject to applicable law, the
Surviving Corporation and the Surviving Bank shall provide the employees of the
Company ("Company Employees") with the same benefits provided to its own
employees; provided, that Parent shall not treat any such employee as a "new"
employee for purposes of any exclusion for an existing condition under any
health, dental or similar plan of Parent, the Surviving Corporation, or the
Surviving Bank. Notwithstanding anything to the contrary herein, with respect to
benefits payable to employees who shall have retired from the Company and its
Subsidiaries, whether before or after the Effective Time, the Surviving
Corporation and the Surviving Bank shall in no event take any action to reduce
such benefits and shall take such action as it deems appropriate from time to
time with respect to possible increases in the level of such benefits, taking
into consideration among other factors any similar increases which Parent shall
have effected with respect to its retired employees.
(b) With respect to the provision of benefits to the Company's employees
pursuant to Section 6.07(a) hereof, to the extent that Company Employees become
participants in any employee benefit plans maintained by the Surviving
Corporation, the Surviving Bank, Parent or any of its Subsidiaries ("Parent
Plans"), Company Employees shall be credited under the Parent Plans for all
prior years of service with the Company and any Subsidiary of the Company (and
any entities acquired by the Company or the Bank to the same extent as the
Company or the Bank recognize such service) for all purposes, including but not
limited to eligibility and vesting, vacation time and 401(k) plans, but
excluding benefit accrual under the qualified defined benefit pension plan of
the Surviving Corporation, the Surviving Bank, Parent or any of its
Subsidiaries, to the extent of any duplication in benefits, to the extent such
service was recognized by the Company or any Subsidiary of the Company under any
of its plans.
(c) The provisions of this Section 6.07 are expressly intended to be for
the irrevocable benefit of, and shall be enforceable by, each officer and
employee covered hereby and his or her heirs and representatives.
6.08 EMPLOYEE TERMINATION AND OTHER BENEFITS.
(a) Following the Effective Time, Parent shall honor and shall cause the
Company and the Bank, or any of their respective successors, including without
limitation, the Surviving Corporation and the Surviving Bank, to honor in
accordance with their terms all employment, severance and other compensation
agreements and arrangements which are between the Company or the Bank and any
director, officer or employee thereof and which have been disclosed in Section
5.01 of the Company Disclosure Schedule, and to assume all duties, liabilities
and obligations under such agreements. Parent agrees for itself and its
Subsidiaries that the consummation of the transactions contemplated hereby is a
"Change in Control" as defined in the Special Termination Agreements between the
Company and/or the Bank and certain officers as disclosed in the Company
Disclosure Schedule.
(b) Parent agrees to offer, or cause the Surviving Bank to offer, continued
comparable employment on and after the Effective Time to all employees of the
Company or the Company Subsidiaries who were such immediately prior to the
Effective Time. Employees of the Company or the Company Subsidiaries who are
A-29
<PAGE> 111
terminated on or within two years after the Effective Time shall be provided, in
addition to all other applicable benefits, severance and other benefits set
forth in Section 5.01 of the Company Disclosure Schedule, with the following:
(i) the greater or more favorable of the severance and other benefits
set forth in (x) Fleet Financial Group, Inc.'s Severance Pay and Benefits
Plan appended to Section 6.08 of the Parent Disclosure Schedule, or (y)
Parent's severance pay and benefits plan policy existing on the date of
termination; and
(ii) continuation of health benefits for one year after termination on
the same terms and conditions as though they had remained active employees
of Parent or the Surviving Corporation or the Surviving Bank (provided,
that such employees shall not be treated as "new" employees for purposes of
any exclusion for an existing condition under any health or similar plan),
and thereafter shall be entitled to continuation benefits (such as COBRA)
for an additional eighteen month period determined as though their
employment had terminated at the end of such one-year period.
(c) The provisions of this Section 6.08 are expressly intended to be for
the irrevocable benefit of, and shall be enforceable by, each officer and
employee covered hereby and his or her heirs and representatives.
6.09 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 person 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 the Company or any of its Subsidiaries (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 the Company, any of
the Company Subsidiaries or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, 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 the Company shall indemnify and hold harmless
and that after the Effective Time, the Surviving Corporation and Parent shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, proceeding or investigation,
and in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after the
Effective Time), (i) the Company, and the Surviving Corporation and Parent after
the Effective Time, shall promptly pay expenses in advance of the final
disposition of any claim, action, suit, proceeding or investigation to each
Indemnified Party to the full extent permitted by law, (ii) the Indemnified
Parties may retain counsel satisfactory to them, and the Company, and the
Surviving Corporation and Parent after the Effective Time, shall pay all fees
and expenses of such counsel for the Indemnified Parties within thirty days
after statements therefor are received, and (iii) the Company, the Surviving
Corporation and Parent will use their respective best efforts to assist in the
vigorous defense of any such matter; provided, that none of the Company, the
Surviving Corporation or Parent shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided further, that the Surviving Corporation and Parent shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and non-appealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim indemnification under this Section 6.09, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Company and, after the Effective Time, the Surviving Corporation and
Parent, thereof, provided, that the failure to so notify shall not affect the
obligations of the Company, the Surviving Corporation and Parent, except to the
extent such failure to notify materially prejudices such party.
(b) Parent agrees that all rights to indemnification existing in favor, and
all limitations on the personal liability, of the Indemnified Parties provided
for in the Company's Certificate of Incorporation or By-laws or the Charter or
By-laws or similar organizational documents of any of its Subsidiaries as in
effect as of the date
A-30
<PAGE> 112
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect for a period of
not less than six (6) years from the Effective Time; provided, however, that all
rights to indemnification in respect of any claim (a "Claim") asserted or made
within such period shall continue until the disposition of such Claim.
(c) Parent shall cause the persons serving as officers and directors of the
Company immediately prior to the Effective Time to be covered for a period of
three (3) years from the Effective Time by the directors' and officers'
liability insurance policy maintained by the Company (provided, that Parent 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 at or prior to the Effective
Time which were committed by such officers and directors in their capacity as
such; provided, however, that in no event shall Parent be required to expend
more than the amount (the "Insurance Amount") equal to 200% of the current
amount expended by the Company and the Bank to maintain or procure insurance
coverage pursuant hereto.
(d) In the event Parent or the Surviving Corporation 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 proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, assume the obligations set forth in
this section.
(e) The provisions of this Section 6.09 are expressly intended to be for
the irrevocable benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
6.10 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS. As soon as
reasonably available, but in no event more than 45 days after the end of each
fiscal quarter ending after December 31, 1993, Parent will deliver to the
Company and the Company will deliver to Parent their respective Quarterly
Reports on Form 10-Q, as filed with the SEC under the Exchange Act. As soon as
reasonably available, but in no event later than April 1, 1995, Parent will
deliver to the Company and the Company will deliver to Parent their respective
Annual Reports on Form 10-K for the fiscal year ended December 31, 1994, as
filed with the SEC under the Exchange Act.
6.11 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purpose of this
Agreement, or the Bank Merger Agreement, or to vest the Surviving Corporation or
the Surviving Bank with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the Merger or the Bank
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, Parent.
6.12 DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
Time, each party will promptly supplement or amend the Disclosure Schedules
delivered in connection with the execution of this Agreement to reflect any
matter which, if existing, occurring or known at the date of this Agreement,
would have been required to be set forth or described in such Disclosure
Schedules or which is necessary to correct any information in such Disclosure
Schedules which has been rendered inaccurate thereby. No supplement or amendment
to such Disclosure Schedules shall have any effect for the purposes of
determining satisfaction of the conditions set forth in Sections 7.02(a) or
7.03(a) hereof, as the case may be, or the compliance by the Company or Parent,
as the case may be, with the respective covenants set forth in Sections 5.01 and
5.03 hereof.
6.13 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the Effective
Time, the Company will cause one or more of its designated representatives to be
available to confer on a regular and frequent basis (not less than monthly) with
representatives of Parent and to report the general status of the ongoing
operations of the Company and its Subsidiaries. The Company will promptly notify
Parent of any material change in the normal course of business of the Company or
any of its Subsidiaries and of any governmental complaints,
A-31
<PAGE> 113
investigations or hearings or the institution of significant litigation
involving the Company or any of its Subsidiaries and will keep Parent reasonably
informed of such events.
(b) Parent will promptly notify the Company of any material change in the
normal course of business of Parent or any of its Subsidiaries and of any
governmental complaints, investigations or hearings, or the institution of
significant litigation involving Parent or any of its Subsidiaries, and will
keep the Company reasonably informed of such events.
6.14 ALCO MANAGEMENT. The Company agrees that during the period from the
date of this Agreement to the Effective Time, the Company will consult and
cooperate with Parent in the development and implementation of a program to
manage the Company's interest rate sensitive assets and liabilities.
6.15 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT. As soon as
reasonably practicable after the date of this Agreement, (a) Parent shall (i)
cause the Board of Directors of Massachusetts Bank to approve the Bank Merger
Agreement, (ii) cause Massachusetts Bank to execute and deliver the Bank Merger
Agreement, and (iii) approve the Bank Merger Agreement as the sole shareholder
of Massachusetts Bank, and (b) the Company shall (i) cause the Board of
Directors of the Bank to approve the Bank Merger Agreement, and (ii) cause the
Bank to execute and deliver the Bank Merger Agreement. The Bank Merger Agreement
shall contain terms that are normal and customary in light of the transactions
contemplated hereby and necessary to carry out the purposes of this Agreement.
6.16 ORGANIZATION OF MERGER SUBSIDIARY.
(a) Prior to the mailing of the Proxy Statement to stockholders of the
Company for approval of the Merger, Parent will take any and all necessary
action to cause (i) Merger Subsidiary to be organized, (ii) Merger Subsidiary to
become a direct wholly owned subsidiary of Parent, (iii) the directors and sole
stockholder of Merger Subsidiary to approve this Agreement and the consummation
of the transactions contemplated hereby, (iv) Merger Subsidiary to execute one
or more counterparts to this Agreement and to deliver at least one such
counterpart so executed to the Company, whereupon Merger Subsidiary shall become
a party to and be bound by this Agreement, and (v) if the Alternative Merger is
to be consummated, Merger Subsidiary to take all necessary action to complete
the transactions contemplated hereby subject to the terms and conditions hereof.
(b) On and as of the date Merger Subsidiary becomes a party to this
Agreement, Parent and Merger Subsidiary shall, jointly and severally, represent
and warrant to the Company as follows:
(i) Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
all of its outstanding capital stock is owned directly by Parent, free and
clear of all liens, charges, encumbrances and security interests
whatsoever, and all of such shares of capital stock are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive
rights. Since the date of its incorporation, Merger Subsidiary has not
engaged in any activities other than in connection with or as contemplated
by this Agreement;
(ii) Merger Subsidiary has all necessary corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Merger
Subsidiary and the consummation of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of Merger
Subsidiary and by Parent in its capacity as sole stockholder of Merger
Subsidiary and no other corporate proceedings on the part of Merger
Subsidiary are necessary to consummate the transaction contemplated hereby
and will not (A) conflict with or violate the Certificate of Incorporation
or By-laws of Merger Subsidiary or (B) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Merger Subsidiary
or by which any of its properties or assets is bound or affected; and
(iii) Merger Subsidiary has duly and validly executed and delivered
this Agreement and this Agreement (assuming adoption of the Agreement by
the requisite vote of the Company's shareholders and the due authorization,
execution and delivery by the Company) constitutes a valid and binding
obligation of Merger Subsidiary enforceable against Merger Subsidiary in
accordance with its terms,
A-32
<PAGE> 114
except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of at least a majority of
the outstanding shares of Company Common Stock entitled to vote thereon.
(b) STOCK EXCHANGE LISTING. The Warrants, shares of Parent Common
Stock which shall be issued to the shareholders of the Company upon
consummation of the Merger and the Warrant Shares shall have been
authorized for listing on the Stock Exchange, subject to official notice of
issuance.
(c) OTHER APPROVALS. All regulatory approvals required to consummate
the Merger and the Bank Merger shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof
shall have expired.
(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 (an
"Injunction") preventing the consummation of the Merger or the other
transactions contemplated by this Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted or
enforced by any Governmental Entity which prohibits or makes illegal
consummation of the Merger.
7.02 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY. The
obligation of Parent and Merger Subsidiary to effect the Merger is also subject
to the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company 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 hereof, such
representations and warranties shall be deemed to be true and correct in
all material respects unless the failure or failures of such
representations and warranties to be so true and correct represent, in the
aggregate, a Material Adverse Effect (as defined in Section 3.01 hereof).
Parent shall have received a certificate signed on behalf of the Company by
the Chief Executive Officer and the Chief Financial Officer of the Company
to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company 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 Parent
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to
such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver of
each person (other than of the Governmental Entities with responsibility
for the regulatory approvals referred to in Section 7.01(c)) whose consent
or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company or any Company Subsidiary of the Company under any
loan or credit agreement, note, mortgage, indenture, lease, license
A-33
<PAGE> 115
or other agreement or instrument shall have been obtained, except where the
failure to obtain such consent, approval or waiver would not have a
Material Adverse Effect on the Company or its Subsidiaries taken as a
whole.
(d) LEGAL OPINION. Parent shall have received the opinion of Goodwin,
Procter & Hoar, counsel to the Company, dated the Closing Date, in a form
that is customary for transactions of this type. As to any matter in such
opinion which involves matters of fact or matters relating to laws other
than Federal securities law, such counsel may rely upon the certificates of
officers and directors of the Company and its Subsidiaries and of public
officials and opinions of local counsel, reasonably acceptable to Parent.
(e) ACCOUNTANT'S LETTER. The Company shall have caused to be
delivered to Parent letters from KPMG Peat Marwick, independent public
accountants with respect to the Company, dated the date on which the
Registration Statement or last amendment thereto shall become effective,
and dated the date of the Closing, and addressed to Parent and the Company,
with respect to the Company's consolidated financial position and results
of operations, which letters shall be based upon agreed upon procedures to
be specified by Parent, which procedures shall be consistent with
applicable professional standards for letters delivered by independent
accountants in connection with comparable transactions.
7.03 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions
(except that the condition set forth in Section 7.03(d) shall not be a condition
to the Company's obligations to effect the Alternative Merger):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Merger Subsidiary (if the Alternative Merger is to be
effected) and Parent 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 hereof, such representations and
warranties shall be deemed to be true and correct in all material respects
unless the failure or failures of such representations and warranties to be
so true and correct represent, in the aggregate, a Material Adverse Effect
(as defined in Section 3.01 hereof). The Company shall have received a
certificate signed on behalf of Merger Subsidiary (if the Alternative
Merger is to be effected) and Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS. Merger Subsidiary (if the Alternative
Merger is to be effected) and Parent shall have each performed in all
material respects all obligations required to be performed by such party
under this Agreement at or prior to the Closing Date, and the Company shall
have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent or approval of each person
(other than of the Governmental Entities with responsibility for the
regulatory approvals referred to in Section 7.01(c)) whose consent or
approval shall be required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument to which Parent or any of
its Subsidiaries is a party or is otherwise bound, except those for which
failure to obtain such consents and approvals would not have a Material
Adverse Effect on Parent and its Subsidiaries taken as a whole (after
giving effect to the transactions contemplated hereby).
(d) FEDERAL TAX OPINION. The Company shall have received from its
counsel, an opinion dated as of the Effective Time, in form and substance
reasonably satisfactory to the Company, rendered on the basis of facts,
representations, and assumptions set forth in such opinion or in writing
elsewhere and referred to therein, substantially to the effect that for
federal income tax purposes (i) the Merger constitutes a reorganization
within the meaning of Section 368(a) of the Code, and (ii) Parent and the
Company each will be a party to the reorganization within the meaning of
Section 368(b) of the Code (noting, however, that the nontaxability of the
shareholders of the Company resulting from such reorganization does not
extend to cash received as Per Share Cash Consideration, cash in lieu of a
A-34
<PAGE> 116
fractional shares interest in Parent Common Stock, cash received by the
holders of Dissenting Shares or the Warrants, if any). In rendering any
such opinion, such counsel may require and, to the extent they deem
necessary or appropriate may rely upon, opinions of other counsel and upon
representations made in certificates of officers of the Company, Parent,
affiliates of the foregoing, and others.
(e) LEGAL OPINION. The Company shall have received the opinion of
Edwards & Angell, counsel to Parent, dated the Closing Date, in a form that
is customary for transactions of this type. As to any matter in such
opinion which involves matters of fact or matters relating to laws other
than Federal securities law, Rhode Island law or Delaware corporate law,
such counsel may rely upon the certificates of officers and directors of
Parent and of public officials and opinions of local counsel, reasonably
acceptable to the Company.
(f) OPINION OF FINANCIAL ADVISOR. The Company shall have received an
opinion, dated as of the date of the Proxy Statement, from Salomon Brothers
Inc to the effect that as of the date thereof the consideration to be
received by the shareholders of the Company pursuant to the Merger is fair
to such shareholders from a financial point of view.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01 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 shareholders of the Company:
(a) by mutual consent of Parent, Merger Subsidiary and the Company 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 Parent and Merger Subsidiary or the Company upon written
notice to the other party (i) ninety days after the date on which any
request or application for a regulatory approval required to consummate the
Merger shall have been denied or withdrawn at the request or recommendation
of the Governmental Entity which must grant such requisite regulatory
approval, unless within the ninety day period following such denial or
withdrawal a petition for rehearing or an amended application has been
filed with the applicable Governmental Entity, provided, however, that no
party shall have the right to terminate this Agreement pursuant to this
Section 8.01 (b)(i) if such denial or request or recommendation for
withdrawal 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, or (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of any of the transactions
contemplated by this Agreement;
(c) by either Parent and Merger Subsidiary or the Company if the
Merger shall not have been consummated on or before May 31, 1995, 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 in any material respect the covenants and agreements of such party
set forth herein;
(d) by either Parent and Merger Subsidiary or the Company if (i) any
approval of the shareholders of the Company required for the consummation
of the Merger shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of shareholders or at any
adjournment or postponement thereof, or (ii) the Company's Board of
Directors determines that it will not recommend to its shareholders
approval, or modifies or withdraws its recommendation, of this Agreement
and the transactions contemplated hereby and such other matters as may be
submitted to its shareholders in connection with this Agreement, if such
Board shall have concluded with the advice of counsel that such action is
required to prevent such Board from breaching its fiduciary obligations to
the shareholders of the Company;
(e) by either Parent and Merger Subsidiary or the Company (provided,
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) if
there shall have been a material breach of any of the representations or
warranties set forth in this Agreement on the part of the other party,
which breach shall not have been cured within forty-five
A-35
<PAGE> 117
days following receipt by the breaching party of written notice of such
breach from the other party hereto, or which breach, by its nature, cannot
be cured prior to the Closing; or
(f) by either Parent and Merger Subsidiary or the Company (provided,
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) if
there shall have been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of the other party,
which breach shall not have been cured within forty-five days following
receipt by the breaching party of written notice of such breach from the
other party hereto.
8.02 EFFECT OF TERMINATION; EXPENSES.
(a) In the event of termination of this Agreement by either Parent and
Merger Subsidiary or the Company as provided in Section 8.01, this Agreement
shall forthwith become void and have no effect except (i) Sections 6.02(c), 8.02
and 9.03 and the last sentence of Section 6.02(a) (except as noted in Section
8.02(c)), shall survive any termination of this Agreement, and (ii) no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(b) If this Agreement is terminated, expenses of the parties hereto shall
be determined as follows:
(i) Any termination of this Agreement pursuant to Section 8.01(a) or
Section 8.01(d) hereof shall be without cost, expense or liability on the
part of any party to the other. Any termination of this Agreement pursuant
to Section 8.01(e) or Section 8.01(f) hereof shall also be without cost,
liability or expense on the part of any party to the others, unless the
breach of a representation or warranty or the breach of a covenant or
agreement is caused by the willful conduct or gross negligence of a party
in which event said party shall be liable to the other party for all
out-of-pocket costs and expenses, including, without limitation, reasonable
legal, accounting and investment banking fees and expenses, incurred by
such other party in connection with the entering into of this Agreement and
the carrying out of any and all acts contemplated hereunder ("Expenses").
(ii) If this Agreement is terminated pursuant to Section 8.01(b) or
Section 8.01(c) or the transactions contemplated hereby otherwise fail to
be consummated, in any such case because of the failure to receive any
required regulatory approval, Parent shall reimburse the Company for all
Expenses up to a maximum of $1,500,000.
(iii) The payment of Expenses is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto at
law or in equity and no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provisions
of this Agreement.
(c) In order to induce Parent to enter into this Agreement and to reimburse
Parent for incurring the costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this Agreement, the
Company will make a cash payment to Parent of $8,000,000 (the "Expense Fee") if
and only if:
(i)(x) the Company has terminated this Agreement pursuant to Section
8.01(d) or (y) Parent and Merger Subsidiary have terminated this Agreement
pursuant to Sections 8.01(e) or 8.01(f) and the breach of the
representation, warranty, covenant or agreement was caused by the willful
conduct or gross negligence of the Company, and
(ii)(x) within six (6) months of any such termination, (A) the Company
shall have entered into an agreement to engage in an Acquisition
Transaction with any person other than Parent or any subsidiary or
affiliate of Parent or (B) the Board of Directors of the Company shall have
approved an Acquisition Transaction or recommended that shareholders of the
Company approve or accept any Acquisition Transaction with any person other
than Parent or any subsidiary or affiliate of Parent, or (y) in the case of
a termination pursuant to Section 8.01(d), at the time of such termination
any person other than Parent or any subsidiary or affiliate of Parent,
shall have made a bona fide proposal to the Company or its shareholders to
engage in an Acquisition Transaction by public announcement or written
communication that shall be or become the subject of public disclosure.
A-36
<PAGE> 118
Any payment required by the previous sentence will be (i) payable by the Company
to Parent (by wire transfer of immediately available funds to an account
designated by Parent) within five business days after demand by Parent and (ii)
net of any other payments made by the Company to Parent pursuant to the
provisions of Section 8.02(b)(i). In the event of a termination under
circumstances that would trigger a payment under this Section 8.02(c), the
standstill provisions contained in the Confidentiality Agreement shall
terminate.
Notwithstanding anything to the contrary set forth in this Agreement, if
the Company pays Parent the Expense Fee, the Company will have no further
obligations or liabilities to Parent with respect to this Agreement or the
transactions contemplated by this Agreement.
For purposes of this Agreement, "Acquisition Transaction" shall mean (i) a
merger, consolidation or other similar transaction with the Company, (ii) any
sale, lease or other disposition of 25% or more of the assets of the Company and
its subsidiaries, taken as a whole, in a single transaction or series of
transactions, or (iii) any tender or exchange offer for 25% or more of the
outstanding shares of Company Common Stock.
8.03 AMENDMENT. Subject to compliance with applicable law, 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 the Merger by the shareholders of the
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the Company's shareholders, there may not be,
without further approval of such shareholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the Company's shareholders hereunder 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.
8.04 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards 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 any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the Company's shareholders, there may not be, without further approval of such
shareholders, 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 Company's shareholders 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 shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.01 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at the offices of Goodwin,
Procter & Hoar, One Exchange Place, Boston, Massachusetts 02109, at 10:00 a.m.
on a date selected by Parent, which shall be not more than five business days
after the satisfaction of the conditions set forth in Section 7.01 hereof or at
such other date, time and place as is mutually agreed upon by the Company and
Parent. The date on which such Closing takes place is referred to herein as the
"Closing Date". Parent shall provide the Company written notice of the date
selected by it as the Closing Date at least five business days prior to such
date.
9.02 NON-SURVIVAL 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 shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time.
A-37
<PAGE> 119
9.03 EXPENSES. Except as provided by Section 8.02(b) hereof, whether or
not the Merger is consummated, 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 Proxy Statement, and all filing and other fees paid
to the SEC or any other Governmental Entity in connection with the Merger, the
Bank Merger and the other transactions contemplated hereby, shall be borne by
Parent, provided, however, that nothing contained herein shall limit either
party's rights under Section 8.02 hereof, including, but not limited to, the
right to recover any liabilities or damages arising out of the other party's
willful breach of any provision of this Agreement.
9.04 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopies (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 Parent or Merger Subsidiary, to:
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903-2305
Attn: William C. Mutterperl, General Counsel
with a copy to:
Edwards & Angell
2700 Hospital Trust Plaza
Providence, Rhode Island 02903-2305
Attn: Duncan Johnson, Esq.
(b) if to the Company, to:
NBB Bancorp, Inc.
174 Union Street
New Bedford, MA 02740
Attn: Robert McCarter, Chairman
with a copy to:
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
Attn: Paul W. Lee, P.C.
Regina M. Pisa, P.C.
9.05 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." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be May 9, 1994.
9.06 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.
9.07 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) 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, other than the
Confidentiality Agreement.
A-38
<PAGE> 120
9.08 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.
9.09 JURISDICTION AND VENUE. The parties consent to the jurisdiction of
all federal and state courts in Massachusetts, and agree that venue shall lie
exclusively in Boston, Suffolk County, Massachusetts.
9.10 ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in the last
sentence of Section 6.02(a) and in Section 6.02(c) of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the last sentence of Section 6.02(a) and
Section 6.02(c) of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.12 PUBLICITY. Except as otherwise required by law or the rules of the
Stock Exchange, so long as this Agreement is in effect, neither Parent nor the
Company 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 the other party, which consent shall
not be unreasonably withheld.
9.13 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder 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 expressly provided herein, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
IN WITNESS WHEREOF, the Company and Parent have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
NBB BANCORP, INC.
By: /s/ ROBERT MCCARTER
Title: Chairman and President
Attest:
By: /s/ CAROL E. CORREIA
Title: Secretary
FLEET FINANCIAL GROUP, INC.
By: /s/ H. JAY SARLES
Title: Vice Chairman
Attest:
By: /s/ BRIAN T. MOYNIHAN
Title: Vice President
A-39
<PAGE> 121
EXHIBIT C
DELAWARE GENERAL CORPORATION LAW
SECTION 262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to the provisions of
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with the provisions of subsection (d) of this Section and
who has neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to sec.228 of this Chapter shall be entitled to an
appraisal by the Court of Chancery of the fair value of his shares of stock
under the circumstances described in subsections (b) and (c) of this Section. As
used in this Section, the word "stockholder" means a holder of record of stock
in a stock corporation and also a member of record of a non-stock corporation;
the words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a non-stock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Sections 251, 252, 254, 257, 258, or 263 of this Chapter;
(1) provided, however, that no appraisal rights under this Section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
(ii) held of record by more than 2,000 holders; and further provided that
no appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of Section 251 of this Chapter.
(2) Notwithstanding the provisions of subsection (b)(1) of this
Section, appraisal rights under this Section shall be available for the
shares of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of
this Chapter to accept for such stock anything except (i) shares of stock
of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof; (ii) shares of
stock of any other corporation, or depository receipts in respect thereof,
which shares of stock or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or held of record by more than 2,000 holders; (iii) cash in lieu
of fractional shares or fractional depository receipts described in the
foregoing clauses (i) and (ii); or (iv) any combination of the shares of
stock, depository receipts and cash in lieu of fractional shares or
fractional depository receipts described in the foregoing clauses (i), (ii)
and (iii) of this subsection.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this Chapter is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this Section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this Section, including those set forth in subsectiom (d) and
(e), shall apply as nearly as is practicable.
C-1
<PAGE> 122
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this Section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) and (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
Section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with the
provisions of this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation
has become effective; or
(2) If the merger or consolidation was approved pursuant to Section
228 or Section 253 of this Chapter, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or within
10 days thereafter, shall notify each of the stockholders entitled to
appraisal rights of the effective date of the merger or consolidation and
that appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
Section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with the provisions of subsections (a) and (d) hereof and who is
otherwise entitled to appraisal rights, may file a petition in the Court of
Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days after
the effective date of the merger or consolidation, any stockholder shall have
the right to withdraw his demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by one or more publications at
least one week before the day of the hearing, in a newspaper of general
circulation published in the City of
C-2
<PAGE> 123
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with the provisions of this Section and who have
become entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this Section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this Section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any other state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, to be charged pro rata against the value of all of
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this Section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this Section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this Section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-3
<PAGE> 124
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's By-laws provide for indemnification to the extent
permitted by Section 7-1.1-4.1 of the Rhode Island Business Corporation Law.
Such section, as adopted by the By-laws, requires the Registrant to indemnify
directors, officers, employees or agents against judgments, fines, reasonable
costs, expenses and counsel fees paid or incurred in connection with any
proceeding to which such director, officer, employee or agent or his legal
representative may be a party (or for testifying when not a party) by reason of
his being a director, officer, employee or agent, provided that such director,
officer, employee or agent shall have acted in good faith and shall have
reasonably believed (a) if he was acting in his official capacity that his
conduct was in the Registrant's best interests, (b) in all other cases that his
conduct was at least not opposed to its best interest, and (c) in the case of
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. The Registrant's By-laws provide that such rights to indemnification
are contract rights and that the expenses incurred by an indemnified person
shall be paid in advance of a final disposition of any proceeding; provided,
however, that if required under applicable law, such person must deliver a
written affirmation that he has met the standards of care required under such
provisions to be entitled to indemnification and provides an undertaking by or
on behalf of such person to repay all amounts advanced if it is ultimately
determined that such person is not entitled to indemnification. With respect to
possible indemnification of directors, officers and controlling persons of the
Registrant for liabilities arising under the Securities Act of 1933 (the "Act")
pursuant to such provisions, the Registrant is aware that the Securities and
Exchange Commission has publicly taken the position that such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following is a list of Exhibits to this Registration
Statement:
<TABLE>
<S> <C> <C>
2 -- Agreement and Plan of Merger dated as of May 9, 1994, as amended and
restated as of August 26, 1994, between Fleet Financial Group, Inc. and
NBB Bancorp, Inc. (included in Part I as Exhibit A to the Proxy
Statement-Prospectus included in this Registration Statement)
3 -- Restated Articles and Bylaws of the Fleet (incorporated by reference to
Exhibit 1 of Fleet's Form 10-8 Quarterly Report dated June 30, 1992).
4(a) -- Shareholder Rights Plan of Fleet (incorporated by reference to Fleet's
Registration Statement on Form 8-A dated November 29, 1990, as amended
by a First Amendment to Rights Agreement dated March 28, 1991 and as
further amended by a Second Amendment to Rights Agreement dated July 12,
1991, as reported on a Form 8 Amendment to Application or Report dated
September 6, 1991)
4(b) -- Instruments defining the rights of security holders, including
indentures (Fleet has no instruments defining the rights of holders of
equity or debt securities where the amount of securities authorized
thereunder exceeds 10% of the total assets of Fleet and its subsidiaries
on a consolidated basis. Fleet hereby agrees to furnish a copy of any
such instrument to the Commission upon request)
4(c) -- Form of Rights Certificate for stock purchase rights issued to Whitehall
Associates, L.P., and KKR Partners II, L.P. (incorporated by reference
to Exhibit 4(c) of Fleet's Form 8-K Current Report dated July 12, 1991)
4(d) -- Form of Warrant Agreement (to be filed by amendment)
5 -- Opinion of Edwards & Angell as to legality
8 -- Form of Opinion of Goodwin, Procter & Hoar as to federal income tax
matters (to be filed by amendment)
</TABLE>
II-1
<PAGE> 125
<TABLE>
<S> <C> <C>
12 -- Computation of Consolidated Ratios of Earnings to Fixed Charges and
Earnings to Fixed Charges and Dividends on Preferred Stock
23(a) -- Consent of KPMG Peat Marwick LLP (as to Fleet)
23(b) -- Consent of KPMG Peat Marwick LLP (as to NBB)
23(c) -- Consent of Salomon Brothers Inc
23(d) -- Consent of Edwards & Angell (included in Exhibit 5)
25 -- Powers of Attorney (included on signature pages to this Registration
Statement)
99(a) -- Opinion of Salomon Brothers Inc
99(b) -- Form of Proxy
-- Financial Statement Schedules. Not Applicable.
(b)
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to supply by means of
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
II-2
<PAGE> 126
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to Item 20 of this Registration Statement, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 127
SIGNATURES AND AMENDMENTS
Each person whose signature appears below hereby constitutes and appoints
the Chairman and President, the Vice Chairman and Chief Financial Officer or the
Secretary of the Registrant, or any one of them, acting alone, as his true and
lawful attorney-in-fact, with full power and authority to execute in the name,
place and stead of each such person in any and all capacities and to file, an
amendment or amendments to the Registration Statement (and all exhibits thereto)
and any documents relating thereto, which amendments may make such changes in
the Registration Statement as said officer or officers so acting deem(s)
advisable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Providence, and State of Rhode Island, on September
22, 1994.
FLEET FINANCIAL GROUP, INC.
By: /s/ TERRENCE MURRAY
---------------------------------
Terrence Murray
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on September 22, 1994.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ -----------------------------------
<C> <S>
/s/ TERRENCE MURRAY Chairman and President, Chief
- ------------------------------------------ Executive Officer and Director
Terrence Murray
/s/ EUGENE M. MCQUADE Executive Vice President and Chief
- ------------------------------------------ Financial Officer
Eugene M. McQuade
/s/ ROBERT C. LAMB, JR. Controller
- ------------------------------------------
Robert C. Lamb, Jr.
/s/ WILLIAM BARNET, III Director
- ------------------------------------------
William Barnet, III
/s/ BRADFORD R. BOSS Director
- ------------------------------------------
Bradford R. Boss
/s/ PAUL J. CHOQUETTE, JR. Director
- ------------------------------------------
Paul J. Choquette, Jr.
/s/ JAMES F. HARDYMON Director
- ------------------------------------------
James F. Hardymon
Director
- ------------------------------------------
Robert M. Kavner
</TABLE>
II-4
<PAGE> 128
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ -----------------------------------
<S> <C>
/s/ LAFAYETTE KEENEY Director
- ------------------------------------------
Lafayette Keeney
/s/ RAYMOND C. KENNEDY Director
- ------------------------------------------
Raymond C. Kennedy
/s/ RUTH R. MCMULLIN Director
- ------------------------------------------
Ruth R. McMullin
/s/ ARTHUR C. MILOT Director
- ------------------------------------------
Arthur C. Milot
Director
- ------------------------------------------
Thomas D. O'Connor
/s/ MICHAEL B. PICOTTE Director
- ------------------------------------------
Michael B. Picotte
/s/ JOHN A. REEVES Director
- ------------------------------------------
John A. Reeves
/s/ JOHN R. RIEDMAN Director
- ------------------------------------------
John R. Riedman
/s/ JOHN S. SCOTT Director
- ------------------------------------------
John S. Scott
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5
September 22, 1994
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-4 (the "Registration
Statement") to be filed by Fleet Financial Group, Inc. (the "Company") with the
Securities and Exchange Commission on September 22, 1994 in connection with the
registration under the Securities Act of 1933, as amended, of up to 7,000,000
shares of common stock, $1.00 par value of the Company (the "Common Stock"),
Warrants to purchase 2,500,000 shares of Common Stock (the "Warrants") and
2,500,000 shares of Common Stock issuable upon the exercise of the Warrants (the
"Warrant Shares").
We have served as counsel for the Company and, as such, assisted in the
organization thereof under the laws of the State of Rhode Island and are
familiar with all corporate proceedings since its organization. We have examined
the following documents and records:
1. The Restated Articles of Incorporation of the Company;
2. The By-Laws of the Company;
3. The Agreement and Plan of Merger dated as of May 9, 1994, as amended
and restated as of August 26, 1994 (the "Merger Agreement");
4. A specimen certificate of the Common Stock;
5. The proposed form of the Warrant Agreement to be entered into between
the Company and Fleet National Bank, as Warrant Agent;
6. The proposed form of the Warrants to be issued by the Company; and
7. All corporate minutes and proceedings of the Company relating to the
issuance of the Common Stock, the Warrants and the Warrant Shares being
registered under the Registration Statement.
We have also examined such further documents, records and proceedings as we
have deemed pertinent in connection with the issuance of said Common Stock,
Warrants and Warrant Shares. In our examination, we have assumed the genuineness
of all signatures, the legal capacity of natural persons, the completeness and
authenticity of all documents submitted to us as originals, and the conformity
to the originals of all documents submitted to us as certified, photostatic or
conformed copies, and the validity of all laws and regulations. We also are
familiar with the additional proceedings proposed to be taken by the Company in
connection with the authorization, registration, issuance and sale of the Common
Stock, the Warrants and the Warrant Shares, and have assumed that the Warrant
Agreement and the Warrants are duly executed and delivered in substantially the
forms reviewed by us.
We are qualified to practice law in the State of Rhode Island and we do not
purport to express any opinion herein concerning any law other than the laws of
the State of Rhode Island and the federal law of the United States.
Based upon such examination, it is our opinion that:
1. Subject to the proposed additional proceedings being duly taken and
completed as now contemplated by the Company prior to the issuance of
the Common Stock and the Warrants, (a) the Common Stock being
registered by the Registration Statement, when issued pursuant to the
Merger Agreement upon consummation of the Merger, will be validly
issued, fully paid and nonassessable and (b) the Warrants, when issued
pursuant to the Merger Agreement upon consummation of the Merger, will
be legally issued and binding obligations of the Corporation except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws, or equitable
<PAGE> 2
principles relating to or limiting creditors' rights generally. We
express no opinion as to the availability of equitable remedies.
2. Subject to the proposed additional proceedings being duly taken and
completed as now contemplated by the Company prior to the issuance of
the Warrant Shares, and compliance by the holder of a Warrant with the
terms of the Warrant Agreement in connection with the exercise thereof
(including payment therefor), the Warrant Shares, when issued and so
paid for, will be validly issued, fully paid and nonassessable.
V. Duncan Johnson, a partner of Edwards & Angell, is a director of Fleet
National Bank, a subsidiary of the Company and beneficially owns 4,052 shares of
Common Stock of the Company.
We consent to the use of this opinion as an exhibit to the Registration
Statement and the reference to our firm in the Prospectus which is part of the
Registration Statement.
Very truly yours,
/s/ EDWARDS & ANGELL
------------------------------------
Edwards & Angell
<PAGE> 1
EXHIBIT 12
FLEET FINANCIAL GROUP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS
(MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
30, YEAR ENDED DECEMBER 31,
------------- ------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net income (loss)...................... $ 285 $225 $ 488 $ 280 $ 98 $ (74) $ 371
Adjustments:
(a) Applicable income taxes
(benefits).......................... 191 153 327 229 55 (90) 168
(b) Fixed charges:
(1) Interest on borrowed funds...... 248 202 417 386 450 783 560
(2) 1/3 of rent.................... 17 17 34 30 23 19 20
------ ---- ------ ------ ------ ------ ------
(c) Adjusted earnings.................. $ 741 $597 $1,266 $ 925 $ 626 $ 638 $1,119
====== ==== ====== ====== ====== ====== ======
Fixed charges [b(1)+b(2)]................ $ 265 $219 $ 451 $ 416 $ 473 $ 802 $ 580
====== ==== ====== ====== ====== ====== ======
Adjusted earnings/fixed charges.......... 2.80x 2.73x 2.81x 2.22x 1.32x 0.80x* 1.93x
====== ==== ====== ====== ====== ====== ======
</TABLE>
INCLUDING INTEREST ON DEPOSITS
(MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
--------------- ------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net income (loss).................... $ 285 $ 225 $ 488 $ 280 $ 98 $ (74) $ 371
Adjustments:
(a) Applicable income taxes
(benefits)........................ 191 153 327 229 55 (90) 168
(b) Fixed charges
(1) Interest on borrowed funds.... 248 202 417 386 450 783 560
(2) 1/3 of rent.................. 17 17 34 30 23 19 20
(3) Interest on deposits.......... 327 399 744 1,076 1,480 1,343 1,256
------ ------ ------ ------ ------ ------ ------
(c) Adjusted earnings................ $1,068 $ 996 $2,010 $2,001 $2,106 $1,981 $2,375
====== ====== ====== ====== ====== ====== ======
Fixed charges [b(1)+b(2)+b(3)]......... $ 592 $ 618 $1,195 $1,492 $1,953 $2,145 $1,836
====== ====== ====== ====== ====== ====== ======
Adjusted earnings/fixed charges........ 1.80x 1.61x 1.68x 1.34x 1.08x 0.92x* 1.29x
====== ====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
* Note that earnings are inadequate to cover fixed charges, the deficiency being
$164 million for both the ratio excluding and including interest on deposits
<PAGE> 2
FLEET FINANCIAL GROUP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
EXCLUDING INTEREST ON DEPOSITS
(MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------- ---------------------------------------
1994 1993 1993 1992 1991 1990 1989
----- ----- ------ ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net income (loss)....................... $ 285 $ 225 $ 488 $ 280 $ 98 $ (74) $ 371
Adjustments:
(a) Applicable income taxes
(benefits)........................... 191 153 327 229 55 (90) 168
(b) Fixed charges:
(1) Interest on borrowed funds....... 248 202 417 386 449 783 560
(2) 1/3 of rent..................... 17 17 34 29 23 19 20
(c) Preferred dividends................. 10 14 37 50 22 13 11
----- ----- ------ ----- ----- ----- ------
(d) Adjusted earnings................... $ 751 $ 611 $1,303 $ 974 $ 647 $ 651 $1,130
===== ===== ====== ===== ===== ===== ======
Fixed charges [b(1)+b(2)]................. $ 274 $ 232 $ 487 $ 465 $ 494 $ 815 $ 591
===== ===== ====== ===== ===== ===== ======
Adjusted earnings/fixed charges........... 2.74x 2.63x 2.67x 2.09x 1.31x 0.80x* 1.91x
===== ===== ====== ===== ===== ===== ======
</TABLE>
INCLUDING INTEREST ON DEPOSITS
(MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------- ------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net income (loss).................... $ 285 $ 225 $ 488 $ 280 $ 98 $ (74) $ 371
Adjustments:
(a) Applicable income taxes
(benefits)........................ 191 153 327 229 55 (90) 168
(b) Fixed charges
(1) Interest on borrowed funds.... 248 202 417 386 449 783 560
(2) 1/3 of rent.................. 17 17 34 29 23 19 20
(3) Interest on deposits.......... 327 399 744 1,076 1,480 1,343 1,256
(c) Preferred dividends.............. 10 14 37 50 22 13 11
------ ------ ------ ------ ------ ------ ------
(d) Adjusted earnings................ $1,078 $1,010 $2,047 $2,050 $2,127 $1,994 $2,386
====== ====== ====== ====== ====== ====== ======
Fixed charges [b(1)+b(2)+b(3)+c]....... 601 $ 631 $1,231 $1,541 $1,974 $2,158 $1,847
====== ====== ====== ====== ====== ====== ======
Adjusted earnings/fixed charges........ 1.79x 1.60x 1.66x 1.33x 1.08x 0.92x* 1.29x
====== ====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
* Note that earnings are inadequate to cover fixed charges, the deficiency being
$164 million for both the ratio excluding and including interest on deposits.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Fleet Financial Group, Inc.
We consent to the use of our report incorporated by reference in the Fleet
Financial Group, Inc. Annual Report on Form 10-K for the year ended December 31,
1993 which is incorporated by reference herein and to the reference to our Firm
under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Providence, Rhode Island
September 20, 1994
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
NBB Bancorp, Inc.
We consent to the use of our report incorporated by reference in the NBB
Bancorp, Inc. Annual Report on Form 10-K for the year ended December 31, 1993
which is incorporated by reference herein and to the reference to our Firm under
the heading "Experts" in the prospectus. Our report refers to a change in the
Company's method of accounting for securities and income taxes.
KPMG PEAT MARWICK LLP
Providence, Rhode Island
September 22, 1994
<PAGE> 1
EXHIBIT 23(c)
We hereby consent to the use of our opinion letter dated May 8, 1994 to the
Board of Directors of NBB Bancorp, Inc. included as Exhibit 99(a) to the Proxy
Statement which forms a part of the Registration Statement on Form S-4 relating
to the proposed merger of NBB Bancorp, Inc. with and into Fleet Financial Group,
Inc., and to the reference to such opinion in such Proxy Statement. In giving
such consent, we do not admit and we hereby disclaim that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder, nor do we thereby admit that we are experts with
respect to any part of such Registration Statement within the meaning of the
terms "experts" as used in the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
SALOMON BROTHERS INC
Date: September 21, 1994
<PAGE> 1
EXHIBIT 99(a)
May 8, 1994
The Board of Directors
NBB Bancorp, Inc.
174 Union Street
New Bedford, MA 02740
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to holders of shares of common stock, $0.10 par
value (the "Company Common Stock"), of NBB Bancorp, Inc. (the "Company") of the
consideration to be received by such shareholders in the proposed merger (the
"Merger") of the Company with a wholly-owned subsidiary of Fleet Financial
Group, Inc. ("Fleet") pursuant to the Agreement and Plan of Merger, to be dated
as of May 9, 1994, (the "Agreement") between the Company and Fleet. Under the
terms of the Agreement, each outstanding share of Company Common Stock will be
converted into the right to receive $48.50 either in cash or in shares of common
stock, $1.00 par value (the "Fleet Common Stock"), of Fleet and approximately
0.277 warrants to purchase one share of Fleet Common Stock determined as
provided and subject to the limitations set forth in the Agreement.
As you are aware, Salomon Brothers Inc from time to time has provided
investment banking and financial advisory services to the Company for which we
have received customary compensation. Such services have included acting as a
manager in the initial public offering of Company Common Stock on March 12,
1987. Salomon Brothers Inc from time to time has also provided investment
banking and financial advisory services to Fleet for which we have received
customary compensation. Such services have included acting as a managing
underwriter of offerings of common stock, subordinated debt and senior debt by
Fleet; acting as an agent for Fleet's medium term note program; acting as a
managing underwriter for the initial public offering of common stock of Fleet
Mortgage Group ("Fleet Mortgage"), an 80% owned subsidiary of Fleet, and acting
as an agent for Fleet Mortgage's medium term note program. In addition, in the
ordinary course of our business, we actively trade the debt and equity
securities of Fleet and Fleet Mortgage and the equity securities of the Company
for our own account and for the accounts of our customers and, accordingly, at
any time may hold a long or short position in such securities.
In arriving at our opinion, we have reviewed and analyzed, among other
things, the following: (i) the May 8, 1994 draft of the Agreement; (ii) the
Annual Reports on Form 10-K of the Company and Fleet for each year in the
three-year period ended December 31, 1993; (iii) financial statements prepared
by managements of the Company and Fleet for the three-month period ended March
31, 1994; (iv) the Report on Form 8-K of Fleet dated March 10, 1994; (v) certain
other publicly available financial and other information concerning the Company
and Fleet and the trading markets for the publicly traded securities of the
Company and Fleet; (vi) certain other internal information, including
projections, relating to the Company and Fleet, prepared by the managements of
the Company and Fleet and furnished to us for purposes of our analysis; and
(vii) certain publicly available information concerning certain other depository
institutions and holding companies, the trading markets for their securities and
the nature and terms of certain other merger and acquisition transactions we
believe relevant to our inquiry. We have also met with certain officers and
representatives of the Company and Fleet to discuss the foregoing as well as
other matters relevant to our inquiry.
In conducting our review and in arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of the financial and other
information provided to us or publicly available and have not attempted
independently to verify the same. We have relied upon the managements of the
Company and Fleet as to the reasonableness and achievability of the projections
(and the assumptions and bases therefor) provided to us, and we have assumed
that such projections reflect the best currently available estimates and
judgments of the managements of the Company and Fleet and that such projections
will be realized in the amounts and in the time periods currently estimated by
the managements of the Company and Fleet. We have also assumed without
independent verification that the allowances for loan losses for the Company and
Fleet are adequate to cover such losses. We have not made or obtained any
evaluations or appraisals of the
<PAGE> 2
properties or assets of the Company or Fleet, nor have we examined any
individual loan credit files. It is understood that we were retained by the
Board of Directors of the Company, and that our opinion as expressed herein is
limited to the fairness, from a financial point of view, to the holders of the
Company Common Stock of the consideration to be received in the Merger and does
not address the Company's underlying business decision to proceed with the
Merger.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of the
Company and Fleet, including interest income, interest expense, net interest
income, net interest margin, non-interest income, non-interest expense,
earnings, dividends, internal capital generation, book value, intangible assets,
return on assets, return on shareholders' equity, capitalization, the amount and
type of non-performing assets, loan losses and the reserve for loan losses, all
as set forth in the financial statements for the Company and Fleet; (ii) the
assets and liabilities of the Company and Fleet, including the loan and
investment portfolios, deposits, other liabilities, historical and current
liability sources, costs and liquidity; (iii) certain pro forma combined
financial information for the Company and Fleet; (iv) historical and current
market data for the Company Common Stock and Fleet Common Stock; and (v) the
nature and terms of certain other merger and acquisition transactions involving
depository institutions and holding companies. We have also taken into account
our assessment of general economic, market and financial conditions and our
experience in other transactions, as well as our experience in securities
valuation and our knowledge of depository institutions and holding companies
generally. Our opinion is necessarily based upon conditions as they exist and
can be evaluated on the date hereof and on the information made available to us
through the date hereof. This letter does not constitute a recommendation to the
Board of Directors or to any shareholder of the Company with respect to any
approval of the Merger.
Based upon and subject to the foregoing, we are of the opinion as
investment bankers that, as of the date hereof, the consideration to be received
in the Merger is fair, from a financial point of view, to the holders of the
Company Common Stock.
Very truly yours,
SALOMON BROTHERS INC
<PAGE> 1
properties or assets of the Company or Fleet, nor have we examined any
individual loan credit files. It is understood that we were retained by the
Board of Directors of the Company, and that our opinion as expressed herein is
limited to the fairness, from a financial point of view, to the holders of the
Company Common Stock of the consideration to be received in the Merger and does
not address the Company's underlying business decision to proceed with the
Merger.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of the
Company and Fleet, including interest income, interest expense, net interest
income, net interest margin, non-interest income, non-interest expense,
earnings, dividends, internal capital generation, book value, intangible assets,
return on assets, return on shareholders' equity, capitalization, the amount and
type of non-performing assets, loan losses and the reserve for loan losses, all
as set forth in the financial statements for the Company and Fleet; (ii) the
assets and liabilities of the Company and Fleet, including the loan and
investment portfolios, deposits, other liabilities, historical and current
liability sources, costs and liquidity; (iii) certain pro forma combined
financial information for the Company and Fleet; (iv) historical and current
market data for the Company Common Stock and Fleet Common Stock; and (v) the
nature and terms of certain other merger and acquisition transactions involving
depository institutions and holding companies. We have also taken into account
our assessment of general economic, market and financial conditions and our
experience in other transactions, as well as our experience in securities
valuation and our knowledge of depository institutions and holding companies
generally. Our opinion is necessarily based upon conditions as they exist and
can be evaluated on the date hereof and on the information made available to us
through the date hereof. This letter does not constitute a recommendation to the
Board of Directors or to any shareholder of the Company with respect to any
approval of the Merger.
Based upon and subject to the foregoing, we are of the opinion as
investment bankers that, as of the date hereof, the consideration to be received
in the Merger is fair, from a financial point of view, to the holders of the
Company Common Stock.
Very truly yours,
SALOMON BROTHERS INC
<PAGE> 2
EXHIBIT 99(b)
[FACING SIDE OF PROXY]
REVOCABLE PROXY
NBB BANCORP, INC.
174 Union Street, New Bedford, Massachusetts 02740
Proxy for Special Meeting of Stockholders to be Held
November , 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Robert McCarter and Carol
Correia, and each of them individually, the attorney and proxy of the
undersigned, with full power of substitution, thereby revoking any proxy
heretofore given, and authorizes each of them to represent and to vote all
shares of Common Stock of NBB Bancorp, Inc. (the "Company") held of record by
the undersigned at the close of business on October , 1994 on behalf of the
undersigned at the Special Meeting of Stockholders (the "Special Meeting") of
the Company to be held at , on , November , 1994 at
a.m., local time, and at any adjournments or postponements thereof.
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
HEREIN FOR THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1, AND IN THEIR DISCRETION, THE PROXIES ARE EACH
AUTHORIZED TO VOTE UPON SUCH BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL
MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. A STOCKHOLDER WISHING TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION NEED ONLY SIGN
AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE PROVIDED.
PLEASE SIGN AND DATE ON THE OTHER SIDE AND MAIL YOUR PROXY CARD TODAY.
(Continued on other side)
<PAGE> 3
[REVERSE SIDE OF PROXY]
The Board of Directors recommends a vote FOR Proposal 1.
1. Proposal to approve and adopt the Agreement and Plan of Merger, dated as
of May 9, 1994, as amended and restated as of August 26, 1994 (the "Merger
Agreement") by and among NBB Bancorp, Inc. (the "Company") and Fleet Financial
Group, Inc., a Rhode Island corporation ("Fleet"), and each of the transactions
contemplated thereby, upon the terms and subject to the conditions set forth in
the Merger Agreement, as more fully described in the Proxy Statement-Prospectus
for the Special Meeting.
/ / FOR / / AGAINST / / ABSTAIN
2. In the discretion, the proxies are each authorized to vote upon such
other business as may properly come before the Special Meeting and any
adjournments or postponements thereof.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Special Meeting and the Proxy Statement-Prospectus with respect
thereto and hereby revoke(s) any proxy or proxies heretofore given. This proxy
may be revoked at any time before it is exercised.
Please date and sign exactly as name
appears herein and return in the
enclosed envelope. Where there is more
than one holder, only one must sign.
When signing as an attorney-in-fact,
administrator, executor, guardian,
trustee or other fiduciary, please add
your full title as such. If executed by
a corporation, the proxy should be
signed by a duly authorized person,
stating his or her title or authority.
<TABLE>
<S> <C>
MARK HERE FOR ADDRESS MARK HERE IF YOU PLAN TO
CHANGE AND NOTE AT LEFT / / ATTEND THE SPECIAL MEETING / /
Signature:____________________ Date:________________________
Signature:____________________ Date:________________________
</TABLE>
