<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1995
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:
<TABLE>
<S> <C> <C> <C>
LAURA N. WILKINSON, ESQ. CRAIG M. WASSERMAN, ESQ. J. MICHAEL SHEPHERD, ESQ. WILLIAM S. RUBENSTEIN, ESQ.
EDWARDS & ANGELL WACHTELL, LIPTON, SHAWMUT NATIONAL SKADDEN, ARPS, SLATE,
2700 Hospital Trust Tower ROSEN & KATZ CORPORATION MEAGHER & FLOM
Providence, Rhode Island 02903 51 West 52nd Street One Federal Street 919 Third Avenue
</TABLE>
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
=================================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered(1) Per Share Offering Price Fee
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $1 par value (2).................... 116,139,576 shares (3) $3,449,561,472(4) $1,189,504
- ---------------------------------------------------------------------------------------------------------------------------------
Preferred Stock with Cumulative and Adjustable
Dividends, no par value(2)...................... 688,700 shares (3) $ 34,435,000(5) $ 11,874
- ---------------------------------------------------------------------------------------------------------------------------------
Depositary Shares, each representing a 1/10
interest in a share of 9.30% Cumulative 5,750,000
Preferred Stock, no par value................... depositary shares (3) $ 149,500,000(6) $ 51,552
- ---------------------------------------------------------------------------------------------------------------------------------
Depositary Shares, each representing a 1/10
interest in a share of 9.35% Cumulative 5,000,000
Preferred Stock, no par value................... depositary shares (3) $ 130,600,000(7) $ 45,043
- ---------------------------------------------------------------------------------------------------------------------------------
Warrants to Purchase Common Stock................. 1,185,836 warrants (3) $ 6,977,854(8) $ 2,406
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock Issuable upon exercise of the
Warrants(2)..................................... 1,185,836 shares(9) (3) (3) (3)
- ---------------------------------------------------------------------------------------------------------------------------------
Total..................................... $3,771,074,326 $1,300,379(10)
=================================================================================================================================
</TABLE>
(1) This Registration Statement covers the maximum number of the Registrant's
securities that would be issued in the transaction described herein or upon
exercise of the options or warrants issued in the transaction described
herein.
(2) Including preferred shares purchase rights.
(3) Not applicable.
(4) Computed pursuant to Rule 457(f)(1), based upon the market value of the
securities to be cancelled in the merger (130,172,131 shares of Shawmut
common stock, consisting of 116,357,871 shares of Shawmut common stock
outstanding at April 21, 1995 plus 13,814,260 shares issuable upon exercise
of stock options outstanding at April 21, 1995 plus 8,028,998 shares of
Shawmut common stock representing the maximum number of shares of Shawmut
common stock to be issued in its acquisition of Northeast Federal Corp.).
(5) Computed pursuant to Rule 457(f)(1), based upon the book value of the
securities to be cancelled in the merger (688,700 shares of Shawmut
preferred stock with cumulative and adjustable dividends).
(6) Computed pursuant to Rule 457(f)(1), based upon the market value of the
securities to be cancelled in the merger (5,750,000 depositary shares, each
representing 1/10 of a share of Shawmut 9.30% cumulative preferred stock).
(7) Computed pursuant to Rule 457(f)(1), based upon the market value of the
securities to be cancelled in the merger (5,000,000 depositary shares, each
representing 1/10 of a share of Shawmut 9.35% cumulative preferred stock).
(8) Computed pursuant to Rule 457(f)(1), based upon the market value of the
securities to be cancelled in the merger (1,329,115 warrants to purchase
Shawmut common stock).
(9) 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.
(10) $715,313 of the Registration Fee was previously paid in connection with the
Registrant's Preliminary Proxy Statement filed with the Commission on
Schedule 14A on March 17, 1995.
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
Shawmut National Corporation with and into the Registrant have been satisfied or
waived as described in the enclosed Joint 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. / /
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.
<TABLE>
CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4
AND
JOINT PROXY STATEMENT-PROSPECTUS.
<CAPTION>
LOCATION IN JOINT PROXY
S-4 ITEM 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;
Selected Consolidated Financial Data
4. Terms of the Transaction.................. Summary of Proxy Statement-Prospectus; The
Merger; Description of Fleet Capital
Stock, Fleet New Preferred Stock, Fleet
New Depositary Shares and Fleet Warrants;
Comparison of Stockholders' Rights
5. Pro Forma Financial Information........... Unaudited Pro Forma Condensed Combined
Financial Statements; Notes to Unaudited
Pro Forma Condensed Combined Financial
Statements
6. Material Contacts with the Company being
Acquired.................................. Not Applicable
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............................... Not Applicable
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
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
LOCATION IN JOINT PROXY
S-4 ITEM STATEMENT-PROSPECTUS
------------------------------------------ ------------------------------------------
<C> <S> <C>
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Cover Page; Information Incorporated by
Reference; Summary of Proxy Statement-
Prospectus; Meeting of Fleet Stockholders;
Meeting of Shawmut Stockholders; The
Merger; Board of Directors, Management and
Operations of Fleet Following the Merger;
Interests of Certain Persons in the
Merger; Involvement in Certain Legal
Proceedings; Experts; Solicitation of
Proxies
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or
in an Exchange Offer...................... Not Applicable
</TABLE>
<PAGE> 4
This Registration Statement contains two forms of the Joint Proxy
Statement-Prospectus to be delivered separately to stockholders of Fleet
Financial Group, Inc. ("Fleet") and Shawmut National Corporation ("Shawmut") in
connection with their respective Annual Meetings. The Joint Proxy
Statement-Prospectus to be delivered to Fleet stockholders in connection with
the Fleet-Shawmut merger described herein will contain a letter to Fleet
stockholders and a Notice of the Fleet Annual Meeting, as well as a separate
table of contents and a separate section at the end of the Joint Proxy
Statement-Prospectus containing information on the amendment and restatement of
the Fleet articles of incorporation, the election of Fleet directors to serve
for terms of three years until their successors are duly elected and qualified
and the ratification of the selection of independent auditors. Similarly, the
Joint Proxy Statement-Prospectus to be delivered to Shawmut stockholders in
connection with the Fleet-Shawmut merger will contain a letter to Shawmut
stockholders and a Notice of the Shawmut Annual Meeting, as well as a separate
table of contents and a separate section at the end of the Joint Proxy
Statement-Prospectus containing information on the election of Shawmut directors
to serve until the next annual meeting of stockholders of Shawmut until their
successors are duly elected and qualified, or, if earlier, until the effective
time of the merger, and the appointment of independent accountants. As described
in the accompanying Joint Proxy Statement-Prospectus, from and after the
effective time of the merger, the Fleet Board of Directors will consist of 20
members, 12 of whom will be directors appointed by Fleet's chairman and the
Fleet Board of Directors and 8 of whom will be directors appointed by Shawmut's
chairman and the Shawmut Board of Directors.
<PAGE> 5
[LOGO]
May 8, 1995
Dear Holder of Fleet Common Stock:
You are cordially invited to attend the Annual Meeting of the Stockholders
(the "Fleet Meeting") of Fleet Financial Group, Inc., a Rhode Island corporation
("Fleet"), to be held on June 21, 1995 at 11:00 a.m. at the Rhode Island
Convention Center, 99 Sabin Street, Providence, Rhode Island.
At the Fleet Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger dated as of
February 20, 1995 (the "Merger Agreement"), by and between Fleet and Shawmut
National Corporation, a Delaware corporation ("Shawmut"), and each of the
transactions contemplated thereby, pursuant to which Shawmut will be merged with
and into Fleet (the "Merger"). A copy of the Merger Agreement is attached to the
accompanying Joint Proxy Statement-Prospectus as Exhibit A.
At the effective time of the Merger, each share of Shawmut common stock,
$.0l par value ("Shawmut Common Stock"), will be entitled to receive 0.8922
shares of Fleet common stock, $1.00 par value, including the associated
preferred share purchase rights (the "Fleet Common Stock").
This significant transaction for Fleet will create one of the ten largest
banking organizations in the United States, and the only such organization to be
headquartered in New England. The Merger will create a strong and profitable
banking institution that is well-positioned to meet the competitive challenges
of the dramatically changing market for United States banking and financial
services. By combining Fleet's and Shawmut's various banking and non-banking
businesses, the combined company will be able to provide a broad array of
financial products and services to the customers and communities it serves more
efficiently than either company could provide separately, creating significant
benefits for the customers and stockholders of both companies.
Enclosed are a Notice of Annual Meeting of Stockholders and a Joint Proxy
Statement-Prospectus which describes the Merger and the background to the
transaction. You are urged to read all of these materials carefully. The Board
of Directors has fixed the close of business on May 3, 1995 as the record date
for the Fleet Meeting. Accordingly, only stockholders of record on that date
will be entitled to notice of, and to vote at, the Fleet Meeting or any
adjournments or postponements thereof. The affirmative vote of the holders of a
majority of the shares of Fleet 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 OF FLEET HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
APPROVING AND ADOPTING THE MERGER AGREEMENT AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER.
At the Fleet Meeting, you will also be asked to consider and vote upon a
proposal to amend and restate Fleet's Restated Articles of Incorporation to
increase the authorized shares of Fleet Common Stock from 300,000,000 to
600,000,000, to change the par value of the Fleet Common Stock from $1.00 to
$0.01 and to include certain other technical amendments.
You will also be asked to consider and vote upon the election of directors
to serve on the Fleet Board of Directors for terms of three years until their
successors are elected and qualified and the ratification of the selection of
independent auditors for 1995. As described in the accompanying Joint Proxy
Statement-Prospectus, from and after the effective time of the Merger the Fleet
Board of Directors will consist of 20
<PAGE> 6
members, 12 of whom will be directors appointed by myself and the Fleet Board of
Directors and 8 of whom will be directors appointed by Shawmut's Chairman and
the Shawmut Board of Directors.
The Fleet Board of Directors recommends that stockholders vote FOR the
amendment and restatement of Fleet's Restated Articles of Incorporation, FOR the
proposed slate of directors and FOR the ratification of the selection of
independent auditors.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE FLEET MEETING,
WHETHER OR NOT YOU PLAN TO ATTEND. AN ABSTENTION OR FAILURE TO VOTE WILL HAVE
THE SAME EFFECT AS A VOTE AGAINST THE MERGER. ACCORDINGLY, 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
FLEET MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
I strongly support the Merger of Shawmut with Fleet and join with the other
members of the Board in enthusiastically recommending the Merger to you. We urge
you to vote in favor of approval and adoption of the Merger Agreement, as well
as each of the additional proposals referred to herein. If you should have any
questions about the Merger or need assistance in completing your proxy card,
please contact Fleet's information agent, Georgeson & Co. at 1-800-223-2064.
Very truly yours,
/s/ Terrence Murray
TERRENCE MURRAY
Chairman and President
<PAGE> 7
FLEET FINANCIAL GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 21, 1995
The Annual Meeting of Stockholders (the "Fleet Meeting") of Fleet Financial
Group, Inc., a Rhode Island corporation ("Fleet"), will be held on June 21, 1995
at 11:00 a.m. at the Rhode Island Convention Center, 99 Sabin Street,
Providence, Rhode Island, 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 February 20, 1995 (the "Merger
Agreement"), by and between Fleet and Shawmut National Corporation, a
Delaware corporation ("Shawmut"), and the consummation of the transactions
contemplated thereby, pursuant to which Shawmut will be merged (the
"Merger") with Fleet, upon the terms and subject to the conditions set
forth in the Merger Agreement, as are more fully described in the enclosed
Joint Proxy Statement-Prospectus. A copy of the Merger Agreement is
attached as Exhibit A to the accompanying Joint Proxy Statement-Prospectus.
2. To consider and vote upon a proposal to amend and restate Fleet's
Restated Articles of Incorporation to increase the authorized shares of
Fleet Common Stock, $1.00 par value ("Fleet Common Stock") from 300,000,000
to 600,000,000, to change the par value of the Fleet Common Stock from
$1.00 to $0.01 and to include certain other technical amendments.
3. To elect five directors to serve for terms of three years until
their successors are elected and qualified. As described in the
accompanying Joint Proxy Statement-Prospectus, from and after the effective
time of the Merger, the Fleet Board of Directors will consist of 20
members, 12 of whom will be directors appointed by Fleet's Chairman and the
Fleet Board of Directors and 8 of whom will be directors appointed by
Shawmut's Chairman and the Shawmut Board of Directors.
4. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors to audit Fleet's books and accounts for the year ending December
3l, 1995.
5. To transact such other business as may properly be brought before
the Annual Meeting, or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on May 3, 1995 as
the record date for determining stockholders entitled to vote at the Fleet
Meeting and any adjournments or postponements thereof. The holders of record of
Fleet Common Stock at said Record Date are entitled to notice of and to vote at
the Fleet Meeting and any adjournments or postponements thereof. Fleet's
transfer books will not be closed.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, AS WELL AS EACH OF THE
FOREGOING ADDITIONAL ACTIONS.
By Order of the Board of Directors,
WILLIAM C. MUTTERPERL
Secretary
Providence, Rhode Island
May 8, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE FLEET 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 FLEET MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 8
[LOGO] SHAWMUT NATIONAL CORPORATION
777 Main Street
Hartford, Connecticut 06115
One Federal Street
Boston, Massachusetts 02211
May 8, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Shawmut National Corporation ("Shawmut") which will be held at the Federal
Reserve Bank of Boston, 600 Atlantic Avenue, Boston, Massachusetts at 10:00
a.m., local time, on June 21, 1995 (the "Shawmut Annual Meeting").
At the Shawmut Annual Meeting, Shawmut shareholders will be asked to
consider and vote upon a proposal to approve and adopt an Agreement and Plan of
Merger, dated February 20, 1995 (the "Merger Agreement"), between Shawmut and
Fleet Financial Group, Inc. ("Fleet"), and the consummation of the transactions
contemplated thereby, including the merger (the "Merger") of Shawmut with and
into Fleet. The Merger is further described in the accompanying Joint Proxy
Statement-Prospectus and a copy of the Merger Agreement is attached thereto as
Exhibit A.
The Merger is designed to create one of the nation's premier banking
organizations. Your Board of Directors believes that the Merger presents a
unique opportunity to create a combined entity that will be stronger than
Shawmut or Fleet alone and will have the financial and managerial resources to
compete effectively in the rapidly changing marketplace for banking and
financial services.
Upon consummation of the Merger, each outstanding share of Shawmut common
stock will be converted into 0.8922 shares of Fleet common stock. In addition,
upon consummation of the Merger, each holder of Shawmut preferred stock and
depositary shares will be entitled to receive Fleet preferred stock or
depositary shares, as applicable, and each holder of Shawmut options and
warrants to purchase Shawmut common stock will receive options or warrants, as
applicable, to acquire Fleet common stock.
At the Shawmut Annual Meeting, Shawmut shareholders will also be asked to
consider and vote upon the election of directors to serve on the Shawmut Board
until the next annual meeting of Shawmut until their successors are elected and
qualified, or, if earlier, until consummation of the Merger, and the appointment
of Price Waterhouse LLP as Shawmut's independent accountant for 1995, or, if
earlier, until consummation of the Merger. As described in the accompanying
Joint Proxy Statement-Prospectus, from and after the effective time of the
Merger, the Fleet Board of Directors will consist of 20 members, 12 of whom will
be directors appointed by Fleet's Chairman and the Fleet Board of Directors and
8 of whom will be directors appointed by myself and the Shawmut Board of
Directors.
The Shawmut Board has determined that the Merger Agreement and the
transactions contemplated thereby are in the best interests of Shawmut and its
shareholders. THE SHAWMUT BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER, FOR THE PROPOSED SLATE OF DIRECTORS AND FOR THE
APPOINTMENT OF INDEPENDENT ACCOUNTANTS AT THE SHAWMUT ANNUAL MEETING.
The accompanying Joint Proxy Statement-Prospectus sets forth the voting
rights of holders of Shawmut common stock with respect to these matters, and
describes the matters to be acted upon at the Shawmut Annual Meeting. Holders of
Shawmut preferred stock are not entitled to vote at the Shawmut Annual Meeting.
Shareholders are urged to review carefully the attached Joint Proxy
Statement-Prospectus, which contains a detailed description of the Merger, its
terms and conditions and the transactions contemplated thereby. If the Merger is
consummated, holders of Shawmut Preferred Stock with Cumulative and Adjustable
Dividends who have complied with the requirements of Section 262 of the Delaware
General Corporation Law
<PAGE> 9
will have certain appraisal rights under Delaware Law, as described in more
detail in the accompanying Joint Proxy Statement-Prospectus.
BECAUSE OF THE SIGNIFICANCE OF THE PROPOSED MERGER TO SHAWMUT, YOUR
PARTICIPATION IN THE SHAWMUT ANNUAL MEETING, IN PERSON OR BY PROXY, IS
ESPECIALLY IMPORTANT. AN ABSTENTION OR FAILURE TO EITHER ATTEND AND VOTE AT THE
ANNUAL MEETING OR SUBMIT A PROXY WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
MERGER AGREEMENT. ACCORDINGLY, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY IN THE POSTAGE-PAID ENVELOPE THAT HAS BEEN PROVIDED TO YOU FOR YOUR
CONVENIENCE. IF YOU ATTEND THE SHAWMUT ANNUAL 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 will be mailed to each
holder of record of shares of Shawmut capital stock and depositary shares.
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD TO THE
EXCHANGE AGENT UNLESS AND UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL, WHICH
WILL INCLUDE INSTRUCTIONS AS TO THE PROCEDURE TO BE USED IN SENDING YOUR STOCK
CERTIFICATES OR DEPOSITARY RECEIPTS.
I urge you to vote FOR the Merger Agreement and each of the transactions
contemplated thereby as well as each of the additional proposals referred to
herein.
Thank you, and I look forward to seeing you at the Shawmut Annual Meeting.
Sincerely,
JOEL B. ALVORD
Chairman and Chief Executive Officer
<PAGE> 10
SHAWMUT NATIONAL CORPORATION
<TABLE>
<S> <C>
777 Main Street One Federal Street
Hartford, Connecticut 06115 Boston, Massachusetts 02211
</TABLE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 21, 1995
The Annual Meeting of Stockholders (the "Shawmut Meeting") of Shawmut
National Corporation, a Delaware corporation ("Shawmut"), will be held on June
21, 1995 at 10:00 a.m., local time, at the Federal Reserve Bank of Boston, 600
Atlantic Avenue, Boston, Massachusetts 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 February 20, 1995 (the "Merger
Agreement"), by and between Shawmut and Fleet Financial Group, Inc., a
Rhode Island corporation ("Fleet"), and the consummation of the
transactions contemplated thereby, pursuant to which Shawmut will be merged
with Fleet (the "Merger"), upon the terms and subject to the conditions set
forth in the Merger Agreement, as are more fully described in the enclosed
Joint Proxy Statement-Prospectus. A copy of the Merger Agreement is
attached as Exhibit A to the accompanying Joint Proxy Statement-Prospectus.
2. To elect directors to serve until the next annual meeting of
stockholders of Shawmut until their successors are elected and qualified,
or, if earlier, until the effective time of the Merger. As described in the
accompanying Joint Proxy Statement-Prospectus, from and after the effective
time of the Merger, the Fleet Board of Directors will consist of 20
members, 12 of whom will be directors appointed by Fleet's Chairman and the
Fleet Board of Directors and 8 of whom will be directors appointed by
Shawmut's Chairman and the Shawmut Board of Directors.
3. To act upon the appointment of Price Waterhouse LLP as independent
accountants for Shawmut for 1995 or, if earlier, until the effective time
of the Merger.
4. To transact such other business as may properly be brought before
the Shawmut Meeting, or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on May 3, 1995 as
the record date (the "Record Date") for determination of stockholders entitled
to notice of and to vote at the Shawmut Meeting and any adjournments or
postponements thereof. A list of stockholders of record will be available for
examination by any stockholder for purposes germane to the meeting at Shawmut's
headquarters located at 777 Main Street, Hartford, Connecticut and One Federal
Street, Boston, Massachusetts during ordinary business hours for a period of at
least ten days prior to the Shawmut Meeting and at the Shawmut Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS APPROVE AND
ADOPT THE MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE MERGER, APPROVE THE ELECTION OF DIRECTORS AND APPROVE THE
APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
If the Merger is consummated, holders of Shawmut Preferred Stock with
Cumulative and Adjustable Dividends who have complied with the requirements of
Section 262 of the Delaware General Corporation Law will have certain appraisal
rights under Delaware Law. See "THE MERGER -- Appraisal Rights" in the
accompanying Joint Proxy Statement-Prospectus.
By Order of the Board of Directors,
J. MICHAEL SHEPHERD
Executive Vice
President,
General
Counsel and
Secretary
Hartford, Connecticut
Boston, Massachusetts
May 8, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE SHAWMUT 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 SHAWMUT MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE> 11
<TABLE>
<S> <C>
FLEET FINANCIAL GROUP, INC. SHAWMUT NATIONAL CORPORATION
50 Kennedy Plaza 777 Main Street
Providence, RI 02903 Hartford, Connecticut 06115
One Federal Street
Boston, Massachusetts 02211
</TABLE>
JOINT PROXY STATEMENT-PROSPECTUS
ANNUAL MEETING OF STOCKHOLDERS
FLEET FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
SHAWMUT NATIONAL CORPORATION
MAY 8, 1995
This Joint Proxy Statement-Prospectus is being furnished in connection with
the solicitation of proxies by the Board of Directors (the "Fleet Board") of
Fleet Financial Group, Inc. ("Fleet") to be used at the Fleet Annual Meeting of
Stockholders to be held on June 21, 1995 (the "Fleet Meeting"). At the Fleet
Meeting, holders of the common stock, par value $1.00 per share, of Fleet (the
"Fleet Common Stock") will consider and vote upon a proposal to approve and
adopt an Agreement and Plan of Merger dated as of February 20, 1995 (the "Merger
Agreement") by and between Fleet and Shawmut National Corporation ("Shawmut")
providing for the merger of Shawmut with and into Fleet (the "Merger").
This Joint Proxy Statement-Prospectus is also furnished in connection with
the solicitation of proxies by the Board of Directors (the "Shawmut Board") of
Shawmut to be used at the Shawmut Annual Meeting of Stockholders to be held on
June 21, 1995 (the "Shawmut Meeting"). At the Shawmut Meeting, holders of the
common stock, par value $.01 per share, of Shawmut (the "Shawmut Common Stock")
will consider and vote upon a proposal to approve and adopt the Merger
Agreement.
The Merger Agreement is attached hereto as Exhibit A and is incorporated
herein by reference.
This Joint Proxy Statement-Prospectus is also being furnished to holders of
Fleet Common Stock and holders of Shawmut Common Stock for the purpose of
considering and voting upon separate proposals to elect directors and approve
auditors for their respective corporations, and, in the case of Fleet, to amend
and restate Fleet's Restated Articles of Incorporation (the "Fleet Existing
Articles") to increase the authorized shares of Fleet Common Stock from
300,000,000 to 600,000,000, to change the par value of the Fleet Common Stock
from $1.00 to $0.01 and to include certain other technical amendments.
Information with respect to these proposals is being furnished separately to
each of the stockholders of Shawmut and Fleet at the end of this Joint Proxy
Statement-Prospectus.
(continued on next page)
THE SHARES OF FLEET COMMON STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW
DEPOSITARY SHARES AND FLEET WARRANTS 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, THE BANK INSURANCE FUND, THE
SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
FEDERAL OR STATE 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
JOINT PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Joint Proxy Statement-Prospectus and the respective forms of proxy are
first being mailed on or about May 11, 1995.
<PAGE> 12
(continued from prior page)
At the effective time of the Merger:
(i) each share of Shawmut Common Stock, other than shares
held in Shawmut's treasury or directly or indirectly by Fleet or
its subsidiaries or by Shawmut or its subsidiaries (except for
in both cases shares held in a fiduciary capacity or in respect
of a debt previously contracted), will be converted into the
right to receive 0.8922 shares (the "Common Exchange Ratio") of
Fleet Common Stock, including the associated preferred share
purchase rights;
(ii) each share of preferred stock with cumulative and
adjustable dividends of Shawmut (the "Shawmut Adjustable
Preferred"), except for shares of Shawmut Adjustable Preferred
as to which appraisal rights are perfected, will be converted
into the right to receive one share of preferred stock with
cumulative and adjustable dividends of Fleet (the "Fleet
Adjustable Preferred");
(iii) each share of 9.30% cumulative preferred stock of
Shawmut (the "Shawmut 9.30% Preferred") will be converted into
the right to receive one share of 9.30% cumulative preferred
stock of Fleet (the "Fleet 9.30% Preferred"); and
(iv) each share of 9.35% cumulative preferred stock of
Shawmut (the "Shawmut 9.35% Preferred, and together with the
Shawmut Adjustable Preferred and the Shawmut 9.30% Preferred,
collectively, the "Shawmut Preferred", and the Shawmut Common
Stock, together with the Shawmut Preferred, collectively the
"Shawmut Capital Stock") will be converted into the right to
receive one share of 9.35% cumulative preferred stock of Fleet
(the "Fleet 9.35% Preferred", and together with the Fleet
Adjustable Preferred and the Fleet 9.30% Preferred,
collectively, the "Fleet New Preferred Stock"); and
(v) the depositary shares, each representing 1/10 of a
share of Shawmut 9.30% Preferred (the "Shawmut 9.30% Depositary
Shares") and the depositary shares, each representing 1/10 of a
share of Shawmut 9.35% Preferred (the "Shawmut 9.35% Depositary
Shares" and together with the Shawmut 9.30% Depositary Shares,
the "Shawmut Depositary Shares") will be converted respectively
into depositary shares, each representing 1/10 of a share of
Fleet 9.30% Preferred (the "Fleet 9.30% Depositary Shares") and
depositary shares, each representing 1/10 of a share of Fleet
9.35% Preferred (the "Fleet 9.35% Depositary Shares", and
together with the Fleet 9.30% Depositary Shares, the "Fleet New
Depositary Shares").
The terms of the Fleet New Preferred Stock and the Fleet New Depositary Shares
will be substantially the same as the terms of the Shawmut Preferred and the
Shawmut Depositary Shares, respectively. The outstanding warrants (the "Shawmut
Warrants") and outstanding options of Shawmut to purchase Shawmut Common Stock
will be converted based on the Common Exchange Ratio into warrants (the "Fleet
Warrants") and options, respectively, to purchase Fleet Common Stock with terms
substantially the same as the Shawmut Warrants and the Shawmut options,
respectively. See "DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED
STOCK, FLEET NEW DEPOSITARY SHARES AND FLEET WARRANTS".
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 116,139,576 shares of Fleet
Common Stock, 688,700 shares of Fleet Adjustable Preferred, 5,750,000 Fleet
9.30% Depositary Shares and 5,000,000 Fleet 9.35% Depositary Shares,
representing shares to be issued in connection with the Merger. The Registration
Statement also covers a maximum of 1,185,836 Fleet Warrants and 1,185,836 shares
of Fleet Common Stock to be issued upon exercise of the Fleet Warrants. This
Joint Proxy Statement-Prospectus also constitutes the Prospectus of Fleet filed
as a part of such Registration Statement.
2
<PAGE> 13
This Joint Proxy Statement-Prospectus does not cover any resales of Fleet
Common Stock, Fleet New Preferred Stock, Fleet New Depositary Shares or Fleet
Warrants received by stockholders or warrantholders of Shawmut upon consummation
of the Merger, and no person is authorized to make use of this Joint Proxy
Statement-Prospectus in connection with any such resale.
All information contained in this Joint Proxy Statement-Prospectus with
respect to Fleet has been supplied by Fleet and all information with respect to
Shawmut has been supplied by Shawmut.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS JOINT PROXY
STATEMENT-PROSPECTUS. THE PROPOSED MERGER IS A COMPLEX TRANSACTION. STOCKHOLDERS
ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS JOINT PROXY
STATEMENT-PROSPECTUS IN ITS ENTIRETY.
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 BY FLEET OR SHAWMUT. 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 JOINT
PROXY-STATEMENT PROSPECTUS NOR ANY DISTRIBUTION OF THE SHARES OF FLEET COMMON
STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY SHARES OR FLEET WARRANTS
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE AFFAIRS OF FLEET OR SHAWMUT SINCE THE DATE HEREOF.
The date of this Joint Proxy Statement-Prospectus is May 8, 1995.
3
<PAGE> 14
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
------
<S> <C>
AVAILABLE INFORMATION................................................................ 7
INFORMATION INCORPORATED BY REFERENCE................................................ 7
SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS.......................................... 9
The Parties..................................................................... 9
Recent Developments............................................................. 9
Date, Time and Place of Meetings................................................ 9
Purposes of Meetings............................................................ 9
Vote Required................................................................... 10
Fleet...................................................................... 10
Shawmut.................................................................... 10
Terms of the Merger............................................................. 11
Recommendation of the Boards of Directors and Reasons for the Merger............ 12
Fairness Opinions of Financial Advisors......................................... 13
Conditions to the Consummation of the Merger.................................... 13
Board of Directors, Management and Operations of Fleet Following the Merger..... 14
Regulatory Approvals............................................................ 14
Certain Federal Income Tax Consequences......................................... 15
Accounting Treatment............................................................ 15
Termination of the Merger Agreement............................................. 15
Waiver and Amendment............................................................ 15
Fleet and Shawmut Stock Option Agreements....................................... 16
Interests of Certain Persons in the Merger...................................... 16
Appraisal Rights................................................................ 17
Certain Differences in the Rights of Stockholders............................... 17
Comparative Stock Prices and Dividends; Pro Forma Equivalent Market Value Per
Share.......................................................................... 17
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA..................................... 19
SELECTED CONSOLIDATED FINANCIAL DATA................................................. 21
FLEET FINANCIAL GROUP, INC........................................................... 25
SHAWMUT NATIONAL CORPORATION......................................................... 25
RECENT DEVELOPMENTS.................................................................. 25
MEETING OF FLEET STOCKHOLDERS........................................................ 27
Date, Time and Place; Purpose of Meeting........................................ 27
Record Date..................................................................... 28
Proxies; Voting and Revocation.................................................. 28
Votes Required to Approve the Merger; Principal Stockholders.................... 29
MEETING OF SHAWMUT STOCKHOLDERS...................................................... 30
Date, Time and Place; Purpose of Meeting........................................ 30
Record Date..................................................................... 30
Proxies; Voting and Revocation.................................................. 30
Votes Required to Approve the Merger; Principal Stockholders.................... 31
THE MERGER........................................................................... 32
General......................................................................... 32
Background of the Merger........................................................ 32
Fleet...................................................................... 32
Shawmut.................................................................... 33
Reasons for the Merger.......................................................... 34
General....................................................................... 34
Recommendation of the Fleet Board and Reasons for the Merger.................. 35
Recommendation of the Shawmut Board and Reasons for the Merger................ 36
Fairness Opinions of Financial Advisors......................................... 38
Fleet...................................................................... 38
Shawmut.................................................................... 43
Structure of the Merger......................................................... 49
Conversion of Shawmut Capital Stock; Treatment of Shawmut Stock Options and
Shawmut Warrants............................................................... 49
Exchange of Certificates; Fractional Shares..................................... 50
Shawmut.................................................................... 50
Fleet...................................................................... 51
Effective Time.................................................................. 52
</TABLE>
4
<PAGE> 15
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Representations and Warranties.................................................. 52
Conduct of Business Pending the Merger and Other Agreements..................... 52
Conditions to the Consummation of the Merger.................................... 54
Regulatory Approvals Required for the Merger.................................... 55
Certain Federal Income Tax Consequences......................................... 60
Accounting Treatment............................................................ 60
Termination of the Merger Agreement............................................. 61
Waiver and Amendment of the Merger Agreement.................................... 61
Fleet and Shawmut Stock Option Agreements....................................... 62
The Fleet Rights Agreement...................................................... 66
The Shawmut Rights Agreement.................................................... 66
Employee Benefits and Plans..................................................... 66
Stock Exchange Listing.......................................................... 68
Expenses........................................................................ 68
Dividends....................................................................... 68
Resales of Fleet Common Stock, Fleet New Preferred Stock, Fleet New Depositary
Shares and Fleet Warrants Received in the Merger............................... 68
Fleet Dividend Reinvestment and Stock Purchase Plan............................. 69
Appraisal Rights................................................................ 69
BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF
FLEET FOLLOWING THE MERGER......................................................... 72
Board of Directors.............................................................. 72
Management...................................................................... 72
Operations...................................................................... 73
INTERESTS OF CERTAIN PERSONS IN THE MERGER........................................... 74
Interests of Shawmut Directors and Executive Officers........................... 74
Interests of Fleet Directors and Executive Officers............................. 78
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS............................................. 79
CERTAIN REGULATORY CONSIDERATIONS.................................................... 80
General......................................................................... 80
Payment of Dividends............................................................ 80
Legislation and Related Matters................................................. 81
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS.......................... 84
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS................. 93
DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY
SHARES AND FLEET WARRANTS.......................................................... 97
General......................................................................... 97
Fleet Common Stock.............................................................. 97
Existing Preferred Stock........................................................ 100
Description of Fleet New Preferred Stock and Fleet New Depositary Shares........ 103
Description of Fleet Warrants................................................... 107
Selected Provisions in the Fleet Existing Articles and the Fleet New Articles... 108
COMPARISON OF STOCKHOLDERS' RIGHTS................................................... 109
General......................................................................... 109
Voting Rights................................................................... 109
Special Meetings; Corporate Action Without a Meeting............................ 111
Dividends....................................................................... 112
Appraisal Rights................................................................ 112
Provisions Relating to Directors................................................ 113
Derivative Suits................................................................ 114
State Anti-Takeover Statutes.................................................... 114
COMPARATIVE COMMON STOCK PRICES AND DIVIDENDS........................................ 116
EXPERTS.............................................................................. 118
LEGAL OPINIONS....................................................................... 119
SOLICITATION OF PROXIES.............................................................. 119
</TABLE>
5
<PAGE> 16
[ALTERNATIVE PAGE 6 TO FLEET STOCKHOLDERS ONLY]
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
AMENDMENT AND RESTATEMENT OF FLEET EXISTING ARTICLES; ELECTION OF FLEET DIRECTORS;
RATIFICATION OF FLEET INDEPENDENT AUDITORS......................................... 120
Voting Requirements............................................................. 120
Principal Stockholders.......................................................... 121
Securities of Fleet Owned by Management......................................... 122
Amendment and Restatement of Fleet Existing Articles............................ 122
Election of Directors........................................................... 124
Committees of the Board of Directors............................................ 129
Compensation Committee Interlocks and Insider Participation..................... 129
Section 16 Compliance........................................................... 130
Human Resources and Planning Committee
Report on Executive Compensation........................................... 130
Compensation of Directors and Officers.......................................... 133
Pension Plans................................................................... 137
Change of Control Contracts..................................................... 138
Stockholder Return Performance Graph............................................ 139
Indebtedness and Other Transactions............................................. 139
Ratification of the Selection of Fleet's Independent Auditors................... 141
Stockholder Proposals........................................................... 141
Other Business.................................................................. 142
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
A. Agreement and Plan of Merger...................................................... A-1
B. Fleet Option Agreement............................................................ B-1
C. Shawmut Option Agreement.......................................................... C-1
D. Opinion of Salomon Brothers Inc................................................... D-1
E. Opinion of Morgan Stanley & Co., Incorporated..................................... E-1
F. Delaware General Corporation Law Section 262...................................... F-1
</TABLE>
6
<PAGE> 17
[ALTERNATIVE PAGE 6 TO SHAWMUT STOCKHOLDERS ONLY]
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ELECTION OF SHAWMUT DIRECTORS; APPOINTMENT OF SHAWMUT INDEPENDENT ACCOUNTANTS........ 120
Voting requirements............................................................. 120
Common stock ownership.......................................................... 121
Election of Directors........................................................... 123
Committees of the board......................................................... 126
Transactions with directors and executive officers.............................. 127
Directors' remuneration......................................................... 128
Executive compensation.......................................................... 129
Executive severance and employment agreements................................... 134
Compensation committee interlocks and insider participation..................... 135
Compensation policies applicable to executive officers.......................... 135
Elements of compensation........................................................ 136
Options......................................................................... 136
Restricted Stock................................................................ 137
Performance Equity Share Units.................................................. 137
Bases for the Compensation of the Chief Executive Officer....................... 138
Appointment of Independent Accountants.......................................... 140
Stockholder proposals for next year's meeting................................... 140
Annual report................................................................... 140
Other matters................................................................... 140
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
A. Agreement and Plan of Merger...................................................... A-1
B. Fleet Option Agreement............................................................ B-1
C. Shawmut Option Agreement.......................................................... C-1
D. Opinion of Salomon Brothers Inc................................................... D-1
E. Opinion of Morgan Stanley & Co., Incorporated..................................... E-1
F. Delaware General Corporation Law Section 262...................................... F-1
G. Certain Compensation Information Relating to Fleet................................ G-1
</TABLE>
6
<PAGE> 18
AVAILABLE INFORMATION
Each of Fleet and Shawmut 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 Shawmut 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, Shawmut Common Stock, Shawmut 9.30% Depositary Shares, Shawmut
9.35% Depositary Shares and Shawmut Warrants are each listed on the New York
Stock Exchange (the "Stock Exchange"). Reports, proxy materials and other
information concerning Fleet and Shawmut also may be inspected at the offices of
the Stock Exchange, 20 Broad Street, New York, New York 10005. This Joint Proxy
Statement-Prospectus does not contain all the information set forth in the
Registration Statement and Exhibits thereto which Fleet or Shawmut 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.
INFORMATION INCORPORATED BY REFERENCE
THIS JOINT 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 JOINT PROXY
STATEMENT-PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST TO THE FOLLOWING:
<TABLE>
<CAPTION>
FLEET DOCUMENTS SHAWMUT DOCUMENTS
- ------------------------------------------ ----------------------------
<S> <C>
Robert W. Lougee, Jr. Shawmut National Corporation
Director of Investor Relations 777 Main Street
Fleet Financial Group, Inc. MSN 335
50 Kennedy Plaza Hartford, Connecticut 06115
Providence, Rhode Island 02903 Attn: Shareholder Relations
401-278-5879 203-986-2028
</TABLE>
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, A REQUEST MUST BE
RECEIVED NO LATER THAN JUNE 14, 1995.
The following Fleet documents are incorporated by reference herein:
(1) Fleet's Annual Report on Form 10-K for the year ended December 31,
1994, ("Annual Report on Form 10-K");
(2) Fleet's Current Reports on Form 8-K dated January 18, 1995,
January 27, 1995, February 20, 1995, February 21, 1995 and April 13, 1995;
(3) 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
(4) 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 and a Form 8-A/A dated March 17, 1995).
7
<PAGE> 19
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 Shawmut documents are incorporated by reference herein:
(1) Shawmut's Annual Report on Form 10-K for the year ended December
31, 1994 ("Annual Report on Form 10-K");
(2) Shawmut's Current Reports on Form 8-K, dated January 6, 1995,
January 11, 1995 (as amended by a Form 8-K/A filed February 7, 1995),
January 17, 1995, January 26, 1995, February 7, 1995, February 20, 1995 (as
amended by Form 8-K/A filed April 13, 1995), February 21, 1995, April 13,
1995 and April 19, 1995; and
(3) The description of Shawmut Common Stock and Shawmut Series A
Junior Participating Preferred Stock and Preferred Stock Purchase Rights
set forth in Shawmut's Registration Statements on Form 8-A dated November
29, 1988 and March 7, 1989 (as amended by a Form 8-A/A dated March 2,
1995).
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 Shawmut pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Joint Proxy Statement-Prospectus and prior to the date of the Fleet Meeting
and the Shawmut 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 Joint 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 Joint 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 Joint Proxy Statement-Prospectus.
8
<PAGE> 20
SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS
The following is a summary, which is necessarily incomplete, of certain
information contained elsewhere in this Joint 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 Joint Proxy Statement-Prospectus and the
Exhibits hereto in their entirety and with care.
THE PARTIES
Fleet Financial Group, Inc. ("Fleet") and Shawmut National Corporation
("Shawmut"), through their respective banking and nonbanking subsidiaries,
provide banking and financial services throughout the United States to
customers, including individuals, corporations, governments and other
institutions. Fleet is headquartered at 50 Kennedy Plaza, Providence, Rhode
Island 02903, telephone (401) 278-5800. Shawmut is headquartered at 777 Main
Street, Hartford, Connecticut 06115, telephone (203) 986-2000 and One Federal
Street, Boston, Massachusetts 02211, telephone (617) 292-2000. See "FLEET
FINANCIAL GROUP, INC." and "SHAWMUT NATIONAL CORPORATION".
RECENT DEVELOPMENTS
Fleet and Shawmut each announced its first quarter earnings on April 19,
1995. See "RECENT DEVELOPMENTS".
DATE, TIME AND PLACE OF MEETINGS
The Fleet Meeting will be held at the Rhode Island Convention Center, 99
Sabin Street, Providence, Rhode Island at 11:00 a.m. on Wednesday, June 21,
1995. The Shawmut Meeting will be held at the Federal Reserve Bank of Boston,
600 Atlantic Avenue, Boston, Massachusetts at 10:00 a.m. on Wednesday, June 21,
1995.
PURPOSES OF MEETINGS
The Fleet Meeting will be held for the purpose of considering and voting
upon proposals to (i) approve and adopt the Merger Agreement and the
consummation of the transactions contemplated thereby, including the Merger,
(ii) amend and restate the Fleet Existing Articles to increase the authorized
shares of Fleet Common Stock from 300,000,000 to 600,000,000, to change the par
value of the Fleet Common Stock from $1.00 to $0.01, and to include certain
other technical amendments to the Fleet Existing Articles (the Fleet Existing
Articles, as so amended and restated are hereinafter referred to herein as the
"Fleet New Articles"), (iii) elect directors to serve on the Fleet Board for
terms of three years until their successors are elected and qualified, (iv)
ratify the selection of independent auditors for 1995 and (v) conduct any other
business that may properly come before the Fleet Meeting, or any adjournments or
postponements thereof.
See "MEETING OF FLEET STOCKHOLDERS -- Date, Time and Place; Purpose of
Meeting".
The Shawmut Meeting will be held for the purpose of considering and voting
upon proposals to (i) approve and adopt the Merger Agreement and the
consummation of the transactions contemplated thereby, including the Merger,
(ii) elect directors to serve on the Shawmut Board until the next annual meeting
of stockholders of Shawmut until their successors are elected and qualified, or,
if earlier, until the effective time of the Merger, (iii) appoint independent
accountants for 1995, or, if earlier, until the effective time of the Merger,
and (iv) conduct any other business that may properly come before the Shawmut
Meeting, or any adjournments or postponements thereof.
See "MEETING OF SHAWMUT STOCKHOLDERS -- Date, Time and Place; Purpose of
Meeting".
As described herein under "BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF
FLEET FOLLOWING THE MERGER", from and after the Effective Time of the Merger,
the Fleet Board
9
<PAGE> 21
will consist of 20 members, 12 of whom will be directors appointed by Fleet's
Chairman and the Fleet Board and 8 of whom will be directors appointed by
Shawmut's Chairman and the Shawmut Board.
VOTE REQUIRED
The Fleet Board and the Shawmut Board have fixed the close of business on
May 3, 1995 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Fleet Meeting and the
Shawmut Meeting, respectively. Only the holders of record of the outstanding
shares of Fleet Common Stock and Shawmut Common Stock on the Record Date will be
entitled to notice of, and to vote at, the Fleet Meeting and Shawmut Meeting and
any adjournments or postponements thereof. In addition, the holders of record of
the outstanding shares of Fleet preferred stock and Shawmut Preferred on the
Record Date will be entitled to notice of, but will not be entitled to vote at,
the Fleet Meeting or the Shawmut Meeting, respectively. The presence, in person
or by proxy, of a majority of the aggregate number of shares of Fleet Common
Stock or Shawmut Common Stock outstanding and entitled to vote on the Record
Date is necessary to constitute a quorum at the Fleet Meeting and the Shawmut
Meeting, respectively.
Fleet. The affirmative vote of the holders of a majority of the shares of
Fleet Common Stock issued, outstanding and entitled to vote at the Fleet Meeting
will be required to approve the Merger Agreement and the consummation of the
transactions contemplated thereby and to approve the Fleet New Articles. Holders
of shares of Fleet's currently outstanding preferred stock are not entitled to
vote on any of the matters to be considered at the Fleet Meeting. Approval of
the Merger Agreement by the requisite vote of the holders of Fleet Common Stock
is a condition to, and required for, consummation of the Merger. None of the
other matters being considered at the Fleet Meeting must be approved by holders
of Fleet Common Stock in order for the Merger to be consummated.
The affirmative vote of a majority of the shares of Fleet Common Stock
represented at the Fleet Meeting and entitled to vote is required to elect Fleet
directors and to ratify the selection of independent auditors, as more fully
described in the section entitled "AMENDMENT AND RESTATEMENT OF FLEET EXISTING
ARTICLES; ELECTION OF FLEET DIRECTORS; RATIFICATION OF FLEET INDEPENDENT
AUDITORS" which is included in the Joint Proxy Statement-Prospectus to be
delivered to Fleet stockholders only.
As of the Record Date, shares of Fleet Common Stock were issued,
outstanding and entitled to vote, of which approximately shares, or
approximately %, were held by directors and executive officers of Fleet,
its subsidiaries and their respective affiliates. Each such director and officer
of Fleet has indicated his or her intention to vote the Fleet Common Stock
beneficially owned by him or her for approval of the Merger Agreement and the
consummation of the transactions contemplated thereby. As of the Record Date,
the banking and trust subsidiaries of Fleet, as fiduciaries, custodians or
agents, held a total of shares, or %, of the outstanding shares
of Fleet Common Stock under trust agreements and other instruments and
agreements. These entities maintained sole or shared voting power with respect
to of such shares. In addition, Shawmut's directors and executive
officers as a group beneficially owned shares, or approximately %, of the
outstanding shares of Fleet Common Stock, all of which they intend to vote for
approval of the Merger and the consummation of the transactions contemplated
thereby. As of the Record Date, the banking and trust subsidiaries of Shawmut,
as fiduciaries, custodians or agents, held a total of shares, or
%, of the outstanding shares of Fleet Common Stock under trust agreements
and other instruments and agreements. These entities maintained sole or shared
voting power with respect to
of such shares.
See "MEETING OF FLEET STOCKHOLDERS -- Votes Required to Approve the Merger;
Principal Stockholders".
Shawmut. The affirmative vote of the holders of a majority of the shares
of Shawmut Common Stock issued, outstanding and entitled to vote at the Shawmut
Meeting will be required to approve the Merger Agreement and the consummation of
the transactions contemplated thereby. Holders of shares of Shawmut Preferred
are not entitled to vote on any of the matters to be considered at the Shawmut
Meeting. Approval of the Merger Agreement by the requisite vote of the holders
of Shawmut Common Stock is a condition to, and
10
<PAGE> 22
required for, consummation of the Merger. None of the other matters being
considered at the Shawmut Meeting must be approved by holders of Shawmut Common
Stock in order for the Merger to be consummated.
At the Shawmut Meeting, Shawmut directors will be elected by a plurality of
the votes of the shares of Shawmut Common Stock represented at the Shawmut
Meeting and entitled to vote. The affirmative vote of a majority of the shares
of Shawmut Common Stock represented at the Shawmut Meeting and entitled to vote
is required to appoint independent accountants. See "ELECTION OF SHAWMUT
DIRECTORS; APPOINTMENT OF INDEPENDENT ACCOUNTANTS" included in the Joint Proxy
Statement-Prospectus to be delivered to Shawmut stockholders only.
As of the Record Date, shares of Shawmut Common Stock were
issued, outstanding and entitled to vote, of which approximately
shares, or approximately %, were held by directors and executive officers
of Shawmut, its subsidiaries and their respective affiliates. Each such director
and officer of Shawmut has indicated his or her intention to vote the Shawmut
Common Stock beneficially owned by him or her for approval of the Merger
Agreement and the consummation of the transactions contemplated thereby. As of
the Record Date, the banking and trust subsidiaries of Shawmut, as fiduciaries,
custodians or agents, held a total of shares, or %, of the
outstanding shares of Shawmut Common Stock under trust agreements and other
instruments and agreements. These entities maintained sole or shared voting
power with respect to of such shares. In addition, Fleet, on the one
hand, and Fleet's directors and executive officers as a group, on the other
hand, beneficially owned and shares, respectively, or
approximately % and %, respectively, of the outstanding shares of
Shawmut Common Stock, all of which they intend to vote for approval of the
Merger and the consummation of the transactions contemplated thereby. As of the
Record Date, the banking and trust subsidiaries of Fleet, as fiduciaries,
custodians or agents, held a total of shares, or %, of the
outstanding shares of Shawmut Common Stock under trust agreements and other
instruments and agreements. These entities maintained sole or shared voting
power with respect to of such shares.
See "MEETING OF SHAWMUT STOCKHOLDERS -- Votes Required to Approve the
Merger; Principal Stockholders".
TERMS OF THE MERGER
At the Effective Time (as hereinafter defined), Shawmut will be merged with
and into Fleet, with Fleet as the surviving corporation in the Merger. In
connection with the Merger (i) each then outstanding share of Shawmut Common
Stock (other than shares held in Shawmut's treasury or directly or indirectly by
Fleet or its subsidiaries or by Shawmut or its subsidiaries (except for in both
cases shares held in a fiduciary capacity or in respect of a debt previously
contracted)) will be converted into the right to receive 0.8922 shares of Fleet
Common Stock, including the associated preferred share purchase rights (the
"Common Exchange Ratio"). Shawmut's obligation to consummate the Merger is not
conditioned upon Fleet Common Stock continuing to trade at any specified minimum
price during any period prior to the Effective Time. Because the Common Exchange
Ratio is fixed and because the market price of Fleet Common Stock is subject to
fluctuation, the value of the shares of Fleet Common Stock that holders of
Shawmut Common Stock will receive in the Merger may increase or decrease prior
to and following the Merger. Immediately following the Merger, stockholders of
Fleet and Shawmut will own approximately 60% and 40%, respectively, of the then
outstanding Fleet Common Stock.
Further, at the Effective Time, (i) each share of preferred stock with
cumulative and adjustable dividends of Shawmut (the "Shawmut Adjustable
Preferred"), except for shares of Shawmut Adjustable Preferred as to which
appraisal rights are perfected, will be converted into the right to receive one
share of preferred stock with cumulative and adjustable dividends of Fleet (the
"Fleet Adjustable Preferred"), (ii) each share of 9.30% cumulative preferred
stock of Shawmut (the "Shawmut 9.30% Preferred") will be converted into the
right to receive one share of 9.30% cumulative preferred stock of Fleet (the
"Fleet 9.30% Preferred") and (iii) each share of 9.35% cumulative preferred
stock of Shawmut (the "Shawmut 9.35% Preferred", and together with the Shawmut
Adjustable Preferred and the Shawmut 9.30% Preferred,
11
<PAGE> 23
collectively, the "Shawmut Preferred", and the Shawmut Common Stock, together
with the Shawmut Preferred, collectively, the "Shawmut Capital Stock") will be
converted into the right to receive one share of 9.35% cumulative preferred
stock of Fleet (the "Fleet 9.35% Preferred", and together with the Fleet
Adjustable Preferred and the Fleet 9.30% Preferred, collectively, the "Fleet New
Preferred Stock"). Further, the depositary shares, each representing 1/10 of a
share of Shawmut 9.30% Preferred (the "Shawmut 9.30% Depositary Shares") and the
depositary shares, each representing 1/10 of a share of Shawmut 9.35% Preferred
(the "Shawmut 9.35% Depositary Shares" and together with the Shawmut 9.30%
Depositary Shares, the "Shawmut Depositary Shares") will be converted
respectively into depositary shares, each representing 1/10 of a share of Fleet
9.30% Preferred (the "Fleet 9.30% Depositary Shares") or depositary shares, each
representing 1/10 of a share of Fleet 9.35% Preferred (the "Fleet 9.35%
Depositary Shares", and together with the Fleet 9.30% Depositary Shares, the
"Fleet New Depositary Shares"). The terms of the Fleet New Preferred Stock and
the Fleet New Depositary Shares will be substantially the same as the terms of
the Shawmut Preferred and the Shawmut Depositary Shares, respectively. See
"DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW
DEPOSITARY SHARES AND FLEET WARRANTS" and "THE MERGER -- Appraisal Rights".
No fractional shares of Fleet Common Stock will be issued in the Merger. In
lieu thereof, each holder of Shawmut 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 of the closing-sale
prices of Fleet Common Stock on the Stock Exchange as reported by The Wall
Street Journal for the five trading days immediately preceding the date of the
Effective Time.
Each stock option to acquire Shawmut Common Stock granted under the Shawmut
Stock Option and Restricted Stock Award Plan and the Shawmut Secondary Stock
Option and Restricted Stock Award Plan (collectively, the "Shawmut Stock Plans")
which is outstanding and unexercised immediately prior to the Effective Time
will be converted automatically at the Effective Time into options to purchase
Fleet Common Stock and will continue to be governed by the terms of the Shawmut
Stock Plans which will be assumed by Fleet. Each unvested option granted under
the Shawmut Stock Plans will, pursuant to the terms of each such plan,
automatically vest and become exercisable upon the approval of the Merger
Agreement by the holders of Shawmut Common Stock. Under the Shawmut 1989
Nonemployee Directors' Restricted Stock Plan, which provides for annual grants
of restricted stock to plan participants in lieu of the annual fees otherwise
payable to such participants, all restrictions on outstanding awards will lapse
upon the consummation of the Merger. Each warrant granted by Shawmut to purchase
shares of Shawmut Common Stock (a "Shawmut Warrant") which is outstanding and
unexercised immediately prior to the Effective Time shall be converted
automatically at the Effective Time into a warrant to purchase shares of Fleet
Common Stock (a "Fleet Warrant"). The number of shares of Fleet Common Stock
subject to such options and Shawmut Warrants and the exercise price of such
options and Shawmut Warrants will be adjusted as provided in the Merger
Agreement to give effect to the Common Exchange Ratio.
The Merger will become effective on the date and time (the "Effective
Time") as set forth in the certificate of merger which will be filed with the
Secretary of State of Delaware and the articles of merger which will be filed
with the Secretary of State of Rhode Island.
See "THE MERGER -- Structure of the Merger", "-- Conversion of Shawmut
Capital Stock; Treatment of Shawmut Stock Options and Shawmut Warrants",
"-- Exchange of Certificates; Fractional Shares", and "-- Effective Time" and
"INTERESTS OF CERTAIN PERSONS IN THE MERGER -- Interests of Shawmut Directors
and Executive Officers".
RECOMMENDATION OF THE BOARDS OF DIRECTORS AND REASONS FOR THE MERGER
THE BOARD OF DIRECTORS OF EACH OF FLEET AND SHAWMUT HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND EACH UNANIMOUSLY RECOMMENDS APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE MERGER, BY ITS RESPECTIVE STOCKHOLDERS.
12
<PAGE> 24
The Fleet Board and the Shawmut Board believe that the terms of the Merger
Agreement are fair and in the best interests of Fleet and its stockholders and
Shawmut and its stockholders, respectively. The terms of the Merger Agreement
were reached on the basis of arms' length negotiations between Fleet and
Shawmut. In the course of reaching their respective decisions to approve the
Merger Agreement, the Fleet Board and the Shawmut Board consulted with their
respective legal advisors regarding the legal terms of the Merger Agreement and
the Fleet Board's and the Shawmut Board's obligations in consideration thereof,
and with their respective financial advisors, Salomon Brothers Inc ("Salomon")
and Morgan Stanley & Co., Incorporated ("Morgan Stanley"), regarding the
financial terms of the Merger Agreement and the fairness to the holders of Fleet
Common Stock and the holders of Shawmut Common Stock (other than Fleet and its
affiliates), respectively, from a financial point of view, of the Common
Exchange Ratio.
See "THE MERGER -- Background of the Merger", "-- Reasons for the
Merger -- Recommendation of the Fleet Board and Reasons for the Merger" and
"-- Recommendation of the Shawmut Board and Reasons for the Merger" and
"-- Fairness Opinions of Financial Advisors".
FAIRNESS OPINIONS OF FINANCIAL ADVISORS
Salomon, Fleet's financial advisor, has rendered its oral opinion as of
February 20, 1995, and its written opinion as of the date of this Joint Proxy
Statement-Prospectus, to the Fleet Board that the Common Exchange Ratio was
fair, from a financial point of view, to the holders of Fleet Common Stock.
Morgan Stanley, Shawmut's financial advisor, has rendered its written
opinions, as of February 20, 1995, and as of the date of this Joint Proxy
Statement-Prospectus, to the Shawmut Board that, as of the date of such
opinions, the Common Exchange Ratio was fair, from a financial point of view, to
the holders of Shawmut Common Stock (other than Fleet and its affiliates).
The opinions of the financial advisors which are attached hereto as
Exhibits D and E, should be read in their entirety with respect to the
assumptions made, matters considered and limits of the reviews undertaken by
Salomon and Morgan Stanley in rendering their respective opinions. Fleet and
Shawmut have agreed to pay fees to Salomon and Morgan Stanley, respectively, a
portion of which are contingent upon consummation of the Merger. See "THE
MERGER -- Fairness Opinions of Financial Advisors" for a further description of
the opinions of Salomon and Morgan Stanley and of the fees payable to Salomon
and Morgan Stanley by Fleet and Shawmut, respectively.
See "THE MERGER -- Background of the Merger", "-- Reasons for the
Merger -- Recommendation of the Fleet Board and Reasons for the Merger",
"-- Reasons for the Merger -- Recommendation of the Shawmut Board and Reasons
for the Merger", "-- Fairness Opinions of Financial Advisors" and Exhibits D and
E to this Joint Proxy Statement-Prospectus.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to certain conditions, including the
approval of the Merger Agreement by the affirmative vote of the holders of a
majority of the shares of Fleet Common Stock and Shawmut Common Stock issued,
outstanding and entitled to vote thereon; the effectiveness of the Registration
Statement of which this Joint Proxy Statement-Prospectus forms a part; approval
of the Merger by certain federal and state regulatory authorities; receipt by
Fleet and Shawmut of opinions of counsel as to the tax-free nature of the Merger
for Federal income tax purposes (except for cash in lieu of fractional shares
and cash received by holders of Shawmut Adjustable Preferred ("Dissenting
Preferred Shares") who perfect appraisal rights); receipt by Fleet and Shawmut
of a letter from KPMG Peat Marwick LLP that the Merger will qualify for "pooling
of interests" accounting treatment; the listing, subject to notice of issuance,
on the Stock Exchange of the Fleet Common Stock to be issued in the Merger; and
certain other customary closing conditions. There can be no assurance as to when
and if such conditions will be satisfied (or, where permissible, waived) or that
the Merger will be consummated.
See "THE MERGER -- Conditions to the Consummation of the Merger" and
"-- Regulatory Approvals Required for the Merger".
13
<PAGE> 25
BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE MERGER
From and after the Effective Time, the Fleet Board will consist of 20
persons, divided into three classes of directors. Mr. Terrence Murray, the
current Chairman of the Board, President and Chief Executive Officer of Fleet,
and Mr. Joel B. Alvord, the current Chairman of the Board and Chief Executive
Officer of Shawmut, will each be a director of Fleet and, with the approval of
the respective Boards of Directors of Fleet and Shawmut, will each designate an
additional eleven and seven individuals, respectively, to be members of the
Fleet Board following the Merger. As of the date of this Joint Proxy
Statement-Prospectus, such directors have not been designated by Messrs. Murray
and Alvord and their respective Boards of Directors. The directors selected by
Fleet and Shawmut will be divided as equally as practicable among the three
classes of directors and will serve on the various committees established by the
Fleet Board in proportion to the aggregate representation of such directors. In
addition, the Fleet Board will establish, promptly following the Effective Time,
and maintain for a period of 18 months thereafter, an integration committee,
comprised of Messrs. Murray and Alvord, two additional representatives of Fleet
and two additional representatives of Shawmut, to oversee the integration of the
operations of Fleet, Shawmut and their respective subsidiaries.
The executive officers of Fleet after the Merger will be comprised of
certain members of Fleet's current senior management and certain members of
Shawmut's current senior management. Mr. Murray will be the Chief Executive
Officer and President of Fleet following the Merger and Mr. Alvord will be the
Chairman of Fleet following the Merger. In addition, the persons listed under
"BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE
MERGER -- Management" will be executive officers of Fleet following the Merger.
Except for such persons, it has not yet been determined which members of Fleet's
or Shawmut's senior management will become executive officers of Fleet following
the Merger or what such persons' titles or functions will be. From time to time
prior to consummation of the Merger, decisions may be made with respect to the
management and operations of Fleet following the Merger, including the selection
of executive officers of Fleet.
Following the Merger, Fleet intends to combine the operations of and,
subject to required regulatory approvals, to merge certain of the subsidiary
banks of Fleet and Shawmut and to consolidate the operations of certain other
Fleet and Shawmut subsidiaries which provide similar services. The receipt of
such required regulatory approvals is not a condition to, or required for,
consummation of the Merger. As of the date of this Joint Proxy
Statement-Prospectus, no final determination with respect to such matters had
been made.
See "BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE
MERGER" and "INTERESTS OF CERTAIN PERSONS IN THE MERGER".
REGULATORY APPROVALS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") pursuant to Sections 3 and 4 of the
Bank Holding Company Act of 1956, as amended ("BHCA"), the Office of the Thrift
Supervision ("OTS") pursuant to Section 10 of the Home Owners' Loan Act, as
amended ("HOLA") and by various state regulators.
Assuming Federal Reserve Board and other required regulatory approvals for
the Merger are obtained, the Merger may not be consummated for 30 days after
such approvals (or 15 days in certain circumstances described more fully under
"THE MERGER -- Regulatory Approvals"), during which time the United States
Department of Justice may challenge the Merger on antitrust grounds and seek the
divestiture of assets and liabilities. Fleet and Shawmut intend to file
applications with the appropriate federal and state regulators with respect to
the Merger as soon as practicable following the date of this Joint Proxy
Statement-Prospectus. The Merger will not proceed until all regulatory approvals
required to consummate the 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 Merger will be approved by the
appropriate federal and state regulators of whom approval is required. If such
approvals are received, there can be no assurance as to the date of such
approvals or the absence of any litigation challenging such approvals.
See "THE MERGER -- Regulatory Approvals Required for the Merger".
14
<PAGE> 26
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Each party's obligation to effect the Merger is conditioned on delivery of
an opinion, in the case of Fleet, from Wachtell, Lipton, Rosen & Katz, special
counsel to Fleet, and, in the case of Shawmut, from Skadden, Arps, Slate,
Meagher & Flom, special counsel to Shawmut, each 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 of the Internal
Revenue Code of 1986, as amended (the "Code").
Based on such opinions, the material federal income tax results of the
Merger will be as follows: (i) no gain or loss will be recognized by Fleet or by
Shawmut as a result of the Merger; (ii) no gain or loss will be recognized by
the stockholders of Shawmut who exchange their Shawmut Capital Stock for Fleet
Common Stock or Fleet New Preferred Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in Fleet Common
Stock or cash received with respect to Dissenting Preferred Shares); and (iii)
the tax basis of the Fleet Common Stock or Fleet New Preferred Stock received by
stockholders who exchange all of their Shawmut Capital Stock solely for Fleet
Common Stock or Fleet New Preferred Stock in the Merger will be the same as the
tax basis of the Shawmut Capital Stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional share interest for which cash is
received).
Each holder of Dissenting Preferred Shares who receives cash instead of
Fleet Adjustable Preferred will recognize gain or loss equal to the difference
between the cash proceeds and the holder's tax basis in the Dissenting Preferred
Shares. Such gain or loss will constitute capital gain or loss if such
stockholder's Dissenting Preferred Shares are held as capital assets at the
Effective Time.
Each stockholder should consult his or her own tax advisors as to the tax
consequences of the Merger to him or her under federal, state, local or any
other applicable law.
See "THE MERGER -- Certain Federal Income Tax Consequences".
ACCOUNTING TREATMENT
The Merger is intended to be accounted for as a pooling of interests under
generally accepted accounting principles. It is a condition to consummation of
the Merger that Fleet and Shawmut receive an opinion from KPMG Peat Marwick LLP
that the Merger will be accounted for as a pooling of interests. See "THE
MERGER -- Accounting Treatment".
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time (i) by the mutual consent of Fleet and Shawmut by a majority vote of the
members of each company's entire Board of Directors; (ii) by either Fleet or
Shawmut if any governmental entity which must grant a regulatory approval has
denied approval of the Merger and such denial has become final and
non-appealable or any governmental entity of competent jurisdiction has issued a
final, non-appealable order enjoining or otherwise prohibiting consummation of
the transactions contemplated by the Merger Agreement; (iii) except if the party
seeking termination is in breach of the Merger Agreement, by either Fleet or
Shawmut, (a) if the Effective Time has not occurred by February 20, 1996 or (b)
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; or (iv) by either Fleet or Shawmut if the requisite stockholder
approvals of either party have not been obtained.
See "THE MERGER -- Termination of the Merger Agreement" and "-- Fleet and
Shawmut Stock Option Agreements".
WAIVER AND AMENDMENT
Prior to the Effective Time, Fleet and Shawmut, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts required of the other party contained in the Merger Agreement; (ii)
waive any
- --------------------------------------------------------------------------------
15
<PAGE> 27
- --------------------------------------------------------------------------------
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 (iii) waive compliance by the other party of any of its agreements
or conditions contained in the Merger Agreement, except that after Shawmut
stockholder approval, no extension or waiver shall reduce the amount or change
the form of consideration to be delivered to Shawmut's stockholders under the
Merger Agreement without further approval of Shawmut's stockholders.
Subject to compliance with applicable law, the Merger Agreement may be
amended by Fleet and Shawmut by action taken or authorized by their respective
Boards of Directors at any time, except that after Shawmut stockholder approval,
no amendment shall reduce the amount or change the form of the consideration to
be delivered to Shawmut's stockholders other than as contemplated by the Merger
Agreement. In addition, Delaware law prohibits any change in any of the terms
and conditions of the Merger Agreement subsequent to Shawmut stockholder
approval if such change or alteration would, among other things, adversely
affect any holder of Shawmut Common Stock.
See "THE MERGER -- Waiver and Amendment of the Merger Agreement".
FLEET AND SHAWMUT STOCK OPTION AGREEMENTS
As an inducement to Shawmut to enter into the Merger Agreement, Fleet and
Shawmut entered into the Fleet Stock Option Agreement, dated February 20, 1995
(the "Fleet Stock Option Agreement"), pursuant to which Fleet granted Shawmut an
option to purchase from Fleet 28,171,050 shares of Fleet Common Stock (subject
to adjustment, but in no event to exceed 19.9% of the then outstanding Fleet
Common Stock), at a price of $33.625 per share (the "Fleet Option"). Shawmut may
exercise the Fleet Option only upon the occurrence of certain events (none of
which has occurred as of the date hereof). At the request of the holder of the
Fleet Option, under certain circumstances, Fleet will repurchase for a formula
price the Fleet Option and any shares of Fleet Common Stock purchased upon the
exercise of the Fleet Option and beneficially owned by such holder at that time.
As an inducement to Fleet to enter into the Merger Agreement, Shawmut and
Fleet entered into the Shawmut Stock Option Agreement, dated February 20, 1995
(the "Shawmut Stock Option Agreement", and together with the Fleet Stock Option
Agreement, the "Option Agreements"), pursuant to which Shawmut granted Fleet an
option to purchase from Shawmut 24,195,625 shares of Shawmut Common Stock
(subject to adjustment, but in no event to exceed 19.9% of the then outstanding
Shawmut Common Stock), at a price of $24.50 per share (the "Shawmut Option").
Fleet may exercise the Shawmut Option only upon the occurrence of certain events
(none of which has occurred as of the date hereof). At the request of the holder
of the Shawmut Option, under certain circumstances, Shawmut will repurchase for
a formula price the Shawmut Option and any shares of Shawmut Common Stock
purchased upon the exercise of the Shawmut Option and beneficially owned by such
holder at that time.
The Option Agreements are intended to increase the likelihood that the
Merger will be consummated in accordance with the terms set forth in the Merger
Agreement. Consequently, certain aspects of the Option Agreements may have the
effect of discouraging persons who might now or prior to the Effective Time be
interested in acquiring all of or a significant interest in Fleet or Shawmut
from considering or proposing such an acquisition, even if, in the case of
Shawmut, such persons were prepared to offer to pay consideration to Shawmut's
stockholders which had a higher current market price than the shares of Fleet
Common Stock to be received for each share of Shawmut Common Stock pursuant to
the Merger Agreement.
See "THE MERGER -- Fleet and Shawmut Stock Option Agreements" and Exhibits
B and C to this Joint Proxy Statement-Prospectus.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Fleet's management and the Fleet Board, and Shawmut's
management and the Shawmut Board, respectively, may be deemed to have certain
interests in the Merger that are in addition to their interests as stockholders
of Fleet or Shawmut, as the case may be, generally. Certain executive officers
- --------------------------------------------------------------------------------
16
<PAGE> 28
and directors of each of Fleet and Shawmut will be executive officers and
directors of Fleet following the Merger. Fleet also has agreed to take certain
actions regarding the existing employment and severance arrangements of certain
officers of Shawmut and to indemnify, and maintain directors and officers
insurance covering, the Shawmut directors and officers following the Merger and
has entered into certain employment and severance agreements with Messrs. Alvord
and Overstrom, the Chairman of the Board and Chief Executive Officer and the
President and Chief Operating Officer, respectively, of Shawmut. Finally,
certain restrictions on certain benefits payable to the directors and executive
officers of Shawmut will lapse, and such benefits will vest, in connection with
the Merger.
The Fleet Board and the Shawmut Board were aware of these interests and
considered them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
See "INTERESTS OF CERTAIN PERSONS IN THE MERGER" and "BOARD OF DIRECTORS,
MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE MERGER".
APPRAISAL RIGHTS
Holders of Shawmut Adjustable Preferred who comply with the requirements of
Section 262 of the Delaware General Corporation Law will be entitled to
appraisal rights in connection with the Merger. A copy of Section 262 is
attached to this Joint Proxy Statement-Prospectus as Exhibit F. Holders of
Shawmut Common Stock, Shawmut 9.30% Preferred, Shawmut 9.35% Preferred and the
Shawmut Depositary Shares do not have any appraisal rights under Delaware law in
connection with the Merger.
See "THE MERGER -- Appraisal Rights" and Exhibit F to this Joint Proxy
Statement-Prospectus.
CERTAIN DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS
The rights of stockholders of Shawmut are currently governed by the
Delaware General Corporation Law, the Shawmut Amended and Restated Certificate
of Incorporation and Shawmut's by-laws. Upon consummation of the Merger, Shawmut
stockholders who receive Fleet capital stock in the Merger will become
stockholders of Fleet, and their rights will be governed by the Rhode Island
Business Corporation Act, the Fleet Existing Articles (or the Fleet New
Articles, if adopted) and Fleet's by-laws.
See "COMPARISON OF STOCKHOLDERS' RIGHTS".
COMPARATIVE STOCK PRICES AND DIVIDENDS; PRO FORMA EQUIVALENT MARKET VALUE PER
SHARE
Common Stock. The shares of Fleet Common Stock and Shawmut Common Stock
are each listed and traded on the Stock Exchange under the symbols "FLT" and
"SNC", respectively. The table below sets forth the high and low sales prices
for Fleet Common Stock and Shawmut 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 Shawmut Common Stock, assuming consummation
of the Merger.
<TABLE>
<CAPTION>
SHAWMUT
FLEET SHAWMUT 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 $10.875 $ 2.875 -- $ 0.71
1992......................... 33.875 24.250 0.825 19.500 8.875 -- 0.74
1993......................... 37.875 28.250 1.025 26.375 17.875 $ 0.500 0.91
1994......................... 41.375 29.875 1.400 25.750 16.375 0.820 1.25
1995 (through May 3, 1995)... 0.800 0.360 0.36
<FN>
- ---------------
(1) Represents dividends declared for Fleet Common Stock multiplied by the
Common Exchange Ratio.
</TABLE>
The following table sets forth the closing sales price of Fleet Common
Stock and Shawmut Common Stock and the equivalent per share price of Shawmut
Common Stock giving effect to the Merger on January 24, 1995, February 17, 1995
(the last business day prior to the public announcement of the proposed
17
<PAGE> 29
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Merger) and May 3, 1995 (the latest practicable trading day before the printing
of this Joint Proxy Statement-Prospectus). Subsequent to January 24, 1995, a
run-up in the market price for the Shawmut Common Stock occurred. Morgan Stanley
believes that such increase was attributable to merger speculation concerning a
potential sale of Shawmut. See "THE MERGER -- Fairness Opinions of Financial
Advisors -- Shawmut."
<TABLE>
<CAPTION>
CLOSING SALES PRICE
--------------------------- PRO FORMA
FLEET SHAWMUT EQUIVALENT
COMMON STOCK COMMON STOCK PER SHARE(1)
------------ ------------ ------------
<S> <C> <C> <C>
Market value per share:
January 24, 1995.......................... $ 31.250 $ 18.000 $27.88
February 17, 1995......................... 33.625 20.625 30.00
May 3, 1995...............................
<FN>
- ---------------
(1) Equivalent market value per share of Shawmut Common Stock represents the
closing sales price of Fleet Common Stock on the Stock Exchange, as reported
in The Wall Street Journal, on each specified date, multiplied by 0.8922.
</TABLE>
Stockholders are advised to obtain current market quotations for Fleet
Common Stock and Shawmut Common Stock. No assurance can be given as to the
market price of Fleet Common Stock or Shawmut Common Stock at the Effective Time
of the Merger, or the Fleet Common Stock after the Effective Time of the Merger.
Because the Common Exchange Ratio is fixed and because the market price of the
Fleet Common Stock is subject to fluctuation, the value of the shares of Fleet
Common Stock that holders of Shawmut Common Stock will receive in the Merger may
increase or decrease prior to and following the Merger.
Shawmut Depositary Shares and Shawmut Warrants. The Shawmut Depositary
Shares and Shawmut Warrants are each listed for trading on the Stock Exchange.
The following table sets forth the high and low sales prices per share of such
shares and warrants as reported on the Stock Exchange on February 17, 1995, the
trading day immediately preceding the public announcement of the proposed
Merger, and on May 3, 1995, the latest practicable trading day before the
printing of this Joint Proxy Statement-Prospectus.
<TABLE>
<CAPTION>
SHAWMUT 9.30% SHAWMUT 9.35%
DEPOSITARY DEPOSITARY SHAWMUT
SHARES SHARES WARRANTS
---------------- ---------------- ---------------
HIGH LOW HIGH LOW HIGH LOW
------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
February 17, 1995............................ $26.125 $26.00 $25.50 $25.375 $3.875 $3.750
May 3, 1995..................................
</TABLE>
Stockholders are advised to obtain current market quotations for Shawmut
9.30% Depositary Shares, Shawmut 9.35% Depositary Shares and Shawmut Warrants.
No assurance can be given as to the market price of Fleet 9.30% Depositary
Shares, Fleet 9.35% Depositary Shares or Fleet Warrants at or after the
Effective Time of the Merger.
See "THE MERGER -- Conversion of Shawmut Common Stock; Treatment of Shawmut
Stock Options and Shawmut Warrants" and "COMPARATIVE COMMON STOCK PRICES AND
DIVIDENDS".
- --------------------------------------------------------------------------------
18
<PAGE> 30
- --------------------------------------------------------------------------------
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA
The unaudited information set forth on the following page reflects certain
comparative per common share data related to income per share, cash dividends
declared per share and book value per share (i) on a historical basis for Fleet
and Shawmut; (ii) on a pro forma combined basis per share of Fleet Common Stock
assuming consummation of the merger (the "NBB Merger") of NBB Bancorp, Inc.
("NBB") into Fleet and the issuance of 6,165,912 shares of Fleet Common Stock in
connection therewith, the consummation of Fleet's repurchase (the "FMG
Repurchase") of the publicly-held shares of Fleet's majority-owned subsidiary,
Fleet Mortgage Group, Inc. ("FMG") and the consummation of the merger ("the
Plaza Merger") of a wholly-owned subsidiary of Fleet National Bank ("Fleet-RI")
into Plaza Home Mortgage Corporation ("Plaza"); (iii) on a pro forma combined
basis per share of Shawmut Common Stock assuming consummation of the pending
merger (the "Northeast Merger") of Northeast Federal Corp. ("Northeast") into
Shawmut and the issuance of 6,572,060 shares of Shawmut Common Stock in
connection therewith (assuming that the exchange ratio in connection with such
transaction is 0.415 which is based on the closing sales price for Shawmut
Common Stock on the Stock Exchange on May 3, 1995, the latest practicable
trading day before the printing of this Joint Proxy Statement-Prospectus) and
the acquisition (the "Barclays Acquisition") of substantially all of the assets
and assumption of certain liabilities of the Business Finance Division of
Barclays Business Credit, Inc. ("Barclays") by Shawmut; (iv) on a pro forma
combined basis per share of Fleet Common Stock assuming consummation of the
Merger, the NBB Merger, the Plaza Merger, the FMG Repurchase, the Northeast
Merger and the Barclays Acquisition; and (v) on an equivalent pro forma combined
basis per share of Shawmut Common Stock assuming consummation of the Merger, the
NBB Merger, the Plaza Merger, the FMG Repurchase, the Northeast Merger and the
Barclays Acquisition. The pro forma per share data for the years ended December
31, 1993 and 1992 assume consummation of the Merger but do not take into account
the affect of the Northeast Merger, the NBB Merger, the Plaza Merger, the
Barclays Acquisition and the FMG Repurchase since such transactions were or will
be accounted for under the purchase method of accounting. The NBB Merger was
consummated on January 27, 1995, the Barclays Acquisition was consummated on
January 31, 1995, and the Plaza Merger was consummated on March 3, 1995. It is
anticipated that the Merger will be consummated in the fourth quarter of 1995
and the Northeast Merger and the FMG Repurchase will be consummated in the
second quarter of 1995.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Fleet and Shawmut, including the
respective notes thereto, which are incorporated by reference in this Joint
Proxy Statement-Prospectus and the unaudited pro forma condensed combined
financial information, including the notes thereto, which appear elsewhere in
this Joint Proxy Statement-Prospectus. The pro forma data is presented for
comparative purposes only and is not necessarily indicative of the combined
financial position or results of operations which would have been realized had
the acquisitions been consummated during the periods or as of the dates for
which the pro forma data is presented.
See "INFORMATION INCORPORATED BY REFERENCE", "UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS" AND "NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS".
- --------------------------------------------------------------------------------
19
<PAGE> 31
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
FLEET COMMON STOCK:
Income per share from continuing operations:
Primary:
Historical................................................... $ 3.75 $ 3.01 $ 1.78
Fleet Pro Forma(1)........................................... 3.36 N/A N/A
Fleet/Shawmut Pro Forma(2)................................... 2.93 2.86 1.35
Fully Diluted:
Historical................................................... 3.75 3.01 1.77
Fleet Pro Forma(1)........................................... 3.36 N/A N/A
Fleet/Shawmut Pro Forma(2)................................... 2.93 2.86 1.34
Cash dividends declared per share:
Historical................................................... 1.40 1.025 0.825
Fleet Pro Forma(3)........................................... 1.40 N/A N/A
Fleet/Shawmut Pro Forma(3)................................... 1.40 1.025 0.825
Book Value per share at period end:
Historical................................................... 22.23
Fleet Pro Forma(1)........................................... 22.78
Fleet/Shawmut Pro Forma(2)................................... 20.25
SHAWMUT COMMON STOCK:
Income before extraordinary credit and accounting changes:
Primary:
Historical................................................... $ 1.87 $ 2.35 $ 0.60
Shawmut Pro Forma(4)......................................... 1.93 N/A N/A
Fleet/Shawmut Pro Forma Equivalent(5)........................ 2.61 2.55 1.20
Fully Diluted:
Historical................................................... 1.87 2.35 0.60
Shawmut Pro Forma(4)......................................... 1.93 N/A N/A
Fleet/Shawmut Pro Forma Equivalent(5)........................ 2.61 2.55 1.19
Cash dividends declared per share:
Historical................................................... 0.82 0.50 --
Shawmut Pro Forma(3)......................................... 0.82 N/A N/A
Fleet/Shawmut Pro Forma Equivalent(3)........................ 1.25 0.91 0.74
Book value per share at period end:
Historical................................................... 16.72
Shawmut Pro Forma(4)......................................... 17.15
Fleet/Shawmut Pro Forma Equivalent(5)........................ 18.06
<FN>
- ---------------
(1) Fleet Pro Forma shares reflect Fleet's historical common shares outstanding
and Fleet's historical primary and fully diluted equivalent shares, both
adjusted for the issuance of 6,165,912 shares of Fleet Common Stock in
connection with the NBB Merger.
(2) Fleet/Shawmut Pro Forma shares reflect Fleet's historical common shares
outstanding and Fleet's historical primary and fully diluted equivalent
shares adjusted for the issuance of 6,165,912 shares of Fleet Common Stock
in connection with the NBB Merger and the exchange of 108,429,899 shares of
Fleet Common Stock in connection with the Merger at a Common Exchange Ratio
of 0.8922 shares of Fleet Common Stock for each share of Shawmut Common
Stock (which includes the issuance of 6,572,060 shares of Shawmut Common
Stock issued in connection with the Northeast Merger and excludes the
5,811,900 shares of Shawmut Common Stock owned by Fleet which are assumed to
be retired for combining purposes).
(3) The Fleet Pro Forma dividends per share amounts and the Shawmut Pro Forma
dividends per share amounts represent Fleet's and Shawmut's respective
historical dividends per share. The Fleet/Shawmut Pro Forma dividends per
share represent Fleet's historical dividends per share and the Fleet/Shawmut
Pro Forma Equivalent dividends per share represent Fleet's historical
dividends per share multiplied by the Common Exchange Ratio of 0.8922.
(4) Shawmut Pro Forma shares reflect Shawmut's historical common shares
outstanding and Shawmut's historical primary and fully diluted equivalent
shares, both adjusted for the issuance of 6,572,060 shares of Shawmut Common
Stock in connection with the Northeast Merger.
(5) Fleet/Shawmut Pro Forma Equivalent share amounts are calculated by
multiplying the Fleet/Shawmut Pro Forma per share amounts by the Common
Exchange Ratio of 0.8922.
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE> 32
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain unaudited historical consolidated
financial data for each of Fleet and Shawmut. This data is based on the
respective consolidated financial statements of Fleet and Shawmut, including the
respective notes thereto, which are incorporated by reference in this Joint
Proxy Statement-Prospectus and should be read in conjunction therewith. See
"INFORMATION INCORPORATED BY REFERENCE". Certain amounts in prior periods have
been reclassified to conform to current-year presentation.
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
(HISTORICAL)
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1994 1993 1992 1991(1) 1990
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Consolidated Summary of Operations:
Interest income............................. $3,272 $3,212 $3,416 $3,329 $3,279
Interest expense............................ 1,290 1,161 1,463 1,930 2,126
Net interest income......................... 1,982 2,051 1,953 1,399 1,153
Provision for credit losses................. 62 271 486 509 762
Net interest income after provision for
credit losses............................. 1,920 1,780 1,467 890 391
Noninterest income......................... 1,173 1,465 1,368 1,082 735
Noninterest expense......................... 2,070 2,424 2,318 1,819 1,289
Income (loss) before income taxes........... 1,023 821 517 153 (163)
Income tax expense (benefit)................ 398 327 228 55 (89)
Net income (loss) before minority
interest.................................. 625 494 289 98 (74)
Minority interest in FMG (after-tax)(2)..... 12 6 9 -- --
----- ----- ----- ----- -----
Net income (loss)........................... $613 $488 $280 $98 $(74)
===== ===== ===== ===== =====
Earnings (loss) per common share:
Primary..................................... $3.75 $3.01 $1.78 $.67 $(.75)
Fully diluted............................... 3.75 3.01 1.77 .67 (.75)
Weighted average primary shares
outstanding............................... 159,483,021 154,666,307 141,469,658 124,966,226 109,415,386
Weighted average fully diluted shares
outstanding............................... 159,483,021 154,899,995 142,778,665 127,092,029 111,259,336
Book value per common share................. $22.23 $22.84 $19.50 $18.15 $17.65
Cash dividends declared per common share.... 1.40 1.025 . 825 .80 1.25
Common dividend payout ratio(3)............. 31.3% 28.7% 36.1% 96.7% --
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits.............. 2.80x 2.81x 2.22x 1.32x --(4)
Including interest on deposits.............. 1.76 1.68 1.34 1.08 --(4)
Ratio of Earnings to Fixed Charges and
Dividends on Preferred Stock:
Excluding interest on deposits.............. 2.73 2.67 2.09 1.31 --(5)
Including interest on deposits.............. 1.75 1.66 1.33 1.08 --(5)
Consolidated Balance Sheet --
Average Balances:
Total assets................................ $48,386 $45,966 $45,166 $38,839 $34,363
Securities held to maturity(6).............. 865 2,496 650 6,787 7,127
Securities available for sale(6)............ 14,573 10,442 11,059 1,376 --
Loans and leases, net of unearned income.... 26,637 26,144 26,615 23,995 21,027
Interest-bearing deposits................... 25,645 25,173 26,551 24,248 18,607
Short-term borrowings....................... 7,645 5,971 4,753 3,284 6,366
Long-term debt/subordinated notes and
debentures................................ 3,392 3,718 3,127 3,020 2,544
Dual Convertible Preferred
Stock(7).................................. -- -- 283 134 --
Stockholders' equity........................ 3,583 3,453 2,611 2,269 2,197
</TABLE>
21
<PAGE> 33
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1994 1993 1992 1991(1) 1990
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Consolidated Ratios:
Net interest margin (fully taxable
equivalent)............................... 4.64% 5.02% 4.80% 4.09% 3.92%
Return (loss) on average assets............. 1.27 1.06 .62 .25 (.21)
Return (loss) on average common
stockholders' equity...................... 18.77(8) 16.07 11.01 4.02 (3.93)
Return (loss) on average stockholders'
equity.................................... 17.11(8) 14.14 10.72 4.31 (3.35)
Average stockholders' equity to average
assets.................................... 7.40(8)(9) 7.51(9) 5.78(9) 5.84(9) 6.39
Tier 1 risk-based capital ratio............. 10.08 11.76 10.44 9.77 7.58
Total risk-based capital ratio.............. 14.21 16.62 15.38 13.79 11.19
Period-end reserve for credit losses to
period-end loans and leases, net of
unearned income........................... 3.46 3.80 3.86 3.81 3.42
Net charge-offs to average loans and leases,
net of unearned income.................... .39 1.11 2.05 1.65 1.92
Period-end nonperforming assets to
period-end loans and leases, net of
unearned income, and other real estate
owned..................................... 1.88 2.27 3.68 5.89 6.64
<FN>
- ---------------
(1) 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.
(2) For the year ended December 31, 1992, the minority interest deduction for
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.
(3) 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.
(4) 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.
(5) 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.
(6) For a discussion of Fleet's reclassification in 1992 of its "securities
held to maturity" to "securities available for sale", see Fleet's Current
Report on Form 8-K dated October 21, 1992. 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.
(7) Fleet's Dual Convertible Preferred Stock was issued in 1991 and
reclassified to stockholders' equity as of December 31, 1992.
(8) 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 and return on average
stockholders' equity would have been 18.11% and 16.57%, respectively, for
the year ended December 31, 1994.
(9) 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 December 31, 1994 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.
</TABLE>
22
<PAGE> 34
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA(1)
SHAWMUT NATIONAL CORPORATION
(HISTORICAL)
The following table sets forth certain unaudited historical consolidated
financial data of Shawmut. The table is based on and should be read in
conjunction with Shawmut's historical financial statements and notes thereto
incorporated by reference in this Joint Proxy Statement-Prospectus. See
"INFORMATION INCORPORATED BY REFERENCE." Certain amounts in prior periods have
been reclassified to conform to current-year presentation.
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1994(1) 1993 1992 1991 1990
----------- ----------- ----------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Summary of Operations:
Interest and dividend income.................. $ 1,938 $ 1,827 $ 1,856 $ 2,028 $ 2,475
Interest expense.............................. 870 755 874 1,212 1,657
Net interest income........................... 1,068 1,072 982 816 818
Provision for credit losses................... 3 56 242 486 474
Net interest income after provision for credit
losses...................................... 1,065 1,016 740 330 344
Noninterest income............................ 378 411 523 545 473
Noninterest expense(2)........................ 1,072 1,137 1,154 1,044 973
Income (loss) before income taxes,
extraordinary credit and cumulative effect
of accounting changes....................... 371 290 109 (169) (156)
Income tax expense............................ 134 7 41 4 --
Income (loss) before extraordinary credit and
cumulative effect of accounting changes..... 237 283 68 (173) (156)
Extraordinary credit.......................... -- -- 18 -- --
Cumulative effect of changes in methods of
accounting.................................. -- 46 -- -- --
----------- ----------- ----------- ---------- ----------
Net income (loss)............................. $ 237 $ 329 $ 86 $ (173) $ (156)
========== ========== ========== ========= =========
Net income (loss) applicable to common
shares...................................... $ 222 $ 314 $ 81 $ (176) $ (159)
========== ========== ========== ========= =========
Earnings (loss) per common share:
Income (loss) before extraordinary credit and
cumulative effect of accounting changes..... $ 1.87 $ 2.35 $ .60 $ (2.04) $ (1.89)
Net income (loss)............................. 1.87 2.75 .78 (2.04) (1.89)
Weighted average shares outstanding........... 118,977,173 113,908,148 104,379,621 85,857,688 84,116,028
Book value per common share................... 16.72 16.25 13.69 13.22 15.65
Common dividend payout ratio.................. 42.63 16.46 -- -- --
Cash dividends declared per common share(3)... .82 .50 .75
Ratio of Earnings to Fixed Charges:
Excluding interest on deposits................ 1.77x 1.82x 1.40x 0.43x(4) 0.63x(4)
Including interest on deposits................ 1.42 1.37 1.12 0.86(4) 0.91(4)
Ratio of Earnings to Fixed Charges and Dividends
on Preferred Stock:
Excluding interest on deposits................ 1.69 1.71 1.32 0.43(5) 0.63(5)
Including interest on deposits................ 1.38 1.33 1.10 0.86(5) 0.91(5)
Consolidated Balance Sheet --
Average Balances:
Total assets.................................. 31,319 29,320 26,467 26,260 27,612
Securities held to maturity(6)................ 7,922 5,239 3,650 5,571 4,209
Securities available for sale(6).............. 2,358 3,698 3,002 221 394
Loans and leases, net of unearned income...... 17,659 17,139 16,414 16,991 18,380
Interest-bearing deposits..................... 14,489 14,593 15,480 16,619 16,681
Other borrowings.............................. 8,361 7,317 4,417 3,494 4,459
Long-term debt/subordinated notes and
debentures.................................. 1,341 839 667 669 687
Shareholders' equity.......................... 2,162 1,859 1,507 1,327 1,572
</TABLE>
23
<PAGE> 35
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1994(1) 1993 1992 1991 1990
----------- ----------- ----------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Consolidated Ratios:
Net interest margin (fully taxable
equivalent)................................. 3.78% 4.03% 4.15% 3.71% 3.42%
Return (loss) on average assets............... .76 1.12 .33 (.66) (.57)
Return (loss) on average common shareholders'
equity...................................... 11.22 18.90 5.73 (13.93) (10.32)
Return (loss) on average shareholders'
equity...................................... 10.98 17.70 5.71 (13.07) (9.94)
Average shareholders' equity to average
assets...................................... 6.90 6.34 5.69 5.05 5.69
Tier 1 risk-based capital ratio............... 8.27 8.79 8.12 5.93 6.16
Total risk-based capital ratio................ 11.55 12.73 12.21 9.82 10.31
Period-end reserve for credit losses to period
end loans and leases, net of unearned
income...................................... 2.93 3.80 5.24 6.04 5.77
Net charge-offs to average loans and leases,
net of unearned income...................... .76 1.72 2.30 2.54 1.41
Period-end nonaccruing loans plus foreclosed
properties to period-end loans and leases,
net of unearned income, and foreclosed
properties.................................. 1.31 2.48 5.81 8.83 10.60
<FN>
- ---------------
(1) Restated to reflect the pooling of interests acquisitions that occurred
during the second quarter of 1994.
(2) Includes merger and restructuring related charges of $140.7 million ($99.8
million after-tax) for the year ended December 31, 1994 and restructuring
related charges of $36.3 million ($23.6 million after-tax) for year ended
December 31, 1993.
(3) 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 Shawmut during such period. For the years ended December 31, 1992
and 1991, Shawmut did not declare common dividends.
(4) Fixed charges exceeded earnings by $169.2 million and $155.7 million
(including and excluding interest on deposits, respectively) for the years
ended December 31, 1991 and 1990, respectively.
(5) The sum of fixed charges and dividends on preferred stock exceeded earnings
by $171.5 million and $158.0 million (including and excluding interest on
deposits, respectively) for the years ended December 31, 1991 and 1990,
respectively.
(6) Effective December 31, 1993, Shawmut 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
shareholders' equity. In connection with the adoption of FASB Statement No.
115, Shawmut transferred securities netting to $422 million from the
available for sale portfolio to the held to maturity portfolio.
</TABLE>
24
<PAGE> 36
FLEET FINANCIAL GROUP, INC.
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At December 31, 1994, Fleet was the 17th largest
banking institution in the United States in terms of total assets, with total
assets of $48.8 billion, total deposits of $34.8 billion and stockholders'
equity of $3.4 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-RI, Fleet Bank
("Fleet-NY"), Fleet Bank, National Association ("Fleet-CT"), Fleet Bank of
Massachusetts, National Association ("Fleet-MA"), Fleet Bank of Maine and Fleet
Bank NH ("Fleet-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, 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 (40l) 278-5800.
SHAWMUT NATIONAL CORPORATION
Shawmut is a multibank holding company and a unitary savings and loan
holding company, registered under the BHCA and the HOLA. At December 31, 1994,
Shawmut had assets of $32.4 billion, deposits of $20.7 billion, and
shareholders' equity of $2.2 billion. Shawmut was organized under the laws of
the State of Delaware in October 1987 and became a bank holding company on
February 29, 1988 through the consummation of a plan of reorganization between
Hartford National Corporation ("HNC") and Shawmut Corporation ("SC") pursuant to
which both HNC and SC became wholly owned subsidiaries of Shawmut. Shawmut
maintains dual headquarters in the States of Connecticut and Massachusetts. The
principal executive offices of Shawmut are located at 777 Main Street, Hartford,
Connecticut 06115 and One Federal Street, Boston, Massachusetts 02211. Its
telephone numbers in Connecticut and Massachusetts are (203) 986-2000 and (617)
292-2000, respectively.
Shawmut is engaged principally in the business of providing comprehensive
corporate, commercial, correspondent and individual banking services, and
personal and corporate trust services, through its network of approximately 330
branches located throughout Connecticut, Massachusetts, New Hampshire and Rhode
Island. Shawmut's principal banking subsidiaries are Shawmut Bank Connecticut,
National Association, Hartford, Connecticut ("Shawmut-CT") and Shawmut Bank,
National Association, Boston, Massachusetts ("Shawmut-MA"). Shawmut also has a
bank subsidiary in New Hampshire, Shawmut Bank NH, Manchester, New Hampshire
("Shawmut-NH"). Shawmut's thrift subsidiary is Shawmut Bank, FSB, Boca Raton,
Florida ("Shawmut-FSB"). On June 11, 1994, Shawmut entered into an Agreement and
Plan of Merger with Northeast, pursuant to which Northeast will merge into
Shawmut. The parties expect the Northeast Merger to be consummated in the second
quarter of 1995.
RECENT DEVELOPMENTS
1995 FIRST QUARTER RESULTS
Fleet. Fleet's net income for the quarter ended March 31, 1995 was $164
million, or $1.02 per fully diluted share, compared to net income of $136
million, or $0.79 per fully diluted share for the first quarter of 1994, an
increase of 29%.
Net interest income for the first quarter totaled $487 million ($497
million on a fully taxable equivalent basis) compared to $482 million ($493
million on a fully taxable equivalent basis) for the fourth quarter of 1994 and
$504 million ($512 million on a fully taxable equivalent basis) for the first
quarter of 1994. The higher net interest margin of 4.83%, an increase of 8 basis
points over the 4.75% recorded in the fourth quarter of 1994, reflected a
reduction in Fleet's securities portfolio as a result of actions taken in the
last half of 1994 to restructure its securities portfolio and improve its
sensitivity to rising interest rates and an increase in higher yielding average
loans outstanding, due in part to the consummation of the NBB Merger in January,
1995. These actions, coupled with an increase in Fleet's prime rate during the
first quarter, resulted in an increase in
25
<PAGE> 37
the yield on interest earning assets from 8.03% in the fourth quarter of 1994 to
8.54% in the first quarter of 1995. This increase, however, was partially offset
by an increase in Fleet's overall cost of funds which was the result of
customers moving into higher yield time deposits, coupled with the impact of an
increase in short-term borrowing rates by the Federal Reserve Board of 50 basis
points during the first quarter of 1995.
Fleet's first quarter provision for credit losses was $20 million, a slight
decrease from the prior year's first quarter. Net charge-offs for the quarter
totaled $35 million, compared to $32 million in the first quarter of 1994.
Expenses related to other real estate owned ("OREO") were $3 million for the
first three months of 1995, compared to $7 million in the first three months of
1994. Nonperforming assets increased in the first quarter to $578 million from
$518 million at December 31, 1994, while the reserve for loan losses also rose
to $966 million from $953 million. At March 31, 1995, Fleet's ratio of reserves
to nonperforming loans was 198%, compared to 208% at March 31, 1994.
Noninterest income in the first quarter totaled $308 million, compared to
$295 million for the same period in 1994. Mortgage banking revenue of $99
million in the first quarter of 1995 remained basically even with the $100
million recorded in the first quarter of 1994, reflecting a reduction in
mortgage production revenue, as this business has been negatively impacted by
rising interest rates over the past year, offset by an increase in mortgage
servicing revenue and gains on sale of servicing. Fleet's servicing portfolio
totaled $90 billion at March 31, 1995 compared to $70 billion at March 31, 1994.
Service charges, fees and commissions increased $13 million as a result of the
implementation of various fee producing programs initiated as part of Fleet's
efficiency improvement programs. Investment services revenue improved slightly
to $46 million, compared to the first quarter of 1994.
Noninterest expense in the first quarter totaled $498 million, a reduction
of $52 million, compared to the $550 million reported for the first quarter of
1994. The decrease is primarily attributable to the successful implementation of
numerous cost-cutting strategies developed as part of Fleet's
efficiency-improvement programs. The first quarter of 1994 included a $25
million restructuring charge related to such efficiency improvement program.
Total assets at March 31, 1995 were $47.8 billion, while total loans and
leases were $29.5 billion at the same date, compared with $48.8 billion of total
assets and $27.7 billion of loans and leases at December 31, 1994. Total assets
and loans and leases were $47.4 billion and $26.0 billion, respectively, at
March 31, 1994. Excluding the NBB and Plaza acquisitions, loans and leases
increased by approximately $513 million from December 31, 1994. The largest
increases were noted in the commercial and residential real estate portfolio.
Fleet's investment securities portfolio remained relatively stable from December
31, 1994 to March 31, 1995 at $11 billion. However, the depreciation in the
portfolio was reduced to approximately $200 million at March 31, 1995, a
reduction of more than $400 million from December 31, 1994 as a result of an
increase in the bond market rally in the first quarter.
Stockholder's equity equaled $3.9 billion at March 31, 1995 and $3.4
billion at December 31, 1994, an increase of $500 million. This increase is
primarily attributable to the reissuance in the NBB Merger of $217 million of
treasury stock purchased by Fleet for that purpose, and a $240 million after-tax
improvement in Fleet's securities available for sale valuation reserve.
At March 31, 1995, Fleet's capital ratios exceeded all minimum regulatory
capital requirements.
Shawmut. Shawmut's net income for the quarter ended March 31, 1995 was
$62.6 million, or $.47 per common share, compared with net income of $77.3
million, or $.62 per common share for the first quarter of 1994. Included in
first quarter 1995 results was a $36.9 million pre-tax charge ($23.1 million
after-tax, or $.19 per common share) related to the settlement of certain
Shawmut employee retirement benefits caused by the pending Merger. First quarter
1995 results reflect the Barclays Acquisition.
Tax equivalent net interest income for the quarter ended March 31, 1995
totaled $273.2 million, compared with $275.4 million for the comparable period
in the previous year. The net interest margin for the first quarter of 1995 was
3.55%, compared to 3.65% for the fourth quarter of 1994 and 3.91% for the first
quarter of 1994. The increase in net interest income relative to the fourth
quarter of 1994 resulted from growth in average interest-earning assets,
primarily due to the Barclays Acquisition. The decline in net interest margin
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<PAGE> 38
for the same period resulted from the liability sensitive nature of Shawmut's
balance sheet in an environment of rising interest rates. Consistent with its
strategy in recent quarters, Shawmut has extended funding maturities while
shortening asset maturities to lessen liability sensitivity. These risk
reduction actions have contributed to the decline in net interest margin.
Noninterest income for the quarter ended March 31, 1995 was $95.3 million,
compared with $88.7 million for the comparable prior year period. This
improvement in noninterest income was primarily due to the Barclays Acquisition
and purchases of other companies during 1994, which contributed to increases in
customer service and other fees.
Noninterest expenses for the quarter ended March 31, 1995 before the Merger
related charge discussed above were $228.7 million, compared with $241.8 million
in the first quarter of 1994. Noninterest expenses for the first quarter of 1995
included $2.9 million of stock incentive adjustments reflecting the increase in
Shawmut's stock price which was influenced by the announcement of the Merger
Agreement and $9.0 million added by the Barclays Acquisition. Excluding these
items, noninterest expenses of $216.8 million declined by $25 million when
compared with the first quarter of 1994, primarily due to Shawmut's continuing
cost management program and acquisition consolidation.
There was no provision for credit losses for the first quarter of 1995,
compared with $3.0 million for the first quarter of 1994. With continuing
increases in reserve coverage of nonaccruing loans and improving credit quality
in the loan portfolio, Shawmut does not currently anticipate that provisions for
credit losses will be necessary in the first half and possibly all of 1995.
At March 31, 1995, nonaccruing loans plus foreclosed properties were $240.3
million, compared with $242.8 million at December 31, 1994, or 1.14% and 1.31%,
respectively, of total loans plus foreclosed properties. Nonaccruing loans
increased from $224.0 million at December 31, 1994 to $228.4 million at March
31, 1995. The Barclays Acquisition increased nonaccruing loans by $14.1 million
at period end and an additional $13.0 million of loans were identified as assets
held for accelerated disposition.
Shawmut's reserve for credit losses increased $17.1 million from $542.1
million at December 31, 1994 to $559.2 million at March 31, 1995, due to the
addition of $41.7 million of reserves purchased as part of the Barclays
Acquisition, net of loans charged off of $24.6 million for the quarter. At March
31, 1995, Shawmut's ratio of credit loss reserves to nonaccruing loans was 245%,
compared with 242% at December 31, 1994.
At March 31, 1995, Shawmut had total assets of $34.2 billion, total
deposits of $20.6 billion and total shareholders' equity of $2.4 billion. Total
loans and leases were $21.1 billion at March 31, 1995, compared with $18.5
billion at December 31, 1994. The increase in loans of $2.6 billion from year
end was due to the Barclays Acquisition. Shawmut's securities portfolio at March
31, 1995 was $9.9 billion, compared with $10.0 billion at December 31, 1994. The
after-tax unrealized loss on Shawmut's $2.1 billion available for sale
securities portfolio recorded as a component of shareholders' equity declined to
$37.4 million at March 31, 1995 from $54.3 million at year end. The unrealized
loss on Shawmut's $7.8 billion held to maturity securities portfolio declined to
$248.5 million at March 31, 1995 from $438.5 million at year end, or a decrease
of $190.0 million. At March 31, 1995, Shawmut's capital ratios exceeded the
ratios designated for well-capitalized financial institutions.
MEETING OF FLEET STOCKHOLDERS
DATE, TIME AND PLACE; PURPOSE OF MEETING
This Joint Proxy Statement-Prospectus is being furnished in connection with
the solicitation of proxies by the Fleet Board for use at the Fleet Meeting. The
Fleet Meeting will be held at the Rhode Island Convention Center, 99 Sabin
Street, Providence, Rhode Island, at 11:00 a.m. on June 21, 1995.
The Fleet Meeting will be held for the purpose of considering and voting
upon proposals to (i) approve and adopt the Merger Agreement and the
consummation of the transactions contemplated thereby, including the Merger,
(ii) amend the Fleet Existing Articles to increase the authorized shares of
Fleet Common Stock
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<PAGE> 39
from 300,000,000 to 600,000,000, to change the par value of the Fleet Common
Stock from $1.00 to $0.01 and to restate the Fleet Existing Articles by
including technical amendments which would delete from the Fleet Existing
Articles the terms of Fleet preferred stock which has been redeemed or converted
in full, (iii) elect directors to serve on the Fleet Board of Directors for
terms of three years until their successors are elected and qualified, (iv)
ratify the selection of independent auditors for 1995, and (v) conduct any other
business that may properly come before the Fleet Meeting, or any adjournments or
postponements thereof. Any action may be taken on the foregoing proposals at the
Fleet Meeting or at any adjournments or postponements thereof.
Management of Fleet knows of no matters to be brought before the meeting
other than those referred to herein. If any other business should properly come
before the Fleet Meeting, the persons named in the proxy will vote in accordance
with their best judgment.
THE FLEET BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE MERGER, AS WELL AS EACH OF THE FOREGOING
ADDITIONAL ACTIONS.
Additional information with respect to the amendment and restatement of the
Fleet Existing Articles, the election of directors and the ratification of the
selection of independent auditors is set forth in the section entitled
"AMENDMENT AND RESTATEMENT OF FLEET EXISTING ARTICLES; ELECTION OF FLEET
DIRECTORS; RATIFICATION OF FLEET INDEPENDENT AUDITORS" which is included in the
Joint Proxy Statement-Prospectus to be delivered to Fleet stockholders only.
RECORD DATE
The Fleet Board has fixed the close of business on May 3, 1995 as the
Record Date. Only the holders of record of the outstanding shares of Fleet
Common Stock and Fleet's outstanding preferred stock on the Record Date will be
entitled to notice of, and only the holders of record of the outstanding shares
of Fleet Common Stock will be entitled to vote at, the Fleet Meeting and any
adjournments or postponements thereof. At the Record Date, shares of
Fleet 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 Fleet
Common Stock outstanding and entitled to vote on the Record Date is necessary to
constitute a quorum at the Fleet Meeting.
PROXIES; VOTING AND REVOCATION
Shares of Fleet Common Stock represented by a properly executed proxy
received prior to the vote at the Fleet Meeting and not revoked will be voted at
the Fleet 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 THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE MERGER, AND FOR THE ADDITIONAL PROPOSALS REFERRED TO
HEREIN. Fleet intends to count shares of Fleet Common Stock present in person at
the Fleet Meeting but not voting, and shares of Fleet 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 Fleet 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 Fleet
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 vote against the approval of
the Merger Agreement. 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 with respect to the approval and adoption of the Merger Agreement
and the transactions contemplated thereby without specific instructions from
such customers. Given that Rhode Island law requires the affirmative vote of the
holders of a majority of the outstanding shares of Fleet Common Stock entitled
to vote on the Merger Agreement and the transactions contemplated thereby, the
failure of such customers to provide specific instructions with respect to their
shares
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<PAGE> 40
of Fleet Common Stock to their broker will have the effect of a vote against the
approval of the Merger Agreement.
The affirmative vote of the holders of a majority of the outstanding shares
of Fleet Common Stock entitled to vote on the amendment and restatement of the
Fleet Existing Articles is required to take such action. The affirmative vote of
the holders of a majority of the shares of Fleet Common Stock represented at the
Fleet Meeting and entitled to vote is required to elect Fleet directors and to
ratify the selection of independent auditors for 1995. Each of these
requirements is more fully described in the section entitled "AMENDMENT AND
RESTATEMENT OF FLEET EXISTING ARTICLES; ELECTION OF FLEET DIRECTORS;
RATIFICATION OF FLEET INDEPENDENT AUDITORS" which is included in the Joint Proxy
Statement-Prospectus to be delivered to Fleet stockholders only.
Each share of Fleet Common Stock is entitled to one vote on each matter
voted upon at the Fleet Meeting. The persons named as proxies by a stockholder
may propose and vote for one or more adjournments or postponements of the Fleet
Meeting to permit further solicitation of proxies in favor of such proposal;
provided, however, that no proxy which is voted against the proposal to approve
and adopt the Merger Agreement will be voted in favor of any such adjournment or
postponement.
A stockholder of record may revoke a proxy by filing an instrument of
revocation with William C. Mutterperl, Secretary of Fleet (50 Kennedy Plaza,
Providence, Rhode Island 02903), by filing a duly executed proxy bearing a later
date, or by appearing at the Fleet Meeting in person, notifying the Secretary,
and voting by ballot at the Fleet Meeting. Any stockholder of record attending
the Fleet Meeting may vote in person whether or not a proxy has been previously
given, but the mere presence (without notifying the Secretary) of a stockholder
at the Fleet Meeting will not constitute revocation of a previously given proxy.
In addition, stockholders whose shares of Fleet Common Stock are not registered
in their own name will need additional documentation from the record holder of
such shares to vote personally at the Fleet Meeting.
VOTES REQUIRED TO APPROVE THE MERGER; PRINCIPAL STOCKHOLDERS
The affirmative vote of the holders of a majority of the shares of Fleet
Common Stock issued, outstanding and entitled to vote at the Fleet Meeting is
necessary to approve and adopt the Merger Agreement and the transactions
contemplated thereby. The approval of the Merger Agreement by holders of Fleet
Common Stock is a condition to the consummation of the Merger. None of the other
matters being considered at the Fleet Meeting must be approved by holders of
Fleet Common Stock in order for the Merger to be consummated.
As of the Record Date, shares of Fleet Common Stock were outstanding
and entitled to vote, of which approximately shares, or approximately %, were
held by directors and executive officers of Fleet, its subsidiaries and their
respective affiliates. Each such director and officer of Fleet has indicated his
or her intention to vote the Fleet Common Stock beneficially owned by him or her
for approval of the Merger Agreement and the consummation of the transactions
contemplated thereby. As of the Record Date, the banking and trust subsidiaries
of Fleet, as fiduciaries, custodians or agents, held a total of shares, or
%, of the outstanding shares of Fleet Common Stock under trust agreements and
other instruments and agreements. These entities maintained sole or shared
voting power with respect to of such shares. In addition, as of the Record
Date, Shawmut's directors and officers beneficially owned shares, or
approximately % of the outstanding shares of Fleet, all of which they intend
to vote for approval of the Merger and the consummation of the transactions
contemplated thereby. As of the Record Date, the banking and trust subsidiaries
of Shawmut, as fiduciaries, custodians or agents, held a total of shares,
or %, of the outstanding shares of Fleet Common Stock under trust agreements
and other instruments and agreements. These entities maintained sole or shared
voting power with respect to of such shares.
Information with respect to beneficial ownership of Fleet Common Stock by
entities owning more than 5% of such stock and more detailed information with
respect to beneficial ownership of Fleet Common Stock by Fleet directors and
executive officers is incorporated by reference to Fleet's 1994 Annual Report on
Form 10-K which is incorporated herein by reference. See "INFORMATION
INCORPORATED BY REFERENCE". Such information is also set forth in the section
entitled "AMENDMENT AND RESTATEMENT
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<PAGE> 41
OF FLEET EXISTING ARTICLES; ELECTION OF FLEET DIRECTORS; RATIFICATION OF FLEET
INDEPENDENT AUDITORS" which is included in the Joint Proxy Statement-Prospectus
to be delivered to Fleet stockholders only.
MEETING OF SHAWMUT STOCKHOLDERS
DATE, TIME AND PLACE; PURPOSE OF MEETING
This Joint Proxy Statement-Prospectus is being furnished in connection with
the solicitation of proxies by the Shawmut Board for use at the Shawmut Meeting.
The Shawmut Meeting will be held at the Federal Reserve Bank of Boston, 600
Atlantic Avenue, Boston, Massachusetts, at 10:00 a.m. on June 21, 1995.
The Shawmut Meeting will be held for the purpose of considering and voting
upon proposals to (i) approve and adopt the Merger Agreement and the
consummation of the transactions contemplated thereby, (ii) elect directors to
serve until the next annual meeting of stockholders of Shawmut and until their
successors are elected and qualified, or, if earlier, until the Effective Time
of the Merger, (iii) appoint independent accountants for 1995, or, if earlier,
until the Effective Time of the Merger, and (iv) conduct any other business that
may properly come before the Shawmut Meeting, or any adjournments or
postponements thereof. Any action may be taken on the foregoing proposals at the
Shawmut Meeting or at any adjournments or postponements thereof.
THE BOARD OF DIRECTORS OF SHAWMUT UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, AS WELL AS EACH OF
THE FOREGOING ADDITIONAL ACTIONS.
Additional information with respect to the election of directors and the
appointment of independent accountants is set forth in the section entitled
"ELECTION OF SHAWMUT DIRECTORS; APPOINTMENT OF SHAWMUT INDEPENDENT ACCOUNTANTS"
which is included in the Joint Proxy Statement-Prospectus to be delivered to
Shawmut stockholders only.
RECORD DATE
The Shawmut Board of Directors has fixed the close of business on May 3,
1995 as the Record Date. Only the holders of record of the outstanding shares of
Shawmut Common Stock and Shawmut Preferred on the Record Date will be entitled
to notice of, and only the holders of record of the outstanding shares of
Shawmut Common Stock will be entitled to vote at, the Shawmut Meeting and any
adjournments or postponements thereof. At the Record Date, shares of
Shawmut 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 Shawmut
Common Stock outstanding and entitled to vote on the Record Date is necessary to
constitute a quorum at the Shawmut Meeting.
PROXIES; VOTING AND REVOCATION
Shares represented by a properly executed proxy received prior to the vote
at the Shawmut Meeting and not revoked will be voted at the Shawmut 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
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER,
AND FOR THE ADDITIONAL PROPOSALS REFERRED TO HEREIN. Shawmut intends to count
shares of Shawmut Common Stock present in person at the Shawmut Meeting but not
voting, and shares of Shawmut 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 Shawmut 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 Shawmut Common Stock entitled
to vote on the Merger is required to approve and adopt the Merger
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<PAGE> 42
Agreement and the transactions contemplated thereby, such non-voting shares and
abstentions will have the effect of a vote against the approval of the Merger
Agreement. 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 Shawmut 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 Shawmut Common Stock to their broker will have the
effect of a vote against the approval of the Merger Agreement.
At the Shawmut Meeting, Shawmut directors will be elected by a plurality of
the votes of the shares of Shawmut Common Stock represented at the Shawmut
Meeting and entitled to vote. "Plurality" means that the nominees who receive
the largest number of votes cast "for" are elected as directors, up to the
maximum number of directors to be chosen at the meeting. The affirmative vote of
a majority of the shares represented at the Shawmut Meeting and entitled to vote
is required to appoint independent accountants. See "ELECTION OF SHAWMUT
DIRECTORS; APPOINTMENT OF SHAWMUT INDEPENDENT ACCOUNTANTS" which is included in
the Joint Proxy Statement-Prospectus to be delivered to Shawmut stockholders
only.
Each share of Shawmut Common Stock is entitled to one vote on each matter
voted upon at the Shawmut Meeting. The persons named as proxies by a stockholder
may propose and vote for one or more adjournments or postponements of the
Shawmut Meeting to permit further solicitation of proxies in favor of such
proposal; provided, however, that no proxy which is voted against the proposal
to approve and adopt the Merger Agreement will be voted in favor of any such
adjournment or postponement.
The giving of a proxy does not affect the rights of a holder of Shawmut
Common Stock who attends the Shawmut Meeting to vote at such meeting, since a
stockholder may revoke his or her proxy at any time before it is voted at the
Shawmut Meeting. A stockholder of record may revoke a proxy by filing an
instrument of revocation with J. Michael Shepherd, Secretary of Shawmut (One
Federal Street, Boston, Massachusetts 02211), by filing a duly executed proxy
bearing a later date, or by appearing at the Shawmut Meeting in person,
notifying the Secretary, and voting by ballot at the Shawmut Meeting. Any
stockholder of record attending the Shawmut Meeting may vote in person whether
or not a proxy has been previously given, but the mere presence (without
notifying the Secretary) of a stockholder at the Shawmut Meeting will not
constitute revocation of a previously given proxy. In addition, stockholders
whose shares of Shawmut Common Stock are not registered in their own name will
need additional documentation from the record holder of such shares to vote
personally at the Shawmut Meeting.
VOTES REQUIRED TO APPROVE THE MERGER; PRINCIPAL STOCKHOLDERS
The affirmative vote of the holders of a majority of the shares of Shawmut
Common Stock issued, outstanding and entitled to vote at the Shawmut Meeting is
necessary to approve and adopt the Merger Agreement and the transactions
contemplated thereby. The approval of the Merger Agreement by Shawmut's
stockholders is a condition to the consummation of the Merger. None of the other
matters being considered at the Shawmut Meeting must be approved by holders of
Shawmut Common Stock in order for the Merger to be consummated.
As of the Record Date, shares of Shawmut Common Stock were
issued, outstanding and entitled to vote, of which approximately
shares, or approximately % were held by directors and executive officers of
Shawmut, its subsidiaries and their respective affiliates. Each such director
and officer of Shawmut has indicated his or her intention to vote the Shawmut
Common Stock beneficially owned by him or her for approval of the Merger
Agreement and the consummation of the transactions contemplated thereby. As of
the Record Date, the banking and trust subsidiaries of Shawmut, as fiduciaries,
custodians or agents, held a total of shares, or %, of the
outstanding shares of Shawmut Common Stock under trust agreements and other
instruments and agreements. These entities maintained sole or shared voting
power with respect to of such shares. In addition, as of the Record
Date, Fleet, on the one hand, and Fleet's directors and executive officers as a
group, on the other hand, beneficially owned and shares
respectively, or approximately % and %, respectively, of the
outstanding shares of Shawmut
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<PAGE> 43
Common Stock, all of which they intend to vote for approval of the Merger and
the consummation of the transactions contemplated thereby. As of the Record
Date, the banking and trust subsidiaries of Fleet, as fiduciaries, custodians or
agents, held a total of shares, or %, of the outstanding shares of
Shawmut Common Stock under trust agreements and other instruments and
agreements. These entities maintained sole or shared voting power with respect
to of such shares.
Information with respect to beneficial ownership of Shawmut Common Stock by
entities owning more than 5% of such stock and more detailed information with
respect to beneficial ownership of Shawmut Common Stock by Shawmut directors and
executive officers is incorporated by reference to Shawmut's 1994 Annual Report
on Form 10-K which is incorporated herein by reference. See "INFORMATION
INCORPORATED BY REFERENCE". Such information is also set forth in the section
entitled, "ELECTION OF SHAWMUT DIRECTORS; APPOINTMENT OF SHAWMUT INDEPENDENT
ACCOUNTANTS" which is included in the Joint Proxy Statement-Prospectus to be
delivered to Shawmut stockholders only.
THE MERGER
GENERAL
The Boards of Directors of Fleet and Shawmut have unanimously approved the
Merger Agreement, which provides for the Merger at the Effective Time (as
hereinafter defined), with Fleet as the surviving corporation in the Merger.
With certain limited exceptions described below, each share of Shawmut Common
Stock outstanding at the Effective Time shall be converted into the right to
receive the Common Exchange Ratio. Shares of Fleet Common Stock issued and
outstanding immediately prior to the Effective Time will remain issued and
outstanding after the Merger.
The Board of Directors of each of Fleet and Shawmut believes that the terms
of the Merger Agreement are fair and in the best interest of the parties and
their respective stockholders and unanimously recommends that the stockholders
of each of Fleet and Shawmut vote to approve and adopt the Merger Agreement and
the consummation of the transactions contemplated thereby and the other
proposals set forth herein.
This Section of the Joint Proxy Statement-Prospectus describes certain
aspects of the proposed Merger, including the principal provisions of the Merger
Agreement and the Option Agreements. Copies of the Merger Agreement, the Fleet
Option Agreement and the Shawmut Option Agreement are attached to this Joint
Proxy Statement-Prospectus as Exhibits A, B and C, respectively. All
stockholders of Fleet and Shawmut are urged to read each of these agreements in
their entirety.
BACKGROUND OF THE MERGER
Fleet. For many years, the Fleet Board's strategy for building long-term
value for Fleet stockholders has been based upon the objective of building a
strong and profitable Northeast banking franchise that will enable Fleet to
compete effectively in the increasingly competitive market for financial service
products, while continuing to expand selectively into national financial product
markets. In 1991, Fleet completed its highly successful acquisition of the
former Bank of New England franchises from the Federal Deposit Insurance
Corporation. Since 1991, Fleet has completed a number of smaller bank and
nonbank acquisitions and in 1993, Fleet embarked upon an extensive reengineering
campaign, entitled Fleet Focus, designed to improve substantially Fleet's
operating efficiency.
The Fleet Board has long recognized that in order for Fleet to achieve the
requisite size and scope of operations necessary for Fleet to remain an
effective competitor in the dramatically changing market for banking and
financial services in the United States, a strategic combination with another
roughly equally sized regional bank holding company would likely be necessary.
An important component to Fleet of any such strategic combination has been the
compatibility of the business profiles of the two merger partners and the
ability of the managements of both parties to work together effectively in
integrating the combining companies. From time to time, Fleet has explored
potential strategic combinations with other leading regional bank holding
companies. None of such discussions led to an agreement as to the terms of a
potential merger
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<PAGE> 44
until the recent commencement of discussions with Shawmut leading to the
execution of the Merger Agreement.
Mr. Murray and Mr. Alvord are well acquainted with each other, each having
played a significant role in New England banking for numerous years. From time
to time during the past several years, Mr. Murray and Mr. Alvord have met to
discuss regional and national developments in the financial services industry as
well as developments affecting their respective companies.
On February 6, 1995, Mr. Alvord met with Mr. Murray, at Mr. Alvord's
request, regarding a potential merger of the companies. Mr. Alvord and Mr.
Murray subsequently met to explore the potential transaction structure and value
of a merger between Fleet and Shawmut. Thereafter, Messrs. Murray and Alvord met
with their respective senior management teams and financial and legal advisors
to negotiate further the structure of the transaction and the terms of the
Merger Agreement. During this time, members of Fleet's management team commenced
a due diligence investigation of Shawmut's business.
On February 14 and 15, 1995, Mr. Murray presented the terms of the Merger
and the then current drafts of the Merger Agreement and the Option Agreements to
the Fleet Board at its regular monthly meeting. At such meetings, members of
Fleet's management team made presentations which set forth the reasons for the
Merger and the benefits to Fleet and its stockholders from the Merger. At the
February 15, 1995 meeting, Fleet's legal advisors reviewed the legal terms of
the proposed Merger Agreement and Option Agreements and the Fleet Board's
obligations in consideration thereof, and Fleet's financial advisors made
presentations regarding the financial terms and fairness, from a financial point
of view, of the Common Exchange Ratio to the holders of Fleet Common Stock.
After discussion and consideration of the factors discussed below under
"-- Reasons for the Merger -- General" and "-- Reasons for the
Merger -- Recommendation of the Fleet Board and Reasons for the Merger", the
Fleet Board unanimously approved the terms of the Merger and authorized Mr.
Murray and senior management to continue such negotiations at an exchange ratio
which reflected a value per share of Shawmut Common Stock of $30.00 based on the
then current trading price of the Fleet Common Stock.
During the remainder of that week, Mr. Murray again met with Mr. Alvord to
continue discussions concerning the proposed transaction and Fleet's senior
management team continued to conduct its due diligence investigation of
Shawmut's business and to negotiate issues in the Merger Agreement and the
Option Agreements.
On February 20, 1995, the Fleet Board held a telephonic conference meeting,
during which Mr. Murray presented a summary of Fleet's due diligence, the final
resolution of the open issues and the final Common Exchange Ratio to be provided
in the Merger Agreement and the Fleet Board ratified its actions taken at the
February 14 and 15, 1995 meetings.
After consideration of the factors described below under "-- Reasons for
the Merger -- General" and "-- Reasons for the Merger -- Recommendation of the
Fleet Board and Reasons for the Merger", the Fleet Board unanimously approved
and authorized the execution of the Merger Agreement and the Option Agreements.
The Merger Agreement and the Option Agreements were entered into on February 20,
1995.
Shawmut. Shawmut was formed in 1988 through the merger of HNC and SC. From
1989 to 1991, most bank and thrift institutions in New England, including
Shawmut, were adversely affected by a severe regional recession. This recession
resulted in significant asset quality problems, which in turn adversely affected
Shawmut's financial condition and results of operations and led to enhanced
regulatory scrutiny.
As the severe New England recession continued, Shawmut initiated
discussions in late 1990 with another in-region bank holding company of similar
size concerning a potential merger of equals. Shawmut ultimately chose to
abandon those discussions approximately one year later.
From time to time following the termination of such merger discussions, the
Shawmut Board reviewed potential strategic alternatives for enhancing
stockholder value and the feasibility of pursuing various alternatives.
Thereafter, Shawmut pursued a strategic course seeking (i) the strengthening of
Shawmut's position in the communities it served through acquisitions and the
marketing of new products to Shawmut's
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existing customer base; (ii) the diversification of Shawmut's revenue sources by
expanding into specialty market niches with attractive operating margins; (iii)
greater geographic diversification; and (iv) the achievement of greater
operating efficiencies.
Numerous steps were taken by Shawmut in an effort to achieve these
objectives. Asset quality improved, and Shawmut was able to access the capital
markets to increase its capital. Programs designed to achieve greater operating
efficiencies were implemented beginning in early 1993 and continued throughout
1994. Between 1993 and January 1995, Shawmut was able to acquire a number of
banks and thrifts, which strengthened its position in communities previously
served by Shawmut and, in certain instances, added a presence in communities
which were not previously served by Shawmut. In addition, in January 1995
Shawmut consummated the Barclay's Acquisition, which was intended to provide a
profitable source of loans outside the New England region and reduce Shawmut's
sensitivity to fluctuations in interest rates.
As Shawmut continued to implement programs aimed at further growth and
geographic and revenue source diversification, its management from time to time
considered possible strategies for enhancing Shawmut's ability to achieve those
strategic objectives. In that connection, the possibility of Shawmut affiliating
with another large bank holding company with a similar strategic focus was
considered.
Mr. Murray and Mr. Alvord are well acquainted with each other, each having
played a significant role in New England banking for numerous years. From time
to time during the past several years, Mr. Murray and Mr. Alvord have met to
discuss regional and national developments in the financial services industry as
well as developments affecting their respective companies.
On February 6, 1995, Mr. Alvord met with Mr. Murray, at Mr. Alvord's
request, regarding a potential merger of the companies. Mr. Alvord and Mr.
Murray subsequently met to explore the potential transaction structure and value
of a merger between Fleet and Shawmut. Thereafter, senior executives of Shawmut
and Fleet and their respective legal and financial advisors commenced
negotiations concerning the potential merger. During this time, Shawmut's
management performed due diligence on Fleet, including due diligence designed to
confirm its assumptions regarding the enhanced opportunities for operating
efficiencies which were anticipated to result from the Merger.
At meetings of the Shawmut Board held on February 19, 1995 and on February
20, 1995, the management of Shawmut, as well as Shawmut's legal and financial
advisors, reviewed, among other things, a summary of management's due diligence
findings concerning Fleet, presentations by management and Morgan Stanley
concerning the strategic alternatives available to Shawmut, the terms of the
definitive Merger Agreement and Stock Option Agreements and Morgan Stanley's
fairness opinion concerning the Common Exchange Ratio. Based upon that review,
and after consideration of other factors, the Shawmut Board unanimously approved
and authorized the execution of the Merger Agreement and the Option Agreements.
REASONS FOR THE MERGER
General. The Merger will create a strong Northeast banking franchise with
an important national presence. By combining the strengths of two leading
financial institutions, the Merger is expected to create an institution that is
capable of meeting the challenges of the ever-changing market for financial
products and services in the United States. The Merger will combine two
companies that currently (i) do not have significant asset quality problems;
(ii) have strong management teams with experience in successfully completing
substantial merger transactions and reducing costs; (iii) maintain compatible
data-processing and other operating systems; and (iv) share many cultural
traits. The Merger will also permit each company to diversify beyond its current
businesses and its current strengths in specialty financial products and
services by expanding the marketing of its products and services to the
customers now served by the other, and will enable the combined company to
continue to provide a broad array of innovative financial services and products
to the customers and communities currently served by each.
In reaching their decisions to approve the Merger Agreement and the Option
Agreements, the Fleet Board and Shawmut Board considered that the Merger would
create one of the ten largest banking institutions in the United States, and the
only such institution to be headquartered in New England. Each Board also
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considered that the Merger would represent a strategic alliance between Fleet
and Shawmut and that the Fleet and Shawmut stockholders would realize the
expected benefits of such alliance, including, but not limited to, the future
stock value and earnings per share prospects of the combined company, the
combined company's financial strength and its consequent enhanced ability to
strengthen its existing businesses and develop new products and services, the
cost savings to be realized through consolidation of services in the New England
market, the potential for cross-marketing services to customers of the two
companies and increased access to the combined company's customers, the
opportunity to diversify earnings, the business synergies that might be
realized, and the potential effect of the Merger on the perception of the
combined company's businesses by the rating agencies and the financial markets.
Each Board determined that the Merger would significantly enhance the
combined company's ability to compete effectively and to meet the ever-changing
credit and product needs of its customers and communities by combining two
financially sound institutions with complementary businesses and business
strategies, thereby creating a stronger combined company with greater size,
flexibility, breadth of services, efficiency, capital strength, profitability
and potential for growth than either Fleet or Shawmut would possess on a
stand-alone basis. Each Board believes that each institution is well-managed and
possesses management philosophies and strategic focus compatible with those of
the other, and that the strong capitalization of Fleet following the Merger will
allow it to take advantage of future opportunities for growth, including
appropriate acquisitions and investments in products and technology. Each Board
also believes that the Merger will allow the combined company to compete
effectively in the rapidly changing marketplace for banking and financial
services and to take advantage of opportunities for growth and diversification
that may not be available to either institution on its own. In evaluating the
Merger, each Board and management discussed the critical importance of
successfully integrating, and building on the strengths of, the management teams
and cultures of both companies, and considered the uncertainties inherent in any
such combination of two significant companies.
Recommendation of the Fleet Board and Reasons for the Merger.
THE FLEET BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, FLEET AND ITS STOCKHOLDERS. THE FLEET BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER.
In reaching its conclusion to approve the Merger Agreement and the Option
Agreements, the Fleet Board consulted with Fleet management, as well as its
financial and legal advisors, and considered the factors described above under
"-- General" and a number of additional factors, including the following:
(i) The Fleet Board considered the effectiveness of the Merger in
implementing and accelerating Fleet's basic long-term external growth
strategy.
(ii) The Fleet Board analyzed the financial condition, businesses and
prospects of Fleet and Shawmut, including, but not limited to, information
with respect to its respective recent and historic stock and earnings
performance and its respective relatively strong credit position and access
to the capital markets. The Fleet Board considered the detailed financial
analyses, pro forma and other information with respect to Fleet and Shawmut
discussed by Salomon, as well as the Fleet Board's own knowledge of Fleet,
Shawmut and their respective businesses. In making its determination, the
Fleet Board took into account the results of Fleet's due diligence review
of Shawmut's business. The Fleet Board also considered the fact that while
the Merger on a pro forma basis would initially be dilutive to Fleet
stockholders, the dilutive effects would be eliminated once cost savings
from the Merger were achieved following the Merger. In addition, the Fleet
Board took Shawmut's interest rate sensitivity, including Shawmut's $438
million unrealized loss on its held to maturity portfolio at December 31,
1994, into account in approving the Common Exchange Ratio, and determined
that such loss, even if realized, would not be material to the equity
account of the combined company following the Merger. See "-- Background of
the Merger -- Fleet".
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(iii) The Fleet Board considered the oral opinion of Salomon that, as
of February 20, 1995, the Common Exchange Ratio was fair to holders of
Fleet Common Stock from a financial point of view. See "-- Fairness
Opinions of Financial Advisors -- Fleet".
(iv) The Fleet Board considered the terms of the Merger Agreement and
the reciprocal Option Agreements. The Fleet Board also considered certain
other information regarding the structure of the Merger, including the
terms and structure of the Merger, the proposed arrangements with respect
to the Fleet Board following the Merger, the management structure following
the Merger, and that the corporate headquarters of Fleet would be located
in Boston, with major functions being located in Hartford and Providence.
See "BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE
MERGER" and "INTERESTS OF CERTAIN PERSONS IN THE MERGER".
(v) The Fleet Board considered the effect on Fleet stockholders' value
of Fleet continuing as a stand-alone entity compared to the effect of Fleet
combining with Shawmut in light of the factors summarized above with
respect to the financial condition and prospects of the two companies on a
stand-alone basis and of the combined company, and the current economic and
financial environment.
(vi) The Fleet Board also considered the likelihood of the Merger
being approved by the appropriate regulatory authorities. See "--
Regulatory Approvals Required for the Merger".
The foregoing discussion of the information and factors considered by the
Fleet Board is not intended to be exhaustive but is believed to include all
material factors considered by the Fleet Board. In reaching its determination to
approve and recommend the Merger, the Fleet Board did not assign any relative or
specific weights to the foregoing factors, and individual directors may have
given differing weights to different factors. Throughout its deliberations, the
Fleet Board received the advice of special counsel. After deliberating with
respect to the Merger and the other transactions contemplated by the Merger
Agreement, considering, among other things, the matters discussed above and the
opinion of Salomon referred to above, the Fleet Board, by unanimous vote of all
directors, approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Option Agreements, as being in the best
interests of Fleet and its stockholders. The Fleet Board is unanimous in its
recommendation that holders of Fleet Common Stock vote for approval and adoption
of the Merger.
Recommendation of the Shawmut Board and Reasons for the Merger.
THE SHAWMUT BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, SHAWMUT AND ITS STOCKHOLDERS. THE SHAWMUT BOARD UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGER.
In reaching its determination to approve and adopt the Merger Agreement,
the Shawmut Board considered the factors described above (see "-- General") and
a number of additional factors, including, without limitation, the following:
(i) the Shawmut Board's familiarity with and review of Shawmut's
business, operations, financial condition and earnings;
(ii) the Shawmut Board's familiarity with and review of Shawmut's
prospects, and the factors giving rise to uncertainty concerning Shawmut's
ability to enhance revenues and achieve geographic and revenue source
diversification on a stand-alone basis, including:
(a) the effect on Shawmut's operating margins of a higher interest
rate environment in light of the composition of Shawmut's existing
assets and liabilities;
(b) the low price/earnings multiple at which the Shawmut Common
Stock has recently traded and could continue to trade, and the effect of
such trading prices on Shawmut's ability to bid at competitive price
levels for attractive acquisition targets;
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(c) the scarcity of attractive bank and thrift acquisition
candidates in Shawmut's existing markets;
(d) the increased competition for attractive non-bank acquisitions
which has resulted from the efforts of many financial institutions to
enhance fee-based income; and
(e) the high cost of investment in technology which could improve
Shawmut's efficiency and accordingly its competitive posture;
(iii) the current and prospective economic, regulatory and competitive
environment facing financial institutions, including Shawmut and Fleet;
(iv) the Shawmut Board's review, based in part on the advice of Morgan
Stanley and Shawmut's management, of alternatives to the Merger, the range
of possible values to Shawmut's stockholders obtainable through
implementation of such alternatives and the timing and likelihood of
actually receiving such values, which review included consideration of the
alternatives of remaining independent and growing through future
acquisitions, selling Shawmut to a larger bank holding company based
outside of New England, either at the present time or after first enhancing
the business of Shawmut to increase the value which might be realized in
the sale, or engaging in a merger or a similar transaction with an
in-region or out-of-region bank holding company other than Fleet;
(v) the Shawmut Board's review, based in part on presentations by
Morgan Stanley and Shawmut management, of (a) the business, operations,
earnings and financial condition of Fleet on both an historical and a
prospective basis and (b) the historical market price and potential future
value of Fleet Common Stock, and the possible effect on such historical
price and potential value of the terms and conditions of Fleet's Dual
Convertible Preferred Stock (as defined below);
(vi) the anticipated cost savings and operating efficiencies available
to the combined institution from the Merger (see "BOARD OF DIRECTORS,
MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE MERGER -- Operations");
(vii) the Shawmut Board's belief that the terms of the Merger
Agreement are attractive in that the agreement allows Shawmut stockholders
to become stockholders in a combined institution which would be the ninth
largest bank holding company in the United States on the basis of assets as
of December 31, 1994;
(viii) the financial presentations of Morgan Stanley and the February
20, 1995 opinion of Morgan Stanley as to the fairness of the Common
Exchange Ratio to the stockholders of Shawmut (see "-- Fairness Opinions of
Financial Advisors -- Shawmut");
(ix) the expectation that the Merger will generally be a tax-free
transaction to Shawmut and its stockholders (see "-- Certain Federal Income
Tax Consequences");
(x) the Shawmut Board's understanding that Fleet had held discussions
with another major New England banking organization concerning a potential
merger and that further discussions were scheduled to be held, and the
views expressed by Shawmut's management and Morgan Stanley that a merger of
Fleet and such entity could impair Shawmut's ability to enhance stockholder
value on a stand-alone basis and could also reduce significantly Shawmut's
attractiveness as an acquisition target;
(xi) the terms of the Merger Agreement and the Option Agreements,
which were reciprocal in nature, and certain other information regarding
the Merger, including the terms and structure of the Merger, the proposed
arrangements with respect to the Fleet Board, the management structure
following the Merger, and that the corporate headquarters of Fleet would be
located in Boston, with major functions being located in Hartford and
Providence (see "BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET
FOLLOWING THE MERGER" and "INTERESTS OF CERTAIN PERSONS IN THE MERGER");
and
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(xii) the effect of the Merger on Shawmut's other constituencies,
including its senior management and other employees and the communities
served by Shawmut (see "INTERESTS OF CERTAIN PERSONS IN THE MERGER").
The foregoing discussion of the information and factors considered by the
Shawmut Board is not intended to be exhaustive but is believed to include all
material factors considered by the Shawmut Board. In reaching its determination
to approve and recommend the Merger, the Shawmut Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors. Throughout its
deliberations, the Shawmut Board received the advice of special counsel. After
deliberating with respect to the Merger and the other transactions contemplated
by the Merger Agreement, considering, among other things, the matters discussed
above and the opinion of Morgan Stanley referred to above, the Shawmut Board, by
unanimous vote of all directors, approved and adopted the Merger Agreement and
the transactions contemplated thereby, including the Option Agreements, as being
in the best interests of Shawmut and its stockholders. The Shawmut Board is
unanimous in its recommendation that holders of Shawmut Common Stock vote for
approval and adoption of the Merger.
FAIRNESS OPINIONS OF FINANCIAL ADVISORS
Fleet. Salomon has delivered its oral opinion dated February 20, 1995, and
its written opinion dated the date of this Joint Proxy Statement-Prospectus, to
the Board of Directors of Fleet that the Common Exchange Ratio in the Merger was
fair, from a financial point of view, to the holders of Fleet Common Stock. No
limitations were imposed by Fleet with respect to the investigations made or the
procedures followed by Salomon in rendering its opinions. Salomon has consented
to the use of its written opinion in this Joint Proxy Statement-Prospectus
without admitting that it comes within the category of persons whose consent is
required under Section 7 of the Securities Act.
THE FULL TEXT OF THE OPINION OF SALOMON DATED THE DATE OF THIS JOINT PROXY
STATEMENT-PROSPECTUS, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS ON THE REVIEW UNDERTAKEN BY SALOMON, IS ATTACHED HERETO AS EXHIBIT D.
HOLDERS OF FLEET COMMON STOCK ARE URGED TO READ THIS OPINION IN ITS ENTIRETY.
SALOMON'S OPINIONS ARE DIRECTED ONLY TO THE COMMON EXCHANGE RATIO IN THE MERGER
AND DO NOT CONSTITUTE RECOMMENDATIONS TO ANY FLEET STOCKHOLDER AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE AT THE FLEET MEETING. THE SUMMARY SET FORTH IN THIS
JOINT PROXY STATEMENT-PROSPECTUS OF THE OPINIONS OF SALOMON IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION ATTACHED HERETO AS EXHIBIT
D.
In connection with its oral opinion dated February 20, 1995, Salomon
reviewed, among other things: (i) drafts of the Merger Agreement and the Option
Agreements; (ii) certain publicly available reports filed with the Commission by
Fleet and by Shawmut; (iii) certain other publicly available financial and other
information concerning Fleet and Shawmut and the trading markets for the
publicly traded securities of Fleet and Shawmut; (iv) certain other internal
information, including pro forma financial statements prepared by the management
of each of Fleet and Shawmut giving effect to recently-completed and pending
acquisitions, and projections relating to Fleet and to Shawmut prepared by the
management of Fleet, furnished to Salomon for the purposes of its analysis; and
(v) certain publicly available information concerning certain other banks and
bank holding companies, the trading markets for their securities and the
financial terms of certain other merger and acquisition transactions Salomon
believed relevant to its inquiry. In connection with its opinion dated the date
of this Joint Proxy Statement-Prospectus, Salomon reviewed the foregoing as well
as the executed Merger Agreement and Option Agreements and this Joint Proxy
Statement-Prospectus. Salomon also met with certain officers and representatives
of Fleet and Shawmut to discuss the foregoing as well as other matters that
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 the banking industry generally. Each of Salomon's
opinions is 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.
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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 assume any responsibility for
independently verifying the same. Salomon relied upon the management of Fleet
and of Shawmut as to the reasonableness of the assumptions underlying the pro
forma financial statements giving effect to recently-completed and pending
acquisitions provided to Salomon, the appropriateness of the adjustments made to
give effect to such assumptions in such pro forma financial statements and the
proper allocation of such adjustments to the respective historical financial
statements. Salomon relied upon the management of Fleet as to the reasonableness
and achievability of the projections (and the assumptions and bases therefor)
for each of Fleet and Shawmut provided to Salomon, and assumed that such
projections were reasonably prepared by the management of Fleet and reflected
the best currently available estimates and judgments of the management of Fleet
and that such projections would be realized in the amounts and in the time
periods estimated by the management of Fleet. Salomon also assumed, without
independent verification, that the aggregate allowances for loan losses for
Fleet and Shawmut were adequate to cover such losses. Salomon did not make or
obtain any evaluations or appraisals of the properties or assets of Fleet or
Shawmut, nor did Salomon examine any individual loan credit files. Salomon was
retained by the Fleet Board to express an opinion as to the fairness, from a
financial point of view, to the holders of Fleet Common Stock of the Common
Exchange Ratio, and the Fleet Board did not look to Salomon to independently
verify the accuracy and completeness of the financial and other information
provided to it or publicly available, including the pro forma financial
statements or the projections provided to it by Fleet or Shawmut, or to obtain
any evaluations or appraisals of the property or assets of Fleet or Shawmut.
Salomon did not address Fleet's underlying business decision to proceed with the
Merger and did not make any recommendation to the Fleet Board or to the
stockholders of Fleet with respect to any approval of the Merger.
In connection with rendering its opinions to the Fleet Board, 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. With respect
to the comparable company analysis and bank merger transaction analysis
summarized below, no public company utilized as a comparison is identical to
Fleet or Shawmut and such analyses necessarily involve complex considerations
and judgments concerning the differences in financial and operating
characteristics of the companies and other factors that could affect the
acquisition or public trading values of the companies concerned. The projections
prepared by the management of Fleet contained in or underlying Salomon's
analyses are not necessarily indicative of future results or values, which may
be significantly more or less favorable than such projections. 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 furnished to Salomon for each of Fleet and Shawmut were
prepared by the respective managements of each company. Neither Fleet nor
Shawmut publicly discloses internal management projections of the type provided
to Salomon in connection with Salomon's review of the Merger. Such projections
were not prepared with a view towards public disclosure. The projections were
based on numerous variables and assumptions that 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.
Each of Fleet and Shawmut believes (i) that the historical financial
information provided by it to Salomon in connection with its analysis was
accurate and complete in all material respects; (ii) that the pro forma
financial data provided by it to Salomon in connection with its analysis, while
not necessarily indicative of the combined financial position or results of
operations in the future or of the combined financial position or results of
operations which would have been realized had the acquisitions been consummated
during the periods or as of the dates for which the pro forma data is presented,
was based on reasonable assumptions and contained appropriate and properly
allocated adjustments; and (iii) that the projections provided by it to
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Salomon in connection with its analysis were reasonably prepared and reflected
the best currently available estimates and judgments of the management of Fleet
and Shawmut, respectively.
The following is a brief summary of the analyses performed by Salomon in
connection with its oral opinion dated February 20, 1995:
(a) Transaction Summary. Salomon analyzed the closing price for the
Fleet Common Stock on February 17, 1995 (the last trading day prior to the
announcement of the Merger) of $33.625 and the Common Exchange Ratio of
0.8922, resulting in consideration of $30.00 per share of Shawmut Common
Stock, noting that the aggregate transaction value was $3,917.7 million
(including shares of Shawmut Common Stock currently owned by Fleet and
calculating the number of outstanding shares of Shawmut Common Stock, pro
forma for all pending acquisitions, using the treasury stock method for
warrants, options and stock appreciation rights). Salomon noted that the
Common Exchange Ratio represented a premium of 45.5% to the closing price
of the Shawmut Common Stock on February 17, 1995 (the last trading day
prior to the announcement of the Merger) and 67.8% to the closing price of
the Shawmut Common Stock on January 17, 1995 (the trading day one month
prior to the announcement of the Merger). Salomon also noted that, as a
multiple of Shawmut's fully diluted earnings per share, the Common Exchange
Ratio represented 11.4x earnings per share for 1994, adjusted to reflect
the recently-completed Barclays Acquisition and the pending Northeast
Merger (assuming an exchange ratio in the Northeast Merger of 0.415 shares
of Shawmut Common Stock for each fully diluted share of common stock of
Northeast), 11.2x Shawmut's projection of earnings per share for 1995 and
10.5x the median First Call ("First Call") projection of earnings per share
for 1995 as of February 15, 1995. First Call is a data service that
monitors and publishes compilations of earnings estimates produced by
selected research analysts regarding companies of interest to institutional
shareholders. Salomon further noted that the Common Exchange Ratio
represented a multiple of 1.79x Shawmut's fully diluted book value, and
2.38x Shawmut's fully diluted tangible book value, at December 31, 1994, in
each case adjusted to reflect the recently-completed Barclays Acquisition
and the pending Northeast Merger, assuming an exchange ratio in the
Northeast Merger of 0.415 shares of Shawmut Common Stock for each fully
diluted share of common stock of Northeast. In addition, Salomon noted that
the Common Exchange Ratio represented a premium (defined as the total
purchase price paid over tangible book value, adjusted to reflect the
recently-completed Barclays Acquisition and the pending Northeast Merger)
to Shawmut's total deposits and core deposits (defined as total retail
deposits, less certificates of deposit greater than $100,000, less foreign
deposits) of 9.8% and 10.8%, respectively. Salomon observed that the
current holders of Fleet Common Stock would own 59.2%, and the current
holders of Shawmut Common Stock would own 40.8%, of the combined entity
after giving effect to the Merger, in each case adjusted to reflect the
recently-completed Barclays Acquisition and the pending Northeast Merger,
assuming an exchange ratio in the Northeast Merger of 0.415 shares of
Shawmut Common Stock for each fully diluted share of common stock of
Northeast.
(b) Comparable Transaction Analysis. Salomon analyzed certain other
commercial bank merger and acquisition transactions, excluding
merger-of-equals transactions, involving consideration to stockholders of
over $1 billion for commercial banking institutions in the United States
during the period from January 1, 1990 to February 20, 1995 and analyzed a
subset of these transactions involving in-market acquisitions. Salomon also
analyzed certain other in-market commercial bank merger and acquisition
transactions, excluding merger-of-equal transactions, over the period from
January 1, 1985 to February 20, 1995 involving consideration to
stockholders of over $500 million, and noted separately the results of its
analysis for target institutions whose return on average assets ("target
ROAA") was greater than 0.75% and for target institutions whose ROAA was
less than 0.75%. Salomon chose to segregate transactions at the level of a
0.75% ROAA based on Salomon's belief that bank holding companies with an
ROAA below this level are widely regarded as less strong performers and
that the consideration paid in comparable transactions for such bank
holding companies was less than the consideration paid for
better-performing bank holding companies. This analysis, which was based on
publicly available financial information for the 12 months preceding the
announcement of the relevant transaction, showed that the Common Exchange
Ratio represented a multiple of: (i) 11.4x Shawmut's 12 months' fully
diluted earnings per share, compared to a median multiple of 20.5x for
United States transactions (1990 to
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present) in excess of $1 billion, 27.7x for in-market transactions (1990 to
present) in excess of $1 billion, 17.5x for in-market transactions (1985 to
present) in excess of $500 million with a target ROAA of more than 0.75%,
and 22.9x for in-market transactions (1985 to present) in excess of $500
million with a target ROAA less than 0.75%; (ii) 1.79x Shawmut's fully
diluted book value, compared to a median multiple of 1.43x for United
States transactions (1990 to present) in excess of $1 billion, 1.38x for
in-market transactions (1990 to present) in excess of $1 billion, 2.42x for
in-market transactions (1985 to present) in excess of $500 million with a
target ROAA of more than 0.75%, and 1.43x for in-market transactions (1985
to present) in excess of $500 million with a target ROAA less than 0.75%;
and (iii) 2.38x Shawmut's fully diluted tangible book value, compared to a
median multiple of 1.63x for United States transactions (1990 to present)
in excess of $1 billion, 1.52x for in-market transactions (1990 to present)
in excess of $1 billion, 2.57x for in-market transactions (1985 to present)
in excess of $500 million with a target ROAA of more than 0.75%, and 1.63x
for in-market transactions (1985 to present) in excess of $500 million with
a target ROAA less than 0.75%. This analysis also showed that the Common
Exchange Ratio represented a premium to the closing price of the Shawmut
Common Stock one day and one month, respectively, prior to announcement of
the Merger, of 45.5% and 67.8%, respectively, compared to median premiums
to market price of 34.5% and 44.5%, respectively, for U.S. transactions
(1990 to present) in excess of $1 billion, 30.4% and 34.2%, respectively,
for in-market transactions (1990 to present) in excess of $1 billion, 33.3%
and 38.0%, respectively, for in-market transactions (1985 to present) in
excess of $500 million with a target ROAA of more than 0.75%, and 34.6% and
49.5%, respectively, for in-market transactions (1985 to present) in excess
of $500 million with a target ROAA less than 0.75%. With respect to
dilution to the acquiror in the transactions analyzed, this analysis showed
dilution to Fleet's pro forma last 12 months' earnings of 4.5% (pro forma
for all recently-completed and pending acquisitions and before the
after-tax impact of Shawmut's non-recurring charges of $99.8 million),
compared to median dilution of 11.9% for United States transactions (1990
to present) in excess of $1 billion, 20.1% for in-market transactions (1990
to present) in excess of $1 billion, 9.1% for in-market transactions (1985
to present) in excess of $500 million with a target ROAA of 0.75% or more
and 17.5% for in-market transactions (1985 to present) in excess of $500
million with a target ROAA less than 0.75%. Salomon noted that no
transaction reviewed was identical to the Merger and that, accordingly, any
analysis of comparable transactions necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of the parties to the transactions being
compared.
(c) Summary Pro Forma Financial Impact. Salomon analyzed the
financial impact of the Merger on the holders of Fleet Common Stock and of
Shawmut Common Stock, using for these purposes financial projections
prepared by management of Fleet for each of Fleet and Shawmut for each
fiscal year in the five-year period ending December 31, 1999 and using
Fleet management's assumptions that cost reductions are phased in 0.0% in
1995, 60.0% in 1996 and 100.0% from 1997 through 1999. In these analyses,
Salomon considered the impact on earnings per share and book value of
investing ("leveraging") the combined entity's excess capital (defined as
capital in excess of a 6.25% tangible common equity ratio at the combined
entity) at different rates of return. These analyses showed that, giving
effect to the Merger before the impact of one-time Merger-related charges
and gain on assumed divestitures of certain assets and liabilities that may
be required by regulatory authorities, in each case as projected by Fleet
management, current holders of Fleet Common Stock would experience a change
in fully diluted earnings per share, leveraged at a 14.0% return, of
(11.4)% for 1995, (5.1)% for 1996, 1.9% for 1997, 7.8% for 1998 and 14.7%
for 1999 as compared to Fleet stand-alone. Salomon's analysis also showed
the changes as compared to Fleet stand-alone in earnings per share with no
leverage and leveraged at 10.0% and 18.0% returns. Salomon selected these
different rates of return based on historical rates of return on average
common equity for Fleet and for the constituent bank holding companies
included in the Salomon Brothers' Superregional Composite Index, an index
of 21 leading superregional bank holding companies throughout the United
States. Salomon performed this analysis in order to show the pro forma
financial impact of the Merger on the holders of Fleet Common Stock and
Shawmut Common Stock under the assumption that Fleet as the surviving
entity would invest its excess capital (as defined above) in a manner that
would produce a return on investment comparable to such historical rates of
return.
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Salomon also analyzed the changes in book value per share from Fleet
stand-alone, including Fleet management's estimates of after-tax losses
from one-time Merger related charges and gain on such assumed regulatory
divestitures, with no leverage and leveraged at a 14.0% return, noting in
each case that such book value would decrease by 7.1% and 7.1%,
respectively, in 1995, by 7.8% and 7.8%, respectively, in 1996, by 7.6% and
7.1%, respectively, in 1997, by 7.3% and 5.4%, respectively, in 1998, and
by 7.1% and 2.9%, respectively, in 1999. This analysis further showed that
current holders of Shawmut Common Stock would experience an increase in
fully diluted earnings per share, leveraged at a 14.0% return, of 33.2% for
1995, 46.0% for 1996, 57.6% for 1997, 67.6% for 1998 and 79.4% for 1999 as
compared to Shawmut stand-alone. Salomon's analysis also showed the
increases as compared to Shawmut stand-alone in earnings per share with no
leverage and leveraged at 10.0% and 18.0% returns. Salomon also analyzed
the increases in book value per share from Shawmut stand-alone, including
Fleet management's estimates of after-tax losses from one-time merger
related charges and gain on such assumed regulatory divestitures, with no
leverage and leveraged at a 14.0% return, noting in each case that such
book value would increase by 11.0% and 11.0%, respectively, in 1995, by
13.6% and 13.6%, respectively, in 1996, by 17.2% and 17.8%, respectively,
in 1997, by 20.4% and 22.9%, respectively, in 1998, and by 23.4% and 29.0%,
respectively, in 1999.
(d) Discounted Cash Flow Analysis. Salomon performed discounted cash
flow analyses to determine the present value per share of Shawmut Common
Stock using financial projections for Shawmut through 2000 provided by
management of Fleet. For purposes of this analysis, such projections gave
effect to the full benefit of the after-tax cost savings estimated by the
management of Fleet, all of which were allocated to Shawmut, and to the
impact on Shawmut of the Merger. Salomon utilized discount rates ranging
from 14.0% to 20.0% and terminal value multiples ranging from 7.0x to 10.0x
to apply to forecasted earnings for 2000. Salomon selected these discount
rates because they represented a reasonable range above and below the
historical cost of equity capital to Fleet and comparable bank holding
companies and these terminal value multiples because they represented a
reasonable range above and below the historical market multiples of Fleet
and comparable bank holding companies. These analyses showed a range of
present values from $27.95 to $42.66 per share for Shawmut. These analyses
also showed projected dividends to Fleet, assuming all excess capital
(defined as capital in excess of a 6.0% tangible common equity ratio at
Shawmut) were dividended to Fleet, of $449.5 million in 1996, $552.6
million in 1997, $587.0 million in 1998, $681.2 million in 1999 and $687.0
million in 2000. Salomon performed this analysis as one method of showing
the present value of Shawmut to Fleet on a per share basis. This analysis
included the projected dividends that Fleet could expect to receive from
Shawmut as a part of Fleet over the period shown, in each case subject to
the assumptions included in the analysis. These analyses did not purport to
be indicative of actual values or expected values of the shares of Shawmut
Common Stock before, or Fleet Common Stock after, the Merger. Salomon noted
that the discounted cash flow analysis is a widely used valuation
methodology, but noted that it relies on numerous assumptions, including
asset and earnings growth rates, dividend payout rates, terminal values and
discount rates.
(e) Summary Contribution Analysis. Salomon computed the contribution
to the combined entity's pro forma 1994 financial results attributable to
each of Fleet and Shawmut. The computation showed, among other things, that
Fleet and Shawmut contributed to the combined entity approximately 57.8%
and 42.2%, respectively, of total loans, 57.8% and 42.2%, respectively, of
total assets, 61.8% and 38.2%, respectively, of total deposits, 63.1% and
36.9%, respectively, of tangible common equity (including purchased
mortgage servicing rights), 61.5% and 38.5%, respectively, of common
equity, 62.0% and 38.0%, respectively, of net income available to common
shares (before the after-tax impact of Shawmut's non-recurring charges of
$99.8 million), 48.3% and 51.7%, respectively, of net income available to
common shares (adjusting earnings for Shawmut to reflect Fleet management's
estimate of the full benefit of after-tax cost savings), 66.8% and 33.2%,
respectively, of market capitalization adjusted to give pro forma effect to
pending share issuances (based on market capitalization as of February 17,
1995) and 59.2% and 40.8%, respectively, of pro forma ownership of the
combined entity (using the Common Exchange Ratio of 0.8922 shares of Fleet
Common Stock for each share of Shawmut Common Stock).
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(f) Pro Forma Industry Statistics. Salomon noted that, based on
Fleet's closing price as of February 17, 1995 and the number of shares
outstanding as of December 31, 1994, pro forma for pending acquisitions,
the Merger would create the seventh largest publicly traded bank holding
company ranked by market capitalization.
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. Fleet 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 Fleet and Shawmut for which Salomon has received customary
compensation, aggregating $5.9 million for the period from February 20, 1993
through February 20, 1995. Such services have included acting as a managing
underwriter of offerings of Fleet Common Stock and Fleet debt securities, acting
as financial advisor to Fleet and as dealer-manager in connection with Fleet's
offer to purchase the publicly-held shares of FMG and acting as financial
advisor to Fleet in connection with acquisitions of other financial
institutions. In the ordinary course of business, Salomon actively trades the
debt and equity securities of Fleet and Shawmut 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.
Fleet and Salomon have entered into a letter agreement, dated February 13,
1995 (the "Salomon Engagement Letter"), relating to the services to be provided
by Salomon in connection with the Merger. Fleet has agreed to pay Salomon's fees
for all services rendered in connection with the Merger as follows:
(i) $250,000, payable promptly following Fleet's execution of the Salomon
Engagement Letter; (ii) $1,000,000, payable upon execution of the Merger
Agreement; and (iii) an additional fee of $3,750,000, payable upon consummation
of the Merger. In the Salomon Engagement Letter, Fleet also has agreed to
reimburse Salomon for all reasonable fees and disbursements of Salomon's counsel
and all of Salomon's reasonable travel and other out-of-pocket expenses incurred
in connection with the Merger or otherwise arising out of Salomon's engagement
under the Salomon Engagement Letter. Pursuant to an additional letter agreement
dated February 13, 1995, Fleet also has agreed to indemnify Salomon against
certain liabilities, including liabilities under the federal securities laws.
Shawmut. Shawmut retained Morgan Stanley to act as Shawmut's financial
advisor in connection with the Merger and related matters based upon its
qualifications, expertise and reputation, as well as Morgan Stanley's prior
investment banking relationship and familiarity with Shawmut. At the February
20, 1995 meeting of the Shawmut Board, Morgan Stanley rendered an oral opinion
to the Shawmut Board that, as of such date, the Common Exchange Ratio pursuant
to the Merger was fair from a financial point of view to holders of the Shawmut
Common Stock (other than Fleet and its affiliates). Morgan Stanley subsequently
delivered to the Shawmut Board a written opinion dated as of February 20, 1995
confirming its oral opinion. Morgan Stanley also delivered to the Shawmut Board
a written opinion dated as of the date of this Joint Proxy Statement-Prospectus
which is substantially identical to the February 20, 1995 opinion. No
limitations were imposed by Shawmut with respect to the investigations made or
the procedures followed by Morgan Stanley in rendering its opinions.
THE FULL TEXT OF MORGAN STANLEY'S OPINION, DATED AS OF THE DATE OF THIS
JOINT PROXY STATEMENT-PROSPECTUS, WHICH SETS FORTH, AMONG OTHER THINGS,
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND LIMITATIONS ON
THE REVIEW UNDERTAKEN, IS ATTACHED AS EXHIBIT E TO THIS JOINT PROXY
STATEMENT-PROSPECTUS. SHAWMUT STOCKHOLDERS ARE URGED TO READ THE MORGAN STANLEY
OPINION IN ITS ENTIRETY. MORGAN STANLEY'S OPINION ADDRESSES ONLY THE FAIRNESS OF
THE COMMON EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF
SHAWMUT COMMON STOCK AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF
SHAWMUT COMMON STOCK AS TO HOW TO VOTE AT THE SHAWMUT MEETING. THE SUMMARY OF
THE OPINION OF MORGAN STANLEY SET FORTH IN THIS JOINT PROXY STATEMENT-PROSPECTUS
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its opinion dated as of February 20, 1995,
Morgan Stanley, among other things: (i) analyzed certain publicly available
financial statements and other information of Shawmut and
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Fleet; (ii) analyzed certain internal financial statements and other financial
and operating data concerning Shawmut and Fleet prepared by the managements of
Shawmut and Fleet, respectively; (iii) analyzed certain financial projections
prepared by the managements of Shawmut and Fleet; (iv) discussed the past and
current operations and financial condition and the prospects of Shawmut and
Fleet with senior executives of the two companies, respectively; (v) reviewed
the reported prices and trading activity for the Shawmut Common Stock and Fleet
Common Stock; (vi) compared the financial performance of Shawmut and Fleet and
the prices and trading activity of the Shawmut Common Stock and Fleet Common
Stock with that of certain other comparable bank holding companies and their
securities; (vii) discussed the results of regulatory examinations of Shawmut
and Fleet with senior management of the respective companies; (viii) reviewed
and discussed with senior management of Shawmut and Fleet the strategic
objectives of the Merger and the synergies and other benefits of the Merger for
the combined company; (ix) analyzed certain pro forma financial projections for
the combined company prepared by Shawmut and Fleet; (x) reviewed the amount and
timing of the cost savings projected by Shawmut and Fleet for the combined
company; (xi) reviewed the financial terms, to the extent publicly available, of
certain comparable bank holding company merger transactions; (xii) participated
in discussions and negotiations among representatives of Shawmut and Fleet and
their financial and legal advisors; (xiii) reviewed the draft Merger Agreement,
the draft Option Agreements and certain related documents; and (xiv) performed
such other analyses as it has deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed for purposes of its opinion. With respect to the financial projections,
Morgan Stanley assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performance of Shawmut and Fleet. Morgan Stanley has not made any
independent valuation or appraisal of the assets or liabilities of Shawmut and
Fleet, nor has it been furnished with any such appraisals and it has not
examined any loan files of Shawmut and Fleet. Morgan Stanley's opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to Morgan Stanley as of, the date of the opinion.
In arriving at its opinion, Morgan Stanley was not authorized to solicit, and
did not solicit, interest from any party with respect to an acquisition of
Shawmut or any of its assets. Morgan Stanley has consented to the use of its
written opinion in this Joint Proxy Statement-Prospectus without admitting that
it comes within the category of persons whose consent is required under Section
7 of the Securities Act.
The projections furnished to Morgan Stanley for each of Fleet and Shawmut
were prepared by the respective managements of each company. Neither Fleet nor
Shawmut publicly discloses internal management projections of the type provided
to Morgan Stanley in connection with Morgan Stanley's review of the Merger. Such
projections were not prepared with a view towards public disclosure. The
projections were based on numerous variables and assumptions that 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.
Each of Fleet and Shawmut believes (i) that the historical financial
information provided by it to Morgan Stanley in connection with its analysis was
accurate and complete in all material respects; (ii) that the pro forma
financial data provided by it to Morgan Stanley in connection with its analysis,
while not necessarily indicative of the combined financial position or results
of operations in the future or of the combined financial position or results of
operations which would have been realized had the acquisitions been consummated
during the periods or as of the dates for which the pro forma data is presented,
was based on reasonable assumptions and contained appropriate and properly
allocated adjustments; and (iii) that the projections provided by it to Morgan
Stanley in connection with its analysis were reasonably prepared and reflected
the best currently available estimates and judgments of the management of Fleet
and Shawmut, respectively.
The following is a brief summary of the analyses performed by Morgan
Stanley in preparation of its presentation to the Shawmut Board on February 19,
1995 and February 20, 1995, its oral opinion to the Shawmut Board on February
20, 1995 and its opinion letter dated February 20, 1995 to the Shawmut Board.
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(a) Overview of Shawmut. Morgan Stanley presented an overview of
Shawmut which included a comparison of Shawmut to a peer group of the 30
largest domestic bank holding companies (ranked by asset size) in terms of
(i) net interest margin; (ii) non-interest income to average earning
assets; (iii) efficiency ratio; (iv) price to 1996 estimated earnings per
share; (v) price to book value; (vi) price as a percentage of the highest
closing price of Shawmut Common Stock in the last twelve months; and (vii)
one year stock price performance. Morgan Stanley also presented an overview
of Shawmut's financial performance for 1994 compared to management's
projections for 1995 through 1997.
(b) Strategic Alternatives Available to Shawmut. Morgan Stanley
performed an analysis of a hypothetical acquisition of Shawmut by an
in-market acquiror and by 16 potential acquirors from outside the New
England region. The analysis examined the impact of such a transaction on
each potential acquiror's earnings per share and leverage ratio in
hypothetical transactions in which Shawmut's shareholders received prices
per share of Shawmut Common Stock of $30 and $33. The analysis was also
performed reviewing each hypothetical transaction as if it were accounted
for as a pooling of interests and a purchase. For purposes of the analysis,
the potential acquirors were generally assumed to be able to achieve cost
savings equal to 15% (or 30% in the case of the in-market acquiror) of
Shawmut's core non-interest expense (excluding expenses for other real
estate owned ("OREO") and any non-recurring charges). In the purchase
accounting scenario, it was assumed that each acquiror would fund the
acquisition with 50% acquiror stock and 50% debt. Morgan Stanley's
assumptions concerning the level of cost savings which could be achieved in
the various hypothetical transactions was based upon its review of the
estimated cost savings achieved in a number of large bank holding company
merger transactions which Morgan Stanley deemed comparable to the
hypothetical transactions and the range of potential divestitures which
might be required by regulators in connection with a potential acquisition
of Shawmut.
(c) Valuation Methodologies. As part of its financial analysis,
Morgan Stanley evaluated the positions and strengths of Shawmut on a
stand-alone basis, considered cost savings and synergies relating to the
Merger and determined an acquisition value based upon specified
assumptions. In addition, Morgan Stanley considered premiums paid in
transactions comparable to the Merger as well as a pro forma analysis
concerning the Merger. For purposes of its analyses of Shawmut on a
historical basis, Morgan Stanley utilized financial information concerning
Shawmut as of December 31, 1994, and accordingly such information did not
reflect the effects of the then-pending Barclays Acquisition or the
Northeast Merger. However, Morgan Stanley's analyses which utilized the
earning projections for Shawmut prepared by Shawmut management for periods
beginning after such date included the projected effect of such
transactions on Shawmut's earnings. The following is a brief summary of the
report presented by Morgan Stanley to the Shawmut Board on February 17,
1995 (the "Morgan Stanley Report") in connection with its February 20, 1995
opinion.
Comparable Company Analysis. Comparable company analysis analyzes a
company's operating performance relative to a group of publicly traded
peers. Based on relative performance and outlook for a company versus its
peers, this analysis enables an implied unaffected market trading value to
be determined. Morgan Stanley analyzed the operating performance of Shawmut
relative to (x) Fleet, Bank of Boston Corporation and Bay Banks, Inc. (the
"New England Peer Group") and (y) 35 bank holding companies (the "Morgan
Stanley Bank Index"). (The New England Peer Group and the Morgan Stanley
Bank Index are collectively referred to as the "Comparables.") Historical
financial information used in connection with the ratios provided below
with respect to the Comparables is as of December 31, 1994.
Morgan Stanley analyzed the relative performance and value of Shawmut
by comparing certain market trading statistics for Shawmut with the
Comparables. Market information used in ratios provided below is as of
February 10, 1995. The market trading information used in the valuation
analysis was market price to book value (which was 1.30x for Shawmut; the
average was 1.40x for the New England Peer Group and 1.50x for the Morgan
Stanley Bank Index) and market price to earnings per share estimates for
1995 and 1996 (which, for Shawmut, were 7.4x and 7.1x, respectively; the
averages were 8.0x and 7.1x, respectively, for the New England Peer Group
and 8.6x and 7.8x, respectively, for the Morgan Stanley Bank Index).
Earnings per share estimates for the New England Peer Group were based
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on First Call estimates as of February 10, 1995. Earnings per share
estimates for the Morgan Stanley Bank Index were based on Institutional
Brokers Estimate System ("IBES") estimates as of January 19, 1995. IBES and
First Call are data services that monitor and publish compilations of
earnings estimates produced by selected research analysts regarding
companies of interest to institutional shareholders. Shawmut's earnings per
share estimates were based on management's projections for 1995 and 1996,
respectively. The implied range of values for Shawmut Common Stock derived
from the analysis of the Comparables market price to book value and market
price to 1995 and 1996 earnings per share estimates ranged from $17.00 to
approximately $20.00.
No company or transaction used in the comparable company and
comparable transaction analyses is identical to Shawmut or the Merger.
Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgments concerning differences in
financial and operating characteristics of Shawmut and other factors that
could affect the public trading value of the companies to which they are
being compared. Mathematical analysis (such as determining the average or
median) is not in itself a meaningful method of using comparable
transaction data or comparable company data.
Analysis of Relationship Between Return on Equity and Price to Book
Value. Based on a sampling of 36 selected publicly traded bank holding
companies that in Morgan Stanley's judgment were deemed to be appropriate
for comparison, Morgan Stanley determined a theoretical relationship in the
market between the ratio of expected sustainable return on equity (based on
Morgan Stanley estimates) to risk-adjusted required return on investment
and the ratio of price to book value. This relationship can be observed by
plotting the price-to-book-value multiple versus the ratio of the expected
sustainable return on equity to the required return on equity and
estimating the line of best fit. The required return on equity was
calculated using a predicted beta estimate by Barra, a data service which
derives and publishes compilations of beta estimates, and assumed a risk
free rate of 7.58%, which was the yield on the 10 year treasury note on
February 10, 1995. According to this analysis, Morgan Stanley estimated
that the implied value per share of Shawmut Common Stock as of February 10,
1995, would have ranged from approximately $19 to approximately $21 if the
market assumed that Shawmut would realize a future sustainable return on
equity of between 14% and 15%. The estimate of Shawmut's future sustainable
return on equity was based on the historical and projected financial
performance of Shawmut. For the year ended December 31, 1994, Shawmut's
annualized return on equity was 11.2%. The bank holding companies used in
this analysis were AmSouth Bancorporation, Banc One Corporation, Bank of
Boston Corporation, Bank of New York, BankAmerica Corporation, Bankers
Trust New York Corporation, Barnett Banks, Inc., Boatmen's Bancshares,
Inc., The Chase Manhattan Corporation, Chemical Banking Corporation,
Citicorp, Comerica, Inc., CoreStates Financial Corp., Crestar Financial
Corporation, First Bank System, Inc., First Chicago Corporation, First
Fidelity Bancorporation, First Interstate, First Union Corporation, Fleet,
Huntington Bancshares, Inc., Integra Financial Corporation, J.P. Morgan &
Co. Inc., KeyCorp, Mellon Bank Corporation, Midlantic Corporation, National
City Corp., Nationsbank, NBD Bancorp, Inc., Norwest Corporation, PNC
Financial Corp., SunTrust Banks, Inc., U.S. Bancorp, Wachovia Corporation,
and Wells Fargo & Company.
Dividend Discount Analysis. Morgan Stanley performed a dividend
discount analysis to determine a range of present values per share of
Shawmut Common Stock assuming Shawmut continued to operate as a stand-alone
entity. This range was determined by adding (i) the present value of the
estimated future dividend stream that Shawmut could generate over the
three-year period beginning in 1995 and ending in 1997 and (ii) the present
value of the "terminal value" of Shawmut Common Stock at the end of 1997.
To determine a projected dividend stream, Morgan Stanley assumed a dividend
payout ratio equal to 40% of Shawmut's projected net income. The earnings
projections which formed the basis for the dividends were adapted from
Shawmut's actual results for 1994 and Shawmut management's projections for
1995-97. The "terminal value" of Shawmut Common Stock at the end of the
three-year period was determined by applying two 1997 projected
price-to-earnings multiples (8.0x and 10.0x) to 1997 projected net income
for Shawmut. The dividend stream and terminal values were discounted to
present values using discount rates of 16% and 18%, which Morgan Stanley
viewed as the appropriate discount rate range for a company with Shawmut's
risk characteristics. For the 8.0x case the fully diluted stand-
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alone value of Shawmut Common Stock ranged from approximately $16.00 per
share to approximately $16.77 per share and for the 10.0x case the fully
diluted stand-alone value of Shawmut Common Stock ranged from approximately
$19.37 per share to approximately $20.32 per share.
Value of Potential Cost Savings. In order to ultimately determine an
implied acquisition value of the Shawmut Common Stock (see "-- Implied
Acquisition Value"), the potential for realization of future cost savings
was estimated by Morgan Stanley using a present value calculation. Based on
discussions with Shawmut management, Morgan Stanley determined the net
theoretical present value of the cost savings that could result if Shawmut
were acquired. The estimates for such cost savings ranged from 10-40% of
Shawmut's core non-interest expense (i.e., excluding OREO expenses and any
non-recurring charges). Such a range would imply annual pre-tax cost
savings between approximately $95 million and approximately $380 million.
Based on discount rates of 16% and 18%, a phase-in of savings over 2 years,
a perpetual expense growth rate of 3.0%, a marginal tax rate of 40%, and a
restructuring charge equal to 100% of fully-phased in cost savings incurred
in the first year following an acquisition, the range of present values for
the cost savings were $334 million to $1,560 million in the aggregate, or
$2.59 to $12.09 per share of Shawmut Common Stock.
Implied Acquisition Value. As part of its analysis of the acquisition
valuation, Morgan Stanley assumed that the net present value of the
estimated cost savings described above was added to the fully diluted
stand-alone value of Shawmut Common Stock also described above (see
"-- Dividend Discount Analysis"). Based on this analysis, Morgan Stanley
estimated the implied acquisition value of Shawmut Common Stock to range
from $18.59 to $28.85 per share in the 8.0x case and from $21.96 to $32.40
per share in the 10.0x case. This analysis did not consider any loss in
value that could result if divestitures of deposits or assets were required
upon an acquisition of Shawmut.
Comparable Transaction Analysis. Morgan Stanley performed an analysis
of premiums paid for selected holding companies of commercial banks in
transactions with value of over $750 million in order to obtain a valuation
range for the Shawmut Common Stock based upon comparable merger
transactions. Multiples of market value, book value, and earnings implied
by the consideration to be received by stockholders of Shawmut in the
Merger were compared with multiples paid in other comparable merger
transactions from 1991 through February 5, 1995. The comparison included a
total of 15 transactions. The transactions examined were
(acquiree/acquiror): Michigan National Corporation and the National
Australia Bank Limited, Continental Bancorporation and BankAmerica
Corporation, Liberty National Bank and Banc One Corporation, Valley
Bancorporation and Marshall & Ilsley Corporation, MNC Financial, Inc. and
NationsBank Corporation, Dominion Bankshares Corporation and First Union
Corporation, First Florida Banks, Inc. and Barnett Banks, Inc., Valley
National Bancorp and Banc One Corporation, Team Bancshares, Inc. and Banc
One Corporation, INB Financial Corporation and NBD Bancorp, Inc., Puget
Sound Bancorp and KeyCorp, Ameritrust Corporation and Society Corporation,
Security Pacific Corporation and BankAmerica Corporation, C&S/Sovran
Corporation and NCNB Corporation, and South Carolina National Bank and
Wachovia Corporation. The analysis yielded a mean premium over market value
of 50% for the comparable transactions, compared to approximately 70% for
the Merger, based on the market price of the Shawmut Common Stock as of
January 24, 1995 ($18.00). Morgan Stanley utilized such market price rather
than the market price as of February 17, 1995 (the last trading day prior
to the public announcement of the Merger) because subsequent to January 24,
1995, the market price of the Shawmut Common Stock appreciated. Morgan
Stanley believed such appreciation was attributable to merger speculation
concerning a potential sale of Shawmut. In terms of price to book multiple,
the mean for the comparable transactions was 1.80x (compared to
approximately 1.80x for the Merger, based on Shawmut's December 31, 1994
book value of $2,019 million). The third multiple considered was price to
latest twelve month trailing earnings with a mean for the comparable
transactions of 20.4x (compared with 11.8x for the Merger, based upon
Shawmut's earnings for the twelve months ended December 31, 1994). For the
comparable transactions: (i) the premiums over market value ranged from
20-80%; (ii) multiples of book value ranged from 1.0x to 2.4x; and (iii)
the premiums over latest twelve month trailing earnings ranged from 8.5x to
39.9x.
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(d) Pro Forma Merger Analysis. The effects of the Merger on Shawmut
and Fleet were analyzed both qualitatively and quantitatively. Qualitative
attributes of the Merger included broader geographical presence,
diversification of the revenue stream, cost savings through the elimination
of duplicative functions and greater economies of scale for Fleet and
Shawmut on a combined basis. Perceived risks associated with the Merger
included cultural integration, the ability to achieve cost savings
estimates and the unknown size and impact of required divestitures.
Shawmut's and Fleet's stand-alone projections were compared to pro
forma combined company projections. The present value of the combined
company per share of Shawmut Common Stock was determined by applying two
1997 projected price to earnings multiples (9.0x and 11.0x) to 1997
estimated net income for the combined company to ascertain a "terminal
value" for the combined company and then discounting those terminal values
along with the estimated future value of the dividend stream. The multiples
of 9.0x and 11.0x reflect the increased value of the combined company and
therefore are higher than the multiples used when evaluating Shawmut on a
stand-alone basis. The dividend stream and terminal values were discounted
to present values using discount rates of 15% and 17%, the discount rate
range deemed by Morgan Stanley to be appropriate for a company with the
combined company's risk characteristics. For the 9.0x case the present
value of the combined company per share of Shawmut Common Stock ranged from
approximately $30.03 to $31.53 and for the 11.0x case the present value of
the combined company per share of Shawmut Common Stock ranged from
approximately $35.88 to $37.69. The estimated earnings used by Morgan
Stanley for purpose of this analysis took into account cost savings equal
to 40% of Shawmut's core non-interest expense (i.e. excluding OREO expense
and any non-recurring charges) phased in equally over two years (for
discussion of cost savings see "-- Value of Potential Cost Savings") after
giving effect to management's projected 1996 earnings estimate for a range
of estimated earnings impacts created by potential divestitures.
In connection with its opinion dated as of the date of this Joint Proxy
Statement-Prospectus, Morgan Stanley confirmed the appropriateness of its
reliance on the analyses used to render its February 20, 1995 opinion by
performing procedures to update certain of such analyses and by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection therewith.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, would
create an incomplete view of the process underlying its opinion. In addition,
Morgan Stanley may have given various analyses more or less weight than other
analyses, and may have deemed various assumptions more or less probable than
other assumptions, so that the ranges of valuations resulting from any
particular analysis described above should not be taken to be Morgan Stanley's
view of the actual value of Shawmut.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Fleet or Shawmut. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
values, which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as a part of Morgan Stanley's
analysis of the fairness of the Common Exchange Ratio to the holders of Shawmut
Common Stock (other than Fleet and its affiliates) and were provided to the
Shawmut Board in connection with the delivery of Morgan Stanley's February 20,
1995 opinion. The analyses do not purport to be appraisals or to reflect the
prices at which a company might actually be sold. In addition, as described
above, Morgan Stanley's opinion and presentation to the Shawmut Board was one of
many factors taken into consideration by the Shawmut Board in making its
determination to approve the Merger. Consequently, the Morgan Stanley analyses
described above should not be viewed as determinative of the Shawmut Board's or
Shawmut management's opinion with respect to the value of Shawmut or of whether
the Shawmut Board or Shawmut management would have been willing to agree to a
different exchange ratio.
The Shawmut Board retained Morgan Stanley based upon its experience and
expertise. Morgan Stanley is an internationally recognized investment banking
and advisory firm. Morgan Stanley, as part of its
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investment banking business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for corporate
and other purposes. Morgan Stanley makes a market in Shawmut Common Stock and
Fleet Common Stock, and may continue to provide investment banking services to
Fleet in the future. In the course of its market-making and other trading
activities, Morgan Stanley may, from time to time, have a long or short position
in, and buy and sell securities of, Shawmut and Fleet. In the past, Morgan
Stanley and its affiliates have provided financial advisory and financing
services to Fleet, and have received customary fees for the rendering of these
services. Recent services rendered by Morgan Stanley to Fleet include serving as
financial advisor to the special committee of the Board of Directors of FMG in
connection with the tender offer for the publicly held minority stake of FMG,
for which Morgan Stanley has requested a payment of approximately $1.25 million.
Since the beginning of 1993, Morgan Stanley and its affiliates have also
provided financial advisory and financing services to Shawmut, and received
customary fees totalling approximately $4.6 million for the rendering of those
services. Recent services rendered by Morgan Stanley to Shawmut include serving
in 1995 as an underwriter of the Shawmut Depositary Shares and Shawmut-CT's
Subordinated Notes due 2005 and serving in November 1994 as financial advisor to
Shawmut in conjunction with the Barclays Acquisition.
Shawmut has agreed to pay Morgan Stanley an opinion fee of $3 million,
which is currently payable, and a transaction fee of $12 million against which
the opinion fee will be credited, which will become payable upon the
consummation of the Merger. In addition, Shawmut has agreed, among other things,
to reimburse Morgan Stanley for all reasonable out-of-pocket expenses incurred
in connection with the services provided by Morgan Stanley, and to indemnify and
hold harmless Morgan Stanley and certain related parties to the full extent
lawful from and against certain liabilities and expenses, including certain
liabilities under the federal securities laws, in connection with its
engagement.
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, Shawmut will merge with and into Fleet. 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. At the Effective Time, the
separate corporate existence of Shawmut will terminate. The Fleet Existing
Articles (or the Fleet New Articles if adopted), as in effect immediately prior
to the Effective Time, will be the articles of incorporation of the surviving
corporation and the by-laws of Fleet (the "Fleet By-laws"), as in effect
immediately prior to the Effective Time, will be the by-laws of the surviving
corporation.
CONVERSION OF SHAWMUT CAPITAL STOCK; TREATMENT OF SHAWMUT STOCK OPTIONS AND
SHAWMUT WARRANTS
At the Effective Time of the Merger, each share of Shawmut Common Stock
outstanding, other than shares held in Shawmut's treasury or held by Fleet or
Shawmut or any subsidiary thereof (except in both cases for 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 in respect of a debt previously contracted ("DPC Shares")),
will be converted into the right to receive 0.8922 shares of Fleet Common Stock,
including the associated preferred share purchase rights (the "Common Exchange
Ratio"). Shawmut's obligation to consummate the Merger is not conditioned upon
Fleet Common Stock continuing to trade at any specified minimum price during any
period prior to the Effective Time. Because the Common Exchange Ratio is fixed
and because the market price of Fleet Common Stock is subject to fluctuation,
the value of the shares of Fleet Common Stock that holders of Shawmut Common
Stock will receive in the Merger may increase or decrease prior to and following
the Merger.
Further, at the Effective Time, (i) each share of Shawmut Adjustable
Preferred (other than Dissenting Preferred Shares) will be converted into the
right to receive one share of Fleet Adjustable Preferred, (ii) each share of
Shawmut 9.30% Preferred will be converted into the right to receive one share of
Fleet 9.30% Preferred and (iii) each share of Shawmut 9.35% Preferred will be
converted into the right to receive one share of Fleet 9.35% Preferred. Further,
the Shawmut Depositary Shares will be converted into the Fleet New
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Depositary Shares, as applicable. The terms of the Fleet New Preferred Stock and
the Fleet New Depositary Shares will be substantially the same as the terms of
the Shawmut Preferred and the Shawmut Depositary Shares. See "-- Appraisal
Rights" and "DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED STOCK,
FLEET NEW DEPOSITARY SHARES AND FLEET WARRANTS".
Each outstanding share of Shawmut Capital Stock owned by Fleet or its
subsidiaries or Shawmut or its subsidiaries (other than Dissenting Preferred
Shares, Trust Account Shares or DPC Shares) or by Shawmut as treasury stock will
be cancelled at the Effective Time and shall cease to exist, and no Fleet
Capital Stock or other consideration will be delivered in exchange therefor. All
shares of Fleet Common Stock or Fleet preferred stock that are owned by Shawmut
(except for shares held by Shawmut or any subsidiary 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 in respect of a debt
previously contracted) will become treasury stock of Fleet.
Each stock option to acquire Shawmut Common Stock granted under the Shawmut
Stock Plans which is outstanding and unexercised immediately prior to the
Effective Time will be converted automatically at the Effective Time into, and
will become, stock options to purchase Fleet Common Stock and will continue to
be governed by the terms of the Shawmut Stock Plans which will be assumed by
Fleet. Each Shawmut Warrant which is outstanding and unexercised immediately
prior to the Effective Time shall be converted automatically at the Effective
Time into a Fleet Warrant. In each case, (a) the number of shares of Fleet
Common Stock subject to the Fleet option or Fleet Warrant, as the case may be,
shall be equal to the product of the number of shares of Shawmut Common Stock
subject to the Shawmut option or Shawmut Warrant, as the case may be, and the
Common Exchange Ratio, rounded down to the nearest share, and (b) the exercise
price per share of Fleet Common Stock subject to the Fleet option or Fleet
Warrant, as the case may be, will be equal to the exercise price per share of
Shawmut Common Stock under the Shawmut option or Shawmut Warrant, as the case
may be, divided by the Common Exchange Ratio, rounded up to the nearest cent.
The duration and other terms of each Fleet option and Fleet Warrant shall be
substantially the same as the Shawmut option or Shawmut Warrant. Each option
granted under the Shawmut Stock Plans will, pursuant to the terms of each such
plan, automatically vest and become exercisable upon approval and adoption of
the Merger Agreement by the holders of Shawmut Common Stock.
The indenture governing Shawmut's 9.85% Subordinated Capital Notes (the
"Capital Notes") provides that, on the maturity date of June 1, 1999, the
Capital Notes, at Shawmut's or, if the Merger is consummated, Fleet's option,
will either be exchanged for common stock, preferred stock or certain other
primary capital securities of Shawmut or, if the Merger is consummated, Fleet,
having a market value equal to the principal amount of the Capital Notes, or
will be repaid from the proceeds of other issuances of such securities. Shawmut
or, if the Merger is consummated, Fleet, may, however, at its option revoke its
obligation to redeem the Capital Notes with capital securities based upon the
capital treatment of the Capital Notes by its primary regulator or consent by
its primary regulator for such revocation. The Capital Notes will remain
outstanding after the Merger. Neither Fleet nor Shawmut currently intends to
exchange Fleet Common Stock or Shawmut Common Stock, as the case may be, for the
Capital Notes upon the maturity of the Capital Notes.
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; FRACTIONAL SHARES
Shawmut. 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 Shawmut Capital Stock, certificates representing the
shares of Fleet Common Stock, Fleet New Preferred Stock and the cash in lieu of
any fractional shares (such certificates for shares of Fleet Common Stock, Fleet
New Preferred Stock and the cash in lieu of any fractional shares, together with
any dividends or distributions with respect thereto, being referred to as the
"Exchange Fund") to be issued pursuant to the Merger Agreement in exchange for
outstanding shares of Shawmut Capital Stock. At or prior to the Effective Time,
Fleet will also deposit, or cause to be deposited, with Fleet-RI (the
"Depositary"), for the benefit of the holders of depositary receipts
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representing Shawmut Depositary Shares, depositary receipts representing the
Fleet New Depositary Shares to be issued pursuant to the Merger Agreement in
exchange for outstanding Shawmut Depositary Shares.
As soon as is practicable after the Effective Time, and in no event later
than five business days thereafter, a form of transmittal letter will be mailed
by the Exchange Agent to the holders of Shawmut Capital Stock and holders of
Shawmut Depositary Shares. The form of transmittal letter will contain
instructions with respect to the surrender of certificates representing Shawmut
Capital Stock and depositary receipts representing Shawmut Depositary Shares.
SHAWMUT STOCK CERTIFICATES OR DEPOSITARY RECEIPTS SHOULD NOT BE RETURNED
WITH THE ENCLOSED PROXY AND SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNLESS
AND UNTIL THE SHAWMUT STOCKHOLDER OR HOLDER OF DEPOSITARY RECEIPTS RECEIVES A
LETTER OF TRANSMITTAL FOLLOWING THE EFFECTIVE TIME.
Until the certificates representing Shawmut Capital Stock or the depositary
receipts representing Shawmut Depositary Shares are surrendered for exchange
after the Effective Time of the Merger, holders of such certificates or receipts
will accrue but will not be paid dividends or other distributions declared after
the Effective Time with respect to the Fleet Common Stock, Fleet New Preferred
Stock or Fleet New Depositary Shares into which their shares have been
converted. When such certificates or receipts are surrendered, any unpaid
dividends or other distributions will be paid, without interest. After the
Effective Time, there will be no transfers on the stock transfer books of
Shawmut of shares of Shawmut Capital Stock issued and outstanding immediately
prior to the Effective Time. If certificates representing shares of Shawmut
Capital Stock are presented after the Effective Time, they will be cancelled and
exchanged for the relevant certificate representing the applicable shares of
Fleet Common Stock, Fleet New Preferred Stock or depositary receipts
representing the Fleet New Depositary Shares.
No fractional shares of Fleet Common Stock will be issued to any holder of
Shawmut Common Stock 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 of the closing sale prices of Fleet Common
Stock on the Stock Exchange as reported by The Wall Street Journal for the five
trading days immediately preceding the date of the Effective Time. No interest
will be paid or accrued on the cash in lieu of fractional shares payable to
holders of such certificates.
Any Dissenting Preferred Shares with respect to which appraisal rights have
been properly perfected will be purchased in accordance with the procedures
described under "-- Appraisal Rights" and under Section 262 of the Delaware law
attached as Exhibit F to this Joint Proxy Statement-Prospectus.
Neither Fleet nor Shawmut nor any other person will be liable to any former
holder of Shawmut Capital Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
If a certificate for Shawmut Capital Stock has been lost, stolen or
destroyed, the Exchange Agent will issue the consideration properly payable in
accordance with the Merger Agreement upon receipt of appropriate evidence as to
such loss, theft or destruction, appropriate evidence as to the ownership of
such certificate by the claimant, and appropriate and customary indemnification.
For a description of the differences between the rights of the holders of
Fleet Capital Stock and Shawmut Capital Stock, see "COMPARISON OF STOCKHOLDERS'
RIGHTS". For a description of the Fleet Capital Stock, including the Fleet New
Preferred Stock, the Fleet New Depositary Shares and the Fleet Warrants, see
"DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW
DEPOSITARY SHARES AND FLEET WARRANTS".
Fleet. Shares of Fleet capital stock (including Fleet Common Stock) issued
and outstanding immediately prior to the Effective Time will remain issued and
outstanding and be unaffected by the Merger, and holders of such stock will not
be required to exchange the certificates representing such stock or take any
other action by reason of the consummation of the Merger.
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EFFECTIVE TIME
The Effective Time will be as set forth in the Certificate of Merger (the
"Certificate of Merger") which will be filed with the Secretary of State of the
State of Delaware and in the Articles of Merger (the "Articles of Merger") which
will 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
on a date to be specified by the parties which shall be no later than two
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions precedent to the Merger set forth in
Article VII of the Merger Agreement. Fleet and Shawmut each anticipate that the
Merger will be consummated during the fourth 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
as to if or when such approvals will be obtained or that the Merger will be
consummated. If the Merger is not effected on or before February 20, 1996, the
Merger Agreement may be terminated by either Fleet or Shawmut, unless the
failure to effect the Merger by such date is due to the failure of the party
seeking to terminate the Merger Agreement to perform or observe the covenants
and agreements of such party set forth therein. See "THE MERGER -- Conditions to
the Consummation of the Merger" and "-- Regulatory Approvals Required for the
Merger".
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of Fleet and
Shawmut as to, among other things, (i) the corporate organization and existence
of each party and its subsidiaries; (ii) the capitalization of each party and
its subsidiaries; (iii) the corporate power and authority of each party; (iv)
the compliance of the Merger Agreement with (a) the charter and by-laws of each
party, (b) applicable law, and (c) certain material agreements; (v) governmental
and third party approvals; (vi) the timely filing of required regulatory
reports; (vii) each party's financial statements and filings with the
Commission; (viii) the absence of certain changes in each party's business since
December 31, 1994; (ix) the absence of material legal proceedings; (x) the
filing and accuracy of each party's tax returns; (xi) each party's employee
benefit plans and related matters; (xii) each party's compliance with applicable
law; (xiii) the absence of material defaults under certain contracts; (xiv)
agreements between each party and regulatory agencies; (xv) the absence of
undisclosed liabilities; and (xvi) the inapplicability to the Merger of the
Delaware or Rhode Island takeover law, certain antitakeover provisions in each
party's charter, and each party's Rights Agreement (as hereinafter defined); and
(xvii) pooling of interests accounting treatment.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Pursuant to the Merger Agreement, prior to the Effective Time Fleet and
Shawmut have each agreed to, and to cause their respective subsidiaries to, (i)
conduct its business in the usual, regular and ordinary course consistent with
past practice, (ii) use reasonable best efforts to maintain and preserve intact
its business organization, employees and advantageous business relationships and
retain the services of its officers and key employees, and (iii) take no action
which would adversely affect or delay the ability of either Fleet or Shawmut to
obtain any necessary or other governmental regulatory approvals required for the
transactions contemplated by the Merger Agreement or to perform its covenants
and agreements under the Merger Agreement or the Option Agreements.
Fleet and Shawmut have also agreed to use their best efforts to promptly
prepare and file all necessary documentation to effect all applications,
notices, petitions and filings, and to obtain and to cooperate in obtaining
permits, consents, approvals and authorizations of all third parties and
governmental entities necessary or advisable to consummate the transactions
contemplated by the Merger Agreement and to comply with the terms and conditions
of all such permits, consents, approvals and authorizations. Fleet and Shawmut
have each agreed upon request to furnish to the other party all information
concerning themselves and their subsidiaries, directors, officers and
stockholders and such other matters as may be necessary or advisable in
connection with the Merger. Fleet and Shawmut have also agreed, subject to the
terms and conditions of the Merger Agreement, to use their best efforts 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 and to consummate the Merger. Fleet also agreed to cause the shares
of Fleet Common Stock to
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be issued in the Merger to be approved for listing on the Stock Exchange,
subject to official notice of issuance, and to use its best efforts to cause the
Fleet New Depositary Shares to be so listed.
Fleet and Shawmut have further agreed to give the other party 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.
In addition, except as expressly contemplated by the Merger Agreement or
specified in a schedule thereto or as contemplated by the Option Agreements,
each of Fleet and Shawmut has agreed that, without the consent of the other
party, it will not, among other things:
(i) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness
of such party or any of its subsidiaries to such party or any of its
subsidiaries), assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any individual, corporation or
other entity, or make any loan or advance;
(ii) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock (except, in the case
of Shawmut, for regular quarterly cash dividends at a rate not in excess of
$0.22 per share of Shawmut Common Stock, and in the case of Fleet, for
regular quarterly cash dividends on Fleet Common Stock at a rate not in
excess of $0.50 per share of Fleet Common Stock, and, in the case of
Shawmut Preferred Stock and Fleet Preferred Stock, for regular quarterly or
semiannual cash dividends thereon at the rates set forth in the applicable
certificate or articles of incorporation or certificate of designation for
such securities and except for dividends paid by any of the wholly-owned
subsidiaries of each of Fleet and Shawmut to Fleet or Shawmut or any of
their wholly-owned subsidiaries, respectively); or issue any additional
shares of capital stock except pursuant to (A) the exercise of stock
options or warrants outstanding as of the date of the Merger Agreement, (B)
the conversion of shares of Fleet's Dual Convertible Preferred Stock (as
hereinafter defined), (C) the Option Agreements, (D) the Shawmut Rights
Agreement (as hereinafter defined), (E) the Fleet Rights Agreement (as
hereinafter defined), or (F) the Northeast Merger;
(iii) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other entity
other than a direct or indirect wholly-owned subsidiary, or cancel, release
or assign any indebtedness to any such entity or any claims held by any
such entity, except in the ordinary course of business consistent with past
practice or pursuant to contracts or agreements in force at the date of the
Merger Agreement;
(iv) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other individual,
corporation or other entity other than a wholly-owned subsidiary thereof;
(v) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases or
contracts, other than renewals of contracts and leases without material
adverse changes of terms;
(vi) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment agreement with or for the
benefit of any employee other than in the ordinary course of business
consistent with past practice or accelerate the vesting of any stock
options or other stock-based compensation;
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(vii) solicit, encourage or authorize any individual, corporation or
other entity to solicit from any third party any inquiries or proposals
relating to the disposition of its business or assets, or the acquisition
of its voting securities, or the merger of it or any of its subsidiaries
with any corporation or other entity other than as provided by the Merger
Agreement (and each party will promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it may
receive relating to any of such matters);
(viii) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(ix) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained in the Merger Agreement will limit the
ability of Fleet or Shawmut to exercise its rights under the Shawmut Option
Agreement or the Fleet Option Agreement, as the case may be;
(x) amend its certificate of incorporation or articles of
incorporation, as the case may be, or its bylaws;
(xi) other than in prior consultation with the other party to the
Merger Agreement, restructure or materially change its investment
securities portfolio or its gap position, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported;
(xii) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in the
Merger Agreement being or becoming untrue in any material respect at any
time prior to the Effective Time, or in any of the conditions to the Merger
not being satisfied or in a violation of any provision of the Merger
Agreement, except, in every case, as may be required by applicable law; or
(xiii) agree to, or make any commitment to, take any of the actions
listed above.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject to the satisfaction
or waiver, where permissible, of the following conditions at or prior to the
Effective Time:
(i) Approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the respective requisite affirmative votes of the
holders of Fleet Common Stock and Shawmut Common Stock entitled to vote
thereon;
(ii) The shares of Fleet Common Stock which are to be issued to
Shawmut stockholders upon consummation of the Merger shall have been
authorized for listing on the Stock Exchange, subject to official notice of
issuance;
(iii) All regulatory approvals required to consummate the transactions
contemplated by the Merger Agreement shall have been obtained and shall
remain in full force and effect and all statutory waiting periods with
respect to such approvals shall have expired (the "Requisite Regulatory
Approvals");
(iv) The registration statement of which this Joint Proxy
Statement-Prospectus forms a part shall have become effective and no stop
order suspending the effectiveness shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
Commission;
(v) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of 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,
entered, promulgated or enforced by any court, administrative agency or
commission or other governmental authority or instrumentality which
prohibits or makes illegal consummation of the Merger;
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(vi) Fleet shall have received an opinion of Wachtell, Lipton, Rosen &
Katz, special counsel to Fleet, and Shawmut shall have received an opinion
of Skadden, Arps, Slate, Meagher & Flom, special counsel to Shawmut, in
form and substance reasonably satisfactory to Fleet and Shawmut, each dated
as of the Effective Time, substantially to the effect that on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated for Federal income tax purposes as part of one or
more reorganizations within the meaning of Section 368 of the Code and that
accordingly (i) no gain or loss will be recognized by Fleet or by Shawmut
as a result of the Merger; (ii) no gain or loss will be recognized by the
stockholders of Shawmut who exchange their Shawmut Capital Stock for Fleet
Common Stock or Fleet New Preferred Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest in
Fleet Common Stock or cash received with respect to Dissenting Preferred
Shares); and (iii) the tax basis of the Fleet Common Stock or Fleet New
Preferred Stock received by stockholders who exchange all of their Shawmut
Capital Stock solely for Fleet Common Stock or Fleet New Preferred Stock in
the Merger will be the same as the tax basis of the Shawmut Capital Stock
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received) (See "-- Certain
Federal Income Tax Consequences");
(vii) Fleet and Shawmut each shall have received a letter from KPMG
Peat Marwick LLP addressed to each of them, to the effect that the Merger
will qualify for "pooling of interests" accounting treatment;
(viii) The representations and warranties of the other party to the
Merger Agreement shall be true and correct in all material respects as of
the date of the Merger 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 the Closing Date;
(ix) Each party shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date; and
(x) The rights issued pursuant to the Fleet Rights Agreement or the
Shawmut Rights Agreement, respectively, shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the terms
of each such agreement. See "-- The Fleet Rights Agreement" and "-- The
Shawmut Rights Agreement".
No assurance can be provided as to if or when the Requisite Regulatory
Approvals necessary to consummate the Merger will be obtained or whether all of
the other conditions precedent to the Merger will be satisfied or waived by the
party permitted to do so. If the Merger is not effected on or before February
20, 1996, the Merger Agreement may be terminated by either Fleet or Shawmut,
unless the failure to effect the Merger by such date is due to the failure of
the party seeking to terminate the Merger Agreement to perform or observe
covenants and agreements of such party set forth therein.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
Fleet and Shawmut have agreed to use their best efforts to obtain the
Requisite Regulatory Approvals, which include approval from the Federal Reserve
Board, the OTS and various state regulatory authorities, and intend to file
applications to obtain such Requisite Regulatory Approvals promptly after the
date of this Joint Proxy Statement-Prospectus. The Merger cannot proceed in the
absence of the Requisite Regulatory Approvals. There can be no assurance that
such Requisite 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. There can likewise be no assurance that
the Department of Justice or any state attorney general will not attempt to
challenge the Merger on antitrust grounds or, if such a challenge is made, as to
the result thereof.
Fleet and Shawmut are not aware of any other governmental approvals or
actions that are required prior to the parties' consummation of the Merger other
than those described below. It is presently contemplated
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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.
Federal Reserve Board. The Merger is subject to approval by the Federal
Reserve Board pursuant to Sections 3 and 4 of the BHCA. Assuming Federal Reserve
Board approval, the Merger may not be consummated until 30 days after such
approval, during which time the Department of Justice may challenge the Merger
on antitrust grounds and seek the divestiture of certain assets and liabilities.
With the approval of the Federal Reserve Board and the Department of Justice,
the waiting period may be reduced to no less than 15 days.
The Federal Reserve Board is prohibited from approving any transaction
under the applicable statutes which:
(i) 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
(ii) may have the effect in any section of the United States of
substantially lessening competition, or tending to create a monopoly, or
resulting in a restraint of trade, unless the Federal Reserve Board 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.
In addition, in reviewing a transaction under the applicable statutes, the
Federal Reserve Board will consider the financial and managerial resources of
the companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of, or in addition to, consideration of the
above factors, it is anticipated that the Federal Reserve Board will consider
the regulatory status of Fleet and Shawmut, 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 Federal Reserve Board must take into account the record of
performance of each of Fleet and Shawmut in meeting the credit needs of the
entire community, including low and moderate income neighborhoods, served by
each company. Each of Fleet-RI, Fleet-NY, Fleet-CT and Fleet-MA has a
"satisfactory" CRA rating with the appropriate federal regulator and each of
Fleet Bank of Maine and Fleet-NH has an "outstanding" CRA rating with the
appropriate federal regulator. Each of Shawmut's banking subsidiaries has a
"satisfactory" CRA rating with the appropriate federal regulator. None of
Fleet's or Shawmut's banking subsidiaries received any comments from its
respective federal regulator in its last CRA examination relating to such
ratings which were material and remain unresolved.
In addition, under the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Act"), certain sections of which will
become effective September 29, 1995, the Federal Reserve Board generally may not
approve an application if the applicant (including all insured depository
institutions which are affiliates of the applicant), upon consummation of the
acquisition, would control 30% or more of the total amount of deposits of
insured depository institutions in a particular state. This provision is not
applicable, however, if the acquisition is approved by the appropriate state
bank supervisor of such state and the standard on which such approval is based
does not have the effect of discriminating against out-of-state banks, out-of-
state bank holding companies, or subsidiaries of such out-of-state banks or bank
holding companies.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the Merger to the Office of the Comptroller of the Currency (the
"OCC"), the Federal Deposit Insurance Corporation (the "FDIC") and the
appropriate state regulatory authorities. These agencies have 30 days to submit
their views and recommendations to the Federal Reserve Board. The Federal
Reserve Board is required to hold a public hearing in the event it receives a
written recommendation of disapproval of the application from any of these
agencies within such 30-day period. Furthermore, the BHCA and Federal Reserve
Board regulations require publication of notice of, and the opportunity for
public comment on, the application submitted by Fleet for approval of the Merger
and authorize the Federal Reserve Board to hold a public hearing in connection
therewith if the Federal Reserve Board determines that such a hearing would be
appropriate. Any such
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hearing or comments provided by third parties could prolong the period during
which the application is subject to review by the Federal Reserve Board.
As noted above, the Merger may not be consummated until 30 days after
Federal Reserve Board approval, during which time the Department of Justice may
challenge the Merger on antitrust grounds and seek the divestiture of certain
assets and liabilities. With the approval of the Federal Reserve Board and the
Department of Justice, the waiting period may be reduced to no less than 15
days. The commencement of an antitrust action by the Department of Justice would
stay the effectiveness of Federal Reserve Board approval of the Merger unless a
court specifically orders otherwise. In reviewing the Merger, the Department of
Justice could analyze the Merger's effect on competition differently than the
Federal Reserve Board, and thus it is possible that the Department of Justice
could reach a different conclusion than the Federal Reserve Board regarding the
Merger's competitive effects. Failure of the Department of Justice to object to
the Merger may not prevent the filing of antitrust actions by private persons or
state attorneys general.
In general, the Federal Reserve Board and the Department of Justice will
examine the impact of the Merger on competition in various product and
geographic markets, including competition for deposits and loans, especially
loans to small and middle market businesses.
Using the above standards, Fleet and Shawmut expect that the Federal
Reserve Board or the Department of Justice will request that Fleet or Shawmut
divest certain operations in order to alleviate what such agency believes would
be an adverse competitive effect. Fleet has not yet formulated a firm
divestiture proposal and will not do so until further discussions with the
Federal Reserve Board and the Department of Justice are held; accordingly, as of
the date of this Joint Proxy Statement-Prospectus neither Fleet nor Shawmut can
predict what the aggregate amount of any such divestitures may be. While any
potential divestitures may affect certain pro forma combined financial statement
amounts, merger and restructuring costs, cost savings and revenues, Fleet
believes that the aggregate amount and financial impact of any such divestitures
will not be material to the business, operations or financial condition of the
combined institution and its subsidiaries, taken as a whole.
Fleet's and Shawmut's rights to exercise their respective options under the
Option Agreements are also subject to the prior approval of the Federal Reserve
Board, to the extent that the exercise of their respective options under the
Option Agreements would result in Fleet or Shawmut, as the case may be, owning
more than 5% of the outstanding shares of Shawmut Common Stock or Fleet Common
Stock, respectively. In considering whether to approve Fleet's or Shawmut's
right to exercise its respective option, including its respective right to
purchase more than 5% of the outstanding shares of Shawmut Common Stock or Fleet
Common Stock, as the case may be, the Federal Reserve Board would generally
apply the same statutory criteria it would apply to its consideration of
approval of the Merger.
OTS. The Merger is subject to approval of the OTS under Section 10 of HOLA
because the Merger will cause Fleet to acquire control of Shawmut-FSB. HOLA
directs the OTS to take into consideration the financial and managerial
resources and future prospects of the acquiring company and savings association
involved, the effect of the acquisition on the savings association, the
insurance risk to the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC and the convenience and needs of the community to be served.
The OTS is prohibited from approving any transaction under the applicable
statutes which:
(i) would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
savings and loan business in any part of the United States; or
(ii) may have the effect in any section of the United States of
substantially lessening competition or tending to create a monopoly, or
resulting in a restraint of trade, unless the OTS 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.
Massachusetts BBI. The Merger requires the approval of the Massachusetts
Board of Bank Incorporation (the "Massachusetts BBI"), under Section 2 of
Chapter 167A of the Massachusetts General Laws. In
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determining whether or not to approve the Merger, the Massachusetts BBI must
determine that the Merger will not unreasonably affect competition among
Massachusetts banking institutions and that it will promote public convenience
and advantage. In making such a determination, the Massachusetts BBI must
consider, but is not limited 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, Fleet will be required to maintain, for a period of two years
following the consummation of the Merger, the asset base of Shawmut-MA at a
level equal to or greater than the total assets of Shawmut-MA on the date of
consummation of the Merger. In addition, unless waived by the Massachusetts
Commissioner of Banks, the Massachusetts 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 25% 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. It is estimated that the Merger will result in Fleet controlling no
more than 18% of such total deposits, and therefore, the 25% limit on deposits
will not be exceeded.
Connecticut Banking Commissioner. The Merger is also subject to the filing
of an application with the Connecticut Banking Commissioner under Section
36a-411 of the Connecticut General Statutes, Revisions of 1958, as amended
("C.G.S."). Under the C.G.S., the Connecticut Banking Commissioner is required
to consider whether the acquisition of a bank in Connecticut or a Connecticut
bank holding company by an out-of-state bank holding company can reasonably be
expected to produce benefits to the public and whether such benefits clearly
outweigh possible adverse effects, including, but not limited to, an undue
concentration of resources and decreased or unfair competition. The Connecticut
Banking Commissioner may not approve such acquisition unless the commissioner
considers whether: (i) the investment and lending policies of the institution to
be acquired are consistent with safe and sound banking practices and will
benefit the economy of Connecticut; (ii) the services or proposed services of
the institution to be acquired are consistent with safe and sound banking
practices and will benefit the economy of Connecticut; (iii) the acquisition
will not substantially lessen competition in the banking industry of
Connecticut; and (iv) in the case of such acquisition and retention of ownership
or control of twenty-five per cent or more of such voting stock, the out-
of-state holding company (A) has sufficient capital to ensure, and agrees to
ensure, that the institution to be acquired will comply with applicable minimum
capital requirements, and (B) has sufficient managerial resources to operate the
institution to be acquired in a safe and sound manner. Pursuant to C.G.S.
Section 36a-34(b), the Connecticut Banking Commissioner may not grant approval
under C.G.S. Section 36a-411 without a finding that (i) the applicant has a
record of compliance with the Connecticut community reinvestment act, the
Connecticut corollary to the CRA and applicable consumer protection laws and
(ii) the resulting entity will provide adequate services to meet the banking
needs of community residents, including those of low and moderate income.
Further, C.G.S. Section 36a-34(b) prohibits the Connecticut Banking Commissioner
from approving a transaction if it would result in or further a monopoly,
substantially lessen competition, or restrain trade, without a finding that the
anti-competitive effects are clearly outweighed by public benefit.
New Hampshire Board of Trust Company Incorporation. The Merger is also
subject to the filing of an application with the New Hampshire Board of Trust
Company Incorporation under Section 384:47 of the New Hampshire Revised Statutes
Annotated. Under New Hampshire law, an out-of-state bank or bank holding company
may affiliate with a New Hampshire bank or bank holding company by directly or
indirectly acquiring 5% or more of the voting stock of a New Hampshire bank or
bank holding company following the issuance of a certificate by the New
Hampshire Board of Trust Company Incorporation. To receive a certificate, an
applicant must file an application with the New Hampshire Board of Trust Company
Incorporation, which application must include (i) the initial and future plans
of the affiliating bank or bank holding company for capital investment in New
Hampshire, with specific reference to the issue of how the proposed affiliation
will bring net new funds to New Hampshire; (ii) the loan, investment and
dividend
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policies of the affiliating bank or bank holding company and the bank to be
affiliated with, if applicable; (iii) the record of performance of the
affiliating bank or bank holding company and its subsidiaries in serving the
credit needs of the community or communities in which the affiliating bank or
bank holding company and its subsidiaries have operated in the past, including
low and moderate income neighborhoods; and (iv) the plan of the affiliating bank
or bank holding company for providing new services in New Hampshire and for
servicing the credit needs of the community or communities in which each New
Hampshire bank it proposes to affiliate with is located consistent with safe and
sound banking. Section 384-B:3 of the New Hampshire Revised Statutes Annotated
prohibits a bank holding company from directly or indirectly acquiring ownership
or control of any voting stock of any bank or national bank if, upon such
acquisition, the bank holding company would have more than 12 affiliates in New
Hampshire or if the dollar volume of the total deposits of the bank holding
company and all of its affiliates, including time, savings and demand deposits
in New Hampshire, would exceed 20% of the dollar volume in the state of such
total deposits of all banks, national banks, and federal savings and loan
associations in New Hampshire, as determined by the Board of Trust Company
Incorporation on the basis of the most recent reports made by such institutions
to the supervisory authorities and available at the time of acquisition. It is
estimated that the Merger will result in Fleet controlling no more than 18% of
such total deposits, and therefore, the 20% limit on deposits will not be
exceeded.
New York Superintendent of Banks. Assuming consummation of the Northeast
Merger and the bank reorganizations described under "CERTAIN REGULATORY
CONSIDERATIONS -- General", the Merger would also be subject to filing of an
application with the New York Banking Board under Section 142 of the New York
Banking Laws. In determining whether to approve such application, the New York
Banking Board is required to take into consideration the policy of the New York
Department of Banking which requires that the business of banking organizations
be supervised and regulated through the New York Department of Banking in such
manner as to insure the safe and sound conduct of such business, to conserve
their assets, to prevent hoarding of money, to eliminate unsound and destructive
competition among banking organizations and thus to maintain public confidence
in such business and protect the public interest and interests of depositors,
creditors and stockholders. In addition, the New York Banking Board must
consider whether the effect of such action shall be either to result in the
formation of a bank holding company or to expand the size or extent of the
resulting or acquiring bank holding company beyond limits consistent with
adequate or sound banking and the preservation thereof, or result in the
concentration of assets beyond limits consistent with effective competition.
Further, the New York Banking Board must consider whether the Merger may result
in such a lessening of competition as to be injurious to the interest of the
public or tend toward monopoly. The New York Banking Board must primarily
consider the public interests and the needs and convenience thereof.
Rhode Island Board of Bank Incorporation. The Merger may also be subject
to the filing of an application with the Rhode Island Board of Bank
Incorporation under Section 19-30-2 of the Rhode Island General Laws. Under the
Rhode Island statute, the Rhode Island Board of Bank Incorporation is required
to consider whether the acquisition is in the public interest. In determining
whether the proposed acquisition is in the public interest, the Rhode Island
Board of Bank Incorporation must consider, in addition to such other factors as
it may, in its discretion, determine, whether the acquisition shall promote the
safety and soundness of the institution whose voting stock is being acquired,
and the needs and convenience of the communities served by that institution, and
whether the acquisition is likely to have a significant impact on Rhode Island's
economy, employment levels and tax base.
Florida Banking Department. The Merger is also subject to the filing of a
notice with the Florida Banking Department regarding the change of control of
Shawmut FSB.
State Attorneys General. In addition, the Merger is subject to review by
the attorneys general in the various states in which Shawmut and Fleet own
banking subsidiaries. Shawmut and Fleet are providing certain requested
information about the potential effects of the Merger to the attorneys general
of Connecticut and Massachusetts. There can be no assurance that no state
attorney general will file an antitrust action to enjoin the Merger or that
Shawmut and Fleet will not agree to divest assets and liabilities or take other
actions to avoid or settle any such action.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of the material federal
income tax consequences of the Merger. This summary is not a complete
description of all of the consequences of the 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 not a U.S. person, is a tax-exempt entity or an individual who acquired
Shawmut Common Stock pursuant to an employee stock option, or exercises some
form of control over Shawmut. In addition, no information is provided herein
with respect to the tax consequences of the Merger under applicable foreign,
state or local laws. Consequently, each Shawmut stockholder is advised to
consult a tax advisor as to the specific tax consequences of the transaction to
that stockholder. The following discussion is based on the Code, as in effect on
the date of this Joint Proxy Statement-Prospectus, without consideration of the
particular facts or circumstances of any holder of Shawmut Common Stock.
The Merger. Each party's obligation to effect the Merger is conditioned on
delivery of an opinion to Fleet from Wachtell, Lipton, Rosen & Katz, its special
counsel, and an opinion to Shawmut from Skadden, Arps, Slate, Meagher & Flom,
its special counsel, each 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 of the Code.
Based on such opinions, the material federal income tax consequences of the
Merger will be:
(i) No gain or loss will be recognized by Fleet or by Shawmut as a result
of the Merger;
(ii) No gain or loss will be recognized by Shawmut stockholders upon their
exchange of Shawmut Capital Stock for Fleet Common Stock or Fleet New Preferred
Stock, except that a Shawmut stockholder who receives cash proceeds in lieu of a
fractional share interest in Fleet Common Stock or a holder of Dissenting
Preferred Shares who receives cash instead of Fleet Adjustable Preferred will
recognize gain or loss equal to the difference between such proceeds and the tax
basis allocated to the fractional share interest or the holder's tax basis in
the Dissenting Preferred Shares, as the case may be, and such gain or loss will
constitute capital gain or loss if such stockholder's Shawmut Capital Stock with
respect to which gain or loss is recognized is held as a capital asset at the
Effective Time;
(iii) The tax basis of the Fleet Common Stock or Fleet New Preferred Stock
(including any fractional share interest) received by a Shawmut stockholder who
exchanges his or her Shawmut Capital Stock for Fleet Common Stock or Fleet New
Preferred Stock will be the same as such stockholder's tax basis in the Shawmut
Capital Stock surrendered in exchange therefor; and
(iv) The holding period of the Fleet Common Stock or Fleet New Preferred
Stock (including any fractional share interest) received by a Shawmut
stockholder will include the period during which the Shawmut Capital Stock
surrendered in exchange therefor was held (provided that such Shawmut Capital
Stock was held by such Shawmut stockholder as a capital asset at the Effective
Time).
Information Reporting and Backup Withholding. Payments in respect of
Shawmut Capital Stock may be subject to information reporting to the Internal
Revenue Service and to a 31% backup withholding tax. Backup withholding will not
apply, however, to a payment to a Shawmut stockholder or other payee if such
stockholder or payee completes and signs the substitute Form W-9 that will be
included as part of the transmittal letter or otherwise proves to Fleet and the
Exchange Agent that it is exempt from backup withholding.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "pooling of
interests" transaction under generally accepted accounting principles. Under
such method of accounting, holders of Shawmut Common Stock will be deemed to
have combined their existing voting common stock interest with that of holders
of Fleet Common Stock by exchanging their shares for shares of Fleet Common
Stock. Accordingly, the book value of the assets, liabilities and stockholders'
equity of Shawmut, as reported on its consolidated balance sheet, will be
carried over to the consolidated balance sheet of Fleet and no goodwill will be
created. Fleet will
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be able to include in its consolidated income the consolidated income of Shawmut
for the entire fiscal year in which the Merger occurs; however, certain expenses
incurred to effect the Merger must be treated by Fleet as current charges
against income rather than adjustments to its balance sheet. In order for the
Merger to qualify for pooling-of-interests accounting treatment, among other
criteria, substantially all (90% or more) of the outstanding Shawmut Common
Stock must be exchanged for Fleet Common Stock.
Fleet and Shawmut's respective obligations to consummate the Merger is
conditioned upon the receipt by Fleet and Shawmut of an opinion from Fleet's
independent public accountants to the effect that the Merger qualifies for
pooling-of-interests method of accounting.
The unaudited pro forma financial information contained in this Joint Proxy
Statement-Prospectus has been prepared using the pooling-of-interests accounting
method to account for the Merger. See "SUMMARY -- Selected Historical and Pro
Forma Per Share Data" and "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS".
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 Shawmut stockholder
approval:
(i) by mutual consent of Fleet and Shawmut 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;
(ii) by either the Board of Directors of Fleet or Shawmut if any
governmental entity which must grant a Requisite Regulatory Approval has
denied approval of the Merger and such denial has become final and
non-appealable or any governmental entity of competent jurisdiction shall
have issued a final non-appealable order enjoining or otherwise prohibiting
the consummation of the transactions contemplated by the Merger Agreement;
(iii) by either the Board of Directors of Fleet or Shawmut if the
Merger shall not have been consummated on or before February 20, 1996,
unless the failure of the Effective Time of the Merger to occur by such
date shall be due to the failure of the party seeking to terminate the
Merger Agreement to perform or observe the covenants and agreements of such
party set forth therein;
(iv) by either the Board of Directors of Fleet or Shawmut (provided
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained therein) if
there shall have been a material breach of any of the covenants or
agreements or any of the representations or warranties set forth in the
Merger Agreement on the part of the other party, which breach is not cured
within forty-five (45) days following written notice to the party
committing such breach, or which breach, by its nature, cannot be cured
prior to the Effective Time; or
(v) by either Fleet or Shawmut if Fleet or Shawmut stockholder
approvals have not been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or any adjournment or
postponement thereof.
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 that the costs and expenses of
printing and mailing this Joint Proxy Statement-Prospectus, and all filing and
other fees paid to the Commission in connection with the Merger, shall be borne
equally by Fleet and Shawmut.
WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Waiver. At any time prior to the Effective Time, Fleet and Shawmut, by
action taken or authorized by their respective Boards of Directors, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party; (ii) 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
(iii) waive compliance by the other party of any of its
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agreements or conditions contained in the Merger Agreement, except that after
Shawmut stockholder approval, no extension or waiver shall reduce the amount or
change the form of consideration to be delivered to each of Shawmut's
stockholders under the Merger Agreement without further approval of Shawmut's
stockholders.
Amendment. Subject to compliance with applicable law, the Merger Agreement
may be amended by Fleet and Shawmut by action taken or authorized by their
respective Boards of Directors, at any time, except that after Shawmut
stockholder approval, no amendment shall reduce the amount or change the form of
the consideration to be delivered to Shawmut's stockholders under the Merger
Agreement without further approval of Shawmut's stockholders, other than as
contemplated by the Merger Agreement. In addition, Delaware law prohibits any
change in any of the terms and conditions of the Merger Agreement subsequent to
Shawmut stockholder approval if such change or alteration would, among other
things, adversely effect any holder of Shawmut Common Stock.
FLEET AND SHAWMUT STOCK OPTION AGREEMENTS
Concurrently with the execution of the Merger Agreement, Fleet executed and
delivered the Fleet Stock Option Agreement, pursuant to which Fleet granted to
Shawmut the Fleet Option. At the same time, Shawmut executed and delivered the
Shawmut Stock Option Agreement, pursuant to which Shawmut granted to Fleet the
Shawmut Option. The Fleet Stock Option Agreement and the Shawmut Stock Option
Agreement are attached to this Joint Proxy Statement-Prospectus as Exhibits B
and C and are incorporated by reference herein. Fleet and Shawmut approved and
entered into the Fleet and Shawmut Option Agreements to induce each other to
enter into the Merger Agreement. The Option Agreements are intended to increase
the likelihood that the Merger will be consummated in accordance with the terms
of the Merger Agreement. Consequently, certain aspects of the Option Agreements
may have the effect of discouraging persons who might now or prior to the
Effective Time be interested in acquiring all of or a significant interest in
Fleet or Shawmut from considering or proposing such an acquisition, even if, in
the case of Shawmut, such persons were prepared to offer to pay consideration to
Shawmut stockholders which had a higher current market price than the shares of
Fleet Common Stock to be received per share of Shawmut Common Stock pursuant to
the Merger Agreement.
Except as otherwise noted below, the terms and conditions of the Fleet
Option Agreement and the Shawmut Option Agreement are identical in all material
respects. For purposes of this section, except as otherwise noted, (i) the Fleet
Option Agreement or the Shawmut Option Agreement, as the case may be, is
sometimes referred to as the "Issuer Option Agreement", (ii) Fleet, as issuer of
the Fleet Common Stock, and Shawmut, as issuer of the Shawmut Common Stock, upon
the exercise of the Fleet Option and the Shawmut Option, respectively, are
sometimes individually referred to as the "Issuer", (iii) Fleet and Shawmut, as
the holder of the Shawmut Option and the Fleet Option, respectively, are
sometimes individually referred to as the "Optionee", (iv) the Fleet Option or
the Shawmut Option, as the case may be, is sometimes referred to as the "Issuer
Option" and (v) the Fleet Common Stock and the Shawmut Common Stock is referred
to as "Issuer Common Stock".
The Fleet Option Agreement provides for the purchase by Shawmut of
28,171,050 shares (the "Fleet Option Shares" or the "Issuer Option Shares", as
the case may be) of Fleet Common Stock at an exercise price of $33.625 per
share, payable in cash. The Fleet Option Shares, if issued pursuant to the Fleet
Option Agreement, shall in no event exceed 19.9% of the Fleet Common Stock
issued and outstanding without giving effect to the issuance of any Fleet Common
Stock subject to the Fleet Option.
The Shawmut Option Agreement provides for the purchase by Fleet of
24,195,625 shares (the "Shawmut Option Shares" or the "Issuer Option Shares", as
the case may be) of Shawmut Common Stock at an exercise price of $24.50 per
share, payable in cash. The Shawmut Option Shares, if issued pursuant to the
Shawmut Option Agreement, shall in no event exceed 19.9% of the Shawmut Common
Stock issued and outstanding without giving effect to the issuance of any
Shawmut Common Stock subject to the Shawmut Option.
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The number of shares of Issuer Common Stock subject to the applicable
Issuer Option will be increased to the extent that additional shares of Issuer
Common Stock are issued or otherwise become outstanding (other than pursuant to
an exercise of an Issuer Option), such that, after such issuance, the number of
Issuer Option Shares will continue to equal 19.9% of the Issuer Common Stock
then issued and outstanding without giving effect to the issuance of any Issuer
Common Stock subject to such Issuer Option. In the event of any change in, or
distributions in respect of, the shares of Issuer Common Stock by reason of a
stock dividend, split-up, merger, recapitalization, combination, subdivision,
conversion, exchange of shares, distribution on or in respect of such Issuer
Common Stock or similar transaction, the type and number of Issuer Option Shares
purchasable upon exercise of the applicable Issuer Option, and the applicable
option price will also be adjusted in such a manner as shall fully preserve the
economic benefits of the Option.
Each Issuer Option Agreement provides that the Optionee or any other holder
or holders of the Issuer Option (as used in this section, collectively, the
"Holder") may exercise the Issuer Option, in whole or in part, subject to
regulatory approval, if both an Initial Triggering Event (as defined below) and
a Subsequent Triggering Event (as defined below) shall have occurred prior to
the occurrence of an Exercise Termination Event (as defined below); provided
that the Holder shall have sent to the Issuer written notice of such exercise
within 90 days following such Subsequent Triggering Event (subject to extension
as provided in each Issuer Option Agreement). The terms Initial Triggering Event
and Subsequent Triggering Event generally relate to attempts by one or more
third parties to acquire a significant interest in the Issuer. Any exercise of
the Issuer Option will be deemed to occur on the date such notice is sent.
For purposes of each Issuer Option Agreement:
(a) The term "Initial Triggering Event" means the occurrence of any of
the following events or transactions after February 20, 1995: (i) the
Issuer or any subsidiary of the Issuer, without the Optionee's prior
written consent, shall have entered into an agreement to engage in, or
Issuer's Board of Directors accepts, or recommends stockholder approval of,
an Acquisition Transaction (as defined below) with any person or group
(other than as contemplated by the Merger Agreement); (ii) Issuer's Board
of Directors shall have publicly withdrawn or modified, or publicly
announced its intention to withdraw or modify, in any manner adverse to the
Optionee, its recommendation that its stockholders approve the Merger
Agreement; (iii) any person, other than the Optionee or any subsidiary of
the Optionee, acting in a fiduciary capacity in the ordinary course of
business acquires beneficial ownership, or the right to acquire beneficial
ownership, of 10% or more of the outstanding shares of the Issuer's Common
Stock; (iv) any person other than the Optionee or any subsidiary of the
Optionee shall have made a bona fide proposal to the Issuer or its
stockholders by public announcement or written communication that shall be
or becomes the subject of public disclosure to engage in an Acquisition
Transaction; (v) the Issuer breaches any covenant or obligation in the
Merger Agreement after any person, other than the Optionee or any
subsidiaries of the Optionee, has proposed an Acquisition Transaction, and
such breach (A) would entitle the Optionee to terminate the Merger
Agreement and (B) is not remedied prior to the date of the Optionee's
notice to the Issuer of the exercise of the Option; or (vi) any person
other than the Optionee or any subsidiary of the Optionee, other than in
connection with a transaction to which the Optionee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
For purposes of each Issuer Option Agreement, the term "Acquisition
Transaction" means (i) a merger or consolidation, or any similar
transaction with the Issuer or any of its Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the Commission); (ii) a purchase,
lease or other acquisition of all or substantially all of the assets of the
Issuer or any of its Significant Subsidiaries; (iii) a purchase or other
acquisition of securities representing 10% or more of the voting power of
the Issuer or any of its Significant Subsidiaries; or (iv) any
substantially similar transaction, provided, however, that in no event
shall any (i) merger, consolidation or similar transaction involving Issuer
or any Significant Subsidiary in which the voting securities of the Issuer
outstanding immediately prior thereto continue to represent (by either
remaining outstanding or being converted into the voting securities of the
surviving entity of any such transaction) at least 65% of the combined
voting power of the voting securities of the
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Issuer or the surviving entity outstanding immediately after the
consummation of such merger, consolidation or similar transaction or (ii)
merger, consolidation, purchase or similar transaction involving only the
Issuer and one or more of its subsidiaries or involving only any two or
more of such subsidiaries, be deemed to be an Acquisition Transaction,
provided any such transaction is not entered into in violation of the terms
of the Merger Agreement.
(b) The term "Subsequent Triggering Event" means the occurrence of
either of the following events or transactions after February 20, 1995: (i)
the acquisition by any person of beneficial ownership of 20% or more of the
then outstanding shares of Issuer Common Stock; or (ii) the occurrence of
the Initial Triggering Event described above in clause (a)(i), except that
the percentage referred to in subclause (iii) of the definition of
"Acquisition Transaction" set forth above shall be 20%.
Each Issuer Option will expire upon the occurrence of an "Exercise
Termination Event", defined as: (i) the Effective Time of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event,
except in the case of the termination of the Merger Agreement by the Optionee as
a result of an uncured material breach by the Issuer of any of its
representations, warranties, covenants or agreements unless the breach by the
Issuer is non-volitional; or (iii) twelve months after the termination of the
Merger Agreement if such termination occurs after the occurrence of an Initial
Triggering Event or is a termination by the Optionee due to a material,
volitional breach by the Issuer of the Merger Agreement (provided that if an
Initial Triggering Event continues or occurs beyond such termination of the
Merger Agreement and prior to the passage of such 12-month period, the Issuer
Option will terminate 12 months from the expiration of the last Initial
Triggering Event to expire, but in no event more than 18 months after such
termination of the Merger Agreement.)
As of the date of this Joint Proxy Statement-Prospectus, to the best
knowledge of Fleet and Shawmut, no Initial Triggering Event or Subsequent
Triggering Event has occurred.
Immediately prior to the occurrence of a Repurchase Event (as defined
below), (i) following a request of a Holder, delivered prior to an Exercise
Termination Event, the Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Issuer Option Repurchase Price") equal
to the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which the Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10 of the Option Agreements), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Issuer Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of (i) the price per
share of Issuer Common Stock at which a tender offer or exchange offer therefor
has been made, (ii) the price per share of Issuer Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Issuer Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of the
Option or the Owner gives notice of the required repurchase of Option Shares, as
the case may be, or (iv) in the event of a sale of all or a substantial portion
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, divided by the number of shares of Issuer Common
Stock outstanding at the time of such sale. In determining the market/offer
price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the Holder or Owner,
as the case may be. However, if Issuer at any time after delivery of a notice of
repurchase as described in this paragraph is prohibited under applicable law or
regulation, from delivering to the Holder and/or the Owner, as appropriate, the
Issuer Option Repurchase Price and the Issuer Option Share Repurchase Price,
respectively, in full, the Holder or Owner may revoke its notice of repurchase
of the Issuer Option or the Issuer Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall promptly
(I) deliver to the Holder and/or the Owner, as appropriate, that portion of the
Issuer Option Repurchase Price or the Issuer Option Share Repurchase Price that
Issuer is not prohibited from delivering and (II) deliver, as appropriate,
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(a) to the Holder, a new Issuer Option Agreement evidencing the right of the
Holder to purchase that number of shares of the Issuer Common Stock obtained by
multiplying the number of shares of the Issuer Common Stock for which the
surrendered Issuer Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Issuer
Option Repurchase Price less the portion thereof theretofore delivered to the
Holder and the denominator of which is the Issuer Option Repurchase Price, and
(b) to the Owner, a certificate for the Issuer Option Shares it is then so
prohibited from repurchasing. A "Repurchase Event" is deemed to have occurred
(i) upon the consummation of an Acquisition Transaction or (ii) upon the
acquisition by any person of the beneficial ownership of 50% or more of the then
outstanding Issuer Common Stock, provided that a Subsequent Triggering Event
shall have occurred prior to an Exercise Termination Event.
In the event that prior to an Exercise Termination Event, the Issuer enters
into any agreement (a) to consolidate with or merge into any person, other than
the Optionee or one of its subsidiaries, such that Issuer is not the continuing
or surviving corporation of such consolidation or merger; (b) to permit any
person, other than the Optionee or one of its subsidiaries, to merge into the
Issuer and the Issuer is the continuing or surviving corporation, but in
connection with such consolidation or merger, the outstanding shares of the
Issuer Common Stock are changed into or exchanged for stock or other securities
of any other person or cash or any other property, or the then outstanding
shares of Issuer Common Stock after such merger shall represent less than 50% of
the outstanding voting shares and voting share equivalents of the merged
corporation; or (c) to sell or otherwise transfer all or substantially all of
its assets to any person, other than the Optionee or any of its subsidiaries,
then, and in each such case, the agreement governing such transaction must
provide that, upon consummation of such transaction and upon terms and
conditions set forth in the Issuer Option Agreement, the Option will be
converted into, or exchanged for, an option having substantially the same terms
as the Option (the "Substitute Option") to purchase securities, at the election
of the Holder, of either the acquiring person or any person that controls the
acquiring person. At the request of the Holder of the Substitute Option, the
issuer of the Substitute Option shall repurchase it at a price, and subject to
such other terms and conditions, as set forth in the Issuer Option Agreement.
Within 90 days after the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Date (subject to extension as provided
in the Issuer Option Agreement), the Optionee may request the Issuer to prepare,
file and keep current with respect to the Option Shares, a registration
statement with the Commission. The Issuer is required to use its reasonable best
efforts to cause such registration statement to become effective and then to
remain effective for 180 days or such shorter time as may be reasonably
necessary to effect such sales or other disposition of Option Shares. The
Optionee has the right to demand two such registrations.
Neither the Issuer nor the Optionee may assign any of its rights and
obligations under the Issuer Option Agreements or the Issuer Option to any other
person without the express written consent of the other party, except that if a
Subsequent Triggering Event occurs prior to an Exercise Termination Event, the
Optionee, subject to the terms of the Issuer Option Agreement, may assign in
whole or in part its rights and obligations thereunder, within 90 days (subject
to extension as provided in the Issuer Option Agreement) of such Subsequent
Triggering Event; provided that until the date 15 days after the date on which
the Federal Reserve Board approves an application by the Optionee to acquire the
Issuer Option Shares, the Optionee may not assign its rights under the Issuer
Option except in (a) a widely dispersed public distribution, (b) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of the Issuer, (c) an assignment to a single party for the
purpose of conducting a widely dispersed public distribution on the Optionee's
behalf, or (d) any other manner approved by the Federal Reserve Board.
Certain rights and obligations of the Optionee and the Issuer under the
Option Agreement are subject to receipt of required regulatory approvals. The
approval of the Federal Reserve Board is required for the acquisition by the
Optionee of more than 5% of the outstanding shares of Issuer Common Stock.
Accordingly, the Optionee has included or will include in its applications with
the Federal Reserve Board a request for approval of the right of the Optionee to
exercise its rights under the Issuer Option Agreement, including its right to
purchase more than 5% of the outstanding shares of Issuer Common Stock. See
"-- Regulatory Approvals Required for the Merger".
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THE FLEET RIGHTS AGREEMENT
On November 21, 1990, the Fleet Board declared a dividend of one preferred
share purchase right (a "Fleet Right") for each outstanding share of Fleet
Common Stock to stockholders of record at the close of business on December 4,
1990. Each Fleet 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 a purchase price of $50 per one one-hundredth of a share of Junior
Preferred Stock, subject to certain adjustments. The Fleet Rights are not
currently exercisable. The description and terms of the Fleet Rights, as well as
the Fleet Rights Agreement (as hereinafter defined) pursuant to which the Fleet
Rights were issued are set forth below in "DESCRIPTION OF FLEET CAPITAL STOCK,
FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY SHARES AND FLEET WARRANTS --
Fleet Common Stock -- Preferred Share Purchase Rights".
Immediately prior to the execution of the Merger Agreement, Fleet amended
the Fleet Rights Agreement to amend the definition of "Acquiring Person" to
permit the execution and delivery by Fleet of the Merger Agreement and the
Shawmut Option Agreement without Shawmut becoming an Acquiring Person under the
Fleet Rights Agreement.
THE SHAWMUT RIGHTS AGREEMENT
On February 28, 1989, the Shawmut Board declared a dividend of one
preferred share purchase right (a "Shawmut Right") for each outstanding share of
Shawmut Common Stock to stockholders of record at the close of business on March
13, 1989. Each Shawmut Right, when exercisable, will entitle the registered
holder to purchase from Shawmut a unit consisting of one one-hundredth of a
share (a "Unit") of Series A Junior Participating Preferred Stock of Shawmut, at
a purchase price of $100 per Unit, subject to adjustment. The Shawmut Rights are
not currently exercisable. The description and terms of the Shawmut Rights are
set forth in the Rights Agreement dated as of February 28, 1989 between Shawmut
and Chemical Bank, as Rights Agent (the "Shawmut Rights Agreement"), a copy of
which was filed as an Exhibit to the Shawmut Registration Statement on Form 8-A
dated March 7, 1989, as amended by a Form 8-A/A dated March 2, 1995, which is
incorporated by reference herein. See "INFORMATION INCORPORATED BY REFERENCE".
Immediately prior to the execution of the Merger Agreement, the Shawmut
Board amended the Shawmut Rights Agreement to amend the definition of "Acquiring
Person" to permit the execution and delivery by Shawmut of the Fleet Option
Agreement without Fleet becoming an Acquiring Person under the Shawmut Rights
Agreement.
EMPLOYEE BENEFITS AND PLANS
The Merger Agreement requires Fleet 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 will provide
Fleet employees who formerly were employees of Shawmut employee benefits
substantially the same as those provided to similarly situated employees of
Fleet, and employees of Fleet who were formerly employees of Shawmut will
receive full credit for all purposes under such employee benefit plans, except
the accrual of benefits, for their years of service with Shawmut or any of its
subsidiaries (and any predecessors thereto).
Each stock option to acquire Shawmut Common Stock granted under the Shawmut
Stock Plans which is outstanding and unexercised immediately prior to the
Effective Time will be converted at the Effective Time into, and will become, a
stock option to purchase Fleet Common Stock and will continue to be governed by
the terms of the Shawmut Stock Plans which will be assumed by Fleet. Each
Shawmut Warrant which is outstanding and unexercised immediately prior to the
Effective Time shall be converted automatically into a Fleet Warrant. In each
case, (i) the number of shares of Fleet Common Stock subject to the Fleet option
or Fleet Warrant, as the case may be, shall be equal to the product of the
number of shares of Shawmut Common Stock subject to the Shawmut option or
Shawmut Warrant, as the case may be, and the Common Exchange Ratio, rounded down
to the nearest share, and (ii) the exercise price per share of Fleet Common
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Stock subject to the Fleet option or Fleet Warrant, as the case may be, will be
equal to the exercise price per share of Shawmut Common Stock under the Shawmut
option or Shawmut Warrant, as the case may be, divided by the Common Exchange
Ratio, rounded up to the nearest cent. The duration and other terms of each
Fleet option and Fleet Warrant shall be substantially the same as the Shawmut
option or Shawmut Warrant. Each option granted under the Shawmut Stock Plans
will, pursuant to the terms of each such plan, automatically become vested and
exercisable upon approval and adoption of the Merger Agreement by the
stockholders of Shawmut.
Shawmut has in effect a separation policy (the "Separation Policy")
covering 41 of its senior officers (each, a "Participant"), several of whom may
be deemed to be executive officers of Shawmut. Of the 41 Participants, 16 have
been classified as Class 1 Participants and 25 have been classified as Class 2
Participants. The Separation Policy provides that if the employment of a
Participant is terminated within the two-year period following a change in
control (as defined in the Separation Policy) of Shawmut and such termination is
by Shawmut (or its successor) other than for cause (as defined in the Separation
Policy) or by the Participant for good reason (as defined in the Separation
Policy), the Participant will be entitled to receive, among other things, an
amount equal to the sum of the Participant's annual base salary and the highest
of the short-term bonuses awarded during the prior three years multiplied by 2
(in the case of Class 1 Participants) or by 1.5 (in the case of Class 2
Participants). The Separation Policy also provides (i) that each Participant
will receive, for a period of 24 months (in the case of Class 1 Participants) or
18 months (in the case of Class 2 Participants) after the date of termination of
employment, benefits equivalent to the additional benefits the Participant would
have received under the qualified and nonqualified pension plans in which the
Participant was participating immediately prior to termination and (ii) for the
continuation of coverage, for a period terminating on the earlier of (A) 24
months (in the case of Class 1 Participants) or 18 months (in the case of Class
2 Participants) following the date of termination of employment and (B) the
commencement of equivalent benefits from a new employer, under all medical and
other welfare benefit plans being provided as of the date of termination. The
Merger will constitute a change in control under the Separation Policy. The
Separation Policy provides that payments received in connection with a change in
control will be reduced to the extent necessary to avoid the imposition of an
excise tax under federal tax laws.
Shawmut has in effect a Special Severance Plan (the "Severance Plan"),
which covers all persons employed by Shawmut (each, a "Covered Employee"), other
than on a temporary, occasional or seasonal basis, who are not otherwise parties
to an individual severance agreement or a participant in the Separation Policy,
and classifies such persons into "Class 1 Covered Employees" and "Class 2
Covered Employees". The Severance Plan provides that if the employment of a
Covered Employee is terminated within the one-year period following a change in
control (as defined in the Severance Plan) of Shawmut, and such termination is
by Shawmut (or its successor) other than for cause (as defined in the Severance
Plan) or by the Covered Employee for good reason (as defined in the Severance
Plan), the Covered Employee will be entitled to receive, in addition to the
severance pay to which such employee is entitled under the Shawmut Salary
Continuation Procedure, as described below (the "Procedure"), (i) an amount
equal to six months of annual base salary (in the case of Class 1 Covered
Employees) or three months of annual base salary (in the case of Class 2 Covered
Employees), (ii) an amount equal to the present value of the Covered Employee's
accrued benefit, if any, which shall be fully vested at the date of termination
of employment, under Shawmut's supplemental, nonqualified pension plans, (iii)
an amount equal to the pro rata portion of such Covered Employee's outstanding
short-term bonus award and (iv) continuation of coverage, for a period
terminating on the earlier of (A) the number of months with respect to which
such employee is entitled to severance pay under the Procedure plus six months
(in the case of Class 1 Covered Employees) or three months (in the case of Class
2 Covered Employees) following the date of termination of employment and (B) the
commencement of equivalent benefits from a new employer, under all medical or
other welfare benefit plans being provided as of the date of termination. The
Procedure provides that a Covered Employee will be entitled to receive severance
pay in an amount equal to two weeks of base salary at the weekly rate in effect
on such employee's last day of active employment with Shawmut (or its successor)
for each year of past service with Shawmut (or its successor) up to a maximum of
twenty-six weeks, with a minimum of four weeks, plus, if applicable, one day's
base salary in lieu of notice for each business day in which no written notice
was given in the thirty days prior to termination of employment. The Severance
Plan provides that payments received in connection with a
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change in control will be reduced to the extent necessary to avoid the
imposition of any federal excise tax. The consummation of the Merger will
constitute a change in control under the Severance Plan.
The aggregate liability that may be incurred by Fleet under the Separation
Policy and the Severance Plan cannot be determined as of the date of this Joint
Proxy Statement-Prospectus. However, as more fully described below (see "BOARD
OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET FOLLOWING THE
MERGER -- Operations"), Fleet and Shawmut anticipate that in connection with the
Merger, they will incur personnel related costs (including without limitation
costs incurred pursuant to the Separation Policy and the Severance Plan) of
approximately $255 million (pre-tax).
STOCK EXCHANGE LISTING
The Merger Agreement provides for the filing of a listing application with
the Stock Exchange covering the Fleet Common Stock issuable pursuant to the
Merger. It is a condition to the consummation of the Merger that such shares of
Fleet Common Stock be authorized for listing on the Stock Exchange effective
upon official notice of issuance. In addition, Fleet agreed to use its best
efforts to cause the Fleet New Depositary Shares to be so listed.
EXPENSES
The Merger Agreement provides that Fleet and Shawmut will each pay its own
expenses in connection with the Merger and the transaction contemplated thereby,
provided that Fleet and Shawmut will divide equally all printing costs, filing
fees and registration fees in connection with the Merger Agreement, the
registration statement and this Joint Proxy Statement-Prospectus.
DIVIDENDS
The Merger Agreement provides that Fleet and Shawmut will coordinate the
declaration and payment of dividends in respect of Fleet Common Stock and
Shawmut Common Stock so that holders thereof will not receive two dividends for
a single quarter or fail to receive one dividend which they would otherwise
receive in the absence of the Merger. Dividends on the Shawmut Preferred Stock
and the Fleet New Preferred Stock will be payable in accordance with their
respective terms.
RESALES OF FLEET COMMON STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY
SHARES AND FLEET WARRANTS RECEIVED IN THE MERGER
The Fleet Common Stock, Fleet New Preferred Stock, Fleet New Depositary
Shares and Fleet Warrants issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares or warrants issued to
any Shawmut 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 Shawmut for purposes of Rule 145 promulgated under the Securities
Act ("Rule 145") (each an "Affiliate"). Affiliates will include persons
(generally executive officers, directors and ten percent stockholders) who
control, are controlled by, or are under common control with (i) Fleet or
Shawmut at the time of the Shawmut Meeting or (ii) Fleet at or after the
Effective Time.
Rules 144 and 145 will restrict the sale of Fleet Common Stock, Fleet New
Preferred Stock, Fleet New Depositary Shares and Fleet Warrants 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, those
persons who are Affiliates of Shawmut at the time of the Shawmut Meeting,
provided they are not Affiliates of Fleet at or following the Effective Time,
may publicly resell any Fleet Common Stock, Fleet New Preferred Stock, Fleet New
Depositary Shares and Fleet Warrants received by them in the Merger, subject to
certain limitations as to, among other things, the amount of Fleet Common Stock,
Fleet New Preferred Stock, Fleet New Depositary Shares and Fleet Warrants, as
the case may be, sold by them in any three-month period and as to the manner of
sale. After the two-year period, such Affiliates 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
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Fleet Common Stock, Fleet New Preferred Stock, Fleet New Depositary Shares and
Fleet Warrants 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, Fleet New
Preferred Stock, Fleet New Depositary Shares and Fleet Warrants 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, Fleet New Preferred Stock, Fleet New Depositary Shares and
Fleet Warrants received in the Merger pursuant to an effective registration
statement under the Securities Act or another available exemption from the
Securities Act registration requirements.
This Joint Proxy Statement-Prospectus does not cover any resales of Fleet
Common Stock, Fleet New Preferred Stock, Fleet New Depositary Shares or Fleet
Warrants received by persons who may be deemed to be Affiliates of Fleet or
Shawmut in the Merger, or the shares issuable upon exercise of the Fleet
Warrants.
Commission guidelines regarding qualifying for the pooling of interests
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. Commission
guidelines indicate further that the pooling of interests method of accounting
will generally not be challenged on the basis of sales by affiliates of the
acquiring or acquired company if they do not dispose of any of the shares of the
corporation they own or shares of a corporation they receive in connection with
a merger during the period beginning 30 days before the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
Each of Shawmut and Fleet has agreed in the Merger Agreement to use its
best efforts to cause each person who is an Affiliate (for purposes of Rule 145
and for purposes of qualifying the Merger for pooling of interests accounting
treatment) of such party to deliver to the other party a written agreement
intended to ensure compliance with the Securities Act and preserve the ability
to treat the Merger as a pooling of interests.
Fleet has agreed in the Merger Agreement to use its best efforts to publish
not later than 90 days after the end of the first month after the Effective Time
in which there are at least 30 days of post-Merger combined operations, combined
sales and net income figures as contemplated by and in accordance with the terms
of the Commission's Accounting Series Release No. 135.
FLEET DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Fleet has an automatic Dividend Reinvestment and Stock Purchase Plan (the
"Plan"). 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. The Plan also provides that
Fleet may change the discount amounts for dividends and optional cash payments,
and the maximum optional cash payment amount at any time in its sole discretion.
After the Effective Time, stockholders of Shawmut who receive Fleet Common Stock
in the Merger will have the right to participate in the Plan.
APPRAISAL RIGHTS
HOLDERS OF SHAWMUT COMMON STOCK, SHAWMUT 9.30% PREFERRED, SHAWMUT 9.35%
PREFERRED AND SHAWMUT DEPOSITARY SHARES DO NOT HAVE ANY APPRAISAL RIGHTS UNDER
DELAWARE LAW IN CONNECTION WITH THE MERGER.
If the Merger is consummated, a holder of record of Shawmut Adjustable
Preferred 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
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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
Joint Proxy Statement-Prospectus is being sent to all holders of record of
Shawmut Adjustable Preferred 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 Joint Proxy Statement-Prospectus as Exhibit F.
A holder of Shawmut Adjustable Preferred electing to exercise appraisal
rights under Section 262 must deliver a written demand for appraisal of such
stockholder's shares to Shawmut prior to the vote on the approval of the Merger
Agreement. Such written demand must reasonably inform Shawmut 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 Shawmut
National Corporation, Attention: J. Michael Shepherd, Executive Vice President,
General Counsel and Secretary, at One Federal Street, Boston, Massachusetts
02211.
Only a holder of shares of Shawmut Adjustable Preferred 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
Shawmut Adjustable Preferred. If Shawmut Adjustable Preferred 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 Shawmut Adjustable Preferred 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 Shawmut Adjustable
Preferred as a nominee for beneficial owners, some of whom desire to demand
appraisal, must exercise appraisal rights on behalf of such beneficial owners
with respect to the shares of Shawmut Adjustable Preferred held for such
beneficial owners. In such case, the written demand for appraisal should set
forth the number of shares of Shawmut Adjustable Preferred covered by it. Unless
a demand for appraisal specifies a number of shares, such demand will be
presumed to cover all shares of Shawmut Adjustable Preferred held in the name of
such record owner. BENEFICIAL OWNERS WHO ARE NOT RECORD OWNERS AND WHO INTEND TO
EXERCISE APPRAISAL RIGHTS SHOULD INSTRUCT THE RECORD OWNER TO COMPLY WITH THE
STATUTORY REQUIREMENTS WITH RESPECT TO THE EXERCISE OF APPRAISAL RIGHTS BEFORE
THE DATE OF THE SHAWMUT MEETING.
Within ten days after the Effective Time, Fleet is required to send notice
of the effectiveness of the Merger to each stockholder of Shawmut who prior to
the Effective Time complied with the requirements of Section 262.
Within 120 days after the Effective Time, Fleet 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 Shawmut Adjustable Preferred held by all stockholders seeking
appraisal. A dissenting stockholder must serve a copy of such petition on Fleet.
If no petition is filed by either Fleet or a dissenting stockholder within such
120 day period, the rights of all dissenting stockholders to appraisal shall
cease. Shawmut stockholders seeking to exercise appraisal rights should not
assume that Fleet will file a petition with respect to the appraisal of the fair
value of their shares or that Fleet will initiate any negotiations with respect
to the fair value of such shares. Fleet is under no obligation to and has no
present intention to take any action in this regard. Accordingly, Shawmut
stockholders who wish to seek appraisal of their shares should initiate all
necessary action with respect to the perfection of their appraisal rights within
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the time periods and in the manner prescribed in Section 262. FAILURE TO FILE
THE PETITION ON A TIMELY BASIS WILL CAUSE THE STOCKHOLDER'S 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 Fleet a statement setting forth the aggregate number of shares
of Shawmut Adjustable Preferred with respect to which demands for appraisal have
been received by Shawmut 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 Fleet 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 appraisal rights and will appraise the shares of Shawmut Adjustable
Preferred 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." 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 appraisal rights, and that investment banking
opinions as to fairness from a financial point of view are not necessarily
opinions as to fair value as determined under 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 charged pro rata
against the value of all shares of the Shawmut Adjustable Preferred 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 receive payment of
dividends or other distributions on the Shawmut Adjustable Preferred, except for
dividends or distributions payable to stockholders of record at a date prior to
the Effective Time.
A Shawmut 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 Fleet. 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.
IN VIEW OF THE COMPLEXITY OF THESE PROVISIONS OF DELAWARE LAW, ANY HOLDER
OF THE SHAWMUT ADJUSTABLE PREFERRED WHO IS CONSIDERING EXERCISING APPRAISAL
RIGHTS SHOULD CONSULT HIS OR HER LEGAL ADVISOR.
See "-- Certain Federal Income Tax Consequences" for a brief description of
certain federal income tax consequences resulting from the receipt of the fair
value of appraised shares.
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BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS
OF FLEET FOLLOWING THE MERGER
BOARD OF DIRECTORS
From and after the Effective Time, the Fleet Board will consist of 20
persons, divided into three classes of directors, with each class serving
staggered terms of three years, so that only one class is elected in any one
year. Messrs. Murray and Alvord will each be a director of Fleet and, with the
approval of the respective Boards of Directors of Fleet and Shawmut, will
designate an additional eleven and seven individuals, respectively, to be
members of the Fleet Board. As of the date of this Joint Proxy
Statement-Prospectus, such directors had not been designated by Messrs. Murray
and Alvord and their respective Boards of Directors.
The directors selected by Fleet and Shawmut shall be divided as equally as
practicable among the three classes of directors and the various committees
established by the Fleet Board in proportion to the aggregate representation of
such directors. In addition, the Fleet Board will establish, promptly following
the Effective Time, and maintain for a period of 18 months thereafter, an
integration committee, comprised of Messrs. Murray and Alvord, two additional
representatives of Fleet and two additional representatives of Shawmut, to
oversee the integration of the operations of Fleet, Shawmut and their respective
subsidiaries.
MANAGEMENT
The executive officers of Fleet will be comprised of certain members of
Fleet's senior management and certain members of Shawmut's senior management.
Mr. Murray, the Chairman of the Board, President and Chief Executive Officer of
Fleet will be the Chief Executive Officer and President of Fleet following the
Merger, and Mr. Alvord, the Chairman of the Board and Chief Executive Officer of
Shawmut will be the Chairman of Fleet following the Merger. In addition, the
following persons will have the responsibilities set forth below at Fleet after
the Merger:
<TABLE>
<CAPTION>
PRESENT COMPANY
NAME AFFILIATION RESPONSIBILITY
- ----------------------------------- ------------------ -----------------------------------
<S> <C> <C>
Robert J. Higgins.................. Fleet Vice Chairman (commercial banking)
Gunnar S. Overstrom, Jr............ Shawmut Vice Chairman (consumer
banking/small business and
investment services)
H. Jay Sarles...................... Fleet Vice Chairman (staff functions and
corporate strategy)
Michael R. Zucchini................ Fleet Vice Chairman (financial services,
fee-based businesses and technology
operations)
David L. Eyles..................... Shawmut Executive Vice President and Chief
Credit Policy Officer
Eugene M. McQuade.................. Fleet Executive Vice President and Chief
Financial Officer
</TABLE>
Additional information about each of such persons is contained in Fleet's
and Shawmut's respective Annual Reports on Form 10-K for the year ended December
3l, 1994, which are incorporated by reference in this Joint Proxy
Statement-Prospectus. See "AVAILABLE INFORMATION" and "INFORMATION INCORPORATED
BY REFERENCE".
Except for the foregoing, it has not yet been determined which members of
Fleet's or Shawmut's senior management will also become executive officers of
Fleet following the Merger or what such persons' titles or functions will be.
From time to time prior to consummation of the Merger, decisions may be made
with respect to the management and operations of Fleet following the Merger,
including the selection of executive officers of Fleet.
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OPERATIONS
Following the Merger, Fleet intends to combine the operations of and,
subject to required regulatory approvals, to merge certain of the subsidiary
banks of Fleet and Shawmut and to consolidate the operations of certain other
Fleet and Shawmut subsidiaries which provide similar services. As of the date of
this Joint Proxy Statement-Prospectus, no final determination with respect to
such matters had been made.
While no assurance can be given, Fleet and Shawmut expect to achieve cost
savings of approximately $400 million (pre-tax) within fifteen months following
the Merger. Such cost savings are expected to be realized primarily through
reductions in staff, elimination, consolidation or divestiture of certain
branches and the consolidation of certain offices, data processing and other
redundant back-office operations and staff functions. Cost reductions and branch
consolidations will come from both companies and will be spread throughout the
geographic region. Cost savings are also expected to be achieved in connection
with the NBB Merger, the Northeast Merger and the Plaza Merger. These cost
savings are expected to be approximately $20 million, $25 million and $15
million, respectively, and are expected to be achieved within the first twelve
months after the consummation of these respective mergers. The extent to which
cost savings will be achieved is dependent upon various factors beyond the
control of Fleet and Shawmut, including the regulatory environment, economic
conditions, unanticipated changes in business conditions, inflation and the
level of FDIC assessments. Therefore, no assurances can be given with respect to
the ultimate level of cost savings to be realized, or that such savings will be
realized in the time-frame currently anticipated. In addition, as described
above in "THE MERGER -- Regulatory Approvals Required for the Merger," certain
regulatory agencies may seek the divestiture of certain assets and liabilities
of the combined company following the Merger. Fleet and Shawmut expect that the
Federal Reserve Board or the Department of Justice will request that Fleet or
Shawmut divest certain operations in order to alleviate what such agency
believes would be an adverse competitive effect. Fleet has not yet formulated a
firm divestiture proposal and will not do so until further discussions with the
Federal Reserve Board and the Department of Justice are held; accordingly, as of
the date of this Joint Proxy Statement-Prospectus neither Fleet nor Shawmut can
predict what the aggregate amount of any such divestitures may be. While any
potential divestitures may affect certain pro forma combined financial statement
amounts, merger and restructuring costs, cost savings and revenues, Fleet
believes that the aggregate amount and financial impact of any such divestitures
will not be material to the business, operations or financial condition of the
combined institution and its subsidiaries, taken as a whole. See "UNAUDITED PRO
FORMA CONDENSED COMBINED FINANCIAL STATEMENTS" and "NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS".
Fleet and Shawmut also anticipate that they will incur one-time merger
expenses and restructuring charges in connection with the Merger, estimated to
be approximately $400 million (pre-tax) in the aggregate, principally as a
result of expenses to be incurred in connection with anticipated staff
reductions, elimination of duplicate headquarters and operational facilities,
and branch consolidations. It is anticipated that substantially all of these
charges will be recognized during 1995 upon consummation of the Merger with the
exception of certain amounts recognized by Shawmut during the first quarter of
1995 (see "RECENT DEVELOPMENTS" for further discussion), and paid during the
first 15 months subsequent to the Merger. The following table provides details
of the estimated charges by type:
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ESTIMATED
TYPE OF COST COSTS
---------------------------------------------------- --------
<S> <C>
Personnel related................................... $255,000
Facilities and equipment............................ 68,000
Branch related...................................... 37,000
Other merger expenses............................... 40,000
--------
Total..................................... $400,000
========
</TABLE>
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<PAGE> 85
Personnel-related costs consist primarily of charges related to employee
severance, termination of certain employee benefits plans and employee
assistance costs for separated employees. Facilities and equipment charges
consist of lease termination costs and other related exit costs resulting from
consolidation of duplicate headquarters and operational facilities, and computer
equipment and software write-offs due to duplication or incompatibility.
Branch-related costs are primarily related to the cost of exiting branches
anticipated to be closed, including lease terminations and equipment write-offs.
In connection with the Merger, Fleet is currently reviewing the investment
securities portfolio of Shawmut and Northeast to determine the classification of
such securities as either available for sale or held to maturity. As a result of
this review, certain reclassifications of Shawmut and Northeast investment
securities may result. See "Unaudited Pro Forma Condensed Combined Financial
Statements" and "Notes to Unaudited Pro Forma Condensed Combined Financial
Statements".
Although Fleet has agreed to move its corporate headquarters to Boston,
Massachusetts promptly following the Merger, it intends to continue to operate
significant portions of its businesses from its existing locations in
Connecticut, New York and Rhode Island.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Shawmut's management and the Shawmut Board, and Fleet's
management and the Fleet Board, respectively, may be deemed to have certain
interests in the Merger that are in addition to their interests as stockholders
of Shawmut or Fleet, as the case may be, generally. The Shawmut Board and the
Fleet Board were aware of these interests and considered them, among other
matters, in approving the Merger Agreement and the transactions contemplated
thereby.
INTERESTS OF SHAWMUT DIRECTORS AND EXECUTIVE OFFICERS
Directorships and Officerships. The Merger Agreement provides that, from
and after the Effective Time, the Fleet Board shall be comprised of 20
directors, including Mr. Alvord (who will serve as Chairman of Fleet until his
60th birthday), Mr. Murray (who will serve as Chief Executive Officer and
President of Fleet and Chairman of Fleet following Mr. Alvord's 60th birthday),
11 additional persons, who are not executive officers of Fleet or Shawmut, to be
selected prior to the Effective Time by Mr. Murray and the Fleet Board and 7
additional persons, who are not executive officers of Fleet or Shawmut, to be
selected prior to the Effective Time by Mr. Alvord and the Shawmut Board. In
addition, after the Effective Time, Mr. Overstrom will serve as a Vice Chairman
of Fleet and Mr. Eyles will serve as an Executive Vice President and Chief
Credit Policy Officer of Fleet. See "BOARD OF DIRECTORS, MANAGEMENT AND
OPERATIONS OF FLEET FOLLOWING THE MERGER."
Indemnification; Directors and Officers Insurance. The Merger Agreement
provides that, in the event of any threatened or actual claim or proceeding in
which any person who is or has been a director, officer or employee of Shawmut,
its subsidiaries or any of their predecessors (the "Indemnified Parties") is, or
is threatened to be, made a party based in whole or in part on, or pertaining to
(i) the fact that such person was a director, officer or employee of Shawmut,
its subsidiaries or any of their predecessors, or (ii) the Merger Agreement, the
Option Agreements or the transactions contemplated thereby, Fleet will, subject
to the conditions set forth in the Merger Agreement, indemnify such person to
the fullest extent permitted by law against any liability or expense incurred in
connection with any such claim or proceeding. The Merger Agreement provides that
Fleet's obligation to indemnify any Indemnified Party will continue for a period
of six years following the Effective Time provided that rights to
indemnification in respect of any claim asserted or made within such period will
continue until final disposition of such claim. The Merger Agreement further
provides that Fleet will, subject to the conditions set forth in the Merger
Agreement, use its best efforts to cause the persons serving as officers and
directors of Shawmut immediately prior to the Merger to be covered for a period
of six years following the Effective Time by Shawmut's directors and officers
liability insurance policy (or any equivalent substitute therefor), provided
that Fleet will not be required to expend more than 200% of the current amount
expended by Shawmut to procure such insurance.
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<PAGE> 86
Existing Severance Agreements and Similar Arrangements. Messrs. Alvord,
Overstrom, Alan R. Buffington, Eyles, Robert B. Hedges, John O. Huston, Niels C.
Jensen, Mrs. Eileen S. Kraus, Ms. Susan E. Lester and Messrs. Michael J.
Rothmeier and J. Michael Shepherd, all of whom are executive officers of
Shawmut, are parties to severance agreements (each an "Existing Severance
Agreement") with Shawmut which provide that if termination of such executive's
employment occurs within the two-year period following a change in control of
Shawmut and such termination is by Shawmut (or its successor) other than for
cause (as defined in the agreements) or by the executive for good reason (as
defined in the agreements), the executive will be entitled to receive, among
other things, (i) an amount equal to the sum of annual base salary and any
amount awarded under Shawmut's short-term incentive plan for the year preceding
the year of termination or, in the case of all of the foregoing persons other
than Messrs. Alvord and Overstrom, if higher, for the year preceding the change
in control, multiplied by three or the number of years remaining to the
executive's 65th birthday, whichever is shorter (the "Applicable Period"); (ii)
a pro rata portion of any award related to any uncompleted performance award
period under Shawmut's performance plan; and (iii) in the case of Messrs. Alvord
and Overstrom, an amount in cash generally equal to the aggregate difference
between the exercise price of certain stock options held by the executive and
the higher of the closing price of Shawmut Common Stock on the date of
termination of employment or the highest per share price paid in connection with
any change in control of Shawmut. The Existing Severance Agreements also provide
for the continuation of health, medical and life insurance coverage and other
employee welfare plans and programs for each executive after termination of
employment until the expiration of the Applicable Period or, if sooner, until
such benefits are provided through the executive's reemployment, and provide
each executive with pension benefits equal to the amount which the executive
would have received under the applicable pension plans had the executive been
fully vested and remained employed for the Applicable Period, reduced by the
pension benefits the executive will actually receive under such pension plans.
The Existing Severance Agreements confer no benefits prior to a change in
control. In the event that any payments received by Messrs. Alvord and Overstrom
in connection with a change in control are subject to the excise tax imposed
upon certain change in control payments under federal tax laws, the Existing
Severance Agreements for such executives provide for an additional payment
sufficient to restore the executive to the same after-tax position the executive
would have been in if the excise tax had not been imposed. The Existing
Severance Agreements with the persons listed above other than Messrs. Alvord and
Overstrom provide that payments received in connection with a change in control
will be reduced to the extent necessary to avoid the imposition of any such
excise tax. In the case of all of the Existing Severance Agreements, the Merger
will constitute a change in control and, without limiting any executive's rights
under the Existing Severance Agreements, any change in the title, authorities or
duties of such executive following the Merger from those in effect prior to the
Merger will constitute good reason. Fleet has agreed to honor each of the
Existing Severance Agreements in accordance with its terms, with the exception
of the Existing Severance Agreements of Messrs. Alvord and Overstrom, which will
terminate at the Effective Time. However, the benefits payable to Messrs. Alvord
and Overstrom under their Existing Severance Agreements have generally been
incorporated into, and may be paid pursuant to, the New Employment Agreements
(as hereinafter defined). See "-- New Fleet Employment Agreements".
As described above, several of the participants in the Separation Policy
may be deemed to be executive officers of Shawmut. See "THE MERGER-- Employee
Benefits and Plans."
Existing Employment Agreements. Shawmut has entered into an employment
agreement (each an "Existing Employment Agreement") with each of Mr. Alvord and
Mr. Overstrom, effective as of February 24, 1994, each of which contains the
following terms and conditions: (i) an initial term of three years, subject to
extension for an additional one-year period on each successive anniversary of
the effective date unless Shawmut gives notice of nonrenewal at least 60 days
prior to such anniversary; (ii) annual salary at least equal to that in effect
on the effective date of the Existing Employment Agreements; (iii) participation
in all compensation and employee benefit arrangements available to other
executive officers of Shawmut; and (iv) noncompetition and confidentiality
covenants by the officers. Pursuant to each of the Existing Employment
Agreements, in the event that the executive is terminated by Shawmut without
cause (as defined in the agreements) or the executive terminates his employment
for good reason (as defined in the agreements) then the affected executive will
be entitled to receive, for the then remaining term of the agreement, salary,
short- and long-term incentive compensation and coverage or credited service, as
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<PAGE> 87
applicable, under Shawmut's employee benefit plans. In addition, if any of such
events occurs, the outstanding equity awards for the affected executive would
vest, but would continue to become exercisable or nonrestricted, as applicable,
as originally scheduled. At the Effective Time, the New Employment Agreements
(as hereinafter defined) will replace the Existing Employment Agreements.
Additional information concerning the salary and other benefits paid to
each of Messrs. Alvord and Overstrom by Shawmut during 1994 is incorporated by
reference to Shawmut's 1994 Annual Report on Form 10-K which is incorporated
herein by reference. See "INFORMATION INCORPORATED BY REFERENCE". Such
information is also set forth in the section entitled, "ELECTION OF SHAWMUT
DIRECTORS; APPOINTMENT OF INDEPENDENT ACCOUNTANTS" which is included in the
Joint Proxy Statement-Prospectus to be delivered to Shawmut stockholders only.
New Fleet Severance Agreements. In connection with the execution of the
Merger Agreement, Messrs. Alvord and Overstrom have entered into severance
agreements with Fleet. The severance agreements provide that if termination of
such executive's employment occurs within the two-year period following a change
in control of Fleet and such termination is by Fleet (or its successor) other
than for cause (as defined in the agreements) or by the executive for good
reason (as defined in the agreements), the executive will be entitled to
receive, among other things, (i) an amount equal to the sum of annual base
salary and any amount awarded under Fleet's short-term incentive plan for the
year preceding the year of termination multiplied by three or the number of
years remaining to the executive's 65th birthday, whichever is shorter (the
"Fleet Applicable Period"), and (ii) a pro rata portion of such executive's
outstanding long-term incentive award. These agreements also provide for the
continuation of health, medical and life insurance coverage and other employee
welfare plans and programs for each executive after termination of employment
until the expiration of the Fleet Applicable Period or, if sooner, until such
benefits are provided through the executive's reemployment, and provide each
executive with pension benefits equal to the amount which the executive would
have received under the applicable pension plans had he been fully vested and
remained employed for the Fleet Applicable Period, reduced by the pension
benefits the executive will actually receive under such pension plans. These
agreements confer no benefits prior to a change in control. In the event that
any payments received by Messrs. Alvord and Overstrom in connection with a
change in control are subjected to the excise tax imposed upon certain change in
control payments under federal tax laws, these agreements provide for an
additional payment sufficient to restore the executive to the same after-tax
position the executive would have been in if the excise tax had not been
imposed.
New Fleet Employment Agreements. In connection with the execution of the
Merger Agreement, Messrs. Alvord and Overstrom have entered into employment
agreements (the "New Employment Agreements") with Fleet which, as of the
Effective Time, will replace the Existing Employment Agreements.
Mr. Alvord's New Employment Agreement contains the following terms and
conditions: (i) a term commencing on the Effective Time and ending on Mr.
Alvord's 60th birthday; (ii) annual salary and bonus at a rate no less than 90%
of the base salary and bonus of the Chief Executive Officer of Fleet; (iii)
long-term bonus and equity-based compensation awards at a rate no less than 90%
of the long-term bonus and equity-based compensation awards of the Chief
Executive Officer of Fleet; (iv) participation in all employee benefit
arrangements available to other similarly situated executive officers of Fleet
(only to the extent that the benefits provided thereunder do not duplicate
benefits received by Mr. Alvord under certain continued Shawmut insurance,
retirement and long-term disability plans); and (v) nonsolicitation and
confidentiality covenants by Mr. Alvord. Pursuant to Mr. Alvord's New Employment
Agreement, except as described in the following sentence, in the event that Mr.
Alvord's employment is terminated by Fleet or Mr. Alvord for any reason other
than death, cause (as defined therein) or disability (as defined therein), then
Mr. Alvord will be entitled to receive, among other things, an amount equal to
the product of (A) the number of years (including fractions thereof) remaining
in the term of the New Employment Agreement and (B) the sum of (i) Mr. Alvord's
base salary then in effect and (ii) the highest annual and long-term bonuses
awarded to and earned by Mr. Alvord during the three fiscal years prior to
termination, and will be entitled to coverage or credited service, as
applicable, under Fleet's employee benefit plans (or certain continued Shawmut
insurance, retirement and long-term disability plans). Pursuant to Mr. Alvord's
new severance agreement with Fleet, any benefits payable to Mr. Alvord upon a
termination of his employment subsequent to a change in control of Fleet will be
paid pursuant to such severance agreement, and no amounts will be payable in
such circumstance
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pursuant to Mr. Alvord's New Employment Agreement. In the event that any
payments received by Mr. Alvord in connection with the New Employment Agreement
are subject to the excise tax imposed under federal tax laws, the New Employment
Agreement provides for an additional payment sufficient to restore Mr. Alvord to
the same after-tax position he would have had if the excise tax had not been
imposed. The benefits payable to Mr. Alvord pursuant to Mr. Alvord's New
Employment Agreement in the event of a termination of his employment with Fleet
are in lieu of, and replace, the benefits which may have been payable to Mr.
Alvord upon consummation of the Merger pursuant to his Existing Severance
Agreement had Mr. Alvord not entered into the New Employment Agreement. Mr.
Alvord's New Employment Agreement also provides that Fleet will sponsor Mr.
Alvord's election and reelection to the Fleet Board during the term of the
agreement and until Mr. Alvord's attainment of age 65 and that following Mr.
Alvord's 60th birthday and until his 65th birthday, Mr. Alvord will serve as
Chairman of the Executive Committee of the Fleet Board or in such other capacity
as Fleet and Mr. Alvord shall agree.
Mr. Overstrom's New Employment Agreement contains the following terms and
conditions: (i) an initial term of two years, subject to extension for an
additional one-year period on each successive anniversary of the effective date
unless Fleet gives notice of nonrenewal at least 60 days prior to such
anniversary; (ii) annual salary and bonus and long-term bonus at a rate equal to
the base salary and bonus and long-term bonus of the other vice chairmen of
Fleet; (iii) participation in all employee benefit arrangements available to
other similarly situated executive officers of Fleet (only to the extent that
the benefits provided thereunder do not duplicate benefits received by Mr.
Overstrom under certain continued Shawmut plans); and (iv) nonsolicitation and
confidentiality covenants by Mr. Overstrom. Mr. Overstrom also will be entitled
to receive amounts equal to the excess of the highest base salary and annual
bonus earned by any executive of Fleet (other than the Chairman or Chief
Executive Officer) during 1995 over the base salary and annual bonus earned by
Mr. Overstrom during 1995 with Shawmut. Pursuant to Mr. Overstrom's New
Employment Agreement, except as described in the following sentence, in the
event that Mr. Overstrom's employment is terminated by Fleet or Mr. Overstrom
for any reason other than death, cause (as defined therein) or disability (as
defined therein), then Mr. Overstrom will be entitled to receive, among other
things, an amount equal to the product of (A) three and (B) the sum of (i) Mr.
Overstrom's base salary then in effect (or if greater, immediately prior to the
Effective Time) and (ii) the highest annual and long-term bonuses awarded to and
earned by Mr. Overstrom during the three fiscal years prior to termination, and
will be entitled to coverage or credited service, as applicable, under Fleet's
employee benefit plans (or certain continued Shawmut insurance and retirement
plans). Pursuant to Mr. Overstrom's new severance agreement with Fleet, any
benefits payable to Mr. Overstrom upon a termination of his employment
subsequent to a change in control of Fleet will be paid pursuant to such
severance agreement, and no amounts will be payable in such circumstance
pursuant to Mr. Overstrom's New Employment Agreement. In the event that any
payments received by Mr. Overstrom in connection with the New Employment
Agreement are subject to the excise tax imposed under federal tax laws, the New
Employment Agreement provides for an additional payment sufficient to restore
Mr. Overstrom to the same after-tax position he would have had if the excise tax
had not been imposed. The benefits payable to Mr. Overstrom pursuant to Mr.
Overstrom's New Employment Agreement in the event of a termination of his
employment with Fleet are in lieu of, and replace, the benefits that may have
been payable to Mr. Overstrom upon consummation of the Merger pursuant to his
Existing Severance Agreement had Mr. Overstrom not entered into the New
Employment Agreement.
The actual salary and other benefits payable to each of Messrs. Alvord and
Overstrom pursuant to their respective New Employment Agreements will depend
upon the salary and benefits paid by Fleet to Mr. Murray (in the case of Mr.
Alvord) and the other vice chairmen of Fleet (in the case of Mr. Overstrom)
following the Merger, and accordingly cannot be determined at this time.
Information concerning the amounts paid by Fleet to its five most highly
compensated executive officers during 1994 is set forth in the section entitled,
"AMENDMENT AND RESTATEMENT OF FLEET EXISTING ARTICLES; ELECTION OF FLEET
DIRECTORS; RATIFICATION OF INDEPENDENT AUDITORS" which is included in the Joint
Proxy Statement-Prospectus to be delivered to Fleet stockholders only and is
also set forth in Exhibit G to the Joint Proxy Statement-Prospectus to be
delivered to Shawmut stockholders only.
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Other Shawmut Plans. As described below, Shawmut maintains for the benefit
of the members of the Shawmut Board and its executive officers certain benefit
plans or arrangements containing provisions that will become operative upon a
change in control of Shawmut.
Under the Shawmut Stock Option and Restricted Stock Award Plan, which
authorizes grants of stock options, restricted stock, stock appreciation rights
and restricted stock units (including awards under Shawmut's Performance Equity
Plan) to employees of Shawmut and its subsidiaries, all outstanding stock
options and stock appreciation rights, whether or not vested, will become fully
exercisable and all restrictions on outstanding restricted stock and restricted
stock unit awards will lapse upon a change in control (as defined therein). The
approval of the Merger by the holders of Shawmut Common Stock will constitute a
change in control for purposes of such plans. Under the Shawmut 1989 Nonemployee
Directors' Restricted Stock Plan, which provides for annual grants of restricted
stock to plan participants in lieu of the annual fees otherwise payable to such
participants, all restrictions on outstanding awards will lapse upon the
consummation of the Merger. Additional information concerning awards granted to
Shawmut's directors and executive officers under these plans is incorporated by
reference to Shawmut's 1994 Annual Report on Form 10-K which is incorporated
herein by reference. See "INFORMATION INCORPORATED BY REFERENCE". Such
information is also set forth in the section entitled, "ELECTION OF SHAWMUT
DIRECTORS; APPOINTMENT OF SHAWMUT INDEPENDENT ACCOUNTANTS" which is included
in the Joint Proxy Statement-Prospectus to be delivered to Shawmut
stockholders only.
Under Shawmut's Executive Supplemental Retirement Plan, which is a
nonqualified defined benefit plan maintained for the purpose of providing
supplemental retirement income to approximately 30 key employees of Shawmut
(including all of its executive officers), all nonvested benefits (which
nonvested benefits equaled $100,000 in the aggregate, all of which is
attributable to Shawmut's executive officers) accrued under such plan will
become fully vested upon a change in control (as defined therein). The
consummation of the Merger will constitute a change in control under such plan.
Further, the Merger Agreement permits Shawmut to and Shawmut will amend the
Shawmut Split-Dollar Life Insurance Plan, which provides supplemental life
insurance coverage and retirement income to approximately 30 key employees of
Shawmut, (including all of its executive officers) and the Shawmut Executive
Group Life Insurance Plan, which provides supplemental life insurance coverage
to key employees of Shawmut (including all of its executive officers), to
provide that all nonvested benefits accrued thereunder (which nonvested benefits
equaled $1.7 million and $2.7 million in the aggregate, respectively, of which
$600,000 and $1.4 million, respectively, are attributable to Shawmut's executive
officers) as of the Effective Time will become fully vested as of such time.
Shawmut also maintains employee benefit trusts for certain of its employee
benefit plans and arrangements. The trust agreement for each such trust requires
that any contributions necessary to fund in full all obligations covered thereby
be made following a "potential change in control," which term is defined to
include the execution of the Merger Agreement by the parties thereto.
Accordingly, funding occurred on March 15, 1995. All of the amount placed in
such trust on such date represents funding that would have occurred during 1995
whether or not the Merger Agreement had been executed. Further, the trust
covering Shawmut's nonqualified supplemental retirement plans and supplemental
executive life insurance plan, to the extent such coverage is elected by
participants in such plans, provides that, upon the occurrence of a change in
control, individual annuities and life insurance contracts shall be purchased
and distributed to those participants in such plans whose benefits are funded
through such trust. The consummation of the Merger will constitute a change in
control for these purposes.
INTERESTS OF FLEET DIRECTORS AND EXECUTIVE OFFICERS.
The Merger Agreement provides that from and after the Effective Time, the
Fleet Board shall be comprised of 20 directors, including Mr. Murray (who will
serve as Chief Executive Officer and President of Fleet), 11 additional persons,
who are not executive officers of Fleet or Shawmut, to be selected prior to the
Effective Time by Mr. Murray and the Fleet Board and 7 additional persons, who
are not executive officers of Fleet or Shawmut, to be selected prior to the
Effective Time by Mr. Alvord and the Shawmut Board. In addition, after the
Effective Time, Messrs. Higgins, Sarles and Zucchini will serve as Vice Chairmen
of Fleet
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and Mr. McQuade will serve as an Executive Vice President and Chief Financial
Officer of Fleet. See "BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET
FOLLOWING THE MERGER."
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Shortly following the announcement on February 21, 1995, that Fleet and
Shawmut had executed the Merger Agreement, certain alleged stockholders of
Shawmut filed seven purported class action lawsuits in the Court of Chancery of
the State of Delaware in and for New Castle County (the "Court") against
Shawmut, the members of the Shawmut Board and Fleet. The complaints all make
similar allegations concerning the proposed Merger. The plaintiffs allege, among
other things, that the defendants have engaged in a plan and scheme to enrich
themselves at the expense of Shawmut's public stockholders; that the defendants
have failed to fully disclose the true value of Shawmut's assets and earnings
power and the future financial benefits which the defendants expect to derive
from the Merger; that the defendants have wrongfully failed and refused to seek
a purchase of Shawmut at the highest possible price and have sought to chill
potential offers for Shawmut; that the defendant members of the Shawmut Board
have breached the fiduciary duties owed by them to the plaintiffs and the
members of the purported class; and that defendant Fleet has induced and aided
and abetted breaches of fiduciary duty by the members of the Shawmut Board. The
plaintiffs seek, among other things, a declaration that the proposed transaction
is unfair, unjust and inequitable; an injunction preliminarily enjoining the
defendants from taking any steps necessary to accomplish or implement the
proposed Merger; and an order requiring the defendants to compensate plaintiffs
and the members of the class for all losses and damages suffered and to be
suffered by them as a result of the acts and transactions complained of in the
complaints. The plaintiffs also seek the award of the costs and disbursements of
the action, including reasonable attorneys', accountants' and experts' fees. The
defendants believe the allegations contained in the complaints are entirely
without merit and intend to contest them vigorously.
In addition, an alleged former stockholder of Shawmut who claims to have
sold shares of Shawmut Common Stock between December 11, 1994 and February 21,
1995 filed a purported class action lawsuit on behalf of himself and all other
persons who sold Shawmut Common Stock between such dates in the United States
District Court for the Eastern District of New York against Shawmut. The
plaintiff alleges, among other things, that, prior to the execution of the
Merger Agreement, Shawmut violated Section 10(b) of the Exchange Act and Rule
10b-5 promulgated thereunder by disseminating false information and/or failing
to disclose material facts necessary in order not to mislead the investing
public and by artificially depressing the market price of the Shawmut Common
Stock as a result of these alleged acts and omissions. In particular, the
plaintiff alleges that on December 11, 1994 a newspaper article reported that
Mr. Alvord had "stated that a merger for Shawmut was not in the cards and that
he would be charting a course for Shawmut as an independent institution." The
plaintiff contends that this newspaper article constituted a representation by
Shawmut, that such alleged representation was materially false and misleading
when made and/or became materially misleading, and that Shawmut had a duty to
correct this alleged representation as soon as it believed that the alleged
representation was no longer accurate. The plaintiff seeks an order requiring
Shawmut to compensate plaintiff and the members of the class for all losses and
damages suffered by them as a result of the acts and omissions complained of in
the complaint. The plaintiff also seeks an award of the costs and disbursements
of the action, including reasonable attorneys', accountants' and experts' fees.
Shawmut denies that the newspaper article referred to by the plaintiff contains
any such statement by Mr. Alvord and further believes the allegations contained
in the complaint are entirely without merit and intends to contest them
vigorously.
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 Resources, Inc., filed for
reorganization under Chapter 11 of the Federal Bankruptcy Code in 1992. A plan
under Chapter 11 was approved in 1993.
John S. Scott, a director of Fleet, is a director and former Chairman of
Cambridge Biotech Corporation ("Cambridge Biotech"), which filed for
reorganization under Chapter 11 of the Federal Bankruptcy Code in July, 1994.
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CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As bank holding companies, Fleet and Shawmut are subject to regulation by
the Federal Reserve Board. As a result of Shawmut's acquisition of the Guardian
Bank, FSB (now known as Shawmut-FSB), a federal savings bank located in Boca
Raton, Florida, Shawmut is subject to supervision and regulation by the OTS as a
savings and loan holding company under HOLA.
Fleet Bank of Maine, Fleet-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, Fleet-MA, Shawmut-CT and Shawmut-MA are national
banks subject to regulation and supervision by the OCC. Shawmut-NH, a state
non-member bank, is supervised by the State of New Hampshire Banking Department
and the FDIC. Shawmut-FSB is supervised by the OTS. Each of Fleet's and
Shawmut's subsidiary banks' deposits are insured by the FDIC and are therefore
subject to FDIC supervision and regulation. Fleet and Shawmut are also subject
to the reporting and other requirements of the Exchange Act.
Following the consummation of the Northeast Merger, Shawmut intends to
transfer the assets and liabilities of Northeast to the national bank
subsidiaries of Shawmut as follows: (i) Northeast's banking subsidiary,
Northeast Savings F.A. ("Northeast Savings") will relocate its home office from
Hartford, Connecticut to Saratoga Springs, New York, (ii) Shawmut-CT will
acquire each Connecticut branch of Northeast Savings and Shawmut-MA will acquire
each Massachusetts branch of Northeast Savings, (iii) Northeast Savings will
convert into Shawmut Savings and Loan Association, a New York stock-form savings
and loan association ("Shawmut-SLA"), (iv) Shawmut Bank New York, National
Association ("Shawmut-NY") will be chartered and (v) Shawmut-SLA will be merged
with and into Shawmut-NY. The Northeast Merger and the transactions contemplated
thereby are subject to the prior receipt of certain regulatory approvals and the
approval of the Northeast stockholders, and there can be no assurance that such
approvals will be obtained or that the above transactions will be consummated.
The credit quality of the assets held by certain of Fleet's and Shawmut's
subsidiaries is subject to periodic review by the state and federal bank
regulatory agencies noted above. While Fleet and Shawmut believe their present
reserves for credit losses are adequate in light of prevailing economic
conditions, there can be no assurance that Fleet's and Shawmut'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.
Neither Fleet, Shawmut nor any of their subsidiaries is subject to formal
written agreements with state and federal regulators. Fleet, Shawmut and their
respective subsidiaries continue to evaluate and refine oversight and reporting
systems and procedures to enhance the ability of such companies to respond to
changes in the 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 Shawmut
stockholders who will become holders of Fleet Common Stock, Fleet New Preferred
Stock, Fleet New Depositary Shares and Fleet Warrants 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, other
extensions of credit, investments or asset purchases. Such transfers by any
subsidiary bank to Fleet or any nonbanking subsidiary of Fleet are limited in
amount to 10% of the bank's capital and surplus and, with respect to Fleet and
all its nonbanking subsidiaries, to an aggregate of 20% of each such bank's
capital and surplus. Furthermore, loans and extensions of credit by Fleet's
banking subsidiaries to Fleet's nonbanking
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subsidiaries 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 December 31, 1994, Fleet's banking
subsidiaries could have declared additional dividends of approximately $620
million, of which $328 million could have been declared by Fleet-MA 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, Inc., a wholly owned subsidiary of Fleet and the holder of all of the
outstanding capital stock of Fleet-MA and Fleet-CT ("Fleet Banking Group"). As
of the date of this Joint Proxy Statement-Prospectus, Fleet Banking Group has
not paid any dividends on its common stock to Fleet.
Under the policies of the Federal Reserve Board, Fleet is expected to act
as a source of financial strength to each of its subsidiary banks 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 amended the federal bankruptcy laws to provide 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.
LEGISLATION AND RELATED MATTERS
General. 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, finance companies and major retailers. In addition, the
existence of banking legislation such as the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("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.
FIRREA. As a result of the enactment of FIRREA on August 9, 1989, any or
all of Fleet's subsidiary depository institutions 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 depository institutions or (b) any assistance provided by the FDIC to
any other of Fleet's subsidiary depository institutions 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 BIF of the FDIC and expanded
regulation of depository institutions and their affiliates, including parent
holding companies. A summary of certain material provisions of FDICIA and its
regulations is provided below.
Prompt Corrective Action. The FDICIA 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." A depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position under certain circumstances. At December 31, 1994, each of Fleet's and
Shawmut's subsidiary depository institutions was classified as
"well-capitalized" under the applicable prompt corrective action regulations.
Brokered Deposits. Under the FDICIA, a depository institution that is
well-capitalized may accept brokered deposits. A depository institution that is
adequately capitalized may accept brokered deposits only if
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it obtains a waiver from the FDIC, and may not offer interest rates on deposits
"significantly higher" than the prevailing rate in its market. An
undercapitalized depository institution may not accept brokered deposits. In
Fleet's and Shawmut's opinion, these limitations do not have a material effect
on Fleet and Shawmut.
Safety and Soundness Standards. The FDICIA, as amended, directs each
federal banking agency to prescribe safety and soundness standards for
depository institutions relating to internal controls, information systems,
internal audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, asset-quality, earnings and stock
valuation. Final interagency regulations to implement these new safety and
soundness standards are being adopted by the federal banking agencies and are
expected to be released imminently. 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 Shawmut'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.
Capital Guidelines. Under the Federal Reserve Board's capital guidelines,
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 noncumulative perpetual preferred stock, less deductible
intangibles ("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, the Federal Reserve Board requires a leverage ratio
(Tier 1 capital to average quarterly 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
and Shawmut's national banking subsidiaries 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, effective January 17, 1995, the federal banking agencies adopted
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 December 31, 1994, Fleet's and Shawmut's capital ratios on a
historical basis exceeded all minimum regulatory capital requirements.
Under federal banking laws, 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 September 29, 1994, President Clinton
signed the Interstate Act into law. The Interstate Act facilitates the
interstate expansion and consolidation of banking organizations by permitting
(i) beginning one year after enactment of the legislation, bank holding
companies that are adequately capitalized and managed to acquire banks located
in states outside their home states regardless of whether such acquisitions are
authorized under the law of the host state, (ii) the interstate merger of banks
after June 1, 1997, subject to the right of individual states to "opt in" or
"opt out" of this authority prior to such date, (iii) banks to establish new
branches on an interstate basis provided that such action is specifically
authorized by the law of the host state, (iv) foreign banks to establish, with
approval of the appropriate regulators in the United States, branches outside
their home states to the same extent that national or state
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banks located in such state would be authorized to do so and (v) beginning
September 29, 1995, banks to receive deposits, renew time deposits, close loans,
service loans and receive payments on loans and other obligations as agent for
any bank or thrift affiliate, whether the affiliate is located in the same or
different state. Fleet does not currently have any plans to consolidate its
banking subsidiaries across state lines or to take any other actions as a result
of this new statute. However, Fleet is considering the potential benefits in
cost savings and convenience to its customers that might be achieved through
combinations of two or more of its banking subsidiaries.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1994, and the Unaudited Pro Forma Condensed Combined Statement of
Income for the year ended December 31, 1994, give effect to the Merger,
accounted for as a pooling of interests, and the Northeast Merger, the NBB
Merger, the Plaza Merger, the Barclays Acquisition and FMG Repurchase, each of
which were or will be accounted for by the purchase method of accounting, in
each case as if such transactions had occurred on January 1, 1994. The Unaudited
Pro Forma Condensed Combined Statements of Income for the years ended December
31, 1993 and December 31, 1992, give effect to the Merger as if the Merger had
occurred on January 1 in each such year and do not take into account the effect
of the Northeast Merger, the NBB Merger, the Plaza Merger, the Barclays
Acquisition and the FMG Repurchase since such transactions were or will be
accounted for under the purchase method of accounting.
The pro forma information is based on the historical consolidated financial
statements of Fleet, Shawmut, Northeast, NBB, Plaza, Barclays and FMG and their
subsidiaries under the assumptions and adjustments set forth in the accompanying
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements. The
pro forma condensed combined financial statements do not give effect to the
anticipated cost savings in connection with the Merger, the Northeast Merger,
the NBB Merger and the Plaza Merger or the effects of any required regulatory
divestitures. See "BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS OF FLEET
FOLLOWING THE MERGER -- Operations".
The information shown below should be read in conjunction with the
consolidated historical financial statements of Fleet and Shawmut, including the
respective notes thereto, which are incorporated by reference in this Joint
Proxy Statement-Prospectus and the unaudited pro forma condensed combined per
share financial information, including the notes thereto, which appear elsewhere
in this Joint Proxy Statement-Prospectus. The pro forma data is presented for
comparative purposes only and is not necessarily indicative of the combined
financial position or results of operations in the future or of the combined
financial position or results of operations which would have been realized had
the acquisitions been consummated during the periods or as of the dates for
which the pro forma data is presented.
Pro forma per share amounts for the combined Fleet and Shawmut entity are
based on the Common Exchange Ratio of 0.8922 shares of Fleet Common Stock for
each share of Shawmut Common Stock. In addition, the pro forma data assumes the
issuance of approximately 6,165,912 shares of Fleet Common Stock in the NBB
Merger. The pro forma data also assumes an exchange ratio of 0.415 shares of
Shawmut Common Stock for each outstanding share and stock option of Northeast,
calculated as set forth in the Shawmut/Northeast merger agreement, assuming for
illustrative purposes only, that the average closing price of Shawmut Common
Stock used to determine such exchange ratio is $ , the closing price of the
Shawmut Common Stock on May 3, 1995. See "INFORMATION INCORPORATED BY
REFERENCE", "SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS -- Comparative Stock
Prices and Dividends; Pro Forma Equivalent Market Value Per Share", "SELECTED
HISTORICAL AND PRO FORMA PER SHARE DATA" and "SELECTED CONSOLIDATED FINANCIAL
DATA".
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<TABLE>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1994(a)
<CAPTION>
FLEET &
SHAWMUT
FLEET SHAWMUT PRO FORMA PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS COMBINED
----------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents......................................... $ 5,109,009 $ 2,377,273 $ -- $ 7,486,282
Federal funds sold and securities purchased under
agreements to resell............................................ 648,681 331,425 -- 980,106
Securities available for sale, at market.......................... 10,359,441 2,099,363 (95,169)(d) 12,363,635
Securities held to maturity....................................... 891,076 9,877,281(b) -- 10,768,357(b)
Loans and leases.................................................. 28,816,314 21,871,784 -- 50,688,098
Reserve for credit losses......................................... (980,509) (595,605) -- (1,576,114)
Mortgages held for resale......................................... 658,077 77,017 -- 735,094
Premises and equipment............................................ 852,171 353,851 -- 1,206,022
Purchased mortgage servicing rights............................... 1,066,670 47,851 -- 1,114,521
Excess cost over net assets of subsidiaries acquired.............. 464,681 531,961 -- 996,642
Other intangibles................................................. 209,186 17,473 -- 226,659
Other assets...................................................... 2,723,673 1,417,641 147,405(d)(e) 4,288,719
----------- ----------- ---------- ----------
Total assets...................................................... $50,818,470 $38,407,315 $ 52,236 $89,278,021
=========== =========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand.......................................................... $ 6,974,389 $ 5,189,589 $ -- $12,163,978
Regular savings, NOW, money market.............................. 16,191,444 9,434,493 -- 25,625,937
Time............................................................ 14,009,389 8,513,589 -- 22,522,978
----------- ----------- ---------- -----------
Total deposits.................................................. 37,175,222 23,137,671 -- 60,312,893
----------- ----------- ---------- -----------
Federal funds purchased and securities sold under
agreements to repurchase........................................ 2,846,197 8,190,001 -- 11,036,198
Other short-term borrowings....................................... 2,487,291 1,715,697 -- 4,202,988
Accrued expenses and other liabilities............................ 1,210,814 454,587 398,721(d)(e) 2,064,122
Long-term debt.................................................... 3,503,866 2,421,788 -- 5,925,654
----------- ----------- ---------- -----------
Total liabilities................................................. 47,223,390 35,919,744 398,721 83,541,855
----------- ----------- ---------- -----------
Stockholders' equity:
Preferred stock................................................. 378,815 303,185 --(c) 682,000
Common stock.................................................... 141,574 1,274 107,156(c) 250,004
Common surplus.................................................. 1,547,228 1,454,157 (230,615)(c) 2,770,770
Retained earnings............................................... 1,936,165 783,223 (240,000)(e) 2,479,388
Net unrealized gain/(loss) on securities available
for sale...................................................... (374,200) (54,268)(b) 16,974(d) (411,494)(b)
Treasury stock, at cost......................................... (34,502) -- -- (34,502)
----------- ----------- ---------- -----------
Total stockholders' equity........................................ 3,595,080 2,487,571 (346,485) 5,736,166
----------- ----------- ---------- -----------
Total liabilities and stockholders' equity........................ $50,818,470 $38,407,315 $ 52,236 $89,278,021
=========== =========== ========== ===========
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS".
85
<PAGE> 97
<TABLE>
FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1994, CONTINUED(a)
<CAPTION>
PRO FORMA FLEET
FLEET NBB PLAZA ADJUSTMENTS PRO FORMA
----------- ---------- -------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents.............................. $ 5,208,938 $ 79,698 $ 31,188 $ (210,815 )(f) $ 5,109,009
Federal funds sold and securities purchased
under agreements to resell........................... 648,681 -- -- -- 648,681
Securities available for sale, at market............... 10,352,656 663,461 164,215 (820,891 )(g) 10,359,441
Securities held to maturity............................ 891,076 322,384 -- (322,384 )(g) 891,076
Loans and leases....................................... 27,540,644 1,325,990 5,832 (56,152 )(h) 28,816,314
Reserve for credit losses.............................. (953,449) (27,060) -- -- (980,509)
Mortgages held for resale.............................. 488,898 -- 405,253 (236,074 )(g)(h) 658,077
Premises and equipment................................. 823,822 22,104 15,087 (8,842 )(h) 852,171
Purchased mortgage servicing rights.................... 826,559 -- 53,701 186,410 (h)(m) 1,066,670
Excess cost over net assets of subsidiaries acquired... 180,257 9,222 -- 275,202 (i)(m) 464,681
Other intangibles...................................... 159,186 3,614 -- 46,386 (h) 209,186
Other assets........................................... 2,589,822 68,767 46,961 18,123 (h) 2,723,673
----------- ---------- -------- ----------- -----------
Total assets........................................... $48,757,090 $2,468,180 $722,237 $(1,129,037) $50,818,470
========== ========== ======== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand............................................... $ 6,889,763 $ 84,626 $ 4,472 $ (4,472 )(g) $ 6,974,389
Regular savings, NOW, money market................... 15,220,444 971,000 2,341 (2,341 )(g) 16,191,444
Time................................................. 12,695,896 1,134,948 189,132 (10,587 )(g)(h) 14,009,389
----------- ---------- -------- ----------- -----------
Total deposits....................................... 34,806,103 2,190,574 195,945 (17,400 ) 37,175,222
----------- ---------- -------- ----------- -----------
Federal funds purchased and securities sold
under agreements to repurchase....................... 2,846,197 -- -- -- 2,846,197
Other short-term borrowings............................ 3,105,188 -- 427,797 (1,045,694 )(g)(m) 2,487,291
Accrued expenses and other liabilities 1,162,256 23,032 18,846 6,680 (h)(m) 1,210,814
Long-term debt......................................... 3,457,266 -- 46,600 -- 3,503,866
----------- ---------- -------- ----------- -----------
Total liabilities...................................... 45,377,010 2,213,606 689,188 (1,056,414 ) 47,223,390
----------- ---------- -------- ----------- -----------
Stockholders' equity:
Preferred stock...................................... 378,815 -- -- -- (l) 378,815
Common stock......................................... 141,574 963 116 (1,079 )(l) 141,574
Common surplus....................................... 1,547,228 136,557 25,767 (162,324 )(l) 1,547,228
Retained earnings.................................... 1,936,165 140,337 7,166 (147,503 )(l) 1,936,165
Net unrealized gain/(loss) on securities available
for sale........................................... (374,200) (13,342) -- 13,342 (l) (374,200)
Treasury stock, at cost.............................. (249,502) (9,941) -- 224,941 (l) (34,502)
----------- ---------- -------- ----------- -----------
Total stockholders' equity............................. 3,380,080 254,574 33,049 (72,623 ) 3,595,080
----------- ---------- -------- ----------- -----------
Total liabilities and stockholders' equity............. $48,757,090 $2,468,180 $722,237 $(1,129,037) $50,818,470
=========== ========== ======== =========== ============
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS".
86
<PAGE> 98
<TABLE>
SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1994, CONTINUED (a)
<CAPTION>
PRO FORMA SHAWMUT
SHAWMUT NORTHEAST BARCLAYS ADJUSTMENTS PRO FORMA
----------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents....................... $ 2,426,118 $ 34,145 $ 4,614 $ (87,604)(f) $ 2,377,273
Federal funds sold and securities purchased under
agreements to resell.......................... 308,700 22,725 -- -- 331,425
Securities available for sale, at market........ 1,991,853 107,510 -- -- 2,099,363
Securities held to maturity..................... 8,000,382(b) 1,960,699(b) -- (83,800)(g) 9,877,281(b)
Loans and leases................................ 18,487,143 959,648 2,388,293 36,700(h) 21,871,784
Reserve for credit losses....................... (542,116) (11,746) (41,743) -- (595,605)
Mortgages held for resale....................... 72,205 4,812 -- -- 77,017
Premises and equipment.......................... 329,780 27,401 2,670 (6,000)(h) 353,851
Purchased mortgage servicing rights............. 13,851 1,686 -- 32,314(h) 47,851
Excess cost over net assets of subsidiaries
acquired...................................... 137,143 -- -- 394,818(i) 531,961
Other intangibles............................... 17,345 128 -- -- 17,473
Other assets.................................... 1,156,207 238,564 3,915 18,955(h) 1,417,641
----------- ---------- ---------- ----------- -----------
Total assets.................................... $32,398,611 $3,345,572 $2,357,749 $ 305,383 $38,407,315
=========== ========== ========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand........................................ $ 5,161,182 $ 28,407 -- $ -- $ 5,189,589
Regular savings, NOW, money market............ 8,649,988 784,505 -- -- 9,434,493
Time.......................................... 6,935,083 1,580,172 -- (1,666)(h) 8,513,589
----------- ---------- ---------- ---------- -----------
Total deposits.................................. 20,746,253 2,393,084 -- (1,666) 23,137,671
----------- ---------- ---------- ---------- -----------
Federal funds purchased and securities sold
under agreements to repurchase................ 6,076,808 -- -- 2,113,193(j) 8,190,001
Other short-term borrowings..................... 1,009,771 707,772 -- (1,846)(h) 1,715,697
Accrued expenses and other liabilities.......... 346,818 63,573 13,556 30,640(h) 454,587
Long-term debt.................................. 2,021,788 42,243 -- 357,757(j)(k) 2,421,788
----------- ---------- ---------- ---------- -----------
Total liabilities............................... 30,201,438 3,206,672 13,556 2,498,078 35,919,744
----------- ---------- ---------- ---------- -----------
Stockholders' equity:
Preferred stock............................... 178,185 4 -- 124,996(j)(l) 303,185
Common stock.................................. 1,208 144 -- (78)(l) 1,274
Common surplus................................ 1,288,825 191,756 -- (26,424)(l) 1,454,157
Retained earnings............................. 783,223 (54,892) -- 54,892(l) 783,223
Net unrealized gain/(loss) on securities
available for sale.......................... (54,268) 1,888 -- (1,888)(l) (54,268)(b)
Treasury stock, at cost....................... -- -- -- -- --
----------- ---------- ---------- ---------- -----------
Total stockholders' equity...................... 2,197,173 138,900 -- 151,498 2,487,571
----------- ---------- ---------- ---------- -----------
Total liabilities and stockholders' equity...... $32,398,611 $3,345,572 $ 13,556 $2,649,576 $38,407,315
=========== ========== ========== ========== ===========
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS."
87
<PAGE> 99
<TABLE>
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994(A)
<CAPTION>
FLEET &
SHAWMUT
FLEET SHAWMUT PRO FORMA PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS COMBINED
---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest and fees on loans and leases............................ $2,513,235 $1,576,256 $ -- $4,089,491
Interest on securities........................................... 907,065 733,853 (2,346)(d) 1,638,572
---------- ---------- ----------- ----------
Total interest income........................................ 3,420,300 2,310,109 (2,346) 5,728,063
Interest expense:
Deposits....................................................... 847,475 509,065 -- 1,356,540
Short-term borrowings.......................................... 263,997 476,815 -- 740,812
Long-term debt................................................. 255,170 109,916 -- 365,086
---------- ---------- ----------- ----------
Total interest expense....................................... 1,366,642 1,095,796 -- 2,462,438
---------- ---------- ----------- ----------
Net interest income.............................................. 2,053,658 1,214,313 (2,346) 3,265,625
Provision for credit losses...................................... 65,076 14,383 -- 79,459
---------- ---------- ----------- ----------
Net interest income after provision for credit losses............ 1,988,582 1,199,930 (2,346) 3,186,166
---------- ---------- ----------- ----------
Mortgage banking................................................. 390,311 47,583 -- 437,894
Investment services revenue...................................... 174,764 117,501 -- 292,265
Service charges, fees and commissions............................ 326,807 201,842 -- 528,649
Securities available for sale gains (losses)..................... (2,779) 7,283 -- 4,504
Other noninterest income......................................... 319,045 74,452 -- 393,497
---------- ---------- ----------- ----------
Total noninterest income..................................... 1,208,148 448,661 -- 1,656,809
---------- ---------- ----------- ----------
Employee compensation and benefits............................... 1,005,961 537,221 -- 1,543,182
Occupancy and equipment.......................................... 324,721 177,020 -- 501,741
Purchased mortgage servicing rights amortization................. 119,574 10,471 -- 130,045
FDIC assessment.................................................. 74,962 52,470 -- 127,432
Marketing........................................................ 66,220 19,902 -- 86,122
Core deposit and goodwill amortization........................... 82,928 28,525 -- 111,453
OREO expense..................................................... 42,665 24,905 -- 67,570
Restructuring charges............................................ 44,000 39,800 -- 83,800
Merger-related charges........................................... -- 100,900 -- 100,900
Other noninterest expense........................................ 490,332 232,003 -- 722,335
---------- ---------- ----------- ----------
Total noninterest expense.................................... 2,251,363 1,223,217 -- 3,474,580
---------- ---------- ----------- ----------
Income before taxes.............................................. 945,367 425,374 (2,346) 1,368,395
Applicable income taxes.......................................... 373,210 155,637 (938) 527,909
---------- ---------- ---------- ----------
Net income before minority interest.............................. 572,157 269,737 (1,408) 840,486
Minority interest................................................ -- -- -- --
---------- ---------- ----------- ----------
Net income....................................................... $ 572,157 $ 269,737 $ (1,408) $ 840,486
========= ========= ========= =========
Net income applicable to common shares........................... $ 557,035 $ 242,615 $ 798,242(o)
Weighted average common shares outstanding:
Primary...................................................... 165,648,933 125,549,233 272,478,583(o)
Fully diluted ............................................... 165,648,933 125,549,233 272,478,583(o)
Income from continuing operations per common share:
Primary...................................................... $3.36 $1.93 $2.93
Fully diluted................................................ $3.36 $1.93 $2.93
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS".
88
<PAGE> 100
<TABLE>
FLEET FINANCIAL GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994, CONTINUED(A)
<CAPTION>
PRO FORMA FLEET
FLEET NBB PLAZA ADJUSTMENTS PRO FORMA
---------- -------- -------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and leases...................... $2,366,923 $108,081 $ 42,838 $ (4,607)(g)(h) $2,513,235
Interest on securities..................................... 905,350 59,507 6,119 (63,911)(g) 907,065
---------- -------- -------- ----------- ----------
Total interest income.................................. 3,272,273 167,588 48,957 (68,518) 3,420,300
Interest expense:
Deposits............................................... 764,186 71,137 14,304 (2,152)(g)(h) 847,475
Short-term borrowings.................................. 294,186 -- 22,486 (52,675)(g)(m) 263,997
Long-term debt......................................... 232,211 -- 1,586 21,373(f) 255,170
---------- -------- -------- ----------- ----------
Total interest expense................................. 1,290,583 71,137 38,376 (33,454) 1,366,642
---------- -------- -------- ----------- ----------
Net interest income........................................ 1,981,690 96,451 10,581 (35,064) 2,053,658
Provision for credit losses................................ 62,130 500 2,446 -- 65,076
---------- -------- -------- ----------- ----------
Net interest income after provision for credit losses...... 1,919,560 95,951 8,135 (35,064) 1,988,582
---------- -------- -------- ----------- ----------
Mortgage banking........................................... 362,587 -- 27,724 -- 390,311
Investment services revenue................................ 174,764 -- -- -- 174,764
Service charges, fees and commissions...................... 321,170 5,637 -- -- 326,807
Securities available for sale gains (losses)............... (620) 68 (2,227) -- (2,779)
Other noninterest income................................... 315,240 1,191 2,614 -- 319,045
---------- -------- -------- ----------- ----------
Total noninterest income............................... 1,173,141 6,896 28,111 -- 1,208,148
---------- -------- -------- ----------- ----------
Employee compensation and benefits......................... 949,251 21,823 34,887 -- 1,005,961
Occupancy and equipment.................................... 300,646 4,352 20,891 (1,168)(h) 324,721
Purchased mortgage servicing rights amortization........... 85,349 -- 7,361 26,864(h)(m) 119,574
FDIC assessment............................................ 69,965 4,997 -- -- 74,962
Marketing.................................................. 64,520 1,113 587 -- 66,220
Core deposit and goodwill amortization..................... 57,309 2,615 -- 23,004(h)(i)(m) 82,928
OREO expense............................................... 39,471 3,194 -- -- 42,665
Restructuring charges...................................... 44,000 -- -- -- 44,000
Merger-related charges..................................... -- -- -- -- --
Other noninterest expense.................................. 459,334 13,898 17,100 -- 490,332
---------- -------- -------- ----------- ----------
Total noninterest expense.............................. 2,069,845 51,992 80,826 48,700 2,251,363
---------- -------- -------- ----------- ----------
Income before taxes........................................ 1,022,856 50,855 (44,580) (83,764) 945,367
Applicable income taxes.................................... 397,708 20,445 (16,199) (28,744) 373,210
---------- -------- -------- ----------- ----------
Net income before minority interest........................ 625,148 30,410 (28,381) (55,020) 572,157
Minority interest.......................................... (12,217) -- -- 12,217(m) --
---------- -------- -------- ----------- ----------
Net income................................................. $ 612,931 $ 30,410 $(28,381) $ (42,803) $ 572,157
========== ======== ======== =========== ==========
Net income applicable to common shares..................... $ 597,809 $ 557,035(n)
Weighted average common shares outstanding:
Primary................................................ 159,483,021 165,648,933(n)
Fully diluted.......................................... 159,483,021 165,648,933(n)
Income from continuing operations per common share:
Primary................................................ $3.75 $3.36
Fully diluted.......................................... $3.75 $3.36
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS".
89
<PAGE> 101
SHAWMUT NATIONAL CORPORATION
<TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994, CONTINUED(A)
<CAPTION>
PRO FORMA SHAWMUT
SHAWMUT NORTHEAST BARCLAYS ADJUSTMENTS PRO FORMA
---------- --------- -------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and leases.................. $1,326,542 $ 84,212 $180,782 $ (15,280)(h) $1,576,256
Interest on securities................................. 611,387 108,499 -- 13,967(g) 733,853
---------- -------- -------- --------- ----------
Total interest income.............................. 1,937,929 192,711 180,782 (1,313) 2,310,109
Interest expense:
Deposits........................................... 406,346 101,886 -- 833(h) 509,065
Short-term borrowings.............................. 368,347 28,215 79,638 615(h) 476,815
Long-term debt..................................... 95,651 3,858 -- 10,407(j)(k) 109,916
---------- -------- -------- --------- ----------
Total interest expense............................. 870,344 133,959 79,638 11,855 1,095,796
---------- -------- -------- --------- ----------
Net interest income.................................... 1,067,585 58,752 101,144 (13,168) 1,214,313
Provision for credit losses............................ 3,000 4,900 6,483 -- 14,383
---------- -------- -------- --------- ----------
Net interest income after provision for credit
losses............................................... 1,064,585 53,852 94,661 (13,168) 1,199,930
---------- -------- -------- --------- ----------
Mortgage banking....................................... 28,852 18,731 -- -- 47,583
Investment services revenue............................ 117,501 -- -- -- 117,501
Service charges, fees and commissions.................. 195,774 6,068 -- -- 201,842
Securities available for sale gains (losses)........... -- 7,283 -- -- 7,283
Other noninterest income............................... 40,841 9,537 24,074 -- 74,452
---------- -------- -------- --------- ----------
Total noninterest income........................... 382,968 41,619 24,074 -- 448,661
---------- -------- -------- --------- ----------
Employee compensation and benefits..................... 478,142 27,459 31,620 -- 537,221
Occupancy and equipment................................ 154,511 16,168 6,941 (600)(h) 177,020
Purchased mortgage servicing rights amortization....... 4,486 1,946 -- 4,039(h) 10,471
FDIC assessment........................................ 43,711 8,759 -- -- 52,470
Marketing.............................................. 19,902 -- -- -- 19,902
Core deposit and goodwill amortization................. 8,068 136 -- 20,321(i) 28,525
OREO expense........................................... 11,702 13,203 -- -- 24,905
Restructuring charges.................................. 39,800 -- -- -- 39,800
Merger-related charges................................. 100,900 -- -- -- 100,900
Other noninterest expense.............................. 214,727 17,276 -- -- 232,003
---------- -------- -------- --------- ----------
Total noninterest expense.......................... 1,075,949 84,947 38,561 23,760 1,223,217
---------- -------- -------- --------- ----------
Income before taxes.................................... 371,604 10,524 80,174 (36,928) 425,374
Applicable income taxes................................ 134,252 (442) 32,070 (10,243) 155,637
---------- -------- -------- --------- ----------
Net income before minority interest.................... 237,352 10,966 48,104 (26,685) 269,737
Minority interest...................................... -- -- -- -- --
---------- -------- -------- --------- ----------
Net income............................................. $ 237,352 $ 10,966 $ 48,104 $ (26,685) $ 269,737
========== ======== ======== ========= ==========
Net income applicable to common shares................. $ 221,917 $ 242,615(n)
Weighted average common shares outstanding:
Primary............................................ 118,977,173 125,549,233(n)
Fully diluted...................................... 118,977,173 125,549,233(n)
Income from continuing operations per common share:
Primary............................................ $1.87 $1.93
Fully diluted...................................... $1.87 $1.93
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS".
90
<PAGE> 102
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
<TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993(A)
<CAPTION>
FLEET &
SHAWMUT
PRO FORMA PRO FORMA
FLEET SHAWMUT ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest and fees on loans and leases.................................. $2,339,609 $1,272,319 $ -- $3,611,928
Interest on securities................................................. 872,886 554,663 (80)(d) 1,427,469
---------- ---------- ----- ----------
Total interest income.............................................. 3,212,495 1,826,982 (80) 5,039,397
Interest expense:
Deposits............................................................. 744,080 420,966 -- 1,165,046
Short-term borrowings................................................ 180,507 262,413 -- 442,920
Long-term debt....................................................... 236,794 72,040 -- 308,834
---------- ---------- ----- ----------
Total interest expense............................................. 1,161,381 755,419 -- 1,916,800
---------- ---------- ----- ----------
Net interest income.................................................... 2,051,114 1,071,563 (80) 3,122,597
Provision for credit losses............................................ 270,724 55,944 -- 326,668
---------- ---------- ----- ----------
Net interest income after provision for credit losses.................. 1,780,390 1,015,619 (80) 2,795,929
---------- ---------- ----- ----------
Mortgage banking....................................................... 414,086 30,737 -- 444,823
Service charges, fees and commissions.................................. 310,095 186,452 -- 496,547
Investment services revenue............................................ 173,762 116,845 -- 290,607
Securities available for sale gains (losses)........................... 282,444 12,468 -- 294,912
Other noninterest income............................................... 284,888 71,690 -- 356,578
---------- ---------- ----- ----------
Total noninterest income........................................... 1,465,275 418,192 -- 1,883,467
---------- ---------- ----- ----------
Employee compensation and benefits..................................... 1,018,124 500,254 -- 1,518,378
Occupancy and equipment................................................ 303,953 163,792 -- 467,745
Purchased mortgage servicing rights amortization....................... 239,940 7,343 -- 247,283
FDIC assessment........................................................ 75,854 52,302 -- 128,156
Marketing.............................................................. 53,141 22,240 -- 75,381
Core deposit and goodwill amortization................................. 53,594 6,289 -- 59,883
OREO expense........................................................... 57,364 105,173 -- 162,537
Restructuring charges.................................................. 125,000 36,319 -- 161,319
Other noninterest expense.............................................. 497,256 250,623 -- 747,879
---------- ---------- ----- ----------
Total noninterest expense.......................................... 2,424,226 1,144,335 -- 3,568,561
---------- ---------- ----- ----------
Income before income taxes and cumulative effect of
changes in accounting principles and minority interest............... 821,439 289,476 (80) 1,110,835
Applicable income taxes................................................ 327,407 6,628 (32) 334,003
---------- ---------- ----- ----------
Income before cumulative effect of changes in accounting
principles and minority interest..................................... 494,032 282,848 (48) 776,832
Minority interest...................................................... (5,983) (5,983)
---------- ---------- ----- ----------
Income before cumulative effect of changes in
accounting principles.............................................. $ 488,049 $ 282,848 $ (48) $ 770,849
========== ========== ===== ==========
Net income applicable to common shares................................. $ 465,840 $ 267,379 $ 733,171(o)
========== ========== ==========
Weighted average common shares outstanding:
Primary.............................................................. 154,666,307 113,908,148 255,938,277(o)
Fully diluted........................................................ 154,899,995 113,908,148 256,171,965(o)
Income from continuing operations per share before cumulative effect of
changes in accounting principles:
Primary.............................................................. $3.01 $2.35 $2.86
Fully diluted........................................................ $3.01 $2.35 $2.86
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS".
91
<PAGE> 103
FLEET FINANCIAL GROUP, INC. AND SHAWMUT NATIONAL CORPORATION
<TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992(A)
<CAPTION>
FLEET &
SHAWMUT
PRO FORMA PRO FORMA
FLEET SHAWMUT ADJUSTMENTS COMBINED
---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest and fees on loans and leases.................................. $2,513,587 $1,328,876 -- $3,842,463
Interest on securities................................................. 902,702 527,650 -- 1,430,352
--
---------- ---------- ----------
Total interest income.............................................. 3,416,289 1,856,526 -- 5,272,815
Interest expense:
Deposits............................................................. 1,076,368 622,436 -- 1,698,804
Short-term borrowings................................................ 164,171 192,240 -- 356,411
Long-term debt....................................................... 222,104 59,321 -- 281,425
---------- ---------- ----------
Total interest expense............................................. 1,462,643 873,997 -- 2,336,640
---------- ---------- ----------
Net interest income.................................................... 1,953,646 982,529 -- 2,936,175
Provision for credit losses............................................ 485,823 242,128 -- 727,951
---------- ---------- ----------
Net interest income after provision for credit losses.................. 1,467,823 740,401 -- 2,208,224
---------- ---------- ----------
Mortgage banking....................................................... 364,011 29,071 -- 393,082
Service charges, fees and commissions.................................. 285,562 187,459 -- 473,021
Investment services revenue............................................ 160,083 115,103 -- 275,186
Securities available for sale gains (losses)........................... 206,713 94,103 -- 300,816
Gain on sale of FMG.................................................... 121,274 -- -- 121,274
Other noninterest income............................................... 230,147 103,327 -- 333,474
---------- ---------- ----------
Total noninterest income........................................... 1,367,790 529,063 -- 1,896,853
---------- ---------- ----------
Employee compensation and benefits..................................... 957,654 474,725 -- 1,432,379
Occupancy and equipment................................................ 283,191 179,507 -- 462,698
Purchased mortgage servicing rights amortization....................... 106,716 6,258 -- 112,974
FDIC assessment........................................................ 75,444 44,937 -- 120,381
Marketing.............................................................. 50,971 16,004 -- 66,975
Core deposit and goodwill amortization................................. 44,799 6,084 -- 50,883
OREO expense........................................................... 154,170 177,813 -- 331,983
Loss on sale of problem assets......................................... 115,000 -- -- 115,000
Other noninterest expense.............................................. 530,118 255,511 -- 785,629
---------- ---------- ----------
Total noninterest expense.......................................... 2,318,063 1,160,839 -- 3,478,902
---------- ---------- ----------
Income before income taxes and extraordinary tax credit and minority
interest............................................................. 517,550 108,625 -- 626,175
Applicable income taxes................................................ 228,526 40,898 -- 269,424
---------- ---------- ----------
Income before extraordinary tax credit and minority interest........... 289,024 67,727 -- 356,751
Minority interest...................................................... (9,181) (9,181)
---------- ---------- ----------
Income before extraordinary tax credit................................. $ 279,843 $ 67,727 -- $ 347,570
========== ========= ======= ===========
Net income applicable to common shares................................. $ 252,801 $ 62,944 $ 315,745(o)
========== ========= ======= ===========
Weighted average common shares outstanding:
Primary.............................................................. 141,469,658 104,379,621 234,597,156(o)
Fully diluted........................................................ 142,778,665 104,379,621 235,906,163(o)
Income from continuing operations per share before cumulative effect of
changes in accounting principles:
Primary.............................................................. $1.78 $0.60 $1.35
Fully diluted........................................................ $1.77 $0.60 $1.34
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS."
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<PAGE> 104
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) The pro forma information presented is not necessarily indicative of
the results of operations or the combined financial position that would have
resulted had the Merger, the Northeast Merger, the NBB Merger, the Plaza Merger,
the Barclays Acquisition and the FMG Repurchase been consummated at the
beginning of the periods indicated, nor is it necessarily indicative of the
results of operations in future periods or the future financial position of the
combined entities. The NBB Merger was consummated on January 27, 1995, the
Barclays Acquisition was consummated on January 31, 1995, and the Plaza Merger
was consummated on March 3, 1995. It is anticipated that the Merger will be
consummated in the fourth quarter of 1995 and the Northeast Merger and the FMG
Repurchase will be consummated in the second quarter of 1995.
Under generally accepted accounting principles ("GAAP"), the assets and
liabilities of Shawmut will be combined with those of Fleet at book value. In
addition, the statements of income of Shawmut will be combined with the
statements of income of Fleet as of the earliest period presented. Certain
reclassifications have been included in the Unaudited Pro Forma Condensed
Combined Balance Sheet and Unaudited Pro Forma Condensed Combined Statements of
Income to conform to Fleet's presentation. Certain transactions conducted in the
ordinary course of business between Fleet, Shawmut, Northeast, NBB, Barclays,
Plaza and FMG are immaterial and, accordingly, have not been eliminated.
All dollar amounts included in these Notes to Unaudited Pro Forma Condensed
Combined Financial Statements are in thousands unless otherwise indicated.
(b) Fleet is currently reviewing the investment securities portfolios of
Shawmut and Northeast to determine the classification of such securities as
either available for sale or held to maturity in connection with Fleet's
existing interest-rate risk position. As a result of this review, certain
reclassifications of Shawmut and Northeast investment securities may result. No
adjustments have been made to either the available for sale or the held to
maturity portfolios in the accompanying pro forma combined balance sheet to
reflect any such reclassification as management has not made a final
determination with respect to such matters. Any such reclassification will be
accounted for in accordance with Financial Accounting Standards Board Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
which requires that securities transferred from held to maturity to available
for sale be transferred at fair value with any unrealized gain or loss, net of
taxes, at the date of transfer recognized as a separate component of
stockholders' equity. At December 31, 1994, securities held to maturity at
Shawmut and Northeast had unrealized losses of $438,492 and $83,800,
respectively.
(c) Pro forma adjustments to common shares and capital surplus at December
31, 1994, reflect the Merger accounted for as a pooling of interests, through:
(a) the exchange of 108,429,899 shares of Fleet Common Stock (using the Common
Exchange Ratio of 0.8922) for the 121,530,934 outstanding shares of Shawmut
Common Stock at December 31, 1994 (which includes the 6,572,060 shares of
Shawmut Common Stock issued to acquire all the outstanding shares of Northeast
common stock and stock options, and excludes the 5,811,900 shares of Shawmut
Common Stock held by Fleet as of such date, which are assumed to be retired for
combining purposes), and (b) the exchange of shares of Fleet New Preferred Stock
for all shares of Shawmut Preferred on a share-for-share basis.
(d) Pro forma adjustments to securities available for sale at December 31,
1994, and to dividend income on securities for the years ended December 31, 1994
and December 31, 1993 reflect the elimination of the 5,811,900 shares of Shawmut
Common Stock held by Fleet at December 31, 1994, and the corresponding dividend
income recorded on such shares during each of the years in the three-year period
ending December 31, 1994. Pro forma adjustments to other assets and accrued
expenses and other liabilities at December 31, 1994, include the elimination of
Fleet's dividend receivable related to such shares and the elimination of
Shawmut's corresponding dividend payable. The Unaudited Pro Forma Condensed
Combined Balance Sheet also eliminates the after-tax unrealized loss on these
securities recorded in equity and the related deferred tax benefit.
93
<PAGE> 105
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(e) A liability of $400,000 has been recorded in the Unaudited Pro Forma
Condensed Combined Balance Sheet to reflect management's best estimate of merger
and restructuring related charges in connection with the Merger. This liability
resulted in a $240,000 after-tax charge to retained earnings in the Unaudited
Pro Forma Condensed Combined Balance Sheet. It is anticipated that substantially
all of these charges will be recognized during 1995 upon consummation of the
Merger, with the exception of certain amounts recognized by Shawmut during the
first quarter of 1995 (see "RECENT DEVELOPMENTS" for further discussion), and
paid during the first 15 months subsequent to the Merger. The following table
provides details of the estimated charges by type:
<TABLE>
<CAPTION>
ESTIMATED COSTS
TYPE OF COST ----------------------
----------------------------------------- (DOLLARS IN THOUSANDS)
<S> <C>
Personnel related........................ $255,000
Facilities and equipment................. 68,000
Branch related........................... 37,000
Other merger expenses.................... 40,000
--------
Total.................................... $400,000
========
</TABLE>
Personnel related costs consist primarily of charges related to employee
severance, termination of certain employee benefits plans and employee
assistance costs for separated employees. Facilities and equipment charges
consist of lease termination costs and other facilities related exit costs
resulting from consolidation of duplicate headquarters and operational
facilities, and computer equipment and software write-offs due to duplication or
incompatibility. Branch related costs are primarily related to the cost of
exiting branches anticipated to be closed, including lease terminations and
equipment write-offs. The effect of the proposed charge has been reflected in
the Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31,
1994; however, since the proposed charge is nonrecurring, it has not been
reflected in the pro forma combined statements of income.
(f) The pro forma adjustments to cash include the redemption of the
Northeast $8.50 Cumulative Preferred Stock, Series B based on the redemption
value of such stock at December 31, 1994 ($42,879), and the redemption of all of
the Northeast Uncertificated Debentures ("the Northeast Debentures") based on
the face value of the Northeast Debentures at December 31, 1994 ($44,725), as if
such redemptions had occurred on January 1, 1994.
Also included in the pro forma adjustments to cash is the amount paid in
cash by Fleet in connection with the NBB Merger. The total consideration paid to
NBB shareholders in the NBB Merger was $425,815. Fleet paid $210,815 in cash and
issued $215,000 of Fleet Common Stock to NBB shareholders, which was repurchased
by Fleet in the open market in the fourth quarter of 1994 and held in treasury
at December 31, 1994. Proceeds from Fleet's senior debt issuances during the
third and fourth quarters of 1994 were used to fund both the cash payment made
to NBB shareholders and such repurchase of shares of Fleet Common Stock. The
1994 Unaudited Pro Forma Condensed Combined Income Statement also includes an
adjustment increasing interest expense for the year ended December 31, 1994, by
$21,373 to reflect the estimated interest expense that would have been recorded
on Fleet's senior indebtedness if such indebtedness had been outstanding as of
January 1, 1994.
(g) The pro forma adjustments also include fair value adjustments of
($83,800) and ($11,373) to securities held to maturity of Northeast and NBB,
respectively. The pro forma adjustments also reflect Fleet's sale of NBB's
available for sale and held to maturity securities portfolios as if such sales
occurred on January 1, 1994, and includes adjustments to eliminate the
corresponding interest income for such period. The proceeds from the sale of
$974,472 were assumed to have reduced Fleet's short-term borrowings as of
January 1, 1994 and, accordingly, interest expense on short-term borrowings has
also been reduced by $47,307 for such period reflecting a weighted average
short-term borrowing rate of 4.75%.
94
<PAGE> 106
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma adjustments also reflect the sale of $157,430 of Plaza's
mortgage-backed securities, the sale of $230,000 of Plaza's adjustable rate
loans, and the sale of $18,445 of Plaza's retail consumer deposits, in each case
as if such sales had occurred on January 1, 1994, and includes adjustments to
eliminate the corresponding interest income and expense for such period. The net
proceeds from the sales of $368,985 were assumed to have reduced short-term
borrowings as of January 1, 1994 and, accordingly, interest expense on
short-term borrowings has also been reduced by $17,904 for such period
reflecting a weighted average short-term borrowings rate of 4.75%. The pro forma
adjustments also assume that Fleet funded the Plaza Merger by the issuance of
commercial paper on January 1, 1994, and accordingly reflect the corresponding
incremental interest expense of $4,358 for such period.
(h) These pro forma adjustments reflect the purchase accounting adjustments
related to the assets acquired and liabilities assumed for the Northeast Merger,
NBB Merger, Barclays Acquisition, Plaza Merger and the FMG Repurchase. These
adjustments are based on the best available information and may be different
from the actual adjustments to reflect the fair value of the net assets
purchased as of the date of the acquisition. The core deposit intangible is
being amortized over seven years.
(i) The 1994 pro forma statements include adjustments for the excess cost
over net assets of subsidiaries acquired for each of the material pending and/or
completed mergers and acquisitions calculated as follows:
<TABLE>
<CAPTION>
NORTHEAST NBB BARCLAYS PLAZA FMG
-------- -------- ---------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Purchase price.............................. $171,398 $425,815 $2,634,193 $88,015 $194,241
Historical net tangible assets acquired... 95,893 241,738 2,344,193 33,049 93,604
Estimated fair value adjustments....... (94,313) (33,700) 65,000 17,491 71,465
-------- -------- ---------- ------- --------
Estimated fair value of net assets.......... 1,580 208,038 2,409,193 50,540 165,069
-------- -------- ---------- ------- --------
Excess cost over net assets of
subsidiaries acquired.................. $169,818 $217,777 $ 225,000 $37,475 $ 29,172
======== ======== ========= ======= ========
</TABLE>
Adjustments have been made to the Unaudited Pro Forma Condensed Combined
Balance Sheet to reflect the recording of these intangibles as calculated above
as well as to eliminate any intangible balances previously recorded at these
companies, in accordance with the purchase method of accounting. Reflected in
the 1994 Unaudited Pro Forma Condensed Combined Income Statement are adjustments
to reflect the amortization of Northeast's, NBB's and Plaza's excess cost over
net assets of subsidiaries acquired ("goodwill") over 15 years, the amortization
of Barclays' goodwill over 25 years, and the amortization of FMG's goodwill over
20 years.
(j) The pro forma adjustments to these items show the effects of the
funding of the Barclays Acquisition as if such funding transactions occurred on
January 1, 1994. Such funding transactions included short-term borrowings
(primarily federal funds purchased and repurchase agreements) of $2,113,193, the
issuance of $250,000 of subordinated notes, the issuance of $150,000 of senior
bank notes, and the issuance of $125,000 of Shawmut 9.35% Preferred Stock.
Adjustments to increase interest expense in the amount of $14,265 for the year
ended December 31, 1994 were made to reflect an estimate of the incremental
interest expense which would have been incurred as if such borrowings had
occurred on January 1, 1994.
(k) These pro forma adjustments include the redemption of all of the
Northeast Debentures based on the face value of the Debentures ($44,725), as if
such redemption had occurred on January 1, 1994, and a related adjustment to
eliminate the interest expense recorded on such debentures ($3,858) for the year
ended December 31, 1994.
(l) The pro forma stockholders' equity accounts of Northeast, NBB and Plaza
have been adjusted in the Unaudited Pro Forma Condensed Combined Balance Sheet
to reflect the elimination of the stockholders' equity accounts in accordance
with the purchase method of accounting. The Fleet Pro Forma adjustments reflect
the issuance of 6,165,912 shares of Fleet Common Stock in connection with the
NBB Merger. The
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<PAGE> 107
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
Shawmut Pro Forma adjustments reflect the issuance of 6,572,060 shares of
Shawmut Common Stock in exchange for all of the outstanding shares of Northeast
common stock and stock options (assuming that the exchange ratio in connection
with the Northeast Merger is 0.415 which is based on the closing sales price for
Shawmut Common Stock on the Stock Exchange on May 3, 1995, the latest
practicable trading day before the printing of this Joint Proxy
Statement-Prospectus) and the redemption of the Northeast Series B preferred
stock. Also included in Shawmut's pro forma adjustments is the $125,000 of
Shawmut 9.35% Preferred Stock, proceeds from which were used to fund the
Barclays Acquisition. Shawmut's pro forma net income applicable to common shares
was decreased to include the effect of additional preferred dividends of
$11,688, as if such Shawmut 9.35% Preferred Stock had been issued on January 1,
1994.
(m) Pro forma adjustments reflect the payment of $194,241 for the 19.3%
publicly-held shares of FMG Common Stock in connection with the FMG Repurchase
as if such transaction had occurred on January 1, 1994. The excess of such
purchase price over the fair value of net assets acquired of $165,069 resulted
in $29,172 of excess cost over net assets acquired that will be amortized over
20 years. Pro forma adjustments for such period reflect the fair market value
adjustment of $118,867 to FMG's purchased mortgage servicing rights as well as
the related amortization expense of $14,264, the corresponding deferred tax
liability and the elimination of the minority interest in both the balance sheet
and income statement. The pro forma adjustments also assume that Fleet funded
the FMG Repurchase by the issuance of commercial paper on January 1, 1994, and
accordingly reflect the corresponding $8,178 incremental interest expense for
such period.
(n) The Fleet Pro Forma weighted average shares outstanding for the year
ended December 31, 1994 reflect Fleet's historical weighted average shares
outstanding plus the issuance of 6,165,912 shares of Fleet Common Stock in
connection with the NBB Merger.
The Shawmut Pro Forma weighted average shares outstanding for the year
ended December 31, 1994 reflect Shawmut's historical weighted average shares
outstanding plus the issuance of 6,572,060 shares of Shawmut Common Stock in
connection with the Northeast Merger. Shawmut's pro forma net income applicable
to common shares was decreased to include the effect of additional preferred
dividends of $11,688, as if such Shawmut 9.35% Preferred Stock had been issued
on January 1, 1994.
(o) The Fleet/Shawmut Pro Forma weighted average shares outstanding for the
year ended December 31, 1994 reflect the Fleet Pro Forma weighted average shares
plus the converted Shawmut Pro Forma weighted average shares outstanding (after
adjustment to eliminate the 5,811,900 shares of Shawmut Common Stock owned by
Fleet, which are assumed to be retired for combining purposes). Each share of
Shawmut Common Stock is converted into 0.8922 shares of Fleet Common Stock.
The Fleet/Shawmut Pro Forma net income applicable to common shares reflects
the sum of the Fleet Pro Forma net income applicable per common share and the
Fleet Pro Forma net income applicable per common shares adjusted for any
Fleet/Shawmut Pro Forma adjustments.
96
<PAGE> 108
DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED STOCK,
FLEET NEW DEPOSITARY SHARES AND FLEET WARRANTS
GENERAL
The Fleet Existing 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 Fleet Board, 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 "Existing Preferred Stock").
At December 31, 1994, 135,024,262 shares of Fleet Common Stock were
outstanding. In addition, as of December 31, 1994, Fleet had outstanding three
series of Fleet $1 Par Preferred Stock as follows: (i) 1,100,000 shares of
Series III Preferred, having a liquidation value of $100 per share, plus accrued
and unpaid dividends, were designated and 519,758 shares were outstanding, (ii)
1,000,000 shares of Series IV Preferred, having a liquidation value of $100 per
share, plus accrued and unpaid dividends, were designated and 478,838 shares
were outstanding and (iii) 1,415,000 shares of 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 outstanding. In addition,
as of December 31, 1994, the Fleet Board had established a series of 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 of which no shares were outstanding. As of
December 31, 1994, Fleet also had authorized 1,500,000 shares of a separate
class of 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
outstanding as of December 31, 1994. Each such outstanding series and class is
described below under "-- Existing Preferred Stock".
Prior to the consummation of the Merger, and subject to the approval of
holders of Fleet Common Stock sought herein, the Fleet Existing Articles will be
amended and restated as the Fleet New Articles which will (i) increase the
authorized shares of Fleet Common Stock from 300,000,000 to 600,000,000, (ii) to
change the par value of the Fleet Common Stock from $1.00 to $0.01 and (iii)
delete therefrom the terms of the Fleet $20 Par Adjustable Rate Preferred Stock
and certain series of the Fleet $1 Par Preferred Stock, all of which have been
redeemed or converted in full. See "-- Description of Fleet New Preferred Stock
and Fleet New Depositary Shares".
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island law and the Fleet
Existing 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 Fleet Board out of any funds legally
available therefor, and are entitled upon liquidation, after claims of creditors
and preferences of the Existing Preferred Stock, the Fleet New 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 Existing Preferred
Stock, the Fleet New Preferred Stock or any other series of preferred stock at
the time outstanding, for the then-current period and, in the case of cumulative
Existing Preferred Stock, the Fleet New Preferred Stock or any other series of
preferred stock at the time outstanding, all prior periods have been paid or
provided for.
The Fleet Existing Preferred Stock, the Fleet New Preferred Stock and any
other class of 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 Fleet Board.
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 Fleet Board
has provided with respect to the Existing Preferred Stock, the Fleet New
Preferred Stock or may provide, in the future, with respect to any other series
of preferred stock
97
<PAGE> 109
which it may hereafter authorize. The Fleet Common Stock does not have
cumulative voting rights. See "-- Existing Preferred Stock" and "-- Description
of Fleet New Preferred Stock and Fleet New Depositary Shares". 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 (as hereinafter defined) between Fleet and/or its subsidiaries and
persons owning 10% or more of its voting stock. See "-- Selected Provisions in
the Fleet Existing Articles and Fleet New Articles -- 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 holders of
Shawmut Common Stock 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 Fleet Board
declared a dividend of one Fleet 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 Fleet 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
Fleet Right with each share of Fleet Common Stock; accordingly, each holder of
Shawmut Common Stock who receives Fleet Common Stock upon consummation of the
Merger shall automatically receive one Fleet 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 Bank-RI, 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 and a Third
Amendment to Rights Agreement dated February 20, 1995, a copy of which was filed
as an exhibit to Fleet's Form 8-A/A dated March 17, 1995 (as amended, the "Fleet
Rights Agreement").
The Fleet 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 Fleet 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
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<PAGE> 110
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 Fleet Board prior to such
time as any person 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 Fleet 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 Fleet Board 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 Fleet Rights Agreement was further amended on February 20, 1995 to permit
the execution and delivery of the Merger Agreement and the Option Agreements.
The Fleet Rights will first become exercisable on the Distribution Date and
could then begin trading separately from the Fleet Common Stock. The Fleet
Rights will expire on the earliest of November 21, 2000 (the "Final Expiration
Date"), the date on which the Fleet Rights are earlier redeemed by Fleet or the
date on which the Fleet Rights are exchanged (such earliest date being referred
to as the "Expiration Date").
In the event any person becomes an Acquiring Person, the Fleet 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 Fleet Board may, at its option and in lieu of any
transaction described in the preceding sentence, exchange the outstanding and
exercisable Fleet Rights (other than Fleet 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
Fleet Right, subject to certain adjustments.
In any merger or consolidation involving Fleet after the Fleet Rights
become exercisable, each Fleet 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 Fleet Board may amend the Fleet Rights Agreement or redeem the Fleet
Rights for $.01 each at any time until the date of a public announcement by
Fleet that there is an Acquiring Person. Thereafter, the Fleet Board may amend
the Fleet Rights Agreement only to eliminate ambiguities or to provide
additional benefits to, and if the amendment would not adversely affect, the
holders of the Fleet Rights (other than the Acquiring Person).
Until a Fleet 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 Fleet
Rights, and the number of outstanding Fleet Rights, are subject to customary
antidilution adjustments.
The Fleet Rights have certain "anti-takeover" effects. The Fleet Rights may
cause substantial dilution to a person or group that attempts to acquire Fleet
on terms not approved by the Fleet Board, except pursuant to an offer
conditioned on a substantial number of Fleet Rights being acquired. The Fleet
Rights should not interfere with any merger or other business combination
approved by the Fleet Board prior to the time that there is an Acquiring Person
(at which time holders of the Rights become entitled to exercise their Fleet
Rights for shares of Fleet Common Stock at one-half the market price), since
until such time the Fleet Rights generally may be redeemed by the Fleet Board at
$.01 per Fleet Right.
Existing Warrants. Fleet currently has outstanding warrants to issue
2,502,773 shares of Fleet Common Stock which were issued in connection with the
NBB Merger (the "NBB Warrants"). The NBB Warrants are
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<PAGE> 111
exercisable at any time beginning January 27, 1996 and ending January 26, 2001
at an exercise price of $43.875 per NBB Warrant, and are subject to customary
anti-dilution provisions.
Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Fleet Common Stock is Fleet-RI.
EXISTING 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 Fleet
Board.
The Fleet New Preferred Stock will be issued as a series of the Fleet $1
Par Preferred Stock.
As of the date of this Joint Proxy Statement-Prospectus, Fleet has three
series of Fleet $1 Par Preferred Stock outstanding, and one series designated
but unissued.
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. So long as any shares of the Series III Preferred are outstanding, Fleet
may not redeem, repurchase or otherwise acquire any shares of the Fleet Common
Stock or any other class of Fleet preferred stock ranking junior to or on a
parity with the Series III Preferred either as to dividends or upon liquidation
unless full cumulative dividends on all outstanding shares of Series III
Preferred are paid for all past dividend payment periods. Further, if any
dividends on the Series III Preferred are in arrears, Fleet may not redeem,
purchase or otherwise acquire any shares of the Series III Preferred unless all
outstanding shares of such class are simultaneously redeemed, purchased or
otherwise acquired, except pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding shares of the Series III Preferred.
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.
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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 Existing Articles (or any certificate supplemental thereto) which will
adversely affect the powers, preferences, privileges or rights of the Series III
Preferred. 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. So long as any shares of the
Series IV Preferred are outstanding, Fleet may not redeem, repurchase or
otherwise acquire any shares of the Fleet Common Stock or any other class of
Fleet preferred stock ranking junior to or on a parity with the Series IV
Preferred either as to dividends or upon liquidation unless full cumulative
dividends on all outstanding shares of Series IV Preferred are paid for all past
dividend payment periods. Further, if any dividends on the Series IV Preferred
are in arrears, Fleet may not redeem, purchase or otherwise acquire any shares
of the Series IV Preferred unless all outstanding shares of such class are
simultaneously redeemed, purchased or otherwise acquired, except pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of the Series IV Preferred.
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 Existing 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
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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
the Fleet Board 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
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 the Fleet
Existing 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. So long as any shares of
the Dual Convertible Preferred Stock are outstanding, Fleet may not make any
payment on account of, or set apart for payment money for a sinking or other
similar fund for, the repurchase, redemption or other retirement of any class or
series of stock ranking junior to or on a parity with the Dual Convertible
Preferred Stock either as to dividends or upon liquidation unless prior to or
concurrently with such declaration, payment, setting apart for payment,
repurchase, redemption or other retirement or distribution, as the case may be,
all accrued and unpaid dividends on shares of the Dual Convertible Preferred
Stock shall have been or be paid.
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
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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 Joint Proxy Statement-Prospectus, there were 1,500,000 shares of Fleet
$1 Par Preferred Stock reserved for issuance upon the exercise of the Fleet
Rights. See "-- Fleet Common Stock -- Preferred Share Purchase Rights". Shares
of Junior Preferred Stock purchasable upon exercise of the Fleet Rights will
rank junior to the Fleet $1 Par Preferred Stock and the Fleet New 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.
DESCRIPTION OF FLEET NEW PREFERRED STOCK AND FLEET NEW DEPOSITARY SHARES
Fleet New Preferred Stock. The following is a brief description of the
Fleet New Preferred Stock. The Fleet New Preferred Stock has preference over the
Fleet Common Stock with respect to the payment of dividends and the distribution
of assets in the event of liquidation, winding up or dissolution of Fleet. The
Fleet New Preferred Stock will be issued as a series of Fleet $1 Par Preferred
Stock.
Fleet Adjustable Preferred. Dividends on the outstanding Fleet Adjustable
Preferred are cumulative. The dividend rate on the Fleet Adjustable Preferred is
established quarterly at the rate of 2.25% below the highest of (a) the
three-month U.S. Treasury bill rate, (b) the U.S. Treasury ten-year constant
maturity rate and (c) the U.S. Treasury twenty-year constant maturity rate, in
each case as defined in the terms of the Fleet Adjustable Preferred, but may not
be less than 6% per annum or greater than 12% per annum. So long as any shares
of the Fleet Adjustable Preferred are outstanding, Fleet may not redeem,
repurchase or otherwise acquire any shares of the Fleet Common Stock or any
other class of Fleet stock ranking junior to or on a parity with the Fleet
Adjustable Preferred either as to dividends or upon liquidation unless full
cumulative dividends on all outstanding shares of Fleet Adjustable Preferred are
paid for all past dividend payment periods. Further, if any dividends on the
Fleet Adjustable Preferred are in arrears, Fleet may not redeem, purchase or
otherwise acquire any shares of the Fleet Adjustable Preferred unless all
outstanding shares of such class are simultaneously redeemed, purchased or
otherwise acquired, except pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding shares of the Fleet Adjustable
Preferred.
Except as indicated below or except as expressly required by applicable
law, the holders of the Fleet Adjustable Preferred are not entitled to vote. If
the equivalent of six quarterly dividends payable on the Fleet Adjustable
Preferred are in default, the number of directors of Fleet will be increased by
two and the holders
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of all outstanding classes and series of Fleet preferred stock, voting as a
single class without regard to series, will be entitled to elect two additional
directors until all accrued dividends have been paid. In addition, the vote of
the holders of two-thirds of the Fleet Adjustable Preferred voting as a separate
class, is required in order to amend or alter the Fleet New Articles in a manner
which would adversely affect the preferences, rights, powers or privileges of
the Fleet Adjustable Preferred; and the vote of two-thirds of the Fleet
Adjustable Preferred, and all of the classes and series of Fleet preferred stock
ranking on a parity, either as to dividends or upon liquidation, with the Fleet
Adjustable Preferred, voting together as a single class, is required in order to
reclassify stock of Fleet into stock ranking prior, either as to dividends or
upon liquidation, to the Fleet Adjustable Preferred, or to authorize the
creation or issuance of stock, or of a security convertible into or evidencing a
right to purchase stock, ranking prior, either as to dividends or upon
liquidation, to the Fleet Adjustable Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the Fleet Adjustable Preferred are entitled to receive $50.00 per
share plus accrued and unpaid dividends.
Shares of Fleet Adjustable Preferred may be redeemed at the option of Fleet
at a redemption price per share of $50.00 per share, plus accrued and unpaid
dividends.
Fleet 9.30% Preferred. Dividends on the outstanding Fleet 9.30% Preferred
are cumulative and are payable quarterly at the rate of 9.30% per annum. So long
as any shares of the Fleet 9.30% Preferred are outstanding, Fleet may not
redeem, repurchase or otherwise acquire any shares of the Fleet Common Stock or
any other class of Fleet stock ranking junior to or on a parity with the Fleet
9.30% Preferred either as to dividends or upon liquidation unless full
cumulative dividends on all outstanding shares of Fleet 9.30% Preferred are paid
for all past dividend payment periods. Further, if any dividends on the Fleet
9.30% Preferred are in arrears, Fleet may not redeem, purchase or otherwise
acquire any shares of the Fleet 9.30% Preferred unless all outstanding shares of
such class are simultaneously redeemed, purchased or otherwise acquired, except
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of the Fleet 9.30% Preferred.
Except as indicated below or except as expressly required by applicable
law, the holders of the Fleet 9.30% Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on any of the Fleet 9.30%
Preferred are in default, the number of directors of Fleet will be increased by
two and the holders of all outstanding classes and series of Fleet preferred
stock, voting as a single class without regard to series, will be entitled to
elect two additional directors until all accrued dividends have been paid. In
addition, the vote of the holders of two-thirds of the Fleet 9.30% Preferred,
voting as a separate class, is required in order to amend or alter the Fleet New
Articles in a manner which would adversely affect the preferences, rights,
powers or privileges of the Fleet 9.30% Preferred; and the vote of two-thirds of
the Fleet 9.30% Preferred, and all of the classes and series of Fleet preferred
stock ranking on a parity, either as to dividends or upon liquidation, with the
Fleet 9.30% Preferred, voting together as a single class, is required in order
to reclassify stock of Fleet into stock ranking prior, either as to dividends or
upon liquidation, to the Fleet 9.30% Preferred, or to authorize the creation or
issuance of stock, or of a security convertible into or evidencing a right to
purchase stock, ranking prior, either as to dividends or upon liquidation, to
the Fleet 9.30% Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the Fleet 9.30% Preferred are entitled to receive $250.00 per share
plus accrued and unpaid dividends.
The Fleet 9.30% Preferred is redeemable on at least 30 but not more than 60
days notice, at the option of Fleet, as a whole or in part, at any time on and
after October 15, 1997 at a redemption price equal to $250 per share plus
accrued and unpaid dividends.
Fleet 9.35% Preferred. Dividends on the outstanding Fleet 9.35% Preferred
are cumulative and are payable quarterly at the rate of 9.35% per annum. So long
as any shares of the Fleet 9.35% Preferred are outstanding, Fleet may not
redeem, repurchase or otherwise acquire any shares of the Fleet Common Stock or
any other class of Fleet stock ranking junior to or on a parity with the Fleet
9.35% Preferred either as to dividends or upon liquidation unless full
cumulative dividends on all outstanding shares of Fleet 9.35% Preferred are paid
for all past dividend payment periods. Further, if any dividends on the Fleet
9.35% Preferred
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are in arrears, Fleet may not redeem, purchase or otherwise acquire any shares
of the Fleet 9.35% Preferred unless all outstanding shares of such class are
simultaneously redeemed, purchased or otherwise acquired, except pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of the Fleet 9.35% Preferred.
Except as indicated below or except as expressly required by applicable
law, the holders of the Fleet 9.35% Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on any of the Fleet 9.35%
Preferred are in default, the number of directors of Fleet will be increased by
two and the holders of all outstanding classes and series of Fleet preferred
stock, voting as a single class without regard to series, will be entitled to
elect two additional directors until all accrued dividends have been paid. In
addition, the vote of the holders of two-thirds of the Fleet 9.35% Preferred,
voting as a separate class, is required in order to amend or alter the Fleet New
Articles in a manner which would adversely affect the preferences, rights,
powers or privileges of the Fleet 9.35% Preferred; and the vote of two-thirds of
the Fleet 9.35% Preferred, and all of the classes and series of Fleet preferred
stock ranking on a parity, either as to dividends or upon liquidation, with the
Fleet 9.35% Preferred, voting together as a single class, is required in order
to reclassify stock of Fleet into stock ranking prior, either as to dividends or
upon liquidation, to the Fleet 9.35% Preferred, or to authorize the creation or
issuance of stock, or of a security convertible into or evidencing a right to
purchase stock, ranking prior, either as to dividends or upon liquidation, to
the Fleet 9.35% Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the Fleet 9.35% Preferred are entitled to receive $250.00 per share
plus accrued and unpaid dividends.
The Fleet 9.35% Preferred is redeemable on at least 30 but not more than 60
days notice, at the option of Fleet, as a whole or in part, at any time on and
after January 15, 2000 at a redemption price equal to $250 per share plus
accrued and unpaid dividends.
Fleet New Depositary Shares. The shares of the Fleet 9.30% Preferred are
represented by the Fleet 9.30% Depositary Shares. Each Fleet 9.30% Depositary
Share represents a one-tenth interest in a share of Fleet 9.30% Preferred and is
not subject to any mandatory redemption or sinking fund provisions. The shares
of the Fleet 9.35% Preferred are represented by the Fleet 9.35% Depository
Shares. Each Fleet 9.35% Depositary Share represents a one-tenth interest in a
share of Fleet 9.35% Preferred and is not subject to any mandatory redemption or
sinking fund provisions. Fleet has agreed to use its best efforts to list the
Fleet New Depositary Shares on the Stock Exchange, subject to official notice of
issuance. The Fleet New Depositary Shares will be freely transferable under the
Securities Act, subject to the restrictions discussed under "THE
MERGER -- Resales of Fleet Common Stock, Fleet New Preferred Stock, Fleet New
Depositary Shares and Fleet Warrants Received in the Merger".
Each series of the Fleet New Depositary Shares will be deposited under a
Deposit Agreement (the "Deposit Agreements") between Fleet and Fleet-RI, as
depositary (the "Depositary"). Subject to the terms of each Deposit Agreement,
each owner of a Fleet New Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Fleet New Preferred Stock represented by
such Fleet New Depositary Share, to all the rights and preferences of the Fleet
New Preferred Stock represented thereby (including dividend, voting, redemption
and liquidation rights).
The Fleet New Depositary Shares will be evidenced by depositary receipts
issued pursuant to the applicable Deposit Agreement ("Depositary Receipts").
Upon consummation of the Merger and return of a properly completed transmittal
letter, Depositary Receipts will be distributed by the Exchange Agent in
exchange for Depositary Receipts representing Shawmut Depositary Shares. Copies
of the forms of Deposit Agreements and Depositary Receipts are filed as exhibits
to the Registration Statement of which this Joint Proxy Statement-Prospectus is
a part and the following summary is qualified in its entirety by reference to
such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of Fleet, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive
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Depositary Receipts will be prepared thereafter without unreasonable delay, and
temporary Depositary Receipts will be exchangeable for definitive Depositary
Receipts at Fleet's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Fleet New
Preferred Stock to the record holders of Fleet New Depositary Shares relating to
such Fleet New Preferred Stock in proportion to the numbers of such Fleet New
Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Fleet New Depositary
Shares entitled thereto, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may, with
Fleet's approval, sell such property and distribute the net proceeds from such
sale to such holders.
REDEMPTION OF FLEET NEW DEPOSITARY SHARES. If a series of Fleet New
Preferred Stock represented by Fleet New Depositary Shares is subject to
redemption, the Fleet New Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of Fleet New Preferred Stock held by the Depositary. The
redemption price per Fleet New Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Fleet New Preferred Stock. Whenever Fleet redeems shares of Fleet New
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Fleet New Depositary Shares representing
shares of Fleet New Preferred Stock so redeemed. If fewer than all the Fleet New
Depositary Shares are to be redeemed, the Fleet New Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Depositary.
VOTING THE FLEET NEW PREFERRED STOCK. Upon receipt of notice of any
meeting at which the holders of the Fleet New Preferred Stock are entitled to
vote, the Depositary will mail the information contained in such notice of
meeting to the record holders of the Fleet New Depositary Shares relating to
each Fleet New Preferred Stock. Each record holder of such Fleet New Depositary
Shares on the record date (which will be the same date as the record date for
the Fleet New Preferred Stock) will be entitled to instruct the Depositary as to
the exercise of the voting rights pertaining to the amount of the Fleet New
Preferred Stock represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the amount of the Fleet New
Preferred Stock represented by such Fleet New Depositary Shares in accordance
with such instructions, and Fleet will agree to take all action which may be
deemed necessary by the Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting shares of the Fleet New Preferred Stock
to the extent it does not receive specific instructions from the holder of Fleet
New Depositary Shares representing such Fleet New Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT. The form of the
applicable Depositary Receipts evidencing the Fleet New Depositary Shares and
any provision of either Deposit Agreement may at any time be amended by
agreement between Fleet and the Depositary. However, any amendment which
materially and adversely alters the rights of the holders of a respective series
of Fleet New Depositary Shares will not be effective unless such amendment has
been approved by the holders of at least a majority of such Fleet New Depositary
Shares then outstanding. Each Deposit Agreement will only terminate if (i) all
outstanding applicable Fleet New Depositary Shares have been redeemed or (ii)
there has been a final distribution in respect of the applicable Fleet New
Preferred Stock in connection with any liquidation, dissolution or winding up of
Fleet and such distribution has been distributed to the holders of the
applicable Depositary Receipts.
CHARGES OF DEPOSITARY. Fleet will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. Fleet will pay charges of the Depositary in connection with the
initial deposit of the Fleet New Preferred Stock and any redemption of the Fleet
New Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
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MISCELLANEOUS. The Depositary will forward all reports and communications
from Fleet which are delivered to the Depositary and which Fleet is required or
otherwise determines to furnish to the holders of the Fleet New Preferred Stock.
Neither the Depositary nor Fleet will be liable if it is prevented or
delayed by law or any circumstances beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Fleet and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Fleet New Depositary Shares or
Fleet New Preferred Stock unless satisfactory indemnity is furnished. Fleet and
the Depositary may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting Fleet New Preferred Stock for
deposit, holders of Fleet New Depositary Receipts or other persons believed to
be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may resign at any
time by delivering to Fleet notice of its election to do so, and Fleet may at
any time remove the Depositary, any such resignation or removal to take effect
upon the appointment of a successor Depositary and its acceptance of such
appointment. Such successor Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
DESCRIPTION OF FLEET WARRANTS
At the Effective Time, the Shawmut Warrants will be converted based on the
Common Exchange Ratio automatically into the Fleet Warrants, which will be
issued under a Warrant Agreement between Fleet and Fleet-RI, as Warrant Agent,
to be dated as of the Effective Time ("the "Warrant Agreement"), a copy of which
is filed as an exhibit to the Registration Statement of which this Joint Proxy
Statement-Prospectus is a part. The following is a general description of the
terms and conditions of the Fleet Warrants and Warrant Agreement and is
qualified in its entirety by reference to the provisions of the Fleet Warrants
and the Warrant Agreement.
The Warrant Agreement provides for the issuance of 1,185,836 Fleet
Warrants, each representing initially the right to acquire upon exercise one
share of Fleet Common Stock at an Exercise Price of $24.78 per Fleet Warrant
(the "Exercise Price"), subject to certain adjustments described below. The
Fleet Warrants are exercisable for a period commencing on the Effective Time and
ending at 5:00 p.m., New York City time, on January 18, 1996.
The Exercise Price and/or the securities issuable upon exercise are subject
to adjustment as set forth in the Warrant Agreement to account for payment by
Fleet of stock dividends payable in shares of Fleet Common Stock, subdivisions,
combinations and reclassifications of the Fleet Common Stock into a greater or
lesser number of shares, mergers or consolidations of Fleet with or into another
company, and the acquisition of all the outstanding Fleet Common Stock by any
person or company. The Fleet Warrants permit Fleet to make additional reductions
in the Exercise Price in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients. The Warrant Agreement provides that upon any adjustment to the
Exercise Price, as provided therein, Fleet will cause a notice to be given to
the holders of the Fleet Warrants of such adjustment.
Subject to the terms of the Warrant Agreement, a Fleet Warrant may be
exercised upon surrender of the Warrant Certificate evidencing such Warrant (the
"Warrant Certificate") to Fleet-RI, as Warrant Agent, with the subscription form
on the reverse of such Warrant Certificate duly executed and the signatures
thereon guaranteed, accompanied by payment of the Exercise Price by certified or
official bank check made payable to the Warrant Agent 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
Fleet Warrant may only be exercised in whole.
No fractional shares of Fleet Common Stock, cash or other consideration in
lieu thereof, will be issued. In the case of the exercise of less than all the
Fleet Warrants represented by a Warrant Certificate, Fleet will
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execute, and the Warrant Agent will authenticate, a new Warrant Certificate for
the balance of such Fleet Warrants.
Fleet intends to use its best efforts to list the Fleet Warrants on the
Stock Exchange, subject to official notice of issuance. The Fleet Warrants will
be freely transferable under the Securities Act, subject to the restrictions
discussed under "THE MERGER -- Resales of Fleet Common Stock, Fleet New
Preferred Stock, Fleet New Depositary Shares and Fleet Warrants Received in the
Merger".
SELECTED PROVISIONS IN THE FLEET EXISTING ARTICLES AND THE FLEET NEW ARTICLES
Business Combinations with Related Persons. The Fleet Existing Articles
require that neither Fleet nor any of its subsidiaries may engage in a Business
Combination (as hereinafter defined) with a Related Person (as hereinafter
defined) unless such Business Combination (a) was approved by an 80% vote of the
Fleet Board 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 Fleet
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 Existing 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 Fleet Board 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 Fleet Board; and the
"Continuing Directors" are those individuals who were members of the Fleet Board
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 Fleet Board, 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 Fleet Board and not less
than 80% of the Continuing Directors, in which event only the vote provided
under Rhode Island law is required. The Fleet New Articles will contain
identical provisions. Because, among other things, the Merger was unanimously
approved by the Fleet Board, the Merger would not trigger these provisions of
the Fleet Existing Articles.
Directors. The Fleet Existing Articles contain a number of additional
provisions which are intended to delay an insurgent's ability to take control of
the Fleet Board, even after an insurgent has obtained majority ownership of the
Fleet Common Stock. The Fleet Existing 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 Fleet Board as constituted at that time. Vacancies on the Fleet
Board, whether due to resignation, death, incapacity or an increase in the
number of directors, may only be filled by the Fleet Board, acting by a vote of
80% of the directors then in office. The Fleet Existing 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
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Fleet Board shall be 13, unless otherwise determined by resolution adopted by a
super majority vote (80%) of the Fleet Board and a majority of the Continuing
Directors. Pursuant to such an adopted resolution, the number of directors that
may serve is currently fixed at 15, 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 Fleet Board and a majority of
the Continuing Directors. At the Effective Time of the Merger, the Fleet Board
will be constituted at 20 members. A super majority vote (80%) of the Fleet
Board, 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. The Fleet
New Articles will contain identical provisions.
COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
Fleet and Shawmut are incorporated in Rhode Island and Delaware,
respectively. Stockholders of Shawmut receiving Fleet Common Stock in connection
with the Merger, whose rights as stockholders are currently governed by the
Delaware General Corporation Law ("Delaware law"), Shawmut's Restated
Certificate of Incorporation (the "Shawmut Certificate"), and Shawmut's by-laws
(the "Shawmut 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 Existing Articles (or the Fleet New Articles if adopted) and
Fleet's by-laws (the "Fleet By-laws"). The following is a summary of the
material differences between the rights of holders of Fleet Common Stock and
those of Shawmut Common Stock. The following does not purport to be a complete
description of the differences between the rights of Fleet and Shawmut
stockholders. Such differences may be determined in full by reference to Rhode
Island law, Delaware law, the Fleet Existing Articles, the Fleet New Articles,
the Shawmut Certificate, the Fleet By-laws and the Shawmut By-laws.
VOTING RIGHTS
Required Vote For Certain Business Combinations. Both Rhode Island law 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 by statute. 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.
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 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.
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
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convertible does not exceed 20% of the surviving corporation's common stock
outstanding immediately prior to the effective date of 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 Shawmut.
As more fully described above, the Fleet Existing Articles contain, and the
Fleet New Articles will contain, certain provisions regarding business
combinations with certain persons. See "DESCRIPTION OF FLEET CAPITAL STOCK,
FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY SHARES AND FLEET
WARRANTS -- Selected Provisions in the Fleet Existing Articles and the Fleet New
Articles".
The Shawmut Certificate provides that any "Business Combination" involving
Shawmut and a person who beneficially owns 10% or more of Shawmut's outstanding
voting stock or certain affiliates or associates of Shawmut who beneficially
owned, at any time within the 2-year period prior to the date in question, 10%
or more of Shawmut's outstanding voting stock (a "Shawmut Related Person") must
be approved by the holders of at least 80% of the votes entitled to be cast by
the holders of the outstanding shares of Shawmut voting stock (the "Shawmut
Voting Requirement") voting together as a single class. The Shawmut Voting
Requirement does not apply if (i) the Business Combination is approved by a
majority of the "Shawmut Continuing Directors" (defined generally to include any
person who is unaffiliated with, and not a representative of, the Shawmut
Related Person in the Business Combination and who either was a director
immediately prior to the time the Shawmut Related Person became such a person or
was recommended or elected to succeed such a Shawmut Continuing Director by a
majority of the Shawmut Continuing Directors); or (ii) certain "fair price"
(defined generally to mean that the consideration to be received by stockholders
in such Business Combination shall be at least equal to the higher of, and in
the same form as, the consideration paid by the Shawmut Related Person for such
person's acquisition of the applicable Shawmut capital stock within the two year
period immediately prior to the first public announcement of the proposal of the
Business Combination or in the transaction in which such person became a Shawmut
Related Person) and other criteria are met. As defined in the Shawmut
Certificate, a "Business Combination" includes, among other things: (i) any
merger or consolidation of Shawmut or any Shawmut subsidiary with any Shawmut
Related Person or affiliate or associate thereof; (ii) the sale, lease,
exchange, mortgage, pledge, transfer or other disposition by Shawmut of assets
or securities having a fair market value equal to 10% or more of the total
shareholders' equity of Shawmut ("Substantial Assets") to a Shawmut Related
Person or an affiliate or associate thereof; (iii) the acquisition by Shawmut of
Substantial Assets from a Shawmut Related Person or an affiliate or associate
thereof; (iv) the adoption of a plan or proposal for the liquidation or
dissolution of Shawmut proposed by or on behalf of a Shawmut Related Person or
an affiliate or associate thereof; (v) any transaction that has the effect of
increasing the proportionate share of any class of equity or convertible
security of Shawmut or any subsidiary that is beneficially owned by a Shawmut
Related Person or any affiliate or associate thereof; and (vi) any agreement or
arrangement providing for any of the foregoing. This provision of the Shawmut
Certificate can only be amended or repealed upon the affirmative vote by the
holders of at least 80% of the voting stock entitled to vote, voting together as
a single class, unless such amendment or repeal is unanimously recommended by
the Shawmut Board and all of such directors are Shawmut Continuing Directors.
Charter and By-Law Amendments. Both Delaware law and Rhode Island law
generally provide that an amendment to a corporate charter requires (i) that the
board of directors adopt a resolution submitting the proposed amendment to the
shareholders and (ii) the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon. Both Delaware law 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. 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. 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. Under both
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Delaware law and Rhode Island law, the board of directors' authority to adopt,
amend or repeal the by-laws of a corporation, if provided for in the articles of
incorporation, does not divest or limit the power of stockholders to adopt,
amend or repeal by-laws; Rhode Island law specifically provides that 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 Fleet Existing Articles provide, and the Fleet New Articles will
provide, that any amendment, alteration, change or repeal of the provisions in
such charter relating to (i) directors and business combinations requires the
affirmative vote of 80% of the Fleet Board and a majority of the Continuing
Directors and the affirmative vote of 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; and (ii) the provisions in the Fleet
Existing Articles or the Fleet New Articles governing the amendment of such
articles require the affirmative vote of 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 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 Fleet Board and a majority of the
Continuing Directors or by an affirmative vote of the holders of at least 50% of
the Fleet Common Stock entitled to vote thereon.
The Shawmut Certificate provides that the amendment, repeal or adoption of
any provisions inconsistent with the provisions of the Shawmut Certificate
relating to business combinations shall require the affirmative vote of at least
80% of the votes entitled to be cast by the holders of the outstanding shares of
voting stock, voting together as a single class, provided that no such
requirement shall apply to any amendment, repeal or adoption unanimously
recommended by the Shawmut Board if all such directors are persons who would be
eligible to serve as Shawmut Continuing Directors. Any repeal or modification by
the stockholders of Shawmut relating to the provisions regarding the management
of the business shall not adversely affect any right or protection of a director
of Shawmut existing at the time of such repeal or modification with respect to
acts or omissions occurring prior to such repeal or modification.
The Shawmut Certificate further provides that directors shall have
concurrent power with the stockholders to make, alter, amend, change, add to or
repeal the Shawmut By-Laws. Any action by stockholders to effect such
alteration, change, addition or appeal requires the affirmative vote of a
majority of the shares represented and entitled to vote at the meeting at which
the action is to be taken. The Shawmut Certificate further provides that notice
of any such action specifying or describing the same shall be contained in or
accompany the notice of the meeting at which the action is to be taken.
SPECIAL MEETINGS; CORPORATE ACTION WITHOUT A MEETING
Special Meetings. Rhode Island law provides that a special meeting of
stockholders may be called by the president, the board of directors or 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 Fleet Board pursuant
to a resolution adopted by the majority of the Fleet Board, or by the Chairman
of the Fleet 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.
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 Shawmut By-laws provide that special meetings may
be called by the Shawmut Board, the Chairman of the Shawmut Board or upon
written request of seven or more stockholders holding at least 30% of the
outstanding shares of Shawmut Common Stock.
Corporate Action Without a Meeting. 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 of a corporation
authorizes such action and the shareholders consenting to such action would be
entitled to cast, at
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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 Existing
Articles authorize, and the Fleet New Articles will 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 and provided that notice of such action is given to
all Fleet stockholders who would have been entitled to vote upon the action if
such meeting were held.
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 Shawmut Certificate does not provide otherwise.
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 charter permits 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.
APPRAISAL RIGHTS
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 Existing Articles nor will there be any
provisions in the Fleet New Articles providing for appraisal rights. Under Rhode
Island law, holders of Fleet capital stock do not have any appraisal rights in
connection with the Merger. See "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
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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 Shawmut Certificate
has no provisions for appraisal rights. Given that Shawmut Common Stock, Shawmut
9.30% Depositary Shares and Shawmut 9.35% Depositary Shares are listed on the
Stock Exchange and Shawmut stockholders will receive Fleet Common Stock or Fleet
Depositary Shares in the Merger, holders of Shawmut Common Stock, Shawmut 9.30%
Depositary Shares and Shawmut 9.35% Depositary Shares will not have appraisal
rights in connection with the Merger; however, the holders of the Shawmut
Adjustable Preferred, which is not listed on a national securities exchange nor
held by more than 2,000 holders of record, will have appraisal rights under
Delaware law. See "THE MERGER -- Appraisal Rights".
PROVISIONS RELATING TO DIRECTORS
Number of Directors. Under both Rhode Island law and Delaware law a
corporation must have a board of directors consisting of at least one director.
The Fleet Existing Articles provide that the Fleet Board shall consist of 13
members (exclusive of directors to be elected by holders of any one or more
series or classes of the Existing Preferred Stock voting separately as a class
or classes) unless otherwise determined from time to time by resolution adopted
by an affirmative vote of at least 80% of the Fleet Board and a majority of the
Continuing Directors. Pursuant to such an adopted resolution, the number of
directors that may serve is currently fixed at 15. As of the Effective Time of
the Merger, the Fleet Board will consist of 20 members (exclusive of directors
to be elected by holders of any one or more series or classes of the Existing
Preferred Stock and the Fleet New Preferred Stock voting separately as a class
or classes) unless otherwise determined from time to time by resolution adopted
by an affirmative vote of at least 80% of the Fleet Board and a majority of the
Continuing Directors. The Shawmut By-laws provide for not less than three
directors. The Shawmut By-laws also provide that the majority of directors then
in office may, between annual meetings of stockholders, increase the membership
of the Shawmut Board by up to eight members. Shawmut currently has 12 directors.
Vacancies. The Fleet Existing Articles provide that vacancies in the Fleet
Board may be filled only by the vote of 80% of the directors then in office. The
Shawmut By-laws provide that vacancies may be filled by a majority of the
directors then in office.
Classification. Rhode Island law 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 Fleet's
Existing Articles and Fleet By-laws provide, and the Fleet New Articles will
provide, for classification of the Fleet Board into three classes as nearly
equal in number as possible, with one class being elected annually. Neither the
Shawmut Certificate nor the Shawmut By-laws provides for such classification of
directors.
Stockholder Nominations. The holders of Fleet Common Stock may nominate
individuals for election to the Fleet Board. 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 Fleet Board, 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 require that a
stockholder's notice to nominate an individual to the Fleet Board include
certain information about the nominee, including the information required to be
disclosed in solicitations for proxies for election of directors pursuant to
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Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected), along with the name, address, class and number of shares of Fleet
beneficially owned by the stockholder giving such notice and by other
stockholders known by such stockholder to be supporting such nominees on the
date of such stockholder's notice.
The Shawmut By-laws establish procedures that must be followed for
stockholders to nominate individuals to the Shawmut Board at the annual meeting
of stockholders. In order to properly propose that certain business come before
the annual meeting of stockholders, a stockholder must provide timely notice in
writing to the Secretary of Shawmut, which notice must include a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, and must
otherwise comply with the notice requirements. In order to nominate individuals
to the Shawmut Board, a stockholder must provide timely notice of such
nomination in writing to the Secretary of Shawmut and a written statement by the
candidate of his or her willingness to serve. To be timely, notice must be
delivered to and received by Shawmut not less than 50 nor more than 75 days
prior to the meeting at which directors are to be elected, or, if Shawmut gives
less than 65 days' notice of the meeting, then notice by the stockholder must be
received by the close of business on the 15th day following the earlier of the
date notice of the meeting was mailed or public disclosure of the meeting was
made. Such notice to nominate an individual to the Shawmut Board must include
certain information about the nominee, including the information required to be
disclosed in solicitations for proxies for election of directors pursuant to
Regulation 14A under the Exchange Act.
Removal. 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 Existing Articles
(which are identical in the Fleet New Articles), see "DESCRIPTION OF FLEET
CAPITAL STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY SHARES AND FLEET
WARRANTS -- Selected Provisions in the Fleet Existing Articles and the Fleet New
Articles".
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. The Shawmut Certificate does not contain
any provisions regarding removal of directors other than the provision stating
that any Shawmut Preferred Director may be removed by, and shall not be removed
except by, the vote of the holders of record of the outstanding shares of
Shawmut Preferred Stock, voting as a class.
DERIVATIVE SUITS
Under both Rhode Island law and Delaware law, stockholders may bring suits
on behalf of the corporation to enforce the rights of a corporation. Under both
Rhode Island law 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.
In addition, 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.
STATE ANTI-TAKEOVER STATUTES
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
114
<PAGE> 126
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 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 the 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 Existing Articles,
the Fleet New Articles nor the original Fleet charter contain any provisions
expressly relating to the non-applicability of the statute.
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
115
<PAGE> 127
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 Shawmut Certificate nor the
Shawmut 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".
Material Differences in Rights Agreements. The material differences
between the Fleet Rights Agreement (which is summarized in "DESCRIPTION OF FLEET
CAPITAL STOCK, FLEET NEW PREFERRED STOCK, FLEET NEW DEPOSITARY SHARES AND FLEET
WARRANTS"), and the Shawmut Rights Agreement (a description of which is
incorporated herein by reference under "INFORMATION INCORPORATED BY REFERENCE"),
relate to the stock ownership thresholds and other conditions which would cause
the rights issued under the respective rights agreement to separate from the
common stock certificates to which such rights are attached and become
exercisable.
In particular, the stock ownership thresholds under which the rights become
exercisable are lower under the Fleet Rights Agreement than under the Shawmut
Rights Agreement. Moreover, under the Shawmut Rights Agreement, but not the
Fleets Rights Agreement, the rights become exercisable 10 business days after
the Shawmut Board deems that, with respect to any person who has become the
beneficial owner of 10% or more of the outstanding Shawmut Common Stock (x) such
beneficial ownership by such person is intended to cause Shawmut to repurchase
the Shawmut stock owned by such person (or enter into other transactions
intended to provide such person with financial gain) under circumstances where
the Shawmut Board determines that the best interests of Shawmut would not be
served by taking such action or (y) such beneficial ownership is causing or is
reasonably likely to cause a material adverse impact on the business or
prospects of Shawmut.
COMPARATIVE COMMON 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 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..................................... $18.00 $ 9.625 $.20
Second Quarter.................................... 25.875 15.50 .20
Third Quarter..................................... 26.25 21.50 .20
Fourth Quarter.................................... 25.50 20.125 .20
</TABLE>
116
<PAGE> 128
<TABLE>
<CAPTION>
PRICE CASH
------------------- DIVIDENDS
YEAR HIGH LOW DECLARED
---------------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
1992
First Quarter..................................... $ 30.75 $ 24.25 $ .20
Second Quarter.................................... 31.00 26.75 .20
Third Quarter..................................... 30.875 25.75 .20
Fourth Quarter.................................... 33.875 27.50 .225
1993
First Quarter..................................... $ 37.875 $30.25 $ .225
Second Quarter.................................... 37.625 28.25 .25
Third Quarter..................................... 35.50 30.375 .25
Fourth Quarter.................................... 35.625 29.50 .30
1994
First Quarter..................................... $ 38.00 $ 31.75 $ .30
Second Quarter.................................... 41.375 34.375 .35
Third Quarter..................................... 40.50 34.875 .35
Fourth Quarter.................................... 37.875 29.875 .40
1995
First Quarter..................................... $ 35.125 $29.875 .40
Second Quarter (through May 3, 1995).............. .40
</TABLE>
Shawmut. Shawmut Common Stock is listed on the Stock Exchange under the
symbol SNC. The following table sets forth the high and low sales prices for
Shawmut Common Stock as reported on the 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..................................... $ 7.625 $ 2.875 --
Second Quarter.................................... 7.25 4.125 --
Third Quarter..................................... 10.875 4.375 --
Fourth Quarter.................................... 10.25 7.25 --
1992
First Quarter..................................... $ 15.875 $ 8.875 --
Second Quarter.................................... 19.25 12.125 --
Third Quarter..................................... 18.75 13.375 --
Fourth Quarter.................................... 19.50 14.50 --
1993
First Quarter..................................... $ 23.875 $17.875 $.10
Second Quarter.................................... 25.125 19.50 .10
Third Quarter..................................... 26.375 22.50 .10
Fourth Quarter.................................... 25.125 19.375 .20
</TABLE>
117
<PAGE> 129
<TABLE>
<CAPTION>
PRICE CASH
------------------- DIVIDENDS
YEAR HIGH LOW DECLARED
---------------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
1994
First Quarter..................................... $ 24.00 $ 19.75 $ .20
Second Quarter.................................... 25.75 19.25 .20
Third Quarter..................................... 23.125 20.25 .20
Fourth Quarter.................................... 21.125 16.375 .22
1995
First Quarter..................................... $ 27.00 $ 16.50 $ .22
Second Quarter (through May 3, 1995)..............
</TABLE>
On May 3, 1995, the latest practicable trading day before the printing of
this Joint Proxy Statement-Prospectus, the closing sales price for Fleet Common
Stock as reported on the Stock Exchange Composite Tape was $ per share
and the closing sales price for Shawmut Common Stock as reported on the Stock
Exchange Composite Tape was $ per share. On February 17, 1995, 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 $33.625 per share, and the
closing sales price of Shawmut Common Stock as so reported was $20.625 per
share. On January 24, 1995, the closing sales price for Fleet Common Stock and
Shawmut Common Stock as so reported was $31.25 and $18.00, respectively.
Subsequent to January 24, 1995, an increase in the market price for the Shawmut
Common Stock occurred. Morgan Stanley believes that such increase was
attributable to merger speculation concerning a potential sale of Shawmut. See
"THE MERGER -- Fairness Opinions of Financial Advisors -- Shawmut."
EXPERTS
The consolidated financial statements of Fleet appearing in Fleet's 1994
Annual Report to Stockholders and incorporated by reference in Fleet's 1994
Annual Report on Form 10-K for the year ended December 31, 1994, 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 report of KPMG Peat Marwick LLP covering the December 31, 1994
financial statements refers to a change in the method of accounting for
investments.
The consolidated financial statements of Shawmut incorporated in this Joint
Proxy Statement-Prospectus by reference to Shawmut's Annual Report on Form 10-K
for the year ended December 31, 1994, have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Northeast and subsidiaries as of
December 31, 1994 and 1993 and for the years then ended, included in Shawmut's
Current Report on Form 8-K filed on April 13, 1995 and incorporated by reference
into this Joint Proxy Statement-Prospectus, have been incorporated by reference
herein and in the Registration Statement of which the Joint Proxy
Statement-Prospectus is a part in reliance upon the report of Deloitte & Touche,
LLP, independent accountants, dated January 20, 1995, and upon the authority of
said firm as experts in accounting and auditing.
The financial statements of the Business Finance Division of Barclays
Business Credit, Inc. incorporated in this Joint Proxy Statement-Prospectus by
reference to Shawmut's Current Report on Form 8-K, filed on April 13, 1995, have
been so incorporated in reliance upon the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
118
<PAGE> 130
LEGAL OPINIONS
The legality of the shares of Fleet Common Stock to be issued to the
holders of Shawmut Common Stock pursuant to the Merger 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-RI, Fleet-CT and Fleet-MA
and beneficially owns 4,052 shares of Fleet Common Stock. Edwards & Angell has
from time to time acted as counsel in advising Shawmut and its affiliates with
respect to certain matters and in connection with various transactions. Edwards
& Angell did not act as counsel to Shawmut or its affiliates with respect to the
Merger or any transaction in connection therewith.
The Merger Agreement provides as a condition to each party's obligation to
consummate the Merger that Fleet receive the opinion of Wachtell, Lipton, Rosen
& Katz, New York, New York, special counsel to Fleet, substantially to the
effect that the Merger will constitute a "reorganization" under Section 368 of
the Code.
The Merger Agreement also provides as a condition to each party's
obligation to consummate the Merger that Shawmut receive the opinion of Skadden,
Arps, Slate, Meagher and Flom, New York, New York, special counsel to Shawmut,
substantially to the effect that the Merger will constitute a "reorganization"
under Section 368 of the Code.
SOLICITATION OF PROXIES
The cost of solicitation of proxies from holders of Fleet Common Stock and
Shawmut Common Stock, 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 each respective party.
Georgeson & Co. has been retained by Fleet to assist in the solicitation of
proxies and will be compensated in the estimated amount of $20,000 plus
reasonable out-of-pocket expenses. Morrow & Co. has been retained by Shawmut to
assist in the solicitation of proxies and will be compensated in the estimated
amount of $11,000 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 Fleet and Shawmut who will not receive additional compensation
therefor. Fleet and Shawmut estimate the total cost to solicit proxies to be
$450,000, of which $52,000 has been incurred through May 3, 1995.
119
<PAGE> 131
[ALTERNATE FLEET PAGE]
AMENDMENT AND RESTATEMENT OF FLEET EXISTING ARTICLES;
ELECTION OF FLEET DIRECTORS;
RATIFICATION OF FLEET INDEPENDENT AUDITORS
VOTING REQUIREMENTS
The Fleet Board has fixed the close of business on May 3, 1995 as the
Record Date. Only the holders of record of the outstanding shares of Fleet
Common Stock on the Record Date will be entitled to notice of, and to vote at,
the Fleet Meeting and any adjournments or postponements thereof. At the Record
Date, shares of Fleet 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 Fleet Common Stock outstanding and entitled to vote on the Record
Date is necessary to constitute a quorum at the Fleet Meeting. Abstentions and
broker non-votes will be counted as present at the Fleet Meeting for purposes of
determining the presence or absence of a quorum for the transaction of business.
Under Rhode Island law, if a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter is required to approve an action, unless a greater vote is
required under Rhode Island law or a corporation's articles or bylaws. Neither
the Fleet Existing Articles nor Fleet's By-laws vary this requirement with
regard to the election of directors or the ratification of the selection of
independent auditors. The affirmative vote of the holders of a majority of the
outstanding shares of Fleet Common Stock entitled to vote on the amendment and
restatement of the Fleet Existing Articles is required to approve such action.
With regard to the election of directors, votes may be cast in favor or
against. Abstentions may not be specified with respect to the election of
directors. Abstentions may be specified with respect to the amendment and
restatement of the Fleet Existing Articles and the ratification of the selection
of independent auditors and will have the same legal effect as a vote against
such proposals.
Under the Stock Exchange rules, brokers who hold shares in street name for
customers who are the beneficial owners of such shares have the authority to
vote on certain "routine" items when they have not received instructions from
such beneficial owners. With respect to certain non-routine matters, however, a
broker does not have authority to vote absent instructions from the beneficial
owners. Accordingly, a broker non-vote generally occurs when customers have not
provided any voting instructions with respect to certain non-routine matters.
The election of directors and the ratification of the selection of auditors are
considered routine matters under the Stock Exchange rules. Accordingly, Fleet
does not expect to receive any broker non-votes with respect to these matters.
Broker non-votes will have no effect on the outcome of the election of directors
or the ratification of the selection of independent auditors.
The vote to amend and restate the Fleet Existing Articles is considered a
"non-routine" matter under the Stock Exchange rules, and brokers who hold shares
in street name for customers who are the beneficial owners of such shares will
be prohibited from giving a proxy to vote such shares with respect to the vote
to amend and restate the Fleet Existing Articles, without specific instructions
from such customers. Accordingly, the failure of such customers to provide
specific instructions with respect to their shares of Fleet Common Stock to
their broker will have the effect of a negative vote on such matter.
See "MEETING OF FLEET STOCKHOLDERS -- Proxies; Voting and Revocation" and
"-- Votes Required to Approve the Merger; Principal Stockholders" for a
discussion of the foregoing with respect to the vote on the Merger.
120
<PAGE> 132
[ALTERNATE FLEET PAGE]
PRINCIPAL STOCKHOLDERS
The following table sets forth information as to the only persons known to
the Fleet Board to be the beneficial owners of 5% or more of the outstanding
shares of Fleet Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
---------------------------------------------- ----------------------- ----------
<S> <C> <C>
Shawmut National Corporation.................. 28,176,050(1) [ ]%(1)
One Federal Street
Boston, MA 02211
777 Main Street
Hartford, CT 06115
KKR Associates(2)............................. 22,533,994(2) [ ]%(2)
9 West 57th Street
New York, NY 10019
<FN>
- ---------------
(1) Based upon information contained in a Schedule 13D dated February 20, 1995
and filed under the Exchange Act by Shawmut. In connection with the
execution of the Merger Agreement, Fleet granted Shawmut an option (the
"Fleet Option") to purchase up to 28,171,050 shares (the "Fleet Option
Shares") of Fleet Common Stock upon the occurrence of certain events, none
of which has occurred as of the date hereof. Because the Fleet Option is not
currently exercisable, Shawmut has disclaimed beneficial ownership of the
Fleet Option Shares. Certain directors and executive officers of Shawmut
beneficially own and have sole voting and sole dispositive power with
respect to, in the aggregate, 5,000 shares of Fleet Common Stock. Such
28,176,050 shares represent [ ]% of the Fleet Common Stock outstanding
as of the Record Date (after giving effect to the exercise of the Fleet
Option).
(2) KKR Associates, which was organized by Kohlberg, Kravis, Roberts & Co.
("KKR"), a private investment firm, as the general partner of each of
Whitehall Associates, L.P. and KKR Partners II, L.P. (the "Partnerships"),
filed a Schedule 13D with the Commission on July 22, 1991, stating that it,
together with the Partnerships, beneficially owned 1,415,000 shares of Dual
Convertible Preferred Stock (100% of the series) and 6,500,000 DCP Rights.
The Dual Convertible Preferred Stock is convertible into 16,033,994 shares
of Fleet Common Stock. The total number of shares of Fleet Common Stock
represented by the DCP Rights and the Dual Convertible Preferred Stock is
22,533,994 shares, or [ ]% of the Fleet Common Stock outstanding as of
the Record Date (after giving effect to the conversion into Fleet Common
Stock of the Dual Convertible Preferred Stock and the exercise of the DCP
Rights). KKR Associates is a Delaware limited partnership consisting of
Henry R. Kravis, George R. Roberts, Robert I. MacDonnell, Paul E. Rather,
Michael W. Michelson, Saul A. Fox, Michael T. Tokarz and James H. Greene,
Jr. as general partners, and certain past and present employees of KKR and
partnerships and trusts for the benefit of the families of the general
partners and employees of KKR and a former general partner of KKR, as
limited partners. KKR, KKR Associates, the Partnerships and Messrs. Kravis,
Rather and Tokarz have an address of 9 West 57th Street, New York, New York
10019. Messrs. Roberts, MacDonnell, Michelson, Fox and Greene have an
address of 101 California Street, San Francisco, California 94111. KKR
Associates has sole voting and investment power for the Partnerships.
</TABLE>
Fleet knows of no other person who beneficially owned more than 5% of the
outstanding Fleet Common Stock as of the Record Date.
121
<PAGE> 133
[ALTERNATE FLEET PAGE]
SECURITIES OF FLEET OWNED BY MANAGEMENT
The following table shows the number of shares of Fleet Common Stock and
the percent of outstanding Fleet Common Stock beneficially owned by directors,
nominees, the Named Executive Officers (as defined under "Compensation of
Directors and Officers") and all directors and executive officers as a group, as
of the Record Date. "Beneficial ownership" means, pursuant to Commission
regulations, the sole or shared power to vote, or to direct the voting of, a
security and/or investment power with respect to a security (i.e., the power to
dispose of, or to direct the disposition of, a security) and/or the right to
acquire such ownership within sixty days.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AMOUNT PERCENT
OR IDENTITY OF BENEFICIALLY OF
GROUP OWNED(1)(2) CLASS(1)(3)
----------------- ----------- -----------
<S> <C> <C>
William Barnet, III................................................. 8,807 *
Bradford R. Boss.................................................... 14,476 *
Paul J. Choquette, Jr............................................... 7,909 *
James F. Hardymon................................................... 3,339 *
Robert M. Kavner.................................................... 3,240 *
Lafayette Keeney.................................................... 2,708 *
Raymond C. Kennedy.................................................. 20,564 [ ]
Ruth R. McMullin.................................................... 2,195 *
Arthur C. Milot..................................................... 239,610 [ ]
Terrence Murray..................................................... 430,135 [ ]
Thomas D. O'Connor.................................................. 25,808 [ ]
Michael B. Picotte.................................................. 30,243 [ ]
John A. Reeves...................................................... 77,117 [ ]
John R. Riedman..................................................... 363,222 [ ]
John S. Scott....................................................... 12,309 *
Robert J. Higgins................................................... 182,804 [ ]
H. Jay Sarles....................................................... 219,534 [ ]
Michael R. Zucchini................................................. 135,833 [ ]
Eugene M. McQuade................................................... 41,836 [ ]
All directors and executive officers as a group
(25 persons)...................................................... 2,063,330
<FN>
- ---------------
(1) Includes 225,000, 97,800, 107,402, 85,100, 20,800 and 195,000 shares,
respectively, that may be acquired by Mr. Murray, Mr. Higgins, Mr. Sarles,
Mr. Zucchini and Mr. McQuade, and all other directors and executive
officers as a group within sixty days of the Record Date pursuant to
employee stock options.
(2) All of the Fleet directors, nominees and Named Executive Officers tendered
any and all of their publicly-held shares of FMG common stock in connection
with the FMG Repurchase.
(3) For purposes of this calculation, the number of shares of Fleet Common Stock
deemed to be outstanding includes shares that may be issued to Fleet's
directors and executive officers upon conversion of other securities of
Fleet within sixty days of the Record Date.
* Less than .01%
</TABLE>
AMENDMENT AND RESTATEMENT OF FLEET EXISTING ARTICLES
The Fleet Existing Articles presently provide for authorized capital stock
of Fleet consisting of 300,000,000 shares of Fleet Common Stock, 16,000,000
shares of Fleet $1 Par Preferred Stock and 1,500,000 shares of Fleet $20 Par
Adjustable Rate Preferred Stock. The Fleet Board has recommended to the
stockholders that the Fleet Existing Articles be amended (i) to increase the
authorized shares of Fleet Common Stock from 300,000,000 to 600,000,000; (ii) to
change the par value of the Fleet Common Stock from $1.00 to $0.01; and (iii) to
delete from the Fleet Existing Articles certain series of the Fleet $1 Par
Preferred Stock and the Fleet $20 Par Adjustable Rate Preferred Stock which have
been redeemed or converted in full. The affirmative vote of the holders of a
majority of the outstanding shares of Fleet Common Stock entitled to vote is
required to amend the Fleet Existing Articles.
122
<PAGE> 134
[ALTERNATE FLEET PAGE]
Proposed Increase in Fleet Common Stock. On the Record Date, the number of
shares of Fleet Common Stock either issued or reserved for issuance totaled
approximately . Fleet expects to issue approximately
shares of Fleet Common Stock to holders of Shawmut Common Stock in the Merger.
Thus, out of the 300,000,000 shares currently authorized, Fleet would have only
approximately shares of Fleet Common Stock available for future
issuance following the Merger.
Fleet intends to continue to finance its operations through the issuance
from time to time of various debt and equity securities, and to continue the
acquisition of banking and other financial services businesses using Fleet
Common Stock as consideration under certain conditions. The continued
availability of sufficient shares of Fleet Common Stock is desirable to provide
Fleet with the flexibility to take advantage of opportunities to issue Fleet
Common Stock in such situations.
Fleet currently has no plans, understandings, agreements or arrangements
concerning the issuance of additional shares of Fleet Common Stock, except for
shares to be issued in the Merger and shares presently reserved for issuance. If
any plans, understandings, agreements or arrangements are made concerning the
issuance of any such shares, holders of then outstanding shares of Fleet's
capital stock may or may not be given the opportunity to vote thereon, depending
on the nature of any such transactions, the law applicable thereto and the
judgment of the Fleet Board regarding the submission thereof to Fleet's
stockholders.
See "DESCRIPTION OF FLEET CAPITAL STOCK, FLEET NEW PREFERRED STOCK, FLEET
NEW DEPOSITARY SHARES AND FLEET WARRANTS -- Selected Provisions in the Fleet
Existing Articles and the Fleet New Articles" for a description of certain
antitakeover provisions in the Fleet Existing Articles and the Fleet New
Articles.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Proposed Change in Par Value from $1.00 to $0.01. The Fleet Board has
recommended a change in the par value of the Fleet Common Stock from $1.00 to
$0.01. Franchise taxes in the State of Rhode Island are paid based on the par
value of a corporation's capital stock. Assuming that stockholders approve the
increase in the authorized Fleet Common Stock from 300,000,000 to 600,000,000,
this change in par value would have the effect of saving Fleet on an annual
basis approximately $150,000 in franchise taxes paid to the State of Rhode
Island. A change in par value has no effect on the underlying value of the Fleet
Common Stock.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
Proposed Deletion of Redeemed or Converted Preferred Stock. The Fleet
Existing Articles currently provide for the Fleet $20 Par Adjustable Rate
Preferred Stock and three series of the Fleet $1 Par Preferred Stock, all of
which have been redeemed or converted in full (the "Obsolete Preferred Stock").
As permitted under Rhode Island law, Fleet has cancelled such shares, which have
now returned to the status of authorized but unissued shares of Fleet $20 Par
Adjustable Rate Preferred Stock and Fleet $1 Par Preferred Stock, respectively.
The amendment of the Fleet Existing Articles to delete the provisions of such
Obsolete Preferred Stock therefrom, however, requires the approval of the
holders of Fleet Common Stock.
All of such Obsolete Preferred Stock was added to the Fleet Existing
Articles in connection with previous acquisitions by Fleet, and has been
redeemed or converted in full in accordance with their terms. Fleet has no
intention of issuing preferred stock with terms identical to the Obsolete
Preferred Stock. The Fleet Board therefore recommends that the Fleet Existing
Articles be amended to delete the provisions of the Obsolete Preferred Stock.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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ELECTION OF DIRECTORS
The Fleet Board is divided into three classes, with each class serving
staggered terms of three years, so that only one class is elected in any one
year. Five directors are to be elected at the Fleet Meeting to serve until the
1998 Annual Meeting and until their respective successors are elected and have
qualified. Such nominees are Bradford R. Boss, James F. Hardymon, Arthur C.
Milot, John A. Reeves and John R. Riedman. Directors are elected by the
affirmative vote of a majority of Fleet Common Stock entitled to vote thereon,
represented in person or by proxy, at the Fleet Meeting when a quorum is
present.
Each of the nominees for director is presently a director of Fleet. Each
has consented to being named a nominee in this Joint Proxy Statement-Prospectus
and has agreed to serve as a director if elected at the Fleet Meeting. In the
event that any nominee is unable to serve, the persons named in the proxy have
discretion to vote for other persons if such other persons are designated by the
Fleet Board. The Fleet Board has no reason to believe that any of the nominees
will be unavailable for election.
As previously discussed elsewhere in this Joint Proxy Statement-Prospectus,
from and after the Effective Time, the Fleet Board will consist of 20 persons,
divided into three classes of directors. Messrs. Murray and Alvord will each be
directors of Fleet, and with the approval of the respective Boards of Directors
of Fleet and Shawmut, will each designate an additional eleven and seven
individuals, respectively, to be members of the Fleet Board following the
Merger. As of the date of this Joint Proxy Statement-Prospectus, such directors
have not been designated by Messrs. Murray and Alvord and their respective
Boards of Directors.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR ELECTION AS
DIRECTORS.
<TABLE>
NOMINEES FOR DIRECTOR
<CAPTION>
NOMINEE, AGE
AND COMMITTEE PRINCIPAL OCCUPATION AND
MEMBERSHIP OTHER INFORMATION
- ----------------- --------------------------------------------------------------------------
<C> <S>
Terms Expiring in 1998
CHAIRMAN, A.T. CROSS COMPANY
BRADFORD R. BOSS Mr. Boss, a graduate of the University of Rhode Island, joined A.T. Cross
62 Company, a manufacturer of writing instruments, in 1958, became President
EXECUTIVE in 1971 and was elected Chairman and Chief Executive Officer in 1979. In
COMMITTEE; April 1993 Mr. Boss became Chairman of A.T. Cross Company. A former member
HUMAN RESOURCES of the Board of Governors of the American Stock Exchange and a director of
AND Bausch & Lomb, Inc., Mr. Boss also has served as President and Chairman of
PLANNING the Writing Instrument Manufacturers Association. He was elected to the
COMMITTEE Fleet Board in 1976.
</TABLE>
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[ALTERNATE FLEET PAGE]
<TABLE>
<CAPTION>
NOMINEE, AGE
AND COMMITTEE PRINCIPAL OCCUPATION AND
MEMBERSHIP OTHER INFORMATION
- ----------------- --------------------------------------------------------------------------
<C> <S>
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, TEXTRON INC.
Mr. Hardymon was elected to the Fleet Board in 1991. Mr. Hardymon joined
Textron Inc., a diversified manufacturing company, in November 1989 as
JAMES F. HARDYMON President and Chief Operating Officer, at which time he was named to the
60 Textron Board of Directors. In 1992, he was elected Chief Executive
EXECUTIVE Officer and, in 1993, was elected Chairman. From 1987 to 1989, Mr.
COMMITTEE; Hardymon was President and Chief Operating Officer of Emerson Electric Co.
HUMAN RESOURCES Mr. Hardymon received his Bachelor's and Master's degrees in civil
AND engineering from the University of Kentucky. Mr. Hardymon has been a
PLANNING Trustee of the University of Kentucky since 1991, and a director of the
COMMITTEE Paul Revere Corporation since 1993.
PRIVATE INVESTOR
ARTHUR C. MILOT A graduate of Harvard University, Mr. Milot has been a director of Fleet
62 since 1976. He was President of Brewster Lumber Company, a supplier of
EXECUTIVE building materials and household appliances, from 1969 to 1986. Mr. Milot
COMMITTEE; also serves as a director of each of Fleet-CT, Fleet-MA and Fleet-RI.
HUMAN RESOURCES
AND
PLANNING
COMMITTEE
PRESIDENT, MID-CONTINENT RESOURCES, INC.
A graduate of the University of Utah, Mr. Reeves has served as President
of Mid-Continent Resources, Inc., a coal mining company, since 1979, and
as President of Pitkin Iron Corporation, an iron mining company, since
1982. He became a director of Fleet in 1988, having been a director of
Norstar Bancorp Inc. ("Norstar") since 1972. Mr. Reeves is a director of
JOHN A. REEVES Mid-Continent Resources, Inc. and Pitkin Iron Corporation. He serves as an
69 emeritus member of the Board of Trustees of the Colorado School of Mines
AUDIT COMMITTEE and is a member of the American Institute of Mining Engineers.
CHAIRMAN, RIEDMAN CORPORATION
Mr. Riedman, named a director of Norstar in 1985, was President of Riedman
Corporation, which is engaged in the property and casualty insurance
marketing and real estate development businesses, for 25 years until he
became Chairman in 1991. He became a director of Fleet in 1988. Mr.
Riedman serves as a director and past Chairman of the Rochester Museum and
Science Center, Treasurer and past Chairman of the Rochester Chamber of
Commerce and Chairman of the Monroe County Airport Advisory Committee. He
JOHN R. RIEDMAN is a trustee of St. John Fisher College and of Genesee Hospital. He is a
66 member of the National Association of Surety Bond Producers and a member
AUDIT COMMITTEE of the Nominating Committee of the United Way of Rochester.
</TABLE>
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[ALTERNATE FLEET PAGE]
<TABLE>
DIRECTORS CONTINUING IN OFFICE
<CAPTION>
DIRECTOR, AGE
AND COMMITTEE
- ---------------------- PRINCIPAL OCCUPATION AND
Terms Expiring in 1996 OTHER INFORMATION
---------------------------------------------------------------------
<C> <S>
PRESIDENT, GILBANE BUILDING COMPANY
A graduate of Brown University and Harvard Law School, Mr. Choquette
has been President and director of Gilbane Building Company, a
building construction company, since 1981 after having served as
Executive Vice President since 1975. He was elected to the Fleet
Board in 1982. Mr. Choquette is Chairman of the Board of Directors of
Gilbane Properties, Inc., a real estate development and management
company, a director of Carlisle Corporation and The Rhode Island
PAUL J. CHOQUETTE, JR. Foundation, former Chairman of the New England Council, Inc. and a
56 trustee of Eastern Utilities Associates. He is also a trustee
EXECUTIVE COMMITTEE; emeritus of Brown University, a director of the National Conference
RISK MANAGEMENT of Christians and Jews and a member of the President's Council of
COMMITTEE Providence College.
EXECUTIVE, CREATIVE ARTISTS AGENCY, INC.
Mr. Kavner, elected to the Fleet Board in 1986, has been an executive
with Creative Artists Agency, Inc., a talent agency and advisory
service business in the entertainment industry, since July 1994. From
1984 until 1994, Mr. Kavner held various positions at American
Telephone and Telegraph ("AT&T"), including Senior Vice President and
Chief Financial Officer since 1984. He became a member of AT&T's
Executive Committee in 1989, and in 1993 was named Chief Executive
Officer of the Multimedia Product and Services Group of AT&T. He
ROBERT M. KAVNER previously was a partner of Coopers & Lybrand, an international
51 accounting firm, for 10 years. A graduate of Adelphi University, Mr.
RISK MANAGEMENT Kavner is a director of Duracell Corporation and the Joint Center for
COMMITTEE Political and Economic Studies.
CHAIRMAN AND PRESIDENT, MOHAWK PAPER MILLS, INC.
Elected a director of Norstar in 1984, Mr. O'Connor joined the Fleet
Board in 1988. He has been Chairman and President of Mohawk Paper
Mills, Inc., a paper manufacturer, since 1971. A Yale University
THOMAS D. O'CONNOR graduate, he is a trustee of Siena College and Marvelwood School, a
64 board member and past Chairman of the Albany Medical Center, and a
EXECUTIVE COMMITTEE; director of the Institute of Paper Science and Technology and the
HUMAN RESOURCES AND American Forest and Paper Association. Mr. O'Connor is a former board
PLANNING COMMITTEE member of St. Gregory's School for Boys and Emma Willard School.
</TABLE>
126
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[ALTERNATE FLEET PAGE]
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND COMMITTEE PRINCIPAL OCCUPATION AND
MEMBERSHIP OTHER INFORMATION
- ---------------------- ---------------------------------------------------------------------
<C> <S>
Terms Expiring in 1996
MANAGING GENERAL PARTNER AND CHIEF EXECUTIVE OFFICER, PICOTTE
COMPANIES
Mr. Picotte, elected to the Fleet Board in 1989, is a Managing
General Partner and Chief Executive Officer of the real estate
ownership and management entities comprising the Picotte Companies,
Albany, New York, having worked for such entities since 1970. A
graduate of Villanova University and the OPM Program of the Harvard
University Graduate School of Business, Mr. Picotte serves on the
board of directors of various educational and public service
organizations, including The Center for Economic Growth and the
MICHAEL B. PICOTTE Albany Institute of History and Art. Mr. Picotte also is the Chairman
47 of St. Peter's Hospital. Mr. Picotte has served on the Governor's
EXECUTIVE COMMITTEE; Real Estate Advisory Board of the State of New York and has served as
CHAIRMAN, RISK a trustee of WMHT-TV (Public Broadcasting) and the College of St.
MANAGEMENT COMMITTEE Rose.
RETIRED CHAIRMAN, RICHARDSON-VICKS INC.
Mr. Scott, elected to the Fleet Board in 1983, retired as Chairman of
Richardson-Vicks Inc. and as a director of The Procter & Gamble
Company in 1987. He was President and Chief Executive Officer of
Richardson-Vicks Inc., a diversified health care and consumer
products company, from 1975 until he was named Chairman in 1986. He
was a director of Richardson-Vicks Inc. from 1975 to 1987, and had
JOHN S. SCOTT been associated with that company and predecessor companies since
68 1950. A graduate of Brown University, Mr. Scott is a director of
CHAIRMAN, HUMAN Fleet NY, Perkin-Elmer Corporation, The Stanley Works, and Creative
RESOURCES AND Products Resource, Inc., and a director and former Chairman of
PLANNING COMMITTEE Cambridge Biotech.
Terms Expiring in 1997
PRESIDENT, WILLIAM BARNET & SON, INC.
Mr. Barnet became a director of Fleet in 1988, having served as a
Norstar director since 1984. He has been President of William Barnet
& Son, Inc., a synthetic fiber processing company, since 1976, and is
a graduate of Dartmouth College and its Amos Tuck School of Business
Administration. Mr. Barnet serves on the boards of numerous civic and
WILLIAM BARNET, III business entities, including the Palmetto Business Forum, the South
52 Carolina Textile Manufacturers Association, Spartanburg County
CHAIRMAN, Foundation and Converse College. Mr. Barnet also is a director of
AUDIT COMMITTEE Spartan Mills and of FMG.
</TABLE>
127
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[ALTERNATE FLEET PAGE]
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND COMMITTEE PRINCIPAL OCCUPATION AND
MEMBERSHIP OTHER INFORMATION
- ---------------------- ---------------------------------------------------------------------
<C> <S>
CONSULTANT
Elected to the Fleet Board in 1986, Mr. Keeney has been a consultant
since he retired as Chairman and Chief Executive Officer of
Sage-Allen & Co., Inc. in 1990. A graduate of Nichols College, Mr.
LAFAYETTE KEENEY Keeney also is a director of Arthur A. Watson & Co., trustee of
68 Suffield Academy and a corporator of Hartford Hospital -- Saint
AUDIT COMMITTEE Francis Hospital.
CHAIRMAN, KENDELL HOLDINGS INC.
Chairman since 1985 of Kendell Holdings Inc., a personal holding
company, Mr. Kennedy was Chief Executive Officer and Publisher of the
Hudson (N.Y.) Register-Star, a daily newspaper, from 1956 to 1985.
Elected a director of Norstar in 1982, he joined Fleet's Board in
1988. Mr. Kennedy is a graduate of Georgetown University. He is past
President of the New York State Publishers Association, a former
member of the Governmental Relations Committee of the American
Newspaper Publishers Association, a former director of Jackson News-
papers (New Haven, CT), former Chairman of the Board of Trustees of
RAYMOND C. KENNEDY Olana Historic Preservation Site, a trustee and past Chairman of
66 Siena College, a Board member and past Chairman of the
AUDIT COMMITTEE; Columbia-Greene Community College Foundation and a trustee of
EXECUTIVE COMMITTEE Columbia-Greene Memorial Hospital.
MANAGEMENT FELLOW, YALE SCHOOL OF MANAGEMENT
Ms. McMullin, elected to Fleet's Board of Directors in 1992, is a
Management Fellow at the Yale School of Management, having served as
President and Chief Executive Officer of Harvard Business School
Publishing Corporation from 1991 to 1994. Ms. McMullin was with John
Wiley & Sons, Inc. from 1987 to 1991, where she served as President
and Chief Executive Officer from 1989 to 1990. Ms. McMullin is a
graduate of Connecticut College and received her Master's Degree from
the Yale School of Management. She serves on the boards of directors
of Bausch & Lomb, Inc., UNR Industries and Middlesex Mutual Assurance
Co. Ms. McMullin also is a director of the Yale University Press, a
RUTH R. MCMULLIN past director of Connecticut Health Plan, a member of the Dean's
53 Advisory Board at the Yale School of Management, a member of the
RISK MANAGEMENT American Repertory Theatre Advisory Board, and a member of the
COMMITTEE corporation of the Deaconess Hospital.
</TABLE>
128
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[ALTERNATE FLEET PAGE]
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND COMMITTEE PRINCIPAL OCCUPATION AND
MEMBERSHIP OTHER INFORMATION
- ---------------------- ---------------------------------------------------------------------
<C> <S>
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, FLEET FINANCIAL
GROUP, INC.
Mr. Murray joined Fleet-RI in 1962 upon his graduation from Harvard
University. He became President of Fleet in 1978 and Chairman and
Chief Executive Officer in 1982. On January 1, 1988, Mr. Murray
became President and Chief Operating Officer of Fleet and on
September 20, 1988, he became Chairman, President and Chief Executive
TERRENCE MURRAY Officer. He has been a director since 1976. Mr. Murray is a director
55 of A.T. Cross Company, State Mutual Life Assurance Company of
CHAIRMAN, EXECUTIVE America, Stop & Shop Companies and FMG. He also serves as a trustee
COMMITTEE of Brown University and of Rhode Island School of Design.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Fleet Board has an Executive Committee, an Audit Committee, a Human
Resources and Planning Committee and a Risk Management Committee. The Executive
Committee, which held one meeting in 1994, has the power to exercise the power
of the full Fleet Board during intervals between meetings of the Fleet Board.
The functions of the Audit Committee, which held five meetings in 1994, were
revised in April 1994 to include regulatory compliance, in addition to its audit
functions. The audit functions include review of the scope of Fleet's internal
auditing, the independence of the outside auditors, the adequacy of Fleet's
system of internal accounting controls and procedures and the adequacy of
management's action with respect to recommendations thereon by Fleet's auditors.
The Audit Committee is no longer responsible for loan review. The Human
Resources and Planning Committee (formerly known as the Executive Compensation
Committee) met five times in 1994 and is responsible for human resources
development, which includes all compensation-related matters (including stock
options and bonuses), management succession, personnel policy developments and
other matters. The Human Resources and Planning Committee also annually reviews
and makes recommendations with respect to Fleet's strategic plan. The Risk
Management Committee, which met twice in 1994, was formed in April 1994 and is
responsible for certain corporate risk areas including loan review, credit
administration and asset and liability management. The Regulatory Committee,
which previously was responsible for monitoring compliance with recommendations
of regulatory reports, was disbanded in April 1994 and its functions were
assumed by the Audit Committee.
During 1994, the Fleet Board met ten times. All members of the Fleet Board
attended at least 75 percent of the aggregate of the meetings of the Fleet Board
and its committees on which they served in 1994, except for Mr. Boss who
attended 69 percent of such board and committee meetings.
The Fleet Board has no nominating committee, as the Fleet Board as a whole
studies the qualifications and recommends to the stockholders the election of
directors of Fleet. A stockholder may nominate a person for election as a
director by complying with Section 3.15 of the Fleet By-laws, which provides
that advance notice of a nomination must be delivered to Fleet, which notice
must contain the name and certain information concerning the nominee and the
stockholders who support the nominee's election. See "COMPARISON OF
STOCKHOLDERS' RIGHTS -- Provisions Relating to Directors -- Stockholder
Nominations". A copy of such By-law provision may be obtained upon written
request directed to the Secretary of Fleet.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Murray serves on the Board of Directors of A.T. Cross Company, which
determines the compensation of senior executives of A.T. Cross Company. Mr.
Boss, Chairman of A.T. Cross Company, serves on Fleet's Human Resources and
Planning Committee. John Scott, who serves as Chairman of Fleet's Human
Resources and Planning Committee, is a director and former Chairman of Cambridge
Biotech. In July 1994, Fleet Credit Corporation, a subsidiary of Fleet ("Fleet
Credit"), made a $1,007,000 three month term loan to
129
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[ALTERNATE FLEET PAGE]
Cambridge Biotech which was secured by certain pledged deposits and bore
interest at a fixed rate of 9.33% per annum. Shortly after such loan was made,
Cambridge Biotech filed for reorganization under Chapter 11 of the Federal
Bankruptcy Code in July 1994. In September 1994, the pledged deposits were
applied to the outstanding balance, as a result of which the loan was repaid in
full. The creditors committee for Cambridge Biotech, however, has challenged
Fleet Credit's right to such pledged deposits and a federal bankruptcy court
recently ruled against Fleet Credit. Fleet Credit has filed an appeal and
intends to contest such ruling vigorously.
SECTION 16 COMPLIANCE
Section 16(a) of the Exchange Act requires Fleet's executive officers and
directors, and persons who own more than 10% of a registered class of Fleet's
equity securities ("Insiders") to file reports of ownership and changes in
ownership with the Commission. Insiders are required by Commission regulations
to furnish Fleet with copies of all Section 16(a) reports they file. Based
solely on a review of the copies of such reports furnished to Fleet, Fleet
believes that during 1994 all Section 16(a) filing requirements applicable to
its Insiders were complied with, except that Mr. Kavner inadvertently failed to
disclose on a timely basis (one business day late) his acquisition in January
1994 of 1,500 shares of Fleet Common Stock.
HUMAN RESOURCES AND PLANNING COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Human Resources and Planning Committee of the Fleet Board
(the "Committee") is comprised of five independent non-employee members of the
Fleet Board. The Committee reviews and approves the compensation for Fleet's
executive officers, and initiates all compensation actions for the Chief
Executive Officer ("CEO"). The Committee's determinations of the compensation
for the CEO and the other executive officers are reviewed with all non-employee
directors who constitute a majority of the full Board.
Fleet's executive compensation program is designed to attract, retain and
motivate high quality and experienced executive talent and to provide a direct
link to the enhancement of shareholder value. In 1994, the Committee's
compensation decisions with respect to the CEO and the four other most highly
compensated executive officers (the "Named Executive Officers") were driven
primarily by its strategy to reduce the emphasis on fixed compensation, in the
form of base salary, as a component of total pay, and increase the emphasis on
variable compensation, in the form of performance-based bonuses and equity-based
awards, in order to more closely link the Named Executive Officers' pay with the
interests of Fleet's shareholders. This strategy is reflected in Fleet's pay
program that has approximately two-thirds of the total compensation opportunity
for the Named Executive Officers (and a very significant portion for other
executive officers) in at-risk variable cash and equity-based components. The
combination of all compensation components is intended to ensure a
pay-for-performance linkage and produce total pay for the Named Executive
Officers at the median of the compensation paid to executives in comparable
positions at the 25 largest (based on asset size) domestic financial
institutions (the "Peer Group"). The Peer Group is the peer group shown in the
Stock Performance Graph. With respect to the executive officers, other than the
Named Executive Officers, references herein to the "Peer Group" shall mean a
broader group, which includes the 25 largest (based on asset size) domestic
financial institutions and certain additional institutions which fall within the
top 50 (based on asset size).
Within this policy framework, the exact amounts paid to each of the
executive officers in the form of base salary, incentive awards and long-term
incentive awards are discretionary based on the Committee's subjective
assessment of certain quantitative and qualitative factors. Although the factors
considered may differ from year to year, in 1994 the Committee considered
primarily: (i) Fleet's performance in 1994, as measured by Return on Equity
("ROE"), Net Income and Return on Assets ("ROA"), and (ii) each individual's
performance as it relates to Fleet's financial goals and strategic objectives,
including the substantial improvement in Fleet's efficiency ratio, the further
reduction in non-performing assets, strong loan growth, the completion of
certain strategic acquisitions and the performance of the lines of business for
which the officer is responsible. The Committee has retained the discretion to
assign relative weights to these factors as it deems appropriate and, in 1994,
no relative weights were assigned. As discussed in this report, the CEO makes
recommendations to the Committee regarding base salary, bonus amounts and equity
awards to the executive officers, other than the CEO and, in 1994, the Committee
approved such recommendations without change.
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[ALTERNATE FLEET PAGE]
In order to determine compensation practices and levels within the Peer
Group, the Committee reviews information contained in Peer Group proxy
statements. The Committee also reviews the results of surveys regarding actual
and anticipated compensation trends within the Peer Group to determine
competitive ranges of Peer Group compensation and ensure the appropriateness of
executive officer compensation positioning. Based on the foregoing information,
the Committee believes that 1994 salaries for Fleet's Named Executive Officers
remain above the median of base salaries; however, total cash compensation
(including salary and bonus) appears to be approximately at the median. Further,
consistent with the Committee's philosophy of emphasizing performance-based
long-term incentive pay, total compensation (including salary, bonus and equity
awards) appears to be slightly above the estimated median of compensation paid
to executives in similar positions in the Peer Group.
In 1994, the Committee carefully considered and reviewed with outside
advisors the impact of Section 162(m) of the Code and the preliminary
regulations promulgated thereunder (the "IRS Regulations"). Section 162(m)
limits the corporate deductions for compensation paid to Fleet's Named Executive
Officers to $1 million per year, unless certain requirements are met. In an
effort to enable Fleet to achieve maximum tax deductibility of its compensation
costs related to bonus awards to its Named Executive Officers and awards under
Fleet's stock option and restricted stock plans, the Committee recommended, and
the Fleet Board of Directors approved and submitted for shareholder approval, a
new bonus plan for the Named Executive Officers (the "NEO Bonus Plan") and
certain technical amendments to Fleet's 1992 Stock Option and Restricted Stock
Plan (the "1992 Stock Plan"). The NEO Bonus Plan and the 1992 Stock Plan
amendments were intended to conform with the performance-based compensation
requirements of the IRS Regulations. Shareholder approval was obtained in each
instance. Since the proposed IRS Regulations may change significantly before
final regulations are adopted under Section 162(m), there can be no assurance
that amounts paid under either the NEO Bonus Plan or the 1992 Stock Plan will be
fully deductible. The Committee will continue to take the deductibility of
executive compensation into consideration while ensuring that Fleet maintains
the leadership it requires to further the interests of its shareholders.
Executive Compensation Program. Fleet's executive compensation program
consists of three primary components:
Base Salary. The base salary of each executive officer (including the CEO)
is set at an amount within an established salary range which reflects the
executive's position, duties and level of responsibility within Fleet. The
salary ranges consist of minimum and maximum levels distributed around an
average of base salaries paid to executives who hold substantially similar
positions within the Peer Group. The base salary level is reviewed every 18
months. Evaluations (including recommendations for salary increases) are made,
in the case of executive officers other than the CEO, by the CEO and, in the
case of the CEO, by the Committee. The CEO's recommendations are based on the
same factors outlined above. The Committee has decided to not seek to qualify
the Base Salary component of its compensation program under the IRS Regulations.
The Committee believes that any amount of Base Salary which may be paid in
excess of $1 million will be immaterial.
Annual Incentive. The NEO Bonus Plan and the Management Bonus Plan (which
excludes the Named Executive Officers) support Fleet's compensation objective of
paying for performance that increases shareholder value by providing for bonuses
under the plans only if Fleet achieves specified target levels of ROE and Net
Income.
(1) NEO Bonus Plan. The NEO Bonus Plan permits the Committee to award
bonuses to the Named Executive Officers only if certain performance goals
related to Net Income and ROE are achieved for a particular year. Based on
Fleet's performance in 1994, the maximum bonus awards payable under the NEO
Bonus Plan to the CEO and to each of the other Named Executive Officers were
$1,685,750 and $842,875, respectively. The Committee retains the discretion to
decrease (but not increase) such bonus award amounts. The Committee's
determination of exact bonus awards are discretionary based on a subjective
assessment of certain objective quantitative and qualitative factors cited
earlier in this report. With respect to the Named Executive Officers, other than
the CEO, the CEO submits recommendations to the Committee regarding individual
bonus amounts based on the same factors considered by the Committee.
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[ALTERNATE FLEET PAGE]
(2) Management Bonus Plan. Fleet's executive officers (except for the
Named Executive Officers) and certain other employees are eligible to
participate in the Management Bonus Plan. The Management Bonus Plan provides for
a bonus pool which is based on Fleet's performance in achieving pre-established
target levels (as determined annually by the Committee) of ROE (50% of the bonus
pool) and Net Income (20% of the bonus pool). The remaining 30% of the bonus
pool is discretionary and intended to account for extraordinary events, measures
not specifically reflected in ROE and Net Income, and specific subsidiary
performance. The CEO submits proposed individual bonus awards under the
Management Bonus Plan to the Committee for approval. Such recommendations are
based on the same factors cited earlier herein and generally are intended to
fall within an approved bonus range for each executive's position, duties and
level of responsibility within Fleet. The bonus ranges are intended to result in
actual bonus payments which are at the median of bonuses paid to executives in
comparable positions within the Peer Group.
Long-Term Incentive. Long-term incentive awards, which include qualified
and non-qualified stock options, stock appreciation rights and restricted stock
awards, act as a retention tool and link the executive officers' opportunity for
financial reward with that of the shareholders. Long-term incentive awards also
ensure that short-term performance is adequately balanced with the achievement
of longer-range objectives which are in the best interests of the shareholders.
The Committee's determinations regarding individual grants of stock options and
performance-based restricted stock awards are discretionary based on a
subjective assessment of the various factors cited in this report, and are made
without regard to the amount or terms of options and restricted stock already
held by the executive officers, either individually or as a group. In granting
long-term incentive awards in 1994, the Committee gave primary consideration to
its stated compensation philosophy of emphasizing variable, at risk compensation
in the total mix of compensation paid to its executives.
Stock options are generally awarded at the average market price on the date
of the grant, so that gains for the executive officers are comparable to those
of a shareholder purchasing a share of Fleet Common Stock on the same date.
Generally, options vest in 20% annual increments, beginning on the first
anniversary of the date of grant, and expire in not more than ten years. The
Committee believes that dependence on stock options for a significant portion of
executives' compensation more closely aligns such executives' interest with
those of Fleet's shareholders, since the ultimate value of such compensation is
linked directly to stock price. The CEO, in consultation with Fleet's Human
Resources staff, submits proposed stock option grants for the executive
officers, other than the CEO, to the Committee for approval. As with proposed
salary increases and bonus payments, such recommendations are discretionary
based on the factors cited earlier herein, but generally fall within approved
option award ranges for particular positions within Fleet. Such option ranges
are intended to result in option awards to the executive officers which are at
the median of option awards granted to executives in comparable positions within
the Peer Group. The Committee did not award any stock appreciation rights in
1994 in order to avoid the negative accounting consequences to Fleet associated
with such awards.
Restricted stock awards are tied to longer-term business objectives,
thereby further strengthening the link of the executive's potential financial
gain to that of the shareholders. Such stock awards are also an important
vehicle to retain key executives and build stock ownership. The terms of the
restricted stock awarded in 1991 and 1992 provide that the transfer restrictions
lapse five years from the date of grant; however, if the average closing price
of Fleet Common Stock measured over a consecutive four-month period reaches a
specified target level during the third year, the restrictions lapse with
respect to half of the award as of January 1st of the fourth year from the date
of grant. In that regard, as of January 1, 1995, the restrictions lapsed with
respect to fifty percent of the restricted stock awarded in 1991.
In September 1994, the Committee awarded performance-based restricted stock
under the 1992 Stock Plan to each of the Named Executive Officers. This
long-term incentive differs from the restricted stock previously awarded and
more closely aligns executive pay with increases in shareholder value. The
restrictions on such shares will lapse, if at all, based on a formula tied to
cumulative earnings per share growth measured over a three-year period (1994 to
1997). The Named Executive Officers will forfeit their restricted stock awards
if cumulative earnings per share growth is less than a specified threshold
amount. To the extent that Fleet's performance exceeds the threshold target, a
varying amount of shares up to 100% of the shares awarded will vest as of
October 1, 1997. Thus, the awards are designed to provide the Named Executive
Officers with an incentive opportunity linked both to corporate financial
performance and shareholder value.
132
<PAGE> 144
[ALTERNATE FLEET PAGE]
CEO Compensation. In 1994, Fleet's most highly compensated officer was
Terrence Murray, Chairman, President and Chief Executive Officer. The Committee
believes that Mr. Murray's 1994 compensation appropriately reflects Fleet's
performance in 1993 and 1994, as well as Mr. Murray's past and expected future
contributions to Fleet in the short and longer term. Mr. Murray was not present
during any Committee or Fleet Board discussions concerning his compensation.
Based on Mr. Murray's scheduled performance and salary review, the
Committee increased Mr. Murray's salary to $992,200, effective January 1994. In
determining the amount of Mr. Murray's salary increase, the Committee gave
primary consideration to the Corporation's overall financial performance in
1993, as well as the other factors discussed in this report.
Mr. Murray's compensation for 1994 also includes a bonus in the amount of
$1,400,000 awarded under the NEO Bonus Plan. The Committee exercised its
judgment in determining the amount of Mr. Murray's award, which represents
approximately 83% of his bonus opportunity under the NEO Bonus Plan. The
Committee's decision was endorsed unanimously by the Fleet Board. The Committee
took into account the quantitative and qualitative factors cited herein, with
particular emphasis placed on Fleet's overall financial performance in 1994.
In 1994, despite the increasingly competitive financial services industry
and challenging interest rate environment, under Mr. Murray's leadership Fleet
reported record earnings of $613 million, an increase of 26% over 1993. The
significant increase in earnings was primarily the result of significant expense
control combined with lower credit costs and steadily improving loan growth. In
addition, Fleet's ROA increased to 1.27% from 1.06% in 1993, and ROE rose to
18.77% from 1993's 16.07%. Nonperforming assets fell 14% during 1994 to their
lowest level in five years, and noninterest expense also was reduced by
approximately $185 million, or 8%, due to implementation of cost-cutting
strategies. In addition, Fleet successfully implemented cost control measures
which reduced Fleet's efficiency ratio from 66.25% reported in 1993 to 63.7% at
year-end 1994. Finally, Fleet successfully completed certain strategic
acquisitions, including Sterling Bancshares Corp. and NBB in early 1995.
In September 1994, Mr. Murray was granted options to purchase 100,000
shares of Fleet Common Stock and 31,250 shares of performance-based restricted
stock. The Committee's decisions with respect to these awards followed the same
principles as those described for executive officers generally. The Committee
believes that Mr. Murray's total compensation package for 1994 will place him
slightly above the median of total compensation awarded to chief executive
officers within the Peer Group.
This report has been provided by the Human Resources and Planning
Committee.
<TABLE>
<S> <C>
John S. Scott (Chairman) Arthur C. Milot
Bradford R. Boss Thomas D. O'Connor
James F. Hardymon
</TABLE>
COMPENSATION OF DIRECTORS AND OFFICERS
DIRECTORS' COMPENSATION. Members of the Fleet Board receive an annual
retainer of $25,000, which retainer Fleet believes is commensurate with the
retainers paid to directors of companies in the Peer Group. Directors also are
paid an attendance fee of $1,500 for each Fleet Board meeting attended.
Committee members are paid $750 per committee meeting attended, and all
committee chairmen are paid an additional fee of $5,000 per year. Fleet has a
standard arrangement pursuant to which directors may elect to defer all or part
of their directors' fees. Fees are not paid to directors employed by Fleet.
The Supplemental Compensation Plan for former Norstar directors, as assumed
by Fleet, provides that, under certain circumstances, Fleet will pay to, or in
respect of, each eligible director of Fleet who was previously a Norstar
director, upon death or termination of service as a director, 40 quarterly
payments of $5,000 each, commencing on the first day of the first calendar
quarter following the calendar quarter of death or termination of service as a
director. William Barnet, III, Raymond C. Kennedy, John A. Reeves, John R.
Riedman and Thomas D. O'Connor were each previously directors of Norstar.
133
<PAGE> 145
[ALTERNATE FLEET PAGE]
In January 1994, the Fleet Board adopted a new retirement plan for all of
its directors who are not former Norstar directors (the "Qualified Directors").
Under the new plan, each Qualified Director (who is not also an employee of
Fleet) is entitled to participate after he or she has served on the Fleet Board
for at least five years. The plan provides that each Qualified Director is
credited with $20,000 for each year of service up to a maximum of 10 years. A
Qualified Director may not collect under the plan until he or she retires from
the Fleet Board, but in no event before his or her 65th birthday.
EXECUTIVE COMPENSATION. The following table shows, for the fiscal years
ending December 31, 1994, 1993 and 1992, the compensation of the Chief Executive
Officer and the four other most highly compensated executive officers of Fleet
(the "Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- --------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS COMPENSATION
POSITION YEAR ($) ($) ($)(2) ($)(3)(4)(5) (#)(5)(6) ($)(7)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Terrence Murray 1994 $993,936(1) $1,400,000 -- $1,160,156 100,000 $ 86,967
Chairman, President 1993 902,000 990,000 -- -- 90,000 67,622
and Chief Executive Officer 1992 917,461 750,000 -- -- 75,000 55,126
Robert J. Higgins 1994 524,999 600,000 $ 75,276 556,875 45,000 40,632
Vice Chairman 1993 505,769 350,000 -- -- 40,000 37,946
1992 441,346 200,000 -- 468,750 32,500 26,893
H. Jay Sarles 1994 524,999 550,000 -- 556,875 45,000 55,135
Vice Chairman 1993 512,692 350,000 -- -- 40,000 43,343
1992 478,731 225,000 124,532 625,000 32,500 33,485
Michael R. Zucchini 1994 524,999 600,000 -- 556,875 45,000 38,867
Vice Chairman 1993 510,769 350,000 -- -- 40,000 30,503
1992 458,731 250,000 -- -- 32,500 19,832
Eugene M. McQuade 1994 358,654 500,000 -- 556,875 45,000 23,585
Executive Vice President 1993 330,769 300,000 -- -- 35,000 20,451
and Chief Financial Officer 1992 254,808 125,000 159,123 -- 27,000 2,088
<FN>
- ---------------
(1) The discrepancy between Mr. Murray's approved base salary for 1994
($992,200) and the amount paid in 1994 ($993,936) is the result of Fleet's
payroll practice of paying employees on a bi-weekly basis.
(2) Perquisites and other personal benefits paid to each of the Named Executive
Officers (including tax preparation assistance) in each instance aggregated
less than $50,000, other than Messrs. Higgins, Sarles and McQuade and,
accordingly, are omitted from the table as permitted by Commission
regulations. In 1994, Mr. Higgins' perquisites and other personal benefits
included a relocation expense and moving allowance aggregating $60,157. In
1992, each of Messrs. Sarles and McQuade's perquisites and other personal
benefits included a relocation expense and moving allowance aggregating
$106,119 and $156,746, respectively.
(3) In September 1994, Fleet awarded performance-based restricted stock to each
of the Named Executive Officers under the 1992 Stock Plan. In accordance
with the terms of the awards, the restrictions on transfer will lapse, if at
all, only if cumulative earnings per share growth, measured over a three
year period, exceeds a threshold target. To the extent cumulative earnings
per share growth exceeds the threshold, each Named Executive Officer will
vest in a percentage of the shares awarded, ranging from 40% to 100%. The
amount and year-end value of the performance-based restricted stock awarded
in 1994 under the 1992 Stock Plan, based on a December 30, 1994 closing
market price of Fleet Common Stock of $32.50, are: Mr. Murray, 31,250 and
$1,015,625; and each of Messrs. Higgins, Sarles, Zucchini and McQuade,
15,000 and $487,500. Dividends will be paid on the shares of
performance-based restricted stock if, and to the extent, paid on Fleet
Common Stock generally. If a change of control were to occur, the
performance-based restricted stock would immediately vest in full.
(4) In December 1991, Fleet awarded shares of restricted stock to certain Named
Executive Officers under Fleet's Amended and Restated 1988 Stock Option and
Restricted Stock Plan (the "1988 Stock Plan"). In accordance with the terms
of the awards, the restrictions on fifty percent of the stock lapsed as of
January 1, 1995 as a result of the performance of Fleet Common Stock during
1994 when the Average Closing Price of Fleet Common Stock was or exceeded
$34 per share for four consecutive months. The Average Closing Price for
each of the four consecutive months was deemed to be or exceed $34 per share
</TABLE>
134
<PAGE> 146
[ALTERNATE FLEET PAGE]
when the average of the daily closing prices of Fleet Common Stock on the
Stock Exchange for such month was or exceeded $34 per share. The number and
year-end value of the remaining fifty percent of the restricted stock shares
awarded to certain Named Executive Officers in 1991 under the 1988 Stock
Plan, based on a December 30, 1994 closing market price of Fleet Common
Stock of $32.50 per share, are: Mr. Murray, 25,000 and $812,500; and Mr.
Zucchini, 12,500 and $406,250. Messrs. Higgins and Sarles were not awarded
any restricted stock in 1991. In December 1992, Fleet awarded shares of
restricted stock to Messrs. Higgins and Sarles under the 1992 Stock Plan.
Mr. McQuade, who did not join Fleet until January 1992, was not awarded any
restricted stock in 1992. The awards to Messrs. Higgins and Sarles provide
that the restrictions will lapse on January 1, 1998 if the executive remains
in the continuous employ of Fleet; however, the restrictions on fifty
percent of the stock will lapse as of January 1, 1996 if, during 1995, the
Average Closing Price of Fleet Common Stock is or exceeds $47 per share for
four consecutive months. The Average Closing Price for a month shall be
deemed to be or exceed $47 per share if the average of the daily closing
prices of Fleet Common Stock on the Stock Exchange for such month is or
exceeds $47 per share. The number and year-end value of the shares of
restricted stock awarded to certain Named Executive Officers under the 1992
Stock Plan, based on a December 30, 1994 closing market price of Fleet
Common Stock of $32.50 per share, are: Mr. Higgins, 15,000 and $487,500; and
Mr. Sarles, 20,000 and $650,000. Dividends will be paid on the shares of
restricted stock if, and to the extent, paid on Fleet Common Stock
generally. If a change of control were to occur, the restricted stock would
immediately vest in full.
(5) The Merger will not constitute a change of control for purposes of any
restricted stock awarded, or any stock options or stock appreciation rights
("SARs") granted, under the 1992 Stock Plan, or any predecessor plan.
(6) All stock options include tandem SARs, except for the stock options granted
in 1994.
(7) Amounts of All Other Compensation include the following: (i) contributions
by Fleet under Fleet's Savings Plan or amounts accrued under Fleet's
Executive Supplemental Plan for the Named Executive Officers: Mr. Murray,
$44,961; Mr. Higgins, $23,852; Mr. Sarles, $23,852; Mr. Zucchini, $23,852;
and Mr. McQuade, $16,205; (ii) term life insurance premiums paid by Fleet on
behalf of each of the Named Executive Officers in 1994 (the Named Executive
Officers have the option of applying these payments to whole life policies):
Mr. Murray, $21,040; Mr. Higgins, $4,957; Mr. Sarles, $5,908; Mr. Zucchini,
$5,683; and Mr. McQuade, $2,268; (iii) an interest free loan in the amount
of $100,000 provided to Mr. Sarles in 1992 which provided a benefit of
$6,089 to Mr. Sarles in 1994 based on the applicable federal rate in effect
on the date of issuance of such loan; and (iv) preferential earnings on
deferred compensation: Mr. Murray, $20,966; Mr. Higgins, $11,823; Mr.
Sarles, $19,286; Mr. Zucchini, $9,332; and Mr. McQuade, $5,112. Mr. Sarles
repaid his loan on January 13, 1995; see "Indebtedness and Other
Transactions".
135
<PAGE> 147
[ALTERNATE FLEET PAGE]
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options pursuant to the 1992 Stock Plan to the Named Executive Officers during
the fiscal year ending December 31, 1994.
<TABLE>
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION
----------------------------------------------------- FOR OPTION TERM(3)
PERCENT ---------------------------
OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES OR BASE
GRANTED(1) IN FISCAL PRICE EXPIRATION
NAME (#) YEAR(2) ($/SH) DATE AT 5% ($) AT 10% ($)
------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
Terrence Murray........... 100,000 4.85% $36.94 9/21/04 $2,323,687 $5,887,799
Robert J. Higgins......... 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
H. Jay Sarles............. 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
Michael R. Zucchini....... 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
Eugene M. McQuade......... 45,000 2.18% 36.94 9/21/04 1,045,659 2,649,510
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in market value of Fleet Common Stock for all stockholders at 5% (TO $60/SHARE) 10% (TO $96/SHARE)
assumed annual rates of stock price appreciation (as used in the table ---------------- -----------------
above) from $36.94 per share, over the ten-year period, based on 135 $3.1 billion $7.9 billion
million shares outstanding on December 31, 1994.
- -------------------------------------------------------------------------------------------------------------
<FN>
(1) All options granted to the Named Executive Officers were granted on
September 21, 1994 under the 1992 Stock Plan. No SARs were awarded in
connection with such grants. The options first become exercisable in 20%
installments commencing on September 21, 1995, so long as employment with
Fleet continues. If a change of control were to occur, the options would
become immediately exercisable in full. The Merger will not constitute a
change of control for purposes of the options granted in 1994 or for
purposes of any other stock options or SARs granted under the 1992 Stock
Plan, or any predecessor plan.
(2) A total of 2,061,796 options were granted to employees in 1994, of which
1,921,200 were granted on the same material terms described in footnote (1)
above. With respect to substantially all of the remaining 139,500 options
granted in 1994, the material terms thereof differ to the extent that they
become fully exercisable commencing one year from the date of grant, so long
as employment with Fleet continues, and expire five years from the date of
grant. The percentages set forth in the above table are based on the total
2,061,796 options granted in 1994. The percent of the grant to each of the
Named Executive Officers based on the total 1,921,200 options granted in
1994 with the same material terms are: Mr. Murray, 5.21%; Mr. Higgins,
2.35%; Mr. Zucchini, 2.35%; Mr. Sarles, 2.35%; and Mr. McQuade, 2.35%.
(3) Potential Realizable Value is based on the assumed annual growth rates for
each of the grants shown over their ten-year option term. For example, a 5%
annual growth rate for Mr. Murray's grant results in a stock price of $60.18
per share and a 10% rate results in a stock price of $95.82 per share. These
potential values are listed in order to comply with Commission regulations,
and Fleet cannot predict whether these values can be achieved. Actual gains,
if any, on stock option exercises are dependent on the future performance of
Fleet Common Stock.
</TABLE>
136
<PAGE> 148
[ALTERNATE FLEET PAGE]
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options and/or SARs during the
fiscal year ending December 31, 1994 and unexercised options and SARs held as of
the end of the 1994 fiscal year.
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
VALUE OPTIONS/SARS AT OPTIONS/SARS AT
SHARES ACQUIRED REALIZED FY-END(#)(1) FY-END($)(2)(3)
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Terrence Murray.............. -- -- 225,000 230,000 $2,145,140 $ 456,710
Robert J. Higgins............ 9,708 $259,980 97,800 102,200 1,011,616 199,299
H. Jay Sarles................ -- -- 107,402 102,200 1,062,042 199,299
Michael R. Zucchini.......... 19,800 555,588 85,100 103,100 518,489 157,494
Eugene M. McQuade............ -- -- 17,800 89,200 49,776 74,664
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The following exercisable/unexercisable options for each of the Named
Executive Officers do not have tandem SARs: Mr. Murray, -0-/100,000; Mr.
Higgins, 5,602/45,000; Mr. Sarles, 5,602/45,000; Mr. Zucchini, -0-/45,000;
and Mr. McQuade, -0-/45,000.
(2) Value based on the fair market value of Fleet Common Stock on December 30,
1994 ($32.56) minus the exercise price. Fair market value is deemed to be
the average of the high and low market prices of Fleet Common Stock on the
Stock Exchange.
(3) The following exercisable/unexercisable options for each of the Named
Executive Officers are at exercise prices above the fair market value of
Fleet Common Stock on December 30, 1994 ($32.56): Mr. Murray,
18,000/172,000; Mr. Higgins, 8,000/77,000; Mr. Sarles, 8,000/77,000; Mr.
Zucchini, 8,000/77,000; and Mr. McQuade, 7,000/73,000.
</TABLE>
PENSION PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Fleet Pension Plan (the
"Pension Plan"), a qualified defined benefit pension plan, based on Final
Average Salary (as defined below) and years of service with Fleet and its
subsidiaries.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
FINAL AVERAGE 15 YEARS 20 YEARS 25 YEARS 30 YEARS
SALARY SERVICE(1) SERVICE(1) SERVICE(1) SERVICE(1)
- ------------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C>
$ 100,000 $ 24,306 $ 32,408 $ 40,510 $ 48,612
200,000 50,556 67,408 84,260 101,112
300,000 76,806 102,408 128,010 153,612
400,000 103,056 137,408 171,760 206,112
500,000 129,306 172,408 215,510 258,612
600,000 155,556 207,408 259,260 311,112
700,000 181,806 242,408 303,010 363,612
800,000 208,056 277,408 346,760 416,112
900,000 234,306 312,408 390,510 468,612
1,000,000 260,556 347,408 434,260 521,112
1,100,000 286,806 382,408 478,010 573,612
1,200,000 313,056 417,408 521,760 626,112
1,300,000 339,306 452,408 565,510 678,612
</TABLE>
137
<PAGE> 149
[ALTERNATE FLEET PAGE]
[FN]
- ---------------
(1) The Pension Plan provides for accrual of benefits over 30 years of service,
with proportionate reduction for years of service less than 30 years. The
annual benefits shown in the above table are not reduced to reflect certain
limitations imposed by the Code which limit the annual benefits payable
from qualified plans to any individual. The years of service accrued and
Final Average Salary for purposes of the Pension Plan as of December 31,
1994 for the Named Executive Officers were: Mr. Murray, 32 years and
$874,248; Mr. Higgins, 23 years and $439,999; Mr. Sarles, 27 years and
$465,992; Mr. Zucchini, 7 years and $454,684; and Mr. McQuade, 3 years and
$314,743.
The Pension Plan covers employees of Fleet and various Fleet subsidiaries,
including the Named Executive Officers. Normal retirement age under the Pension
Plan is 65, and benefits vest upon completion of five years of service. Benefits
shown in the table are computed as a single life annuity and are not subject to
any deduction for Social Security or other offset amounts. In general, the
normal benefit at age 65 is equal to 37.5% multiplied by the average annual base
salary during the 60 consecutive calendar months in the last 120 calendar months
of a participant's employment yielding the highest average annual salary (the
"Final Average Salary") up to the Integration Level (as defined below), plus
52.5% multiplied by the amount by which the Final Average Salary exceeds the
Integration Level. For 1995, the Integration Level will equal $25,920 (the
"Integration Level"). The Integration Level will increase each year based on
increases in the Social Security Taxable Wage Base (the maximum amount of wages
subject to Social Security Taxes). Final Average Salary for each of the Named
Executive Officers is calculated using annual base salary as reported in the
Summary Compensation Table.
The table above includes benefits under Fleet's Retirement Income Assurance
Plan (the "Assurance Plan") and Fleet's Supplemental Executive Retirement Plan
(the "SERP"), each of which is a nonqualified deferred compensation plan. The
Assurance Plan provides benefits that would otherwise be denied a participant by
reason of the limitations imposed by the Code on the Pension Plan. Under the
Assurance Plan, highly compensated employees affected by these limitations,
including the Named Executive Officers, will receive additional retirement
income payments from Fleet. Under the SERP, a participant is entitled to receive
additional retirement income payments from Fleet equal to the difference between
(a) the amount such participant would have been entitled to receive under the
Pension Plan if cash bonuses paid after January 1, 1994 (as reported in the
Summary Compensation Table for the Named Executive Officers) were included in
the calculation of Final Average Salary, and (b) the benefit payable to the
participant under the Pension Plan and the Assurance Plan. Each of the Named
Executive Officers is a participant in the SERP. For purposes of calculating
total benefits payable under the Pension Plan, the Assurance Plan and the SERP,
the Final Average Salary as of December 31, 1994 for Messrs. Murray, Higgins,
Sarles, Zucchini and McQuade was $1,054,248, $509,999, $535,992, $524,684 and
$414,743, respectively.
CHANGE OF CONTROL CONTRACTS
Fleet is a party to change of control agreements with 10 key executives
(including each of the Named Executive Officers), which are intended to
encourage such employees to remain in the employ of Fleet. A change of control
is defined to include the acquisition, other than from Fleet, by any person or
group of beneficial ownership of 25 percent or more of Fleet's outstanding
stock, a change in the majority of the Fleet Board of Directors or, under
certain circumstances, approval of a reorganization, merger, consolidation or
sale of substantially all Fleet's assets by Fleet's stockholders (a "Change in
Control"). The agreements operate only upon a Change in Control. Absent such an
event, Fleet is under no obligation under the contracts to retain any employee
or to pay any specified level of compensation or benefits. In the event of a
Change in Control, the agreement provides that there will be no adverse change
in the executive's salary, bonus opportunity, benefits, duties, indemnification
and location of employment for a period of three years after the Change in
Control. If, during such period, the executive's employment is terminated by his
employer other than for cause or disability, or by the executive for good reason
(as defined in the agreement), the executive shall receive his accrued salary,
pro rata bonus and a lump sum severance payment equal to the product of his base
salary and highest annual bonus multiplied by a factor, ranging up to 2.99 to 1,
depending upon the length of time from the date of the Change in Control until
the date of termination of employment. Payments under the agreements will be
reduced to the extent necessary to avoid imposition of excise tax under the Code
and to assure the deductibility of payments by Fleet. The Merger will not
constitute a Change in Control for purposes of the agreements.
138
<PAGE> 150
[ALTERNATE FLEET PAGE]
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth on the following page is a line graph comparing the cumulative
total stockholder return on Fleet Common Stock (assuming $100 was invested on
December 31, 1989 and all dividends were reinvested) against the cumulative
total return of the S&P Composite-500 Stock Index, the Keefe, Bruyette & Woods
("KBW") Eastern Region Bank Index and the top 25 (based on asset size) domestic
financial institutions (the "Peer Group"), excluding Fleet, for the five fiscal
years ended December 31, 1994. The financial institutions which comprise the
Peer Group are Citicorp, BankAmerica Corporation, Chemical Banking Corporation,
NationsBank Corporation, J.P. Morgan & Co. Incorporated, The Chase Manhattan
Corporation, Bankers Trust New York Corporation, Banc One Corporation, Wells
Fargo & Company, PNC Bank Corp., First Union Corporation, First Interstate
Bancorp, First Chicago Corporation, KeyCorp., Norwest Corporation, NBD Bancorp,
Inc., The Bank of New York Company, Inc., Barnett Banks, Inc., Republic New York
Corporation, SunTrust Banks, Inc., Wachovia Corporation, Bank of Boston
Corporation, Mellon Bank Corporation, and First Fidelity Bancorporation.
National City Corporation is no longer among the top 25 domestic financial
institutions, and KeyCorp. now is included within the Peer Group (based on asset
size). The returns of each of these corporations have been weighted according to
their market capitalization at the beginning of each year presented.
[(GRAPH)]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fleet Financial S&P 500 KBW Eastern Peer Group
<S> <C> <C> <C> <C>
1989 $100 $100 $100 $100
1990 46 97 62 76
1991 107 126 108 123
1992 145 136 150 161
1993 153 150 156 176
1994 154 152 139 168
</TABLE>
INDEBTEDNESS AND OTHER TRANSACTIONS
The banking subsidiaries of Fleet have had transactions in the ordinary
course of business, including borrowings, with certain directors of Fleet and
their associates, all of which were on substantially the same terms (including
the transactions described below other than the loans to Messrs. Higgins and
Sarles), including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and did not involve more
than the normal risk of collectibility or present other unfavorable features.
On August 1, 1992 and January 16, 1992, respectively, Fleet made a $100,000
loan to each of Messrs. Higgins and Sarles to facilitate his relocation, secured
in each case by a second mortgage on his residence. Mr. Higgins' loan was
interest free until July 1, 1994 and was repaid on December 1, 1993. Mr. Sarles'
loan was interest-free until January 1, 1995 and thereafter bore interest at the
prime rate of interest of Fleet-RI until its repayment on January 13, 1995. The
benefit to each of Messrs. Higgins and Sarles as a result of the interest-free
aspects of these loans was $2,671 and $6,451, respectively, in 1992; $5,566 and
$6,089, respectively, in 1993; and $6,089 in 1994 with respect to Mr. Sarles'
loan.
139
<PAGE> 151
[ALTERNATE FLEET PAGE]
In 1972, subsidiaries of Fleet and Gilbane Building Company ("Gilbane"), a
building construction company of which Paul J. Choquette, Jr., a director of
Fleet, is President and a director, formed an equal partnership (the "Gilbane
Partnership") to develop an urban renewal project, including a shopping center
and residential units, in Narragansett, Rhode Island. The initial phase was an
apartment complex developed by a limited partnership of which the Gilbane
Partnership is the general partner and in which it has a 5 percent interest. The
second phase was a shopping center and condominium development. Fleet Real
Estate, Inc., a subsidiary of Fleet ("FRE"), made loans in connection with these
projects having an aggregate principal balance as of December 31, 1994 of
approximately $684,054 (the highest amount outstanding since January 1, 1994
having been $890,444), including loans aggregating $188,928 which are
non-performing and were originally made pursuant to the Gilbane Partnership's
commitment to fund certain contingencies relating to the apartment complex. FRE
has refinanced the current portion of the loans with a five-year term loan which
bears interest at a fixed rate of 9.76% per annum and matures on December 15,
1999. In addition, Fleet-RI leases space from the Partnership in the shopping
center for a branch bank at an annual cost of approximately $17,671.
In 1984, Fleet-RI issued a $4,136,000 letter of credit (the "Letter of
Credit") to enhance a series of tax-exempt bonds issued by the Rhode Island
Industrial Facilities Corporation ("RIIFC"). The proceeds of the bonds were
loaned to a limited partnership, the general partner of which is Gilbane
Properties, Inc. ("Gilbane Properties"), a wholly-owned subsidiary of Gilbane,
for the development of an office building in Middletown, Rhode Island. The
Letter of Credit was placed on non-performing status in the fourth quarter of
1992 as a result of insufficient collateral coverage, and a September 1994
appraisal showed a further significant diminution in value. In the fourth
quarter of 1994, a default occurred under the bonds due to the borrower's
inability either to pay off the bonds or obtain a substitute letter of credit
prior to the expiration of the Fleet-RI Letter of Credit on December 1, 1994.
The Letter of Credit was drawn on December 1, 1994 in the amount of $3,883,538
(the highest amount outstanding under the Letter of Credit since January 1,
1994), and the borrower's obligation was converted to a demand note with a per
annum interest rate equal to two percent above Fleet-RI's prime rate of
interest. As of December 31, 1994, the principal amount outstanding under the
note was $3,494,000. Fleet-RI placed the loan on non-accrual status and
foreclosed on the property in January 1995.
The Arcade Company, a limited partnership, the co-general partners of which
are Mr. Choquette and Gilbane Properties, received a non-recourse $2,150,000
loan from the proceeds of RIIFC tax-exempt bonds which were purchased by
Fleet-RI. In 1991, in response to concerns raised by the then most recent
appraisal, Gilbane partially guaranteed the bonds. Gilbane's guarantee plus the
underlying value of the collateral were, in combination, sufficient at that time
to demonstrate full collectibility of such bonds. In the first quarter of 1993,
however, a new appraisal was completed on the property which showed a further
significant diminution in value. Despite the absence of any payment default
since the issuance of the bonds, Fleet-RI was unable to demonstrate full
collectibility of the bonds and thus placed the bonds on non-performing status.
The principal amount outstanding on the bonds at December 31, 1994 was
$1,737,966 (the highest amount outstanding on the bonds since January 1, 1994
having been $1,845,279). In February 1995, Fleet-RI agreed to the Arcade
Company's sale of the property to an unrelated third party for $76,000, the net
proceeds of which (approximately $13,000) were paid to Fleet-RI. Fleet-RI also
collected approximately $400,000 on Gilbane's partial guarantee (which amount
represented Gilbane's full legal obligation under the guarantee) and Fleet-RI
received approximately $305,000 from the bond trustee. In addition, Fleet-RI
applied approximately $256,000 of interest paid to reduce the principal amount
outstanding on the bonds. Fleet-RI recognized approximately a $761,000 principal
loss on this transaction.
A subsidiary of Fleet is a partner in several partnerships with certain
other parties, including subsidiaries of, and limited partnerships organized by,
Gilbane to construct and manage Fleet's headquarters building, and to
rehabilitate an adjacent structure. One of the partnerships has constructed a
parking garage on land it is leasing from Fleet-RI. Fleet and Gilbane have
46.55% and 36.75% partnership interests, respectively, in the partnership that
developed the new headquarters building. In 1992, FRE provided permanent
mortgage financing to three of such partnerships in the amount of $54,000,000,
secured by a first mortgage on the Fleet Center office complex and the Arcade
garage. As of December 31, 1994, the amount remaining unpaid under the loan was
$53,039,147 (the highest amount outstanding since January 1, 1994 having been
$53,562,998).
140
<PAGE> 152
[ALTERNATE FLEET PAGE]
The loan presently carries an interest rate of 8.5% per annum plus a contingent
interest feature that serves to enhance FRE's yield. The loan closed and was
fully funded on December 31, 1992. Fleet and Fleet-RI have leased space in the
Fleet Center for a total annual rental of approximately $2,591,784.
A company of which John R. Riedman, a director of Fleet, is an executive
officer leases office space to a subsidiary of Fleet. In 1994, the gross rental
proceeds from such lease were $127,500. The company also leases space to a
second subsidiary of Fleet. The gross rental proceeds from this lease were
$385,000 in 1994. Both leases contain escalation clauses for services.
In December 1994, Fleet acquired an aircraft from William Barnet & Son,
Inc., a company of which William Barnet, a director of Fleet, is President and a
100% stockholder, at a purchase price of $1,275,000. The purchase price was
determined by Fleet's controller based on appraisals furnished by two
independent consultants regarding the fair market value of the aircraft.
An insurance agency of which Mr. Riedman is an executive officer and
principal stockholder has assisted Fleet in obtaining coverage under various
insurance policies necessary for its business operations. During 1994, the
agency received from Fleet commissions and fees of approximately $150,000. Fleet
believes that such commissions and fees are at rates customary in the industry.
One of Fleet's subsidiaries leases office space for one dollar per annum
and shared expenses from Delta Properties. Michael Picotte, a director of Fleet,
is a 50% partner in Delta Properties. The lease expires in December 2004.
A subsidiary of Fleet is currently a participant in a syndicated bank
credit agreement and a working capital facility with The Stop & Shop Companies,
Inc. ("Stop & Shop"). Pursuant to such credit agreement and working capital
facility in 1994, the subsidiary received approximately $25,894, which amount
included commitment fees and a fee relating to the refinancing of the facility
in 1994. Automatic teller machines of a Fleet subsidiary are located in a number
of Stop & Shop's store and office locations. The subsidiary paid fees to Stop &
Shop of approximately $267,550 during 1994 as a result of this activity. A
subsidiary of Fleet provides investment services with respect to Stop & Shop's
pension master trust. Such subsidiary received fees for these services in 1994
of approximately $33,672. In addition, Fleet's subsidiaries provide certain
non-credit banking services (such as bank depositary services) to Stop & Shop
and its subsidiaries. KKR, which beneficially owns more than 5% of Fleet Common
Stock, beneficially owns in excess of 10% of the common stock of Stop & Shop.
Mr. Murray currently serves as a director of Stop & Shop. See also
"-- Compensation Committee Interlocks and Insider Participation.
RATIFICATION OF THE SELECTION OF FLEET'S INDEPENDENT AUDITORS
The ratification of the selection of KPMG Peat Marwick LLP to serve as
independent auditors of Fleet for the current fiscal year ending December 31,
1995, will be submitted to the Fleet Meeting. Representatives of KPMG Peat
Marwick LLP will be present at the Fleet Meeting, will have the opportunity to
make a statement if they so desire and will be available to answer appropriate
questions.
The firm of KPMG Peat Marwick LLP has advised Fleet that neither it nor any
of its members has any direct financial interest in Fleet as a promoter,
underwriter, voting trustee, director, officer or employee. All professional
services rendered by KPMG Peat Marwick LLP during the year ended December 31,
1994 were furnished at customary rates.
The ratification of the selection of independent auditors requires the
affirmative vote of a majority of the shares entitled to vote thereon,
represented in person or by proxy at the Annual Meeting when a quorum is
present.
THE FLEET BOARD RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal for presentation to the
1996 Annual Meeting of Stockholders must submit the proposal to Fleet, 50
Kennedy Plaza, Providence, Rhode Island 02903,
141
<PAGE> 153
[ALTERNATE FLEET PAGE]
Attention: Secretary and General Counsel, not later than November 10, 1995 for
inclusion, if appropriate, in Fleet's Proxy Statement and the form of proxy
relating to the 1996 Annual Meeting.
OTHER BUSINESS
Fleet management knows of no matters to be brought before the meeting other
than those referred to, but if any other business should properly come before
the meeting, the persons named in the proxy intend to vote in accordance with
their best judgment.
142
<PAGE> 154
[ALTERNATE SHAWMUT PAGE]
ELECTION OF SHAWMUT DIRECTORS;
APPOINTMENT OF SHAWMUT INDEPENDENT ACCOUNTANTS
VOTING REQUIREMENTS
The Shawmut Board has fixed the close of business on May 3, 1995 as the
Record Date. Only the holders of record of the outstanding shares of Shawmut
Common Stock on the Record Date will be entitled to notice of, and to vote at,
the Shawmut Meeting and any adjournments or postponements thereof. At the Record
Date, shares of Shawmut 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 Shawmut Common Stock outstanding and entitled to vote on the Record
Date is necessary to constitute a quorum at the Shawmut Meeting. Abstentions and
broker non-votes will be counted as present at the Shawmut Meeting for purposes
of determining the presence or absence of a quorum for the transaction of
business.
Under Delaware law, directors will be elected by a plurality of the votes
of the shares present in person or represented by proxy at the meeting and
entitled to vote. "Plurality" means that the nominees who receive the largest
number of votes cast "For" are elected as directors, up to the maximum number of
directors to be chosen at the meeting. Under Delaware law, if a quorum is
present, the affirmative vote of a majority of the shares represented at the
meeting and entitled to vote on the subject matter is required to approve an
action other than election of directors, unless a greater vote is required under
Delaware law or a corporation's articles or bylaws. Neither the Shawmut
Certificate nor the Shawmut By-laws vary this requirement with regard to the
appointment of independent accountants.
Accordingly, with regard to the election of directors, votes may be cast in
favor or withheld. Votes that are withheld will have the same legal effect as a
vote against the election of each director from whom such votes are withheld.
Abstentions may not be specified with respect to the election of directors.
Abstentions may be specified with respect to appointment of independent
accountants and will have the same legal effect as a vote against such proposal.
Under the Stock Exchange rules, brokers who hold shares in street name for
customers who are the beneficial owners of such shares have the authority to
vote on certain "routine" items when they have not received instructions from
such beneficial owners. With respect to certain non-routine matters, however, a
broker does not have authority to vote absent instructions from the beneficial
owners. Accordingly, a broker non-vote generally occurs when customers have not
provided any voting instructions with respect to certain non-routine matters.
The election of directors and the appointment of independent accountants are
considered routine matters under the Stock Exchange rules. Accordingly, Shawmut
does not expect to receive any broker non-votes with respect to these matters.
Broker non-votes will have no effect on the outcome of the election of directors
or the appointment of independent accountants.
See "MEETING OF SHAWMUT STOCKHOLDERS -- Proxies; Voting and Revocation" and
"-- Votes Required to Approve the Merger; Principal Stockholders" for a
discussion of the foregoing with respect to the vote on the Merger.
120
<PAGE> 155
<TABLE>
[ALTERNATE SHAWMUT PAGE]
COMMON STOCK OWNERSHIP
The ownership of the Shawmut Common Stock is widely diversified. On
[ ], 1995, approximately [ ] shareholders of record owned
[121,703,792] shares, excluding 163,511 shares that are reserved for issuance in
connection with the completion of the exchange of the securities of certain
previously acquired companies. Holders of outstanding shares are entitled to one
vote per share. The holders of a majority of the total shares issued and
outstanding, whether present in person or represented by proxy, will constitute
a quorum for the transaction of business at the annual meeting. The following
table sets forth information as to the only persons known to the board to be the
beneficial owners of 5% or more of the outstanding Shawmut Common Stock:
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
---------------------------------------------- ----------------------- ----------
<S> <C> <C>
Fleet Financial Group, Inc.................... 30,017,492(1) 20.6%(1)
50 Kennedy Plaza
Providence, RI 02903
FMR Corp...................................... 8,614,167(2) 7.16%(2)
82 Devonshire Street
Boston, MA 02109
<FN>
- ---------------
(1) Based upon information contained in a Schedule 13D dated February 20, 1995
and filed under the Exchange Act by Fleet. In connection with the execution
of the Merger Agreement, Shawmut granted Fleet an option (the "Shawmut
Option") to purchase up to 24,195,625 shares (the "Shawmut Option Shares")
of Shawmut Common Stock upon the occurrence of certain events, none of which
has occurred as of the date hereof. Because the Shawmut Option is not
currently exercisable, Fleet has disclaimed beneficial ownership of the
Shawmut Option Shares. Other than the Shawmut Option Shares, Fleet
beneficially owns and has sole voting and sole dispositive power with
respect to 5,811,900 shares of Shawmut Common Stock. Certain directors and
executive officers of Fleet beneficially own and have sole voting and sole
dispositive power with respect to, in the aggregate, 4,950 shares of Shawmut
Common Stock. Terrence Murray, the Chairman, Chief Executive Officer and
President of Fleet, beneficially owns 17 currently exercisable Shawmut
Warrants, each warrant representing the right to purchase one share of
Shawmut Common Stock at an exercise price of $22.11.
(2) Based upon information contained in a Schedule 13G dated February 13, 1995
and filed under the Exchange Act by FMR Corp. ("FMR"). Based upon the
information contained in the Schedule 13G, FMR is a beneficial owner of
these shares as a result of various of its subsidiaries and affiliates
providing investment advisory and management services and has sole voting
power with respect to 232,455 of the shares, shared voting power with
respect to 2,000 of the shares, sole dispositive power with respect to
8,612,167 of the shares and shared dispositive power with respect to 2,000
of the shares.
</TABLE>
121
<PAGE> 156
[ALTERNATE SHAWMUT PAGE]
The table below sets forth beneficial ownership of Shawmut Common Stock by
each director, and by all directors and executive officers as a group as of
[ ]. As of that date all directors and executive officers as a
group [(21 in number)] controlled [ ] shares directly and controlled
[ ] shares indirectly, or a total of [ ] shares representing [ %]
of the outstanding shares. No director or executive officer beneficially owns or
controls directly or indirectly more than [ %] of the outstanding shares. The
group [(21 in number)] would have beneficially owned or controlled [ ]
shares, representing [ %] of outstanding shares, if all stock options
exercisable within [60] days of [ ], 1995 had been exercised. Except
as may be indicated below, each director possesses sole voting and investment
power with respect to the number of shares described as beneficially owned.
Except as set forth below, no director or executive officer reported any
ownership of any shares of any series of Shawmut Preferred Stock. All of the
directors are being nominated for reelection.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP
------------------------ --------------------
<S> <C>
Joel B. Alvord.................................................... [278,762](1)(2)
Stillman B. Brown................................................. [27,316]
John T. Collins(5)................................................ [32,911]
Ferdinand Colloredo-Mansfeld...................................... [10,666]
Bernard M. Fox.................................................... [4,270]
Robert J. Matura(6)............................................... [9,435]
Gunnar S. Overstrom, Jr........................................... [249,712](2)(3)
Lois D. Rice(7)................................................... [3,410]
Maurice Segall.................................................... [28,768]
Samuel O. Thier................................................... [283]
Paul R. Tregurtha................................................. [25,666]
Wilson Wilde...................................................... [13,410]
Directors and executive officers as a group....................... [945,752](2)(4)
---------
<FN>
- ---------------
(1) Includes [ ] shares that are subject to unexercised stock options
which are exercisable within 60 days of [ ], 1995, none of
which are at option prices in excess of the market price of Shawmut Common
Stock on [ ], 1995; and [ ] shares held in the
employees' thrift plan.
(2) Does not include unexercised stock options to acquire an aggregate of
shares which are not exercisable within 60 days of
[ ], 1995 and restricted stock units awarded under
Shawmut's Performance Equity Plan as follows: options to acquire
shares at an average exercise price of $ and restricted
stock units held by Mr. Alvord; options to acquire shares at an
average exercise price of $ and restricted stock units
held by Mr. Overstrom; options to acquire shares at an average
exercise price of $ and restricted stock units held by
Mr. Eyles; options to acquire shares at an average exercise price
of $ and restricted stock units held by Mrs. Kraus;
options to acquire shares at an average exercise price of
$ and restricted stock units held by Mr. Rothmeier; and,
with respect to all other executive officers, options to acquire an
aggregate of shares at an average exercise price of $ and
restricted stock units. As more fully described above (see
"INTERESTS OF CERTAIN PERSONS IN THE MERGER -- Interests of Shawmut
Directors and Executive Officers"), the approval of the Merger by the
holders of the Shawmut Common Stock will cause all such options to become
fully exercisable and all restrictions on such restricted stock units to
lapse.
(3) Includes [ ] shares that are subject to unexercised stock options
which are exercisable within 60 days of [ ], 1995, none of which
are at option prices in excess of the market price of the Shawmut Common
Stock on [ ], 1995; [ ] shares held in the employees'
thrift plan; and [ ] shares held in the names of his wife and
children.
</TABLE>
122
<PAGE> 157
[ALTERNATE SHAWMUT PAGE]
(4) With respect to executive officers other than Messrs. Alvord and Overstrom,
this number includes (i) shares that are subject to unexercised stock
options which are exercisable within 60 days of [ ],
1995, none of which are at option prices in excess of the market price of
the Corporation's common stock on [ ], 1995, as follows:
Mr. Eyles, [ ] shares, Mrs. Kraus, [ ] shares, Mr.
Rothmeier, [ ] shares, and for all other executive officers,
[ ] shares; (ii) shares held in the employees' thrift plan as
follows: Mr. Eyles, [ ] shares, Mrs. Kraus, [ ] shares,
Mr. Rothmeier, [ ] shares, and for all other executive officers,
[ ] shares; (iii) shares of restricted stock as follows: Mr. Eyles,
[ ] shares, Mrs. Kraus, [ ] shares, Mr. Rothmeier,
[ ] shares, and for all other executive officers, [ ]
shares; and (iv) with respect to Mr. Eyles, Mrs. Kraus, Mr. Rothmeier, and
all other executive officers, [ ] shares held in the name of family
members. The approval of the Merger by the holders of the Shawmut Common
Stock will cause all such options to become fully exercisable and all
restrictions on shares of restricted stock to lapse.
(5) In addition, Mr. Collins owns 10,000 Shawmut 9.35% Depositary Shares.
(6) In addition, Mr. Matura owns 1,000 Shawmut 9.30% Depositary Shares.
(7) In addition, Mrs. Rice owns 124 Shawmut 9.30% Depositary Shares and 1,000
Shawmut 9.35% Depositary Shares.
ELECTION OF DIRECTORS
The directors are elected annually by the holders of the Shawmut Common
Stock and represent the interests of shareholders of Shawmut as a whole. The
Shawmut Board holds regular meetings to review significant matters affecting
Shawmut and to act on matters requiring board consideration. Shawmut Board and
committee meetings are held alternately in Hartford and Boston. The Shawmut
Board met 13 times during 1994. Each director attended at least 75% of the
aggregate of the number of board meetings and meetings of the committees on
which he or she served. Background information about each nominee for director
appears on pages [115] through [118] of this Joint Proxy Statement-Prospectus.
Under the Shawmut By-laws, the Shawmut Board can increase the number of
directorships between annual meetings by not more than eight and fill any
vacancy thus created. All of the nominees named below are members of the present
Shawmut Board and, with the exception of Dr. Thier, were elected by the holders
of the Shawmut Common Stock at the last annual meeting. At the 1995 annual
meeting, directors are to be elected for a term of one year, each to hold office
until the expiration of his or her term until his or her successor is elected
and qualified, or, if earlier, until the Effective Time of the Merger. Unless
authority is withheld, it is the intention of the persons named in the proxy, or
authorized substitutes, to vote for the election of the following 12 nominees.
THE SHAWMUT BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR ELECTION AS
DIRECTORS.
JOEL B. ALVORD, 56, is chairman and chief executive officer of Shawmut,
chairman and a director of Shawmut-MA and a director of Shawmut-CT. He has
served as a director of Shawmut since 1987, and additionally as a director of
Shawmut-CT since 1978, and Shawmut-MA since 1988.
Mr. Alvord began his 31-year Shawmut-CT tenure in 1963. He became an
officer in 1965, a vice president in 1967, and executive vice president in 1976.
In January 1978, he was elected president and director of both the bank and its
parent holding company, HNC. From 1986 to 1988, he was president, chief
executive officer, and director of HNC and chairman, chief executive officer,
and director of Shawmut-CT. In February 1988, when SC and HNC merged and became
subsidiaries of Shawmut, Mr. Alvord was named president and chief executive
officer of the new combined corporation. In August 1988, he additionally assumed
his current title of chairman of Shawmut. In September 1994, Mr. Alvord was
appointed chairman of Shawmut-MA. He is also a member of the community affairs,
trust, and loan and investment committees of Shawmut-CT and Shawmut-MA. Mr.
Alvord is active in numerous community, civic, and industry organizations. He is
director of the Hartford Steam Boiler Inspection and Insurance Company, and Jobs
for Massachusetts. He also serves as a trustee of the Wadsworth Atheneum, and is
a member of the Museum of Fine Arts (Boston), the Wang
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<PAGE> 158
[ALTERNATE SHAWMUT PAGE]
Center for Performing Arts, the Massachusetts Business Roundtable, The Bankers
Roundtable and the Boston Symphony Orchestra.
A native of Manchester, Connecticut, Mr. Alvord is a graduate of Dartmouth
College where he received his undergraduate degree and earned a Master of
Business Administration from the Amos Tuck School of Business Administration in
1961. He is a member of the community affairs committee of Shawmut.
STILLMAN B. BROWN, 61, is President of Harcott Corporation (investments),
Lake Worth, Florida.
Before joining Harcott Corporation (formerly Harcott Associates), Mr. Brown
was executive vice president, chief financial officer and a director of United
Technologies Corporation, where he served in a variety of executive positions
from 1978 to 1986. He is a director of The Stanley Works, and former chairman of
the board of regents of the University of Hartford.
Mr. Brown has served as a director of Shawmut since 1987 and Shawmut-CT
from 1979 to 1988. He is chairman of the audit committee and a member of the
human resources committee of Shawmut, and a member of the loan and investment
committees of Shawmut-CT and Shawmut-MA.
JOHN T. COLLINS, 48, is chairman and chief executive officer of The Collins
Group, Inc. (acquisition company), Boston, Massachusetts.
Previously, Mr. Collins was president and chief executive officer of
Quebecor Printing, (USA) Corp. Mr. Collins joined Quebecor Printing, (USA) Corp
in 1990. From 1986 to 1990 he served as president and chief executive officer of
Quebecor America, Inc. (printing). Mr. Collins is an advisory board member of
Pell Rudman Venture Partners (investments), board member of the National
Association of Printers and Lithographers, vice chairman of the board of
trustees of Bentley College, and a trustee of Beth Israel Hospital and the
Massachusetts Chapter of the Leukemia Society of America. Mr. Collins is also on
the advisory council of Junior Achievement of Northern New England.
Mr. Collins has served as a director of Shawmut and Shawmut-CT since 1992,
and Shawmut-MA since 1987. He is a member of the audit committee and the human
resources committee of Shawmut, and a member of the loan and investment
committees of Shawmut-CT and Shawmut-MA.
FERDINAND COLLOREDO-MANSFELD, 55, is chairman and chief executive officer
of Cabot Partners (investment management company), Boston, Massachusetts.
Mr. Colloredo-Mansfeld has held his present position since 1990. From 1986
through October 1990 he served as chairman and chief executive officer of Cabot,
Cabot & Forbes Realty Advisors, Inc. (predecessor of Cabot Partners) and
chairman, chief executive officer and president of the development company
Cabot, Cabot & Forbes. He is also a director of Data General Corporation and
Raytheon Company.
Mr. Colloredo-Mansfeld has served as a director of Shawmut since 1988 and
SC from 1983 to 1988. He is a member of the nominating committee of Shawmut.
BERNARD M. FOX, 52, is president and chief executive officer and a trustee
of the Northeast Utilities System, Hartford, Connecticut.
Mr. Fox has held his present position since July 1993. From June 1987 to
July 1993, he served as president and chief operating officer and financial
officer. He is a director of The Dexter Corporation (specialties materials),
CIGNA Corporation, The Connecticut Business and Industry Association, the
Institute of Nuclear Power Operations, Mount Holyoke College, the Institute of
Living and Hartford Hospital. In addition, Mr. Fox is a fellow and founder of
the American Leadership Forum.
Mr. Fox has served as a director of Shawmut since January 1993, Shawmut-CT
from 1988 to 1994, and Shawmut-MA from 1992 to 1994. He is a member of the audit
committee of Shawmut.
ROBERT J. MATURA, 61, is chairman and chief executive officer of Robert J.
Matura Associates and its subsidiary, Treefort Fellows (consulting firms
specializing in textiles and apparel), Stamford, Connecticut.
Mr. Matura has held his present position since June 1992. From July 1988 to
May 1992 he served as chairman, president and chief executive officer of The
William Carter Company (manufacturer of infants' and
124
<PAGE> 159
[ALTERNATE SHAWMUT PAGE]
childrens' apparel). From July 1986 through June 1988 he served, pro bono, as
chief executive officer and chancellor of Sacred Heart University. From March
1976 to June 1986 Mr. Matura was chief executive officer and chairman of the
board of Warnaco, Inc. (an international diversified apparel company). He is a
director, investor and consultant at Unisa, Inc. (women's shoe manufacturer) and
a director of EMI and Ed Mitchell's, Inc. (clothing retailer). Mr. Matura is
chairman of the executive committee of the board of trustees and a trustee of
Sacred Heart University and a regent of St. Peter's College.
Mr. Matura has served as a director of Shawmut and Shawmut-MA since 1992
and Shawmut-CT since 1984. He is a member of the audit committee and the human
resources committee of Shawmut.
GUNNAR S. OVERSTROM, JR., 52, is president and chief operating officer of
Shawmut, chairman, chief executive officer and a director of Shawmut-CT and
president, chief executive officer and a director of Shawmut-MA. He has served
as a director of Shawmut since 1987, Shawmut-CT since 1986 and Shawmut-MA since
1989.
Mr. Overstrom joined Shawmut-CT in 1975 as vice president and was promoted
to senior vice president in 1977. In 1979 he was appointed Shawmut-CT's
executive vice president and chief financial officer. That same year he was
named chief financial officer of HNC and became a director and its executive
vice president in 1982. From 1986 to October 1992, Mr. Overstrom served as
president of Shawmut-CT. In 1988, he also served as chief executive officer of
Shawmut-CT; and in October 1992, he became chairman of Shawmut-CT and chief
executive officer of Shawmut-MA. From October 1992 to September 1994, Mr.
Overstrom also served as chairman of Shawmut-MA. In February 1988, when SC and
HNC merged and became subsidiaries of Shawmut, he was appointed vice chairman
and chief financial officer of Shawmut, responsible for Connecticut operations.
In August 1988, he assumed his current title of president and chief operating
officer of Shawmut. Mr. Overstrom is also a member of the community affairs,
trust, and loan and investment committees of Shawmut-CT and Shawmut-MA. An
active supporter of numerous organizations, Mr. Overstrom is a corporator of
Hartford Hospital, Saint Francis Hospital, Mount Sinai Hospital and the
Institute of Living. He is a trustee of Babson College and of the Museum of
Science, a director of Connecticut Health Systems, Inc., president of the Old
State House in Hartford, and a member of the Emerging Issues Committee of The
Bankers Roundtable. He is also a member of Boston's Private Industry Council and
serves on its Corporate Diversity Committee.
Mr. Overstrom received his undergraduate degree from Babson College, a law
degree from Suffolk University, and a master's degree in economics from Trinity
College. He is a member of the community affairs committee of Shawmut.
LOIS D. RICE, 62, is a guest scholar at the Brookings Institution, Program
in Economic Studies, in Washington, D.C.
Mrs. Rice joined the Brookings Institution in 1991. From 1981 to 1991 she
was a director and senior vice president of Government Affairs at Control Data
Corporation. She is a director of Bell Atlantic-Washington, D.C., International
Multifoods, McGraw Hill, The Hartford Steam Boiler Inspection and Insurance
Company, Unum Corp. (insurance company) and the Center for Naval Analysis. Mrs.
Rice is a trustee of The Urban Institute and The Harry Frank Guggenheim
Foundation, and is a member of the President's Foreign Intelligence Advisory
Board.
Mrs. Rice has served as a director of Shawmut since 1992. She is a member
of the nominating committee and the community affairs committee of Shawmut.
MAURICE SEGALL, 65, is a senior lecturer at the MIT-Sloan School of
Management, Cambridge, Massachusetts.
Previously, Mr. Segall was chairman, chief executive officer, president and
a director of Zayre Corporation (department stores), Framingham, Massachusetts.
He retired from Zayre Corporation in June 1989. Mr. Segall joined Zayre
Corporation as president and chief executive officer in 1978. He is a director
of AMR Corporation and Harcourt General Corporation (publishing and specialty
retailing), and a trustee of Beth Israel Hospital, Massachusetts General
Hospital and the Museum of Fine Arts (Boston).
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Mr. Segall has served as a director of Shawmut since 1987 and SC from 1983
to 1988. He is a member of the audit committee and the human resources committee
of Shawmut.
SAMUEL O. THIER, 57, is president of Massachusetts General Hospital,
Boston, Massachusetts, and professor of medicine at Harvard Medical School,
Boston, Massachusetts.
Dr. Thier has held his present position since May 1994. Prior to that, he
served as president of Brandeis University from 1991 to 1994. From 1985 to 1991,
Dr. Thier was president of the Institute of Medicine, National Academy of
Sciences. He is a director of Merck & Company and National Health Labs, and a
trustee of Johns Hopkins University and the Museum of Science (Boston).
Dr. Thier has served as a director of Shawmut since July 1994.
PAUL R. TREGURTHA, 59, is chairman, chief executive officer and a director
of Mormac Marine Group, Inc. (marine shipping), Stamford, Connecticut and
chairman of Moran Transportation Company (tug/barge shipping), Greenwich,
Connecticut.
Mr. Tregurtha joined Mormac Marine Group in 1988 and Moran Transportation
in July 1994. Prior to that, he had served as chairman, president and chief
executive officer of Moore McCormack Resources, Inc. (construction materials and
oil and gas exploration). He is a director and vice chairman of Interlake
Holding Company and Lakes Shipping Company, Inc. (marine shipping) and a
director of Brown & Sharpe Manufacturing Company and FPL Group, Inc. (Florida
utilities). Mr. Tregurtha is a trustee of Teachers Insurance and Annuity
Association of America.
Mr. Tregurtha has served as a director of Shawmut since 1987 and Shawmut-CT
from 1979 to 1988. He is chairman of the human resources committee of Shawmut.
WILSON WILDE, 67, is chairman of the executive committee and a director of
The Hartford Steam Boiler Inspection and Insurance Company, Hartford,
Connecticut.
Mr. Wilde joined Hartford Steam Boiler in 1953, and served as president
from November 1971 until September 1993, and as chief executive officer from
November 1971 to May 1994. From November 1993 to May 1994 , he served as
chairman. In April 1994, Mr. Wilde assumed his current title of chairman of the
executive committee. He is a director of Phoenix Home Life Mutual Insurance
Company and PXRE Corporation (reinsurance company).
Mr. Wilde has served as a director of Shawmut since 1987 and HNC and
Shawmut-CT from 1972 to 1988. He is chairman of the nominating committee of
Shawmut, and a member of the trust committees of Shawmut-CT and Shawmut-MA.
COMMITTEES OF THE BOARD
The Shawmut Board has established four standing committees to assist it in
the discharge of its responsibilities-the audit committee, the community affairs
committee, the human resources committee and the nominating committee.
Additional information concerning the committees, including membership, is
presented below.
The audit committee consists of five members: four nonemployee directors
from Shawmut (Messrs. Stillman B. Brown, John T. Collins, Bernard M. Fox and
Robert J. Matura), and one member (Mr. S. Caesar Raboy) who is a nonemployee
director of Shawmut's principal subsidiaries, Shawmut-CT and Shawmut-MA. The
committee has primary oversight responsibility for specific functions within
Shawmut and its subsidiaries, including (i) the integrity of financial
information and the financial reporting process, (ii) the adequacy of the
internal control environment, (iii) the objectivity of the internal and
independent audit processes, (iv) review of reports of examination and
inspection by regulatory agencies and responses thereto, (v) review of
performance under Shawmut's compliance program, including the review of
Shawmut's overall processes for establishing and updating policies and
procedures and (vi) oversight of an independent credit review function charged
with the review of credit and loan administration policies and procedures review
of Shawmut's loan portfolio, compliance with the credit review systems policies
and procedures, and evaluation of the quality and trends in the loan portfolio.
Each year it recommends the appointment of independent
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<PAGE> 161
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accountants for Shawmut and meets with representatives of that firm and with the
internal auditor. The committee met five times during 1994.
The community affairs committee consists of eight members: one nonemployee
director of Shawmut (Mrs. Lois D. Rice), two employee directors of Shawmut
(Messrs. Joel B. Alvord and Gunnar S. Overstrom), four nonemployee directors of
Shawmut-CT and Shawmut-MA (Mr. Walter H. Monteith, Ms. Evelyn F. Murphy, Ms.
Deborah B. Prothrow-Stith and The Honorable Paul E. Tsongas), and one employee
director of Shawmut-CT and Shawmut-MA (Mrs. Eileen S. Kraus). The committee
oversees compliance by Shawmut and its subsidiaries with the policies and
provisions of the Community Reinvestment Act of 1978, as amended, and
establishes and supervises policies relating to voluntary corporate
contributions and other matters of business and community conduct, all as the
Shawmut Board of directors or the chairman may from time to time specify or
request. The committee met four times during 1994.
The human resources committee consists of five members, all of whom are
nonemployee directors of Shawmut (Messrs. Stillman B. Brown, John T. Collins,
Robert J. Matura, Maurice Segall and Paul R. Tregurtha). The committee advises
the Shawmut Board on all matters pertaining to compensation programs and
policies and establishes guidelines for employee incentive and benefits
programs, which it reviews on a continuing basis. It makes specific
recommendations relating to salaries of officers with general management
responsibility and relating to all incentive awards, including equity-based
awards. The committee met six times during 1994.
The nominating committee consists of three members, all of whom are
nonemployee directors of Shawmut (Mr. Ferdinand Colloredo-Mansfeld, Mrs. Lois D.
Rice and Mr. Wilson Wilde). It advises the Shawmut Board on all matters with
respect to (i) the appropriate number of directors to serve on the Shawmut
Board; (ii) identification of qualified people to sit on the Shawmut Board;
(iii) assessment of director performance; and (iv) other recommendations related
to the composition or selection of directors for the Shawmut Board. The
committee met once during 1994.
Holders of Shawmut Common Stock who wish to have the board consider
individuals for nomination as directors should submit to the secretary of
Shawmut a written statement detailing the qualifications of each such person
together with relevant biographical information and a written statement by the
candidate of his or her willingness to serve. The secretary will refer each such
statement to the nominating committee, which will consider the nominee's
demonstrated achievements and recognized abilities in conjunction with corporate
needs and any pertinent regulatory considerations.
In addition, a shareholder may directly nominate a person for election as a
director by complying with Section 4 of the Shawmut By-laws, which provides for
timely notice of such nomination in writing to the secretary of Shawmut, and a
written statement by the candidate of his or her willingness to serve. Said
notice shall include the information required to be disclosed in solicitations
for proxies for election of directors pursuant to Regulation 14A under the
Exchange Act, along with the name, record address, class and number of shares of
Shawmut beneficially owned by the shareholder giving such notice. To be timely,
notice must be delivered to Shawmut not less than 50 nor more than 75 days prior
to the meeting, or, if Shawmut gives less than 65 days' notice of the meeting,
then notice by the shareholder must be received by the close of business on the
15th day following the earlier of the date notice of the meeting was mailed or
public disclosure was made. The foregoing summary is not intended to be complete
and is qualified in its entirety by the Shawmut By-laws, a copy of which may be
obtained from the secretary of Shawmut. As described below, if the Merger
Agreement is consummated, there will not be an annual meeting of Shawmut's
stockholders in 1996. See "-- Stockholder proposals for Next Year's meeting".
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Certain directors and executive officers of Shawmut and their associates
are customers of and have had transactions with Shawmut-CT and Shawmut-MA and
their subsidiaries and affiliates in the ordinary course of business during the
last fiscal year. All loans and commitments included in such transactions were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons
and did not involve more than normal risk of collectibility or
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<PAGE> 162
[ALTERNATE SHAWMUT PAGE]
present other unfavorable features. Additional transactions may be expected to
take place between such persons and these banks in the ordinary course of
business.
DIRECTORS' REMUNERATION
Directors' remuneration for 1994 was fixed by the Shawmut Board at the
board meeting following the annual meeting of shareholders of Shawmut. Each
nonemployee director elected at the 1994 annual meeting of shareholders received
an annual retainer of $25,000, payable in Shawmut Common Stock pursuant to the
restricted stock plan described below, and a fee of $1,500 per meeting attended.
In addition, the chairmen of the audit, human resources and nominating
committees each received an additional cash retainer of $5,000. Employees who
are also directors do not receive any additional compensation for service as
directors. Pursuant to Shawmut's deferred compensation plan for directors,
directors may elect to defer all of their compensation as directors in any one
year.
On April 25, 1989, the shareholders of Shawmut approved the adoption of a
restricted stock plan for nonemployee members of the Shawmut Board, which plan
is administered by the human resources committee. The maximum number of shares
of Shawmut Common Stock that may be granted under the plan is 125,000. Awards of
restricted stock were made automatically, on the date of the 1994 annual meeting
of shareholders, to each nonemployee director who was elected at the 1994
meeting or otherwise continued in office. The number of shares of restricted
stock awarded to each nonemployee director so elected equalled the amount
payable to the nonemployee director as an annual retainer for the calendar year
within which the award date fell, divided by the fair market value of each such
share on the award date. Effective December 15, 1994, the Shawmut Board amended
the restricted stock plan to allow nonemployee directors to elect to receive the
annual retainer in shares of restricted stock of Shawmut, in cash, or in a
combination thereof. The annual retainer does not include fees paid for
attendance at any board or committee meeting or for chairing a committee of the
board. In 1994, a total of 10,390 shares of Shawmut Common Stock were awarded to
nonemployee directors under the amended plan. Directors who are not employees
are not eligible to participate in any of the plans presently in effect for
employees of Shawmut.
In January 1995, as part of Shawmut's policy of providing support for
charitable institutions and in order to retain and attract qualified directors,
the Shawmut Board established a charitable giving program, which will be funded
by life insurance on the lives of the members of the Shawmut Board. Each
director is permitted to recommend up to three tax-exempt charities to receive
contributions. Under the program, directors of Shawmut will be paired up based
upon similar life expectancies. When the first director of the pair of directors
dies, Shawmut will make a charitable contribution of $1 million, paid out over a
period of ten years. Upon the death of the second director of the pair of
directors, the insurance company reimburses Shawmut for the money Shawmut has
paid out, pays out any balance due for the remaining ten year period from the
death of the first director, and pays out the charitable contribution of $1
million over a period of ten years following the death of the second director.
Directors derive no financial benefit from the program. Because of the
deductibility to Shawmut of contributions and the use of insurance, the
long-term cost to Shawmut is not expected to be material.
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EXECUTIVE COMPENSATION
The tables and descriptive information set forth below are being furnished
with respect to those persons who, at December 31, 1994, were Shawmut's chief
executive officer, its four most highly compensated executive officers, other
than the chief executive officer, as well as a former executive officer, whose
salary and bonus exceeded $100,000 for the most recent fiscal year (together,
the "named executive officers").
TABLE I
Table I sets forth certain information concerning the annual and long-term
compensation for services in all capacities to Shawmut for the fiscal years
ended December 31, 1994, 1993 and 1992 of the named executive officers.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
AWARDS
ANNUAL COMPENSATION ----------------------- PAYOUTS
------------------------------------------- RESTRICTED SECURITIES --------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (1)($) (2)($) (3)(#) (4)($) (5)(6)(7)($)
- ---------------------------- ----- -------- -------- ------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel B. Alvord.............. 1994 $650,000 $850,000 $ 39,314 $ 0 102,562 $504,987 $ 18,263
Chairman and Chief Executive 1993 650,000 650,000 9,663 0 117,558 0 19,827
Officer 1992 650,000 200,000 255,753 276,250 50,000 0 33,750
Gunnar S. Overstrom, Jr..... 1994 $510,000 $525,000 $ 32,160 $ 0 68,946 $252,483 $ 8,832
President and Chief 1993 510,000 400,000 9,640 0 83,047 0 12,803
Operating Officer 1992 510,000 150,000 127,544 212,500 40,000 0 19,672
David L. Eyles.............. 1994 $330,000(8) $250,000(9) $ 25,366 $ 0 35,946(9) $125,146 $ 7,613
Vice Chairman and Chief 1993 330,000 230,000 13,099 0 35,740 0 9,016
Credit Policy Officer 1992 258,300 155,000 81,624 154,000 16,000 0 94,305
Eileen S. Kraus............. 1994 $330,000 $220,000 $ 3,924 $ 0 35,852 $125,146 $ 9,413
Vice Chairman; President of 1993 330,000 210,000 4,259 0 35,142 0 13,109
Shawmut-CT 1992 310,000 100,000 36,871 148,750 16,000 0 23,138
Michael J. Rothmeier(10).... 1994 $260,000 $210,000 $ 10,848 $ 0 20,000 $ 87,821 $ 3,217
Executive Vice President of
Shawmut-CT and Shawmut-MA
Allen W. Sanborn(11)........ 1994 $360,000(8) $180,000(9) $ 3,077 $ 0 30,000(9) $125,146 $ 6,754
Vice Chairman; President of 1993 360,000 180,000 3,033 0 20,000 0 8,897
Shawmut-MA 1992 240,000 180,000 1,235 146,250 30,000 0 125,498
<FN>
- ---------------
(1) Amounts reported represent payments or reimbursements of tax liabilities
imputed to the named executive officers. Aggregate perquisite amounts less
than $50,000 or 10% of salary and bonus are excluded, in accordance with the
rules of the Commission.
(2) Based upon the closing price per share on date of grant. The number and
value of the aggregate restricted stock holdings at December 31, 1994 of the
named executive officers, based upon the closing price per share on such
date, are as follows: Mr. Alvord, 8,666 shares, $141,906; Mr. Overstrom,
6,666 shares, $109,156; Mr. Eyles, 0 shares, $0; Mrs. Kraus, 4,666 shares,
$76,406; Mr. Rothmeier, 2,666 shares, $43,656; and Mr. Sanborn, 3,333
shares, $54,578. Dividends are paid on restricted shares at the same rate as
on other shares of Shawmut Common Stock. 1992 grants vest in thirds at
one-year intervals from the date of grant. See "INTERESTS OF CERTAIN PERSONS
IN THE MERGER -- Interests of Shawmut Directors and Executive Officers" for
the effect of approval by the holders of Shawmut Common Stock of the Merger
on such shares of restricted stock.
Such aggregate holdings at December 31, 1994 also include the following
number and value of performance equity share units granted in 1994 (see
Table IV), based upon the closing price per share on such date: Mr. Alvord,
69,000 shares and $1,129,875; Mr. Overstrom, 34,500 shares and $564,938; Mr.
Eyles, Mrs. Kraus and Mr. Sanborn each, 17,100 shares and $280,013; and Mr.
Rothmeier, 13,100 shares and $214,513. Dividend equivalent units accrue on
performance equity share units at the same rate as on shares of Shawmut
Common Stock. The maturation of all performance equity share units granted
</TABLE>
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[ALTERNATE SHAWMUT PAGE]
and dividend equivalent units accrued from the date of grant is contingent
upon corporate performance. See "INTERESTS OF CERTAIN PERSONS IN THE
MERGER -- Interests of Shawmut Directors and Executive Officers" for the
effect of approval by the holders of Shawmut Common Stock of the Merger on
such performance equity share units.
(3) Includes both original options and restoration options granted during 1994.
See Table II.
(4) Represents earnout of the initial performance equity award reflecting 1994
performance inclusive of dividend equivalent units accrued from the date of
grant.
(5) 1994 amounts represent (a) Shawmut matching contributions to employees'
thrift plan, (b) aggregate insurance premiums (executive group life and
split-dollar life policies), respectively, as follows; Mr. Alvord, (a)
$5,400, (b) $6,413; Mr. Overstrom, (a) $5,400, (b) $3,432; Mr. Eyles, (a)
$3,600, (b) $4,013; Mrs. Kraus, (a) $5,400, (b) $4,013; Mr. Rothmeier (a)
$1,800, (b) $1,417; and Mr. Sanborn, (a) $3,600, (b) $3,154. Payout of
discontinued stock equivalent plan for Mr. Alvord of $6,450 is also
included.
(6) 1993 amounts represent (a) Shawmut matching contributions to employees'
thrift plan and (b) aggregate insurance premiums (executive group life and
split-dollar life policies), respectively, as follows; Mr. Alvord, (a)
$5,392, (b) $14,435; Mr. Overstrom, (a) $5,392, (b) $7,411; Mr. Eyles, (a)
$3,598, (b) $5,418; Mrs. Kraus (a) $5,392, (b) $7,717; and Mr. Sanborn, (a)
$3,598, (b) $5,299.
(7) 1992 amounts represent (a) Shawmut matching contributions to employees'
thrift plan and (b) aggregate insurance premiums (executive group life and
split-dollar life policies), respectively, as follows; Mr. Alvord, (a)
$5,237, (b) $28,513; Mr. Overstrom, (a) $5,237, (b) $14,435; Mr. Eyles, (a)
$0, (b) $4,294; Mrs. Kraus (a) $5,237, (b) $17,901; and Mr. Sanborn, (a)
$0, (b) $498. Also includes (i) payments of $90,011 to Mr. Eyles for
services rendered and expenses incurred as a consultant during the first
two months of 1992, and (ii) relocation payment of $125,000 to Mr. Sanborn.
(8) Salary is pro rata from hire date.
(9) Incentive commitments made upon hiring in 1992.
(10) Mr. Rothmeier was not an executive officer prior to 1994.
(11) Mr. Sanborn ceased to be an executive officer of Shawmut effective
September 17, 1994.
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[ALTERNATE SHAWMUT PAGE]
TABLE II
Table II sets forth certain information concerning options granted during
1994 by Shawmut to the named executive officers. The hypothetical present value
on date of grant shown below for Shawmut options granted in 1994 are presented
pursuant to the rules of the Commission and are calculated under the modified
Black-Scholes model for pricing options. The actual before-tax amount, if any,
realized upon the exercise of stock options will depend upon the excess, if any,
of the market price of the Shawmut Common Stock (or, if the Merger is
consummated, the Fleet Common Stock) over the exercise price per share of such
common stock of the Shawmut option at the time the stock option is exercised.
There is no assurance that the hypothetical present values of the options
reflected in this table will be realized. For a description of the treatment of
these options under the Merger Agreement, see "The Merger -- Conversion of
Shawmut Capital Stock; Treatment of Shawmut Stock Options and Shawmut Warrants."
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES PERCENT OF TOTAL GRANT DATE
UNDERLYING OPTIONS GRANTED EXERCISE OR PRESENT
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION VALUE(3)
NAME (1)(#) IN FISCAL YEAR(2) ($/SHARE) DATE(1) ($)
- ------------------------------ -------------------- ----------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Joel B. Alvord................ 85,000 3.4% $23.125 1/27/2004 $452,094
17,562* 0.7% 23.375 1/17/1999 86,207
Gunnar S. Overstrom, Jr....... 55,000 2.2% $23.125 1/27/2004 $292,531
13,946* 0.6% 23.875 1/17/1999 69,922
David L. Eyles................ 30,000 1.2% $23.125 1/27/2004 $159,563
5,946* 0.2% 20.625 1/28/1999 25,754
Eileen S. Kraus............... 30,000 1.2% $23.125 1/27/2004 $159,563
5,852* 0.2% 20.750 1/17/1999 25,500
Michael J. Rothmeier.......... 20,000 0.8% $23.125 1/27/2004 $106,375
Allen W. Sanborn.............. 30,000 1.2% $23.125 1/27/2004 $159,563
<FN>
- ---------------
* Restoration options replace shares tendered to exercise prior options and
shares withheld for tax liability.
(1) Ten year stock options granted in 1994 will become exercisable in annual
one-third increments, beginning one year from the date of grant. Restoration
options will become exercisable one year after grant and will expire at the
same time as the original option. All options will become exercisable upon a
change in control of Shawmut which will be deemed to include the approval
and adoption of the Merger Agreement by the holders of Shawmut Common Stock.
(2) During 1994 a total of 2,472,746 options were granted.
(3) The hypothetical present values on grant date are calculated under the
modified Black-Scholes Model, which is a mathematical formula used to value
options traded on stock exchanges. This formula considers a number of
factors in hypothesizing an option's present value. Factors used to value
options include the stock's expected volatility rate (28%), risk free rate
of return (6%), dividend yield (4%), projected time of exercise (7 years)
and projected risk of forfeiture rate for vesting period (5% per annum).
Restoration option values are calculated using the same model and factors as
original options, except that the projected date of exercise is the
remaining term of the original grant (5 years) and the assumed risk free
rate of return is 5%.
</TABLE>
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TABLE III
Table III sets forth certain information concerning options exercised
during 1994 by the named executive officers and the number and value of
specified options at December 31, 1994. The value of unexercised in-the-money
stock options at December 31, 1994 shown below are presented pursuant to the
Commission's rules. The actual amount, if any, realized upon exercise of stock
options will depend upon the excess, if any, of the market price of the Shawmut
Common Stock (or, if the Merger is consummated, the Fleet Common Stock (see "THE
MERGER -- Treatment of Shawmut Capital Stock; Treatment of Shawmut Stock Options
and Shawmut Warrants")) over the exercise price per share of such common stock
of the stock option at the time the option is exercised. There is no assurance
that the values of unexercised in-the-money options reflected in this table will
be realized.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST YEAR AND FISCAL
YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (1)(#) ($) (#) (#) ($) (#)
- -------------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel B. Alvord............ 25,000 $318,750 120,558 172,562 $ 0 $ 0
Gunnar S. Overstrom, Jr... 20,000 265,000 95,047 113,946 0 0
David L. Eyles............ 8,000 77,000 5,740 65,946 0 0
Eileen S. Kraus........... 8,000 81,000 30,642 55,852 0 0
Michael J. Rothmeier...... 0 0 14,000 29,000 36,750 0
Allen W. Sanborn.......... 0 0 30,000 50,500 52,500 0
<FN>
- ---------------
(1) The named executive officers used already owned shares to pay the exercise
price of options exercised during 1994. The options noted above were
exercised under the restoration option program, pursuant to which such
officers are required to retain, for a minimum of three years, the number of
newly acquired shares equal in value to the after-tax value realized on the
option exercise.
(2) Based upon the difference between exercise price and closing price per share
at December 31, 1994.
</TABLE>
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<TABLE>
TABLE IV
Table IV sets forth certain information concerning long-term incentive
awards granted to the named executive officers during 1994.
LONG-TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR(1)
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(3)
NUMBER OF --------------------------------
SHARE UNITS PERFORMANCE OR THRESHOLD TARGET MAXIMUM
MATURATION OR PAYMENT NAME (2)(#) OTHER PERIOD UNTIL (#) (#) (#)
- --------------------------------- ----------- ------------------ --------- ------ -------
<S> <C> <C> <C> <C> <C>
Joel B. Alvord................... 23,000 12/31/96 0 23,000 23,000
Gunnar S. Overstrom, Jr. ........ 11,500 12/31/96 0 11,500 11,500
David L. Eyles................... 5,700 12/31/96 0 5,700 5,700
Eileen S. Kraus.................. 5,700 12/31/96 0 5,700 5,700
Michael J. Rothmeier............. 5,100 12/31/96 0 5,100 5,100
Allen W. Sanborn................. 5,700 12/31/96 0 5,700 5,700
<FN>
- ---------------
(1) The performance equity plan was adopted during 1993 to provide significant
and fully competitive long-term reward opportunities for key senior members
of management. Participants have the opportunity to earn their target
performance equity share units if predetermined strategic business goals are
achieved, and shareholder value is thereby created.
(2) Under the 1994-1996 cycle, the named executive officers received awards of
target performance equity share units based on individual performance as
determined by the human resources committee.
(3) Awards are earned, based on an accelerating scale, if Shawmut achieves a
preestablished threshold return on average common equity. If the target
return on average common equity is met, the number of shares of Shawmut
Common Stock paid out will equal the number of performance equity share
units granted, plus dividend equivalents. Performance below the threshold
goal will result in no payout; there is no minimum payout under the plan.
Under the plan, all restrictions on outstanding performance equity share
units will lapse upon a change of control which will be deemed to include
the approval of the Merger by the holders of Shawmut Common Stock. See
"INTERESTS OF CERTAIN PERSONS IN THE MERGER -- Interests of Shawmut
Directors and Executive Officers."
</TABLE>
<TABLE>
TABLE V
PENSION TABLE
<CAPTION>
YEARS OF CREDITED SERVICE
FINAL --------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 400,000.......................... 120,000 160,000 200,000 240,000 240,000
500,000.......................... 150,000 200,000 250,000 300,000 300,000
600,000.......................... 180,000 240,000 300,000 360,000 360,000
700,000.......................... 210,000 280,000 350,000 420,000 420,000
800,000.......................... 240,000 320,000 400,000 480,000 480,000
900,000.......................... 270,000 360,000 450,000 540,000 540,000
1,000,000.......................... 300,000 400,000 500,000 600,000 600,000
1,100,000.......................... 330,000 440,000 550,000 660,000 660,000
1,200,000.......................... 360,000 480,000 600,000 720,000 720,000
1,300,000.......................... 390,000 520,000 650,000 780,000 780,000
</TABLE>
Table V sets forth information for determining the estimated annual
retirement benefits commencing at age 65 that would be payable to participants
under Shawmut's defined benefit plans pursuant to which benefits are determined
by final compensation and years of service ("retirement plans"). Compensation
for purposes of the pension table means the final year's salary and the average
of the short-term incentive awards for the five
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[ALTERNATE SHAWMUT PAGE]
highest consecutive calendar years after 1984 (see summary compensation table
for salary). The amounts set forth in the table are offset by social security
benefits and assume payment in the form of a 50% joint and survivor annuity, but
do not reflect the reduction for tax payments discussed below. As of December
31, 1994, remuneration covered by the retirement plans and years of credited
service as defined therein are as follows for the named executive officers: Mr.
Alvord, $1,042,000 and 35 years; Mr. Overstrom, $788,600 and 24 years; Mr.
Eyles, $522,500 and 7 years; Mrs. Kraus, $459,000 and 15 years; and Mr.
Rothmeier, $406,667 and 2 years; and Mr. Sanborn, $540,000 and 2 years.
Shawmut also maintains a split-dollar life insurance program which, in
addition to supplemental insurance benefits, provides a choice of postretirement
death benefits or supplemental retirement income. The formula by which any
retirement benefits for executive officers are determined under the split-dollar
life insurance program is 4% of cumulative base salary (6% for Mr. Alvord) for
all years of participation in the plan.
The retirement plans include a tax-qualified pension plan and a
supplemental, nonqualified pension plan. At the election of individual
participants, Shawmut funds the supplemental plan and the split-dollar life
insurance plan discussed above through contributions to an irrevocable trust
(the "trust"). Such contributions will constitute taxable income to an electing
participant to the extent and at the time that the participant's benefit becomes
vested; income of the trust may also constitute taxable income to such
participants. The trust provides for the distribution annually to each electing
participant (or the remittance by Shawmut to the appropriate tax authority on
behalf of the participant) of an amount sufficient to pay all income taxes
imposed on the participant in connection with the trust; the trust also provides
for the retirement benefits to which electing participants will be entitled to
be reduced to their after-tax equivalents.
EXECUTIVE SEVERANCE AND EMPLOYMENT AGREEMENTS
Shawmut entered into two-year employment agreements with Messrs. Eyles and
Sanborn on March 1, 1992 and May 11, 1992, respectively, providing for annual
salaries of $310,000 and $360,000, respectively. These agreements also prescribe
the 1993 grants of stock options, awards of restricted stock and awards of
short-term bonuses made to the executives for 1993, as disclosed above on the
summary compensation table. In the event of termination of employment by Shawmut
other than for cause (as defined in the agreements) or by the executive for good
reason (as defined in the agreements), these agreements provide for the
continuation of salary payments for the remainder of their terms and, with
respect to other matters, generally provide as set forth in the employment
agreements described in "INTERESTS OF CERTAIN PERSONS IN THE MERGER -- Interests
of Shawmut Directors and Executive Officers". On May 11, 1994, Mr. Sanborn's
employment agreement expired in accordance with its terms. On May 16, 1994, Mr.
Eyles's employment agreement with Shawmut was amended to provide for a
termination date of May 15, 1997, subject to automatic one year extension
periods unless written notice to the contrary is provided by either party on or
before the March 17th immediately prior to such May 16th renewal date. In the
event of a termination of Mr. Eyles's employment after a change in control of
Shawmut, any benefits payable to Mr. Eyles as a result of such termination will
be paid pursuant to Mr. Eyles's existing severance agreement described above,
and no amounts will be payable in such circumstance pursuant to Mr. Eyles's
employment agreement. See "INTERESTS OF CERTAIN PERSONS IN THE
MERGER -- Interests of Shawmut Directors and Executive Officers."
Shawmut entered into a letter agreement (the "Letter Agreement") with Mr.
Sanborn as of September 16, 1994 in connection with his termination of
employment. Pursuant to the Letter Agreement, Shawmut has agreed to provide to
Mr. Sanborn (1) continued base salary and certain welfare benefits until
December 31, 1995, (2) his bonus with respect to 1994, (3) the payment to which
he would have been entitled under Shawmut's Performance Equity Plan, with
respect to the performance cycle ended on December 31, 1994, had his employment
continued until December 31, 1994, and (4) an election, exercisable only at the
times specified in the Letter Agreement, to receive a cash payment with respect
to all options held by him in an amount equal to the fair market value of the
stock subject thereto on the date of such election over the exercise price
thereof. The Letter Agreement also includes covenants relating to
non-competition and confidential information, as well as mutual releases.
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[ALTERNATE SHAWMUT PAGE]
For a description of Shawmut's other executive severance and employment
agreements, see "INTERESTS OF CERTAIN PERSONS IN THE MERGER -- Interests of
Shawmut Directors and Executive Officers."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Alvord is chairman of the compensation committee of the board of
directors of The Hartford Steam Boiler Inspection and Insurance Company ("HSB").
Mr. Wilde, who is chairman of the executive committee and a director of HSB, is
a director of Shawmut; however, Mr. Wilde does not serve on Shawmut's human
resources committee. The following directors, all of whom are nonemployees of
Shawmut, serve on the human resources committee of Shawmut: Stillman B. Brown,
John T. Collins, Robert J. Matura, Maurice Segall, and Paul R. Tregurtha
(chairman).
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES APPLICABLE TO EXECUTIVE OFFICERS
The human resources committee of the Shawmut Board, which is composed
entirely of independent outside directors, is responsible for establishing,
implementing and monitoring Shawmut's strategy, policies and plans for executive
compensation. Shawmut's strategy is to (i) attract high-caliber managerial and
professional talent at both entry level and mid-career to meet the
organization's growing needs, (ii) assess and develop such talent for careers at
Shawmut through internal promotion under its performance planning and evaluation
policy, (iii) select and retain top-performing executive officers at the
corporate level and in each sector of Shawmut's financial services businesses,
(iv) provide compensation opportunities that are fair and competitive with those
provided by comparable organizations, and (v) motivate and reward its executives
based on corporate, business line and individual annual performance and
long-term creation of shareholder value.
Incentive awards are related to the financial results of Shawmut and its
business lines. This focus on performance-related compensation may cause
individual long-term total remuneration to change significantly from year to
year. As a result, compensation for Shawmut's executive officers involves a high
proportion of pay that is at risk: the variable annual bonus (which permits
individual performance to be recognized annually, based, in part, on an
evaluation of the contribution made by the officer to Shawmut's performance) and
equity participation in the form of stock options and performance equity share
units (which relate a significant portion of the executive officer's
remuneration to the market value of Shawmut's stock and other measures of
Shawmut's performance).
In accordance with its responsibilities, at the beginning of each
performance year, the committee reviews Shawmut's overall mission, strategy and
objectives. Shawmut's 1994 performance objectives included profitability,
improved asset quality, expense control, and expansion through acquisitions.
Using those objectives, the individual business lines developed performance
initiatives that directly aligned business line goals to overall corporate
performance. Executive officers were assessed by the committee on the basis of
the accomplishments of their individual business lines vis-a-vis their goals and
results. No specific numerical weight was assigned to any factor.
The committee determines the elements and levels of compensation on the
basis of this assessment, taking into consideration prevailing economic
conditions and opportunities, shareholder well-being and performance and
marketplace pay levels and practices among a peer group of 28 banks considered
comparable for compensation purposes. This peer group is composed of a national
sample of financial institutions with similar emphasis and business mix and is
therefore representative of pay practices at institutions against which Shawmut
competes for talented, experienced executives. Of the eleven eastern regional
institutions (other than Shawmut) included in the Keefe, Bruyette & Woods
Eastern Regional Index used on the performance graph set forth below, eight are
included in the national peer group that is used to assess competitive pay
practices. The committee is assisted in its review and evaluation by an
independent outside executive compensation consultant retained by the committee.
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[ALTERNATE SHAWMUT PAGE]
Section 162(m) of the Code imposes an annual, individual limit of $1
million on the deductibility of Shawmut's compensation payments (excluding
"performance-based" compensation) to the named executive officers. It is the
committee's policy to maximize the effectiveness, as well as the tax-efficiency,
of Shawmut's executive compensation programs. With regard to future executive
compensation actions, the committee's policy is to maintain flexibility to take
actions which it deems to be in the best interests of Shawmut and its
stockholders, but which may not qualify for tax deductibility under Section
162(m) or other Sections of the Code.
ELEMENTS OF COMPENSATION
For 1994, the compensation of Shawmut's named executive officers was
consistent with the policies and plans in place for several years, which provide
for three major elements of compensation, all subject to board approval:
1. Competitive base salaries -- Base salaries reflect the competitive
marketplace at the appropriate job level, the individual performance of each
executive officer, time in position, prior experience and accomplishments, and
the relative importance of the job to Shawmut. Base salaries are reviewed
periodically for adjustment by the committee. Adjustments may be recommended
based on individual performance and overall corporate results, subject to the
minimum amount set forth in any applicable employment agreement. As an
executive's level of responsibility increases, a larger portion of the
executive's total annual compensation is performance-based and a smaller portion
consists of salary. Consistent with this philosophy, base salaries for executive
officers are changed infrequently. Specifically, none of the named executive
officers received an increase in salary during the past year. Mr. Alvord's last
salary increase was in January 1989.
2. Annual incentive awards -- Annual incentive awards are based on the
committee's year-end assessment of annual performance achievement for the year.
All executive officers are eligible to participate in Shawmut's short-term
incentive plan under which such awards are generally made in cash early in the
following year.
Shawmut's 1994 performance objectives are discussed in general above.
Individual performance evaluation factors included leadership, organizational
management, administration and control. Executive officers managing specific
business lines/subsidiaries were also responsible for profit plan goals in their
areas of responsibility. Based on 1994 results, which included the closing of
five acquisitions totaling $4.2 billion in assets, the improvement in core
earnings, the reduction of recurring expenses by $94 million, the elimination of
the asset quality problem, and other major achievements, bonuses were awarded by
the committee as shown in Table I to the named executive officers in accordance
with the committee's assessment of their performance and relative contribution.
Executive officers influence corporate performance depending upon their specific
responsibilities and their effective execution of those responsibilities.
Therefore, individual performance factors receive different emphasis depending
on the particular executive officer being assessed. In all instances (except in
the case of the chief executive officer as discussed below), performance factors
specific to each business line's profit plan were the principal determinants of
annual incentive awards. Comparative pay practices in the peer group of 28 banks
discussed above served as useful benchmarks in making these decisions.
3. Equity participation -- Equity participation is provided in the form of
stock options, restricted stock, and performance equity share units, which
strengthen the coincidence of interest of executive officers and Shawmut's
shareholders in Shawmut's growth in real value over the long-term. Options
granted in 1994 will become exercisable over three years from the date of grant,
and expire ten years after date of grant.
OPTIONS
Option grants have generally been made annually to executive officers at
100 percent of fair market value at date of grant. These grants to executive
officers are discretionary within a guideline range based on competitive
practice and reflect the relative value of the individual's position as well as
the current performance assessment, continuing contribution and prospective
effect of that executive officer on Shawmut's future success.
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[ALTERNATE SHAWMUT PAGE]
The value of options granted to executive officers is fixed at a percentage
of salary, with the value of the options established by using the Black-Scholes
option valuation model. This percentage varies, within the guideline range
discussed above, based on each executive's prior year performance as judged on
individual performance evaluation factors including leadership, organizational
management, administration and control. The percentages are set at levels which,
together with the performance equity share unit grants, are designed to provide
target long-term incentive compensation opportunities at approximately the
average level of executives in similar positions in the peer group of 28 banks
discussed above. Shawmut options which will become exercisable in annual
one-third increments, beginning one year from the date of grant, and expire ten
years after date of grant were granted in 1994 as shown in Table II.
The committee decided in 1993 to include a restoration option feature to
specific existing grants to encourage early exercise of Shawmut options and
further increase actual ownership to provide greater linkage to stockholder
interests. The restoration option feature allows a participant who exercises the
original stock option prior to the participant's retirement, and who pays all or
a part of the exercise price of the stock option with shares of Shawmut Common
Stock held by the participant for at least six months, to receive a restoration
option to purchase the number of shares of Shawmut Common Stock equal to the
number of whole shares used by the participant in payment of the exercise price
and applicable taxes of the original stock option. A restoration option may be
exercised between the date of its grant and the date of expiration of the
original stock option to which the restoration option is related, and the
exercise price may not be less than 100% of the fair market value of the Shawmut
Common Stock on the date the restoration option is granted. A participant must
retain for a minimum of three years that number of newly acquired shares equal
in value to the after-tax gain realized on the option exercised. The principal
factors taken into account in determining these awards were the need to retain
and motivate these key employees, to recognize Shawmut's successful transition,
to increase alignment of managers' and shareholders' interests and to increase
managers' ownership, but did not include the level of outstanding awards.
Restoration options were granted in 1994 as shown in Table II.
Under the Shawmut Stock Option and Restricted Stock Award Plan, all
outstanding stock options and stock appreciation rights, whether or not vested,
will become fully exercisable upon a change in control (as defined therein). The
approval of the Merger by the holders of the Shawmut Common Stock will
constitute a change in control for purposes of such plan. See "INTERESTS OF
CERTAIN PERSONS IN THE MERGER -- Interests of Shawmut Directors and Executive
Officers."
RESTRICTED STOCK
Restricted stock, which provides executive officers with an immediate
at-risk equity interest in Shawmut, may be granted annually to executive
officers; however, restricted stock has generally been granted less frequently.
Such awards, which may require attainment of financial performance objectives,
always impose future service requirements of up to ten years. Vesting may occur
ratably over the restriction period or 100% on completion of the period.
No restricted stock awards were made to the named executive officers in
1993 or 1994.
Under the Shawmut Stock Option and Restricted Stock Award Plan, all
restrictions on outstanding restricted stock will lapse upon a change in control
(as defined therein). The approval of the Merger by the holders of the Shawmut
Common Stock will constitute a change in control for purposes of such plan. See
"INTERESTS OF CERTAIN PERSONS IN THE MERGER -- Interests of Shawmut Directors
and Executive Officers."
PERFORMANCE EQUITY SHARE UNITS
Performance equity share units, which provide executive officers with a
partnership-oriented, long-term performance incentive, may be granted annually.
Award opportunities, payable in stock, focus executives on earning an equity
stake in Shawmut and enhance team motivation. The committee meets each year to
select the key executives who will participate based upon its evaluation of a
potential participant's current
137
<PAGE> 172
[ALTERNATE SHAWMUT PAGE]
performance and future ability to contribute. It also looks at the critical
nature of the skills and the strategic importance of a participant's position in
the organization.
The committee selects financial performance targets taking into account
Shawmut's long-range strategic plan, the current economic climate, and return on
average common equity, stock market price, and dividend expectations for
Shawmut. For each selected performance criteria, the committee will determine a
performance objective and a minimum performance level. Full achievement of the
performance objectives will result in the award of the entire share target plus
reinvested dividends accrued during the cycle on that number of shares.
Performance below the minimum level will result in no award for the cycle.
Performance equity share units were awarded in 1994 as shown in Table IV.
Under the Shawmut Stock Option and Restricted Stock Award Plan, all
restrictions on outstanding performance equity share units will lapse upon a
change in control (as defined therein). The approval of the Merger by the
holders of the Shawmut Common Stock will constitute a change in control for
purposes of such plans. See "INTERESTS OF CERTAIN PERSONS IN THE
MERGER -- Interests of Shawmut Directors and Executive Officers."
BASES FOR THE COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As discussed above, the chief executive officer participates in Shawmut's
executive compensation program. Mr. Alvord did not receive a salary increase in
1994, reflecting the committee's decision to continue the shift from fixed (base
salary) to variable (performance-based) compensation. The chief executive
officer's 1994 performance was assessed on the basis of specific corporate
objectives, the most important of which were Shawmut's improved income before
merger related charges and the effect of accounting changes, expense reduction
and control (improved efficiency ratio), generation of revenues, improvement of
the profitability of the loan portfolio, and achievement of other annual
objectives in Shawmut's 1994 profit plan, as well as fulfillment of his personal
performance initiatives. As a result of the successful achievement of these key
objectives, the chief executive officer was awarded an annual bonus for 1994
performance as set forth above in Table I. Based upon Shawmut's results, and
strategic repositioning in order to compete effectively in the years ahead, the
chief executive officer was granted the stock options described above in Table
II and the performance equity share unit award described above in Table IV.
Based on the competitive compensation of the 28 peer group CEOs, the committee
believes Mr. Alvord's total remuneration is reasonable and appropriate given the
size, complexity and performance of Shawmut.
Like those of other executives, the chief executive officer's options were
granted at 100 percent of fair market value on the date of grant, will become
exercisable over a three-year vesting period, and will expire ten years after
the date of grant; his performance equity share unit award will mature on
completion of the 1994-1996 performance cycle. Under the Shawmut Stock Option
and Restricted Stock Award Plan, all outstanding stock options and stock
appreciation rights, whether or not vested, will become fully exercisable and
all restrictions on outstanding restricted stock and performance equity share
units will lapse upon a change in control (as defined therein). The approval of
the Merger by the holders of the Shawmut Common Stock will constitute a change
in control for purposes of such plans. See "INTERESTS OF CERTAIN PERSONS IN THE
MERGER -- Interests of Shawmut Directors and Executive Officers."
Submitted by the members of the Human Resources Committee
Paul R. Tregurtha, Chairman
Stillman B. Brown
John T. Collins
Robert J. Matura
Maurice Segall
138
<PAGE> 173
[ALTERNATE SHAWMUT PAGE]
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in Shawmut's
cumulative total shareholder return on the Shawmut Common Stock over the prior
five years (assuming reinvestment of dividends at date of payment into Shawmut
Common Stock) with the cumulative total return on the published Standard &
Poor's 500 Stock Index and the cumulative total return on the Keefe, Bruyette &
Woods Eastern Regional Index, described in note (1) below. Shawmut believes that
while total shareholder return is a most important criterion of corporate
performance, it is subject to the vagaries of the market. In addition to the
creation of shareholder value, Shawmut's executive compensation program is based
on operating and strategic results, and the other factors set forth and
discussed in the committee report on page 132.
[(GRAPH)]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
S&P 500 $100 97 126 136 150 152
KBW Index 100 62 108 150 156 139
Shawmut 100 27 52 103 124 97
</TABLE>
139
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[ALTERNATE SHAWMUT PAGE]
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Shawmut Board, on recommendation of the audit committee, favors the
appointment of Price Waterhouse LLP as independent accountants for Shawmut for
the year ending December 31, 1995 and, unless otherwise directed, the proxies
will be voted in favor of this appointment. Price Waterhouse LLP has advised
that neither the firm nor any present member or associate of it has any
financial interest, direct or indirect, in Shawmut or its subsidiaries, nor has
had any connection with Shawmut or its subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee. Representatives of
Price Waterhouse LLP will be present at the meeting, as in the past, to make a
statement if they should desire to do so and to respond to appropriate questions
raised by shareholders at the meeting.
Adoption of this proposal requires the affirmative vote of a majority of
the votes cast at the meeting.
THE SHAWMUT BOARD RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF PRICE
WATERHOUSE, AS INDEPENDENT ACCOUNTANTS.
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S MEETING
Shawmut intends to hold an annual meeting of stockholders in 1996 only if
the Merger is not consummated on or before February 20, 1996. To the extent that
an annual meeting of stockholders in 1996 is scheduled, Shawmut anticipates that
next year's proxy statement will be mailed on or about March 14, 1996, and the
annual meeting will be held on April 25, 1996. Any eligible stockholder who
wishes to submit written proposals for possible inclusion in next year's proxy
statement must be sure that all such proposals are received by Shawmut on or
before November 14, 1995. Any such proposal or nomination should be mailed to
Shawmut National Corporation, One Federal Street, Boston, Massachusetts 02211,
Attention: Secretary.
ANNUAL REPORT
The 1994 annual report of Shawmut, including financial statements, was
mailed on or about March 31, 1995 to each stockholder of record as of March 28,
1995 and is being mailed to each stockholder of record as of the Record Date,
who was not a stockholder of record on March 28, 1995, together with the notice
of annual meeting of stockholders, this Joint Proxy Statement-Prospectus and
proxy on or about May 11, 1995.
OTHER MATTERS
The Shawmut Board knows of no other matters that are to be presented for
action at the Shawmut Meeting. If any other matters are properly presented to
the Shawmut Meeting, the proxies, who are all directors of Shawmut and who were
appointed to this capacity by the Shawmut Board and are named in the enclosed
proxy, or authorized substitutes, will vote on such matters in accordance with
their best judgment.
140
<PAGE> 175
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
FLEET FINANCIAL GROUP, INC.
AND
SHAWMUT NATIONAL CORPORATION
DATED AS OF FEBRUARY 20, 1995
<PAGE> 176
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 20, 1995, by and among
Fleet Financial Group, Inc., a Rhode Island corporation ("Parent") and Shawmut
National Corporation, a Delaware corporation ("Subject Company").
WHEREAS, the Boards of Directors of Parent and Subject Company have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the business combination transaction provided
for herein in which Subject Company will, subject to the terms and conditions
set forth herein, merge (the "Merger") with and into Parent, so that Parent is
the surviving corporation in the Merger; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, Parent and Subject Company are entering into a Parent Stock Option
Agreement (the "Parent Option Agreement") attached hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, Parent and Subject Company are entering into a Subject Company Stock
Option Agreement (the "Subject Company Option Agreement"; and together with the
Parent Option Agreement, the "Option Agreements") attached hereto as Exhibit B;
and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 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 Act (the "RIBCA"), at the Effective Time (as defined
in Section 1.2 hereof), Subject Company shall merge with and into Parent. Parent
shall be the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") in the Merger, and shall continue its corporate existence under
the laws of the State of Rhode Island. Upon consummation of the Merger, the
separate corporate existence of Subject Company shall terminate.
1.2 Effective Time. 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 9.1 hereof). The term
"Effective Time" shall be the date and time when the Merger becomes effective,
as set forth in the Certificate of Merger and the Articles of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Section 261 of the DGCL and Section 7-1.1-69
of the RIBCA.
1.4 Conversion of Subject Company Common Stock; Subject Company Preferred
Stock. At the Effective Time, in each case, subject to Section 2.2(e) hereof,
by virtue of the Merger and without any action on the part of Parent, Subject
Company or the holder of any of the following securities:
(a) Each share of the common stock, par value $0.01 per share, of Subject
Company (the "Subject Company Common Stock"; the Subject Company Common Stock
and the Subject Company Preferred Stock, as defined below, being referred to
herein as, the "Subject Company Capital Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of Subject Company
Common Stock held (x) in Subject Company's treasury or (y) directly or
indirectly by Parent or Subject Company or any of their respective Subsidiaries
(as defined below) (except for Trust Account Shares and DPC shares, as such
A-1
<PAGE> 177
terms are defined below)) shall be converted into the right to receive 0.8922
shares (the "Common Exchange Ratio") of the common stock, par value $1.00 per
share, of Parent ("Parent Common Stock"; the Parent Common Stock and the Parent
New Preferred, as defined below, being referred to herein as, the "Parent
Capital Stock") (together with the number of parent rights ("Parent Rights")
issued pursuant to the Parent Rights Agreement (as defined in Section 4.2
hereof) associated therewith).
(b) Each share of preferred stock with cumulative and adjustable dividends,
stated value $50.00 per share, of Subject Company (the "Subject Company
Adjustable Preferred") issued and outstanding immediately prior to the Effective
Time (other than Dissenting Preferred Shares (as defined below)) shall be
converted into the right to receive one share of preferred stock with cumulative
and adjustable dividends of Parent (the "Parent Adjustable Preferred"). The
terms of the Parent Adjustable Preferred shall be substantially the same as the
terms of the Subject Company Adjustable Preferred.
(c) Each share of 9.30% cumulative preferred stock, stated value of $250
per share, of Subject Company (the "Subject Company 9.30% Preferred") issued and
outstanding immediately prior to the Effective Time shall be converted into the
right to receive one share of 9.30% preferred stock of Parent (the "Parent 9.30%
Preferred"). The terms of the Parent 9.30% Preferred shall be substantially the
same as the terms of the Subject Company 9.30% Preferred.
(d) Each share of 9.35% cumulative preferred stock of Subject Company (the
"Subject Company 9.35% Cumulative Preferred"; and together with the Subject
Company Adjustable Preferred and the Subject Company 9.30% Preferred, the
"Subject Company Preferred") issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive one share of 9.35%
cumulative preferred stock of Parent (the "Parent 9.35% Cumulative Preferred";
and together with the Parent Adjustable Preferred and the Parent 9.30%
Preferred, the "Parent New Preferred"). The terms of the Parent 9.35% Cumulative
Preferred shall be substantially the same as the terms of the Subject Company
9.35% Cumulative Preferred.
(e) All of the shares of Subject Company Common Stock converted into Parent
Common Stock pursuant to this Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist as of the Effective Time,
and each certificate (each a "Common Certificate") previously representing any
such shares of Subject Company Common Stock shall thereafter represent the right
to receive (i) a certificate representing the number of whole shares of Parent
Common Stock and (ii) cash in lieu of fractional shares into which the shares of
Subject Company Common Stock represented by such Common Certificate have been
converted pursuant to this Section 1.4 and Section 2.2(e) hereof. Common
Certificates previously representing shares of Subject Company Common Stock
shall be exchanged for certificates representing whole shares of Parent Common
Stock and cash in lieu of fractional shares issued in consideration therefor
upon the surrender of such Common Certificates in accordance with Section 2.2
hereof, without any interest thereon. If prior to the Effective Time the
outstanding shares of Parent Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
as a result of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar change in Parent's
capitalization, then an appropriate and proportionate adjustment shall be made
to the Common Exchange Ratio.
(f) All of the shares of Subject Company Preferred Stock converted into
Parent New Preferred Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate (each a "Preferred Certificate"; and
together with a Common Certificate, a "Certificate") previously representing any
such shares of Subject Company Preferred Stock shall thereafter represent the
right to receive a certificate representing the number of whole shares of
corresponding Parent New Preferred into which the shares of Subject Company
Preferred Stock represented by such Preferred Certificate have been converted
pursuant to this Section 1.4. Preferred Certificates previously representing
shares of Subject Company Preferred Stock shall be exchanged for certificates
representing whole shares of corresponding Parent New Preferred issued in
consideration therefor upon the surrender of such Preferred Certificates in
accordance with Section 2.2 hereof, without any interest thereon.
(g) At the Effective Time, all shares of Subject Company Capital Stock that
are owned by Subject Company as treasury stock and all shares of Subject Company
Capital Stock that are owned directly or
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indirectly by Parent or Subject Company or any of their respective Subsidiaries
(other than shares of Subject Company Capital 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 Subject Company, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of
Subject Company Capital Stock held by Parent or Subject Company or any of their
respective Subsidiaries in respect of a debt previously contracted (any such
shares of Subject Company Capital Stock, and shares of Parent Common Stock which
are similarly held, whether held directly or indirectly by Parent or Subject
Company or any of their respective Subsidiaries, being referred to herein as
"DPC Shares")) shall be cancelled and shall cease to exist and no stock of
Parent or other consideration shall be delivered in exchange therefor. All
shares of Parent Common Stock that are owned by Subject Company or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Parent.
(h) Notwithstanding anything in this Agreement to the contrary, shares of
Subject Company Adjustable Preferred which are outstanding immediately prior to
the Effective Time, the holders of which shall have delivered to Subject Company
a written demand for appraisal of such shares in the manner provided in Section
262 of the DGCL ("Dissenting Preferred Shares"), shall not be converted into the
right to receive, or be exchangeable for, the shares of Parent Adjustable
Preferred otherwise issuable in exchange for such shares of Subject Company
Adjustable Preferred pursuant to this Section 1.4 but, instead, the holders
thereof shall be entitled to payment of the appraised value of such Dissenting
Preferred Adjustable Shares in accordance with the provisions of Section 262 of
the DGCL; provided, however, that (i) if any holder of Dissenting Preferred
Shares shall subsequently deliver a written withdrawal of his demand for
appraisal of such shares (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60 days after the
Effective Time), or (ii) if any holder fails to establish his entitlement to
appraisal rights as provided in such Section 262 of the DGCL, or (iii) if
neither any holder of Dissenting Preferred Shares nor the Surviving Corporation
has filed a petition demanding a determination of the value of all Dissenting
Preferred Shares within the time provided in Section 262 of the DGCL, such
holder or holders (as the case may be) shall forfeit the right to appraisal of
such shares of Subject Company Adjustable Preferred and each of such shares
shall thereupon be deemed to have been converted into the right to receive, and
to have become exchangeable for, as of the Effective Time, the shares of Parent
Adjustable Preferred otherwise issuable in exchange for such shares of Subject
Company Adjustable Preferred pursuant to this Section 1.4, without any interest
thereon.
1.5 Parent Common Stock; Parent Preferred Stock. At and after the
Effective Time, each share of Parent Common Stock and each share of Parent
Preferred Stock issued and outstanding immediately prior to the Closing Date
shall remain an issued and outstanding share of common stock or preferred stock,
as the case may be, of the Surviving Corporation and shall not be affected by
the Merger.
1.6 Options and Warrants. (a) At the Effective Time, each option and
warrant granted by Subject Company to purchase shares of Subject Company Common
Stock which is outstanding and unexercised immediately prior thereto shall cease
to represent a right to acquire shares of Subject Company Common Stock and shall
be converted automatically into an option or warrant, as the case may be, to
purchase shares of Parent Common Stock in an amount and at an exercise price
determined as provided below (and otherwise, in the case of options, subject to
the terms of the Subject Company Stock Option and Restricted Stock Award Plan,
the Subject Company Secondary Stock Option and Restricted Stock Award Plan and
the Subject Company 1989 Nonemployee Directors' Restricted Stock Plan
(collectively, the "Subject Company Stock Plans") and the agreements evidencing
grants thereunder or, in the case of warrants, otherwise subject to the terms of
the Stock Warrants, each dated January 18, 1994, of Subject Company (the
"Subject Company Warrants")):
(1) The number of shares of Parent Common Stock to be subject to the
new option or warrant shall be equal to the product of the number of shares
of Subject Company Common Stock subject to the original option or warrant
and the Common Exchange Ratio, provided that any fractional shares of
Parent Common Stock resulting from such multiplication shall be rounded
down to the nearest share; and
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(2) The exercise price per share of Parent Common Stock under the new
option or warrant shall be equal to the exercise price per share of Subject
Company Common Stock under the original option or warrant, as the case may
be, divided by the Common Exchange Ratio, 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 Internal Revenue
Code of 1986, as amended (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 or warrant shall be the same as the original
option or warrant, as the case may be, except that all references to Subject
Company shall be deemed to be references to Parent.
1.7 Articles of Incorporation. 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.
1.8 Bylaws. At the Effective Time, the Bylaws of Parent, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.9 Tax Consequences. 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.
1.10 Board of Directors. From and after the Effective Time, the Board of
Directors of Parent shall consist of 20 persons, including Mr. Alvord, who shall
serve as the Chairman of Parent from and after the Effective Time, and Mr.
Murray, who shall serve as the Chief Executive Officer and President of Parent
from and after the Effective Time, 11 additional persons who are not executive
officers of Parent or Subject Company to be named by Mr. Murray and the Board of
Directors of Parent and 7 additional persons who are not executive officers of
Parent or Subject Company to be named by Mr. Alvord and the Board of Directors
of Subject Company. The representatives selected by Parent and Subject Company,
respectively, shall be divided as equally as practicable among the three classes
of directors in proportion to the aggregate representation set forth above. From
and after the Effective Time, the representatives of Parent and Subject Company
shall also be represented in proportion to the aggregate representation set
forth above on all committees of the Parent Board of Directors. Promptly
following the Effective Time, the Parent Board of Directors shall establish and
maintain for a period of 18 months an Integration Committee to oversee the
integration of the operations of Parent, Subject Company and their respective
Subsidiaries, which committee shall be comprised of Messrs. Murray and Alvord,
two additional representatives of Parent and two additional representatives of
Subject Company.
1.11 Headquarters of Parent. Promptly following the Effective Time, the
headquarters and principal executive offices of Parent shall be moved to Boston,
Massachusetts.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares 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 Subject Company (which
may be a Subsidiary of Parent) (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Parent Common Stock and Parent New
Preferred and the cash in lieu of any fractional shares (such cash and
certificates for shares of Parent Common Stock and Parent New Preferred,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding shares of
Subject Company Capital Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event later than five business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or
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Certificates 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) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing, as the case may be, the shares of Parent Common Stock
or Parent New Preferred and the cash in lieu of fractional shares, if any, into
which the shares of Subject Company Capital Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a Certificate for exchange and cancellation
to the Exchange Agent, together with such properly completed letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor, as applicable, (i) a certificate representing that
number of whole shares of Parent Common Stock to which such holder of Subject
Company Common Stock shall have become entitled pursuant to the provisions of
Article I hereof, (ii) a certificate representing that number of whole shares of
Parent Adjustable Preferred, if any, to which such holder of Subject Company
Adjustable Preferred shall have become entitled pursuant to the provisions of
Article I hereof, (iii) a certificate representing that number of whole shares
of Parent 9.30% Preferred, if any, to which such holder of Subject Company 9.30%
Preferred shall have become entitled pursuant to the provisions of Article I
hereof, (iv) a certificate representing that number of whole shares of Parent
9.35% Preferred, if any, to which such holder of Subject Company 9.35% Preferred
shall have become entitled pursuant to the provisions of Article I hereof, and
(v) a check representing the amount of cash in lieu of fractional shares, if
any, which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be cancelled. No interest will be paid or accrued
on the cash in lieu of fractional shares and unpaid dividends and distributions,
if any, payable to holders of Certificates. Notwithstanding anything to the
contrary contained herein, no certificate representing Parent Common Stock or
Parent New Preferred or cash in lieu of a fractional share interest shall be
delivered to a person who is an Affiliate (as defined in Section 6.5) of Subject
Company unless such Affiliate has theretofore executed and delivered to Parent
the agreement referred to in Section 6.5.
(b) No dividends or other distributions declared after the Effective Time
with respect to Parent Common Stock or Parent New Preferred shall be paid to the
holder of any unsurrendered Certificate until the holder thereof shall surrender
such Certificate in accordance with this Article II. After the surrender of a
Certificate in accordance with this Article II, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Parent Common Stock or Parent New Preferred represented by such Certificate.
(c) If any certificate representing shares of Parent Common Stock or Parent
New Preferred is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Parent Common Stock or
Parent New Preferred in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Subject Company of the shares of Subject Company Capital 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 Capital Stock as provided in this
Article II.
(e) 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 stockholder of
Subject Company. In lieu of the issuance of any such fractional share, Parent
shall pay to each former stockholder of Subject Company who otherwise would be
entitled to receive such fractional share an amount in cash determined by
multiplying (i) the average of the closing-sale prices of
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Parent Common Stock on the New York Stock Exchange as reported by The Wall
Street Journal for the five trading days immediately preceding the date of the
Effective Time by (ii) the fraction of a share of Parent Common Stock to which
such holder would otherwise be entitled to receive pursuant to Section 1.4
hereto.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Subject Company for twelve months after the Effective Time shall
be paid to Parent. Any stockholders of Subject Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of the shares of Parent Common Stock or Parent New Preferred, cash in lieu of
any fractional shares and unpaid dividends and distributions on the Parent
Common Stock or Parent New Preferred deliverable in respect of each share of
Subject Company Common Stock or Subject Company Preferred Stock, as the case may
be, such stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon. Notwithstanding the foregoing, none of
Parent, Subject Company, the Exchange Agent or any other person shall be liable
to any former holder of shares of Subject Company Common Stock or Subject
Company Preferred for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such amount as Parent may determine is
reasonably necessary as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Parent Common Stock and
cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as follows:
3.1 Corporate Organization. (a) Subject Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Subject 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 Subject Company.
As used in this Agreement, the term "Material Adverse Effect" means, with
respect to Parent, Subject Company or the Surviving Corporation, as the case may
be, a material adverse effect on the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole. As used
in this Agreement, the word "Subsidiary" when used with respect to any party
means any bank, corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes. Subject Company is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the "BHC
Act") and as a savings and loan holding company under the Home Owners' Loan Act
("HOLA"). The Certificate of Incorporation and Bylaws of Subject Company, copies
of which have previously been made available to Parent, are true, complete and
correct copies of such documents as in effect as of the date of this Agreement.
(b) Each Subject Company Subsidiary is (i) duly organized and validly
existing as a bank, corporation or partnership under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Subject Company, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
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(c) The minute books of Subject Company accurately reflect in all material
respects all corporate actions held or taken since January 1, 1993 of its
stockholders and Board of Directors (including committees of the Board of
Directors of Subject Company).
3.2 Capitalization. (a) The authorized capital stock of Subject Company
consists of 300,000,000 shares of Subject Company Common Stock and 10,000,000
shares of preferred stock, no par value. At the close of business on January 31,
1995 there were 121,586,053 shares of Subject Company Common Stock outstanding
and 1,775,000 shares of Subject Company Preferred Stock outstanding (comprised
of 700,000 shares of Subject Company Adjustable Preferred, 5,750,000 shares of
Subject Company Depositary Shares (each representing a one-tenth interest in a
share of Subject Company 9.30% Preferred and 5,000,000 shares of Subject Company
Depositary Shares (each representing a one-tenth interest in a share of Subject
Company 9.35% Cumulative Preferred), and 13,390 shares of Subject Company Common
Stock held in Subject Company's treasury. On January 31, 1995, no shares of
Subject Company Common Stock or Subject Company Preferred Stock were reserved
for issuance, except that (i) 10,314,108 shares of Subject Company Common Stock
were reserved for issuance pursuant to Subject Company's dividend reinvestment
and stock purchase plans, (ii) 9,409,380 shares of Subject Company Common Stock
were reserved for issuance upon the exercise of stock options pursuant to the
Subject Company Stock Plans, (iii) 1,329,115 shares of Subject Company Common
Stock were reserved for issuance upon the exercise of the Subject Company
Warrants, (iv) 8,023,915 shares of Subject Company Common Stock were reserved
for issuance upon consummation of the merger of Northeast Federal Corp.
("Northeast") with a Subsidiary of Subject Company, pursuant to the Agreement
and Plan of Merger (the "Northeast Agreement"), dated as of June 11, 1994,
between Subject Company and Northeast, (v) 3,000,000 shares of Subject Company
Series A Junior Participating Preferred Stock were reserved for issuance upon
exercise of the rights (the "Subject Company Rights") distributed to holders of
Subject Company Common Stock pursuant to the Shareholder Rights Agreement, dated
as of February 28, 1989, between Subject Company and Manufacturers Hanover Trust
Company, as Rights Agent (the "Subject Company Shareholder Rights Agreement"),
and (vi) the shares of Subject Company Common Stock issuable pursuant to the
Subject Company Option Agreement. All of the issued and outstanding shares of
Subject Company Common Stock and Subject Company Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as set forth in Section 3.2(a)
of the Subject Company Disclosure Schedule and except for the Subject Company
Shareholder Rights Agreement and the Subject Company Option Agreement, Subject
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 Subject Company Common Stock or
Subject Company Preferred Stock or any other equity securities of Subject
Company or any securities representing the right to purchase or otherwise
receive any shares of Subject Company Common Stock or Subject Company Preferred
Stock. Subject Company has previously provided Parent with a list of the option
holders, the date of each option to purchase Subject Company Common Stock
granted, the number of shares subject to each such option, the expiration date
of each such option, and the price at which each such option may be exercised
under an applicable Subject Company Stock Plan. Except as set forth in Section
3.2(a) of the disclosure schedule of Subject Company delivered to Parent
concurrently herewith (the "Subject Company Disclosure Schedule"), since January
31, 1995, Subject Company has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock,
other than pursuant to the exercise of employee stock options granted prior to
such date and as disclosed in Section 3.2(a) of the Subject Company Disclosure
Schedule, pursuant to the Northeast Agreement in amounts not exceeding the
amounts disclosed in Section 3.2(a) of the Subject Company Disclosure Schedule,
pursuant to the exercise of any Subject Company Warrants in amounts not
exceeding the amounts disclosed in Section 3.2(a) of the Subject Company
Disclosure Schedule and pursuant to the Subject Company Shareholder Rights
Agreement.
(b) Except as set forth in Section 3.2(b) of the Subject Company Disclosure
Schedule, Subject Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Subject Company Subsidiaries,
free and clear of any liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Subject Company
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Subsidiary has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary. Assuming compliance by Parent with Section 1.6 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which Subject
Company or any of its Subsidiaries will be bound calling for the purchase or
issuance of any shares of the capital stock of Subject Company or any of its
Subsidiaries.
3.3 Authority; No Violation. (a) Subject Company has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Subject Company. The Board of
Directors of Subject Company has directed that this Agreement and the
transactions contemplated hereby be submitted to Subject Company's stockholders
for approval at a meeting of such stockholders and, except for the adoption of
this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Subject Company Common Stock, no other corporate
proceedings on the part of Subject 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 Subject Company and
(assuming due authorization, execution and delivery by Parent) constitutes a
valid and binding obligation of Subject Company, enforceable against Subject
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) Except as set forth in Section 3.3(b) of the Subject Company Disclosure
Schedule, neither the execution and delivery of this Agreement by Subject
Company nor the consummation by Subject Company of the transactions contemplated
hereby, nor compliance by Subject Company with any of the terms or provisions
hereof, will (i) violate any provision of the Certificate of Incorporation or
Bylaws of Subject Company or (ii) assuming that the consents and approvals
referred to in Section 3.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Subject Company or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Subject Company
or any of its 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 Subject Company or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which, either individually or
in the aggregate, will not have or be reasonably likely to have a Material
Adverse Effect on Subject Company.
3.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of applications with the Office of the
Thrift Supervision (the "OTS") under HOLA and approval of such applications,
(iii) the filing of any requisite applications with the Office of the
Comptroller of the Currency (the "OCC"), (iv) the filing of any required
applications or notices with any state agencies and approval of such
applications and notices (the "State Approvals"), (v) the filing with the SEC of
a joint proxy statement in definitive form relating to the meetings of Parent's
and Subject Company's stockholders to be held in connection with this Agreement
and the transactions contemplated hereby (the "Joint Proxy Statement") and the
registration statement on Form S-4 (the "S-4") in which the Proxy Statement will
be included as a prospectus, (vi) the filing of the Certificate of Merger with
the Delaware Secretary pursuant to the DGCL, (vii) the Articles of Merger with
the Rhode Island Secretary pursuant to the RIBCA, (viii) such filings and
approvals as are required to be made or
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obtained under the securities or "Blue Sky" laws of various states in connection
with the issuance of the shares of Parent Common Stock pursuant to this
Agreement, (ix) the approval of this Agreement by the requisite vote of the
stockholders of Parent and Subject Company, and (x) the consents and approvals
set forth in Section 3.4 of the Subject 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
(A) the execution and delivery by Subject Company of this Agreement and (B) the
consummation by Subject Company of the Merger and the other transactions
contemplated hereby.
3.5 Reports. Subject Company and each of its Subsidiaries have timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 1993 with (i) the Federal Reserve Board, (ii) the OTS,
(iii) any state regulatory authority (each a "State Regulator"), (iv) the OCC
and (v) any other self-regulatory organization ("SRO") (collectively "Regulatory
Agencies"), and all other material reports and statements required to be filed
by them since January 1, 1993, including, without limitation, any report or
statement required to be filed pursuant to the laws, rules or regulations of the
United States, any state, the Federal Reserve Board, the FDIC, the OCC, the OTS,
any State Regulator or any SRO, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Subject Company and
its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
best knowledge of Subject Company, investigation into the business or operations
of Subject Company or any of its Subsidiaries since January 1, 1993. There is no
material unresolved violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of Subject
Company or any of its Subsidiaries.
3.6 Financial Statements. Subject Company has previously delivered to
Parent copies of (a) the consolidated balance sheets of Subject Company and its
Subsidiaries as of December 31, for the fiscal years 1992 and 1993, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1991 through 1993, inclusive, as reported in
Subject 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"), in each case accompanied by the audit report of
Price Waterhouse, independent public accountants with respect to Subject
Company, (b) the unaudited consolidated balance sheet of Subject Company and its
Subsidiaries as of December 31, 1994, and the related consolidated statements of
income and changes in stockholders' equity for the fiscal year 1994,
substantially in the form that is proposed to be reported in Subject Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the
"Subject Company Delivered December 1994 Financials"), and (c) the unaudited
consolidated balance sheet of Subject Company and its Subsidiaries as of
September 30, 1993 and September 30, 1994 and the related unaudited consolidated
statements of income, cash flows and changes in stockholders' equity for the
nine month periods then ended as reported in Subject Company's Quarterly Report
on Form 10-Q for the period ended September 30, 1994 filed with the SEC under
the Exchange Act. The December 31, 1994 consolidated balance sheet of Subject
Company (including the related notes, where applicable) fairly presents the
consolidated financial position of Subject Company and its Subsidiaries as of
the date thereof, and the other financial statements referred to in this Section
3.6 (including the related notes, where applicable) fairly present (subject, in
the case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of Subject Company and
its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and each of such statements (including the related notes, where
applicable) has been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except in
each case as indicated in such statements or in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q. The books and records
of Subject Company and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
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3.7 Broker's Fees. Except as set forth in Section 3.7 of the Subject
Company Disclosure Schedule, neither Subject Company nor any Subject 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 Option Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Subject Company Reports (as defined below) filed prior to the date
hereof, since December 31, 1994, (i) neither Subject Company nor any of its
Subsidiaries has incurred any material liability, except in the ordinary course
of their business consistent with their past practices, and (ii) no event has
occurred which has had, individually or in the aggregate, a Material Adverse
Effect on Subject Company.
(b) Except as publicly disclosed in Subject Company Reports filed prior to
the date hereof, and except as set forth in Section 3.8(b) of the Subject
Company Disclosure Schedule, since December 31, 1994, Subject Company and its
Subsidiaries have carried on their respective businesses in the ordinary and
usual course consistent with their past practices.
(c) Except as set forth in Section 3.8(c) of the Subject Company Disclosure
Schedule, since December 31, 1994, neither Subject Company nor any of its
Subsidiaries has (i) except for normal increases in the ordinary course of
business consistent with past practice or except as required by applicable law,
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1994, granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus other than customary year-end bonuses for
fiscal 1993 and 1994 or (ii) suffered any strike, work stoppage, slow-down, or
other labor disturbance.
3.9 Legal Proceedings. (a) Neither Subject Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Subject Company's knowledge, threatened, material legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Subject Company or any of its Subsidiaries
or challenging the validity or propriety of the transactions contemplated by
this Agreement or the Subject Company Option Agreement as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on Subject Company.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Subject Company, any of its Subsidiaries or the assets
of Subject Company or any of its Subsidiaries which has had, or might reasonably
be expected to have, a Material Adverse Effect on Subject Company.
3.10 Taxes and Tax Returns. (a) Each of Subject Company and its
Subsidiaries has duly filed all material Federal, state and, to the best of
Subject 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 accurate and complete in all material respects) and has duly paid or made
provisions for the payment of all material Taxes (as defined below) and other
governmental charges 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 of this Agreement (including, without limitation, if and to the extent
applicable, those due in respect of its properties, income, business, capital
stock, deposits, franchises, licenses, sales and payrolls) other than Taxes or
other charges (1) which are not yet delinquent or are being contested in good
faith and (2) have not been finally determined. The income tax returns of
Subject Company and its Subsidiaries have been examined by the Internal Revenue
Service (the "IRS") and any liability with respect thereto has been satisfied
for all years to and including 1987, and no material deficiencies were asserted
as a result of such examination or all such deficiencies were satisfied. To the
best of Subject Company's knowledge, there are no material disputes pending, or
claims asserted for, Taxes or assessments upon Subject Company or any of its
Subsidiaries, nor has Subject 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. In addition, (i) proper and accurate amounts have been withheld
by Subject Company and its Subsidiaries from their employees for all prior
periods in compliance in all material respects with the tax withholding
provisions of applicable Federal, state and local laws, except where failure to
do so would not have
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a Material Adverse Effect on Subject Company, (ii) Federal, state, county and
local returns which are accurate and complete in all material respects have been
filed by Subject Company and its Subsidiaries for all periods for which returns
were due with respect to income tax withholding, Social Security and
unemployment taxes, except where failure to do so would not have a Material
Adverse Effect on Subject Company, (iii) the amounts shown on such Federal,
state, local or county returns to be due and payable have been paid in full or
adequate provision therefor has been included by Subject Company in its
consolidated financial statements as of December 31, 1994, except where failure
to do so would not have a Material Adverse Effect on Subject Company and (iv)
there are no Tax liens upon any property or assets of the Subject Company or its
Subsidiaries except liens for current taxes not yet due. To the knowledge of
Subject Company, no property of Subject Company or any of its Subsidiaries is
property that Subject Company or any of its Subsidiaries is or will be required
to treat as being owned by another person pursuant to the provisions of Section
168(f)(8) of the Code (as in effect prior to its amendment by the Tax Reform Act
of 1986) or is "tax-exempt use property" within the meaning of Section 169(h) of
the Code. Neither Subject Company nor any of its Subsidiaries has been required
to include in income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by Subject Company
or any of its Subsidiaries, and the Internal Revenue Service has not initiated
or proposed any such adjustment or change in accounting method. Except as set
forth in the financial statements described in Section 3.6 hereof, neither
Subject Company nor any of its Subsidiaries has entered into a transaction which
is being accounted for as an installment obligation under Section 453 of the
Code, which would be reasonably likely to have a Material Adverse Effect on
Subject Company.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all federal,
state, county, local, and foreign income, excise, gross receipts, ad valorem,
profits, gains, property, sales, transfer, use, payroll, employment, severance,
withholding, duties, intangibles, franchise, and other taxes, charges, levies or
like assessments together with all penalties and additions to tax and interest
thereon.
(c) Except as set forth in Section 3.10(c) of the Subject Company
Disclosure Schedule, any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of Subject
Company or any of its affiliates who is a "Disqualified Individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Subject Company Benefit Plan currently in effect would not be characterized
as an "excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code).
(d) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Subject Company or any
Subsidiary of Subject Company under any contract, plan, program, arrangement or
understanding would be reasonably likely to have a Material Adverse Effect on
Subject Company.
3.11 Employees. (a) Section 3.11(a) of the Subject Company Disclosure
Schedule sets forth a true and complete list of each material employee benefit
plan, arrangement or agreement that is maintained as of the date of this
Agreement (the "Plans") by Subject Company or any of its Subsidiaries or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), all of
which together with Subject 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) Subject Company has heretofore delivered to Parent true and complete
copies of each of the Plans and all related documents, including but not limited
to (i) the actuarial report for such Plan (if applicable) for each of the last
two years, and (ii) the most recent determination letter from the Internal
Revenue Service (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Disclosure Schedule, (i)
each of the Plans has been operated and administered in all material respects
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 the actuarial assumptions used for funding purposes in the most
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recent actuarial report prepared by such Plan's actuary with respect to such
Plan, 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 Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of Subject
Company, its Subsidiaries or any ERISA Affiliate beyond their retirement or
other termination of service, other than (w) coverage mandated by applicable
law, (x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Subject Company,
its Subsidiaries or the ERISA Affiliates or (z) benefits the full cost of which
is borne by the current or former employee (or his beneficiary), (v) no
liability under Title IV of ERISA has been incurred by Subject Company, its
Subsidiaries or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Subject Company, its
Subsidiaries or any ERISA Affiliate of incurring a material liability
thereunder, (vi) no Plan is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by Subject Company or its 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, (viii) neither Subject Company, its Subsidiaries nor any ERISA
Affiliate has engaged in a transaction in connection with which Subject Company,
its Subsidiaries or any ERISA Affiliate could be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material
tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best
knowledge of Subject Company there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto.
(d) Except as set forth in Section 3.11(d) of the Subject Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
employee of Subject Company or any of its affiliates from Subject Company or any
of its affiliates under any Subject Company Benefit Plan or otherwise, (ii)
materially increase any benefits otherwise payable under any Subject Company
Benefit Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
3.12 SEC Reports. Subject Company has previously made available to Parent
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1993 by Subject Company with the SEC pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act (the "Subject Company
Reports") and prior to the date hereof and (b) communication mailed by Subject
Company to its stockholders since January 1, 1993 and prior to the date hereof,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. Subject Company has
timely filed all Subject Company Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Subject Company Reports complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. Except as disclosed in Section 3.13
of the Subject Company Disclosure Schedule, Subject 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 in any material respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Subject 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, individually or in the aggregate, have a Material Adverse
Effect on Subject Company, and neither Subject Company nor any of its
Subsidiaries knows of, or has received notice of, any material violations of any
of the above.
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3.14 Certain Contracts. (a) Except as set forth in Section 3.14(a) of the
Subject Company Disclosure Schedule, neither Subject Company nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers, employees or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement will (either
alone or upon the occurrence of any additional acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from Parent,
Subject Company, the Surviving Corporation, 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 Subject Company Reports, (iv) which materially
restricts the conduct of any line of business by Subject Company, (v) with or to
a labor union or guild (including any collective bargaining agreement) or (vi)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Subject Company has previously
delivered to Parent true and correct copies of all employment, consulting and
deferred compensation agreements which are in writing and to which Subject
Company or any of its Subsidiaries is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section 3.14(a),
whether or not set forth in Section 3.14(a) of the Subject Company Disclosure
Schedule, is referred to herein as a "Subject Company Contract", and neither
Subject Company nor any of its Subsidiaries knows of, or has received notice of,
any violation of the above by any of the other parties thereto which,
individually or in the aggregate, would have a Material Adverse Effect on
Subject Company.
(b) (i) Each Subject Company Contract is valid and binding and in full
force and effect, (ii) Subject Company and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each Subject Company Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect on
Subject Company, and (iii) 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 Subject Company or any of its Subsidiaries under any such Subject
Company Contract, except where such default, individually or in the aggregate,
would not have a Material Adverse Effect on Subject Company.
3.15 Agreements with Regulatory Agencies. Except as set forth in Section
3.15 of the Subject Company Disclosure Schedule, neither Subject 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 with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 3.15 of the Subject
Company Disclosure Schedule, a "Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Subject Company or any of its Subsidiaries been advised
by any Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
3.16 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Subject
Company included in the Subject Company Delivered December 1994 Financials and
for liabilities incurred in the ordinary course of business consistent with past
practice, since December 31, 1994, neither Subject Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, has had, or
could reasonably be expected to have, a Material Adverse Effect on Subject
Company.
3.17 State Takeover Laws. The Board of Directors of Subject Company has
approved the transactions contemplated by this Agreement and the Option
Agreements such that the provisions of Section 203 of the
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DGCL and Article Sixth of Subject Company's Certificate of Incorporation will
not apply to this Agreement or the Option Agreements or any of the transactions
contemplated hereby or thereby.
3.18 Rights Agreement. Subject Company has taken all action (including,
if required, redeeming all of the outstanding preferred stock purchase rights
issued pursuant to the Subject Company Rights Agreement or amending or
terminating the Subject Company Rights Agreement) so that the entering into of
this Agreement and the Option Agreements, the Merger, the acquisition of shares
pursuant to the Option Agreements and the other transactions contemplated hereby
and thereby do not and will not result in the grant of any rights to any person
under the Subject Company Rights Agreement or enable or require the Subject
Company Rights to be exercised, distributed or triggered.
3.19 Pooling of Interests. As of the date of this Agreement, Subject
Company has no reason to believe that the Merger will not qualify as a pooling
of interests for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Subject Company as follows:
4.1 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 Articles of Incorporation and
Bylaws of Parent, copies of which have previously been made available to Subject
Company, are true, complete and correct copies of such documents as in effect as
of the date of this Agreement.
(b) Each Parent Subsidiary is (i) duly organized and validly existing as a
bank, corporation or partnership under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a Material
Adverse Effect on Parent, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its business
as now conducted.
(c) The minute books of Parent accurately reflect in all material respects
all corporate actions held or taken since January 1, 1993 of its stockholders
and Board of Directors (including committees of the Board of Directors of
Parent).
4.2 Capitalization. (a) The authorized capital stock of Parent consists
of (i) 300,000,000 shares of Parent Common Stock, of which as of January 31,
1995, 141,563,067 shares were issued and outstanding and held in treasury, (ii)
16,000,000 shares of Preferred Stock, par value $1.00 per share, ("Parent
Preferred Stock"), of which as of January 31, 1995, (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 no
shares were issued and outstanding as Series I 12% Cumulative Convertible
Preferred Stock ("Parent Series I 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 ("Parent Series III Preferred Stock"), (E) 1,000,000 shares were
designated and 478,838 shares were issued and outstanding as Series IV 9.375%
Preferred Stock ("Parent Series IV 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 Rights Agreement, as amended
("Parent Rights Agreement"), and (G) 1,415,000 shares were designated and
outstanding as Dual Convertible Preferred Stock ("Parent DCP
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Stock") and (iii) 1,500,000 shares of Preferred Stock with Cumulative and
Adjustable Dividends, par value $20.00 (the "Parent $20 Par Value Preferred
Stock"), of which at such date, no shares were issued and outstanding. 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, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
set forth in Section 4.2(a) of the disclosure schedule of Parent delivered to
Subject Company concurrently herewith (the "Parent Disclosure Schedule"), and
except for the Parent Shareholder Rights Agreement and the Parent Option
Agreement, 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 or Parent Preferred Stock or any other equity securities of Parent or any
securities representing the right to purchase or otherwise receive any shares of
Parent Common Stock or Parent Preferred Stock. As of January 31, 1995,
41,598,590 shares of Parent Common Stock were reserved for issuance pursuant to
outstanding warrants, rights, options and the employee benefit plans set forth
in Section 4.11(a) of the Parent Disclosure Schedule and no shares of Parent
Preferred Stock were reserved for issuance. Since January 31, 1995, Parent has
not issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than pursuant to the
exercise of employee stock options granted prior to such date and as disclosed
in Section 4.2(a) of the Parent Disclosure Schedule. The shares of Parent
Capital 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, with no personal liability
attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent Disclosure
Schedule, Parent owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the Parent Subsidiaries, free and clear of
any liens, charges, encumbrances and security interests whatsoever, and all of
such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Parent Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Parent. The Board of Directors of
Parent has directed that this Agreement and the transactions contemplated hereby
be submitted to Parent's stockholders for approval at a meeting of such
stockholders and except for the adoption of this Agreement by the affirmative
vote of the holders of a majority of the outstanding shares of Parent Common
Stock, no other corporate proceedings on the part of Parent are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and
(assuming due authorization, execution and delivery by Subject 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) Except as set forth in Section 4.3(b) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement by Parent, nor
the consummation by Parent of the transactions contemplated hereby, nor
compliance by Parent with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws of Parent or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance
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required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
Parent or any of its 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 any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except (in the case of clause (y) above) for
such violations, conflicts, breaches or defaults which either individually or in
the aggregate will not have or be reasonably likely to have a Material Adverse
Effect on Parent.
4.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the filing of applications with
the OTS under HOLA and approval of such applications, (iii) the filing of any
requisite applications with the OCC, (iv) the filing of the State Approvals, (v)
the filing with the SEC of the Joint Proxy Statement and the S-4, (vi) the
filing of the Certificate of Merger with the Delaware Secretary pursuant to the
DGCL, (vii) the filing of the Articles of Merger with the Rhode Island Secretary
pursuant to the RIBCA, (viii) 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 pursuant to
this Agreement, and (ix) the approval of this Agreement by the requisite vote of
the stockholders of Parent and Subject Company, no consents or approvals of or
filings or registrations with any Governmental Entity or with any third party
are necessary in connection with (A) the execution and delivery by Parent of
this Agreement and (B) the consummation by Parent of the Merger and the other
transactions contemplated hereby.
4.5 Reports. Parent and each of its Subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
January 1, 1993 with the Regulatory Agencies, and all other material reports and
statements required to be filed by them since January 1, 1993, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, the Federal Reserve
Board, the FDIC, the OCC, the OTS, any State Regulator or any SRO, and have paid
all fees and assessments due and payable in connection therewith. Except for
normal examinations conducted by a Regulatory Agency in the regular course of
the business of Parent and its Subsidiaries, no Regulatory Agency has initiated
any proceeding or, to the best knowledge of Parent, investigation into the
business or operations of Parent or any of its Subsidiaries since January 1,
1993. There is no material unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of Parent or any of its Subsidiaries.
4.6 Financial Statements. Parent has previously delivered to Subject
Company copies of (a) 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 stockholders' equity and
cash flows for the fiscal years 1991 through 1993, inclusive, as reported 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, in each case accompanied by the audit
report of KPMG Peat Marwick, independent public accountants with respect to
Parent, (b) the unaudited consolidated balance sheet of Parent and its
Subsidiaries as of December 31, 1994, and the related consolidated statements of
income and changes in stockholders' equity for the fiscal year 1994,
substantially in the form that is proposed to be reported in Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994 (the "Parent
Delivered December 1994 Financials"), and (c) the unaudited consolidated balance
sheet of Parent and its Subsidiaries as of September 30, 1993 and September 30,
1994 and the related unaudited consolidated statements of income, cash flows and
changes in stockholders' equity for the nine month periods then ended as
reported in Parent's Quarterly Report on Form 10-Q for the period ended
September 30, 1994 filed with the SEC under the Exchange Act. The December 31,
1994 consolidated balance sheet of Parent (including the related notes, where
applicable) fairly presents the consolidated financial position of Parent and
its Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 4.6 (including the related notes, where applicable)
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
position of Parent
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and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the related notes,
where applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been prepared in accordance with GAAP consistently applied
during the periods involved, except in each case as indicated in such statements
or in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q. The books and records of Parent and its Subsidiaries have been, and
are being, maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements and reflect only actual
transactions.
4.7 Broker's Fees. Except as set forth in Section 4.7 of the Parent
Disclosure Schedule, neither Parent nor 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 Option
Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Parent Reports (as defined below) filed prior to the date hereof,
since December 31, 1994, (i) neither Parent nor any of its Subsidiaries has
incurred any material liability, except in the ordinary course of their business
consistent with their past practices, and (ii) no event has occurred which has
had, individually or in the aggregate, a Material Adverse Effect on Parent.
(b) Except as publicly disclosed in Parent Reports filed prior to the date
hereof, and except as set forth in Section 4.8(b) of the Parent Disclosure
Schedule, since December 31, 1994, Parent and its Subsidiaries have carried on
their respective businesses in the ordinary and usual course consistent with
their past practices.
(c) Except as set forth in Section 4.8(c) of the Parent Disclosure
Schedule, since December 31, 1994, neither Parent nor any of its Subsidiaries
has (i) except for normal increases in the ordinary course of business
consistent with past practice or except as required by applicable law, increased
the wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1994, granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus other than customary year-end bonuses for
fiscal 1993 and 1994 or (ii) suffered any strike, work stoppage, slow-down, or
other labor disturbance.
4.9 Legal Proceedings. (a) Neither Parent nor any of its Subsidiaries is
a party to any and there are no pending or, to the best of Parent's knowledge,
threatened, material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Parent or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Parent
Option Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on Parent.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of Parent
or any of its Subsidiaries which has had, or might reasonably be expected to
have, a Material Adverse Effect on Parent or the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Each of Parent and its Subsidiaries has
duly filed all material Federal, state and, to the best of Parent'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 accurate and complete in all
material respects) and has duly paid or made provisions for the payment of all
material Taxes (as defined below) and other governmental charges 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 of this Agreement (including,
without limitation, if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits, franchises, licenses,
sales and payrolls) other than Taxes or other charges (1) which are not yet
delinquent or are being contested in good faith and (2) have not been finally
determined. The income tax returns of Parent and its Subsidiaries have been
examined by the Internal Revenue Service (the "IRS") and
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any liability with respect thereto has been satisfied for all years to and
including 1989, and no material deficiencies were asserted as a result of such
examination or all such deficiencies were satisfied. To the best of Parent's
knowledge, there are no material disputes pending, or claims asserted for, Taxes
or assessments upon Parent or any of its Subsidiaries, nor has Parent 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. In addition, (i) proper and
accurate amounts have been withheld by Parent and its Subsidiaries from their
employees for all prior periods in compliance in all material respects with the
tax withholding provisions of applicable Federal, state and local laws, except
where failure to do so would not have a Material Adverse Effect on Parent, (ii)
Federal, state, county and local returns which are accurate and complete in all
material respects have been filed by Parent and its Subsidiaries for all periods
for which returns were due with respect to income tax withholding, Social
Security and unemployment taxes, except where failure to do so would not have a
Material Adverse Effect on Parent, (iii) the amounts shown on such Federal,
state, local or county returns to be due and payable have been paid in full or
adequate provision therefor has been included by Parent in its consolidated
financial statements as of December 31, 1994, except where failure to do so
would not have a Material Adverse Effect on Parent and (iv) there are no Tax
liens upon any property or assets of the Parent or its Subsidiaries except liens
for current taxes not yet due. To the knowledge of Parent, no property of Parent
or any of its Subsidiaries is property that Parent or any of its Subsidiaries is
or will be required to treat as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Code (as in effect prior to its amendment
by the Tax Reform Act of 1986) or is "tax-exempt use property" within the
meaning of Section 169(h) of the Code. Neither Parent nor any of its
Subsidiaries has been required to include in income any adjustment pursuant to
Section 481 of the Code by reason of a voluntary change in accounting method
initiated by Parent or any of its Subsidiaries, and the Internal Revenue Service
has not initiated or proposed any such adjustment or change in accounting
method. Except as set forth in the financial statements described in Section 4.6
hereof, neither Parent nor any of its Subsidiaries has entered into a
transaction which is being accounted for as an installment obligation under
Section 453 of the Code, which would be reasonably likely to have a Material
Adverse Effect on Parent.
(b) Any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of Parent or any of its
affiliates who is a "Disqualified Individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Parent Benefit Plan
currently in effect would not be characterized as an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code).
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Parent or any Subsidiary
of Subject Company under any contract, plan, program, arrangement or
understanding would be reasonably likely to have a Material Adverse Effect on
Parent.
4.11 Employees. (a) Section 4.11(a) of the Parent Disclosure Schedule
sets forth a true and complete list of each material employee benefit plan,
arrangement or agreement that is maintained as of the date of this Agreement
(the "Parent Plans") by Parent, any of its Subsidiaries or by any trade or
business; whether or not incorporated (a "Parent ERISA Affiliate"), all of which
together with Parent would be deemed a "single employer" within the meaning of
Section 4001 of ERISA.
(b) Parent has heretofore delivered to Subject Company true and complete
copies of each of the Parent Plans and all related documents, including but not
limited to (i) the actuarial report for such Parent Plan (if applicable) for
each of the last two years, and (ii) the most recent determination letter from
the Internal Revenue Service (if applicable) for such Parent Plan.
(c) Except as set forth in Section 4.11(c) of the Parent Disclosure
Schedule, (i) each of the Parent Plans has been operated and administered in all
material respects with applicable laws, including but not limited to ERISA and
the Code, (ii) each of the Parent Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified, (iii) with respect to
each Parent Plan which is subject to Title IV of ERISA, the present value of
accrued benefits under such Parent Plan, based upon the actuarial
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assumptions used for funding purposes in the most recent actuarial report
prepared by such Parent Plan's actuary with respect to such Parent Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such Parent Plan allocable to such accrued benefits, (iv) no Parent
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of Parent,
its Subsidiaries or any Parent ERISA Affiliate beyond their retirement or other
termination of service, other than (w) Coverage mandated by applicable law, (x)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
accrued as liabilities on the books of Parent, its Subsidiaries or the Parent
ERISA Affiliates or (z) benefits the full cost of which is borne by the current
or former employee (or his beneficiary), (v) no liability under Title IV of
ERISA has been incurred by Parent, its Subsidiaries or any Parent ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Parent, its Subsidiaries or any Parent ERISA
Affiliate of incurring a material liability thereunder, (vi) no Parent Plan is a
"multiemployer pension plan", as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by Parent or its Subsidiaries
as of the Effective Time with respect to each Parent 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, (viii) neither
Parent, its Subsidiaries nor any Parent ERISA Affiliate has engaged in a
transaction in connection with which Parent, its Subsidiaries or any Parent
ERISA Affiliate could be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of Parent there
are no pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Parent Plans or any trusts
related thereto.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
employee of Parent or any of its affiliates from Parent or any of its affiliates
under any Parent Benefit Plan or otherwise, (ii) materially increase any
benefits otherwise payable under any Parent Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits to any
material extent.
4.12 SEC Reports. Parent has previously made available to Subject Company
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1993 by Parent with the SEC pursuant to the Securities Act or the Exchange
Act (the "Parent Reports") and prior to the date hereof and (b) communication
mailed by Parent to its stockholders since January 1, 1993 and prior to the date
hereof, and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. Parent has timely filed
all Parent Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Parent Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. Except as disclosed in Section 4.13
of the Parent Disclosure Schedule, Parent 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 in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline 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, individually
or in the aggregate, have a Material Adverse Effect on Parent, and neither
Parent nor any of its Subsidiaries knows of, or has received notice of, any
material violations of any of the above.
4.14 Certain Contracts. (a) Except as set forth in Section 4.14(a) of the
Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers,
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employees or consultants, (ii) which, upon the consummation of the transactions
contemplated by this Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from Parent, Subject Company, the Surviving Corporation,
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 Parent Reports, (iv) which
materially restricts the conduct of any line of business by Parent, (v) with or
to a labor union or guild (including any collective bargaining agreement) or
(vi) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Parent has previously delivered
to Subject Company true correct copies of all employment, consulting and
deferred compensation agreements which are in writing and to which Parent or any
of its Subsidiaries is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.14(a), whether or not set
forth in Section 4.14(a) of the Parent Disclosure Schedule, is referred to
herein as a "Parent Contract", and neither Parent nor any of its Subsidiaries
knows of, or has received notice of, any violation of the above by any of the
other parties thereto which, individually or in the aggregate, would have a
Material Adverse Effect on Parent.
(b) (i) Each Parent Contract is valid and binding and in full force and
effect, (ii) Parent and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
Parent Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, and (iii) 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 Parent or any of its
Subsidiaries under any such Parent Contract, except where such default,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent.
4.15 Agreements with Regulatory Agencies. Except as set forth in Section
4.15 of the Parent Disclosure Schedule, 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 written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth in Section 4.15 of the Parent
Disclosure Schedule, a "Parent Regulatory Agreement"), any Regulatory Agency or
other Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Parent or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Parent
included in the Parent Delivered December 1994 Financials and for liabilities
incurred in the ordinary course of business consistent with past practice, since
December 31, 1994, neither Parent nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either alone or when combined
with all similar liabilities, has had, or could reasonably be expected to have,
a Material Adverse Effect on Parent.
4.17 State Takeover Laws. The Board of Directors of Parent has approved
the transactions contemplated by this Agreement and the Option Agreements such
that the provisions of the Business Combination Act of Rhode Island and Article
Ninth of Parent's Articles of Incorporation will not apply to this Agreement or
the Option Agreements or any of the transactions contemplated hereby or thereby.
4.18 Rights Agreement. Parent has taken all action (including, if
required, redeeming all of the outstanding preferred stock purchase rights
issued pursuant to the Parent Rights Agreement or amending or terminating the
Parent Rights Agreement) so that the entering into of this Agreement and the
Option Agreements, the Merger, the acquisition of shares pursuant to the Option
Agreements and the other
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transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any person under the Parent Rights Agreement or enable or
require the Parent Rights to be exercised, distributed or triggered.
4.19 Pooling of Interests. As of the date of this Agreement, Parent has
no reason to believe that the Merger will not qualify as a pooling of interests
for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, each of
Parent and Subject Company shall, and shall cause each of their respective
Subsidiaries to, (i) conduct its business in the usual, regular and ordinary
course consistent with past practice, (ii) use reasonable best efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees and (iii) take no action which would adversely affect or delay the
ability of either Parent or Subject Company to obtain any necessary approvals of
any Regulatory Agency or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement or the Option Agreements.
5.2 Forbearances. During the period from the date of this Agreement to
the Effective Time, except as set forth in Section 5.2 of the Parent Disclosure
Schedule or Section 5.2 of the Subject Company Disclosure Schedule, as the case
may be, and, except as expressly contemplated or permitted by this Agreement or
the Option Agreements, neither Parent nor Subject Company shall, and neither
Parent nor Subject Company shall permit any of their respective Subsidiaries to,
without the prior written consent of the other:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness
of Subject Company or any of its Subsidiaries to Subject Company or any of
its Subsidiaries, on the one hand, or of Parent or any of its Subsidiaries
to Parent or any of its Subsidiaries, on the other hand; it being
understood and agreed that incurrence of indebtedness in the ordinary
course of business shall include, without limitation, the creation of
deposit liabilities, purchases of federal funds, sales of certificates of
deposit and entering into repurchase agreements), assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make
any loan or advance;
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock (except, in the case
of Subject Company, for regular quarterly cash dividends at a rate not in
excess of $0.22 per share of Subject Company Common Stock, and in the case
of Parent, for regular quarterly cash dividends on Parent Common Stock at a
rate not in excess of $0.50 per share of Parent Common Stock, and, in the
case of Subject Company Preferred Stock and Parent Preferred Stock, for
regular quarterly or semiannual cash dividends thereon at the rates set
forth in the applicable certificate of incorporation or certificate of
designation for such securities and except for dividends paid by any of the
wholly owned Subsidiaries of each of Parent and Subject Company to Parent
or Subject Company or any of their wholly owned Subsidiaries,
respectively); or issue any additional shares of capital stock except
pursuant to (A) the exercise of stock options or warrants outstanding as of
the date hereof, (B) the conversion of shares of the Parent Series I
Preferred Stock or the Parent DCP Stock or (C) the Option Agreements, (D)
the Subject Company Shareholder Rights Agreement, (E) the Parent
Shareholder Rights Agreement, (F) the Northeast Agreement or (G) the Option
Agreements;
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(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity
other than a direct or indirect wholly owned Subsidiary, or cancel, release
or assign any indebtedness to any such person or any claims held by any
such person, except in the ordinary course of business consistent with past
practice or pursuant to contracts or agreements in force at the date of
this Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other individual,
corporation or other entity other than a wholly owned Subsidiary thereof;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases or
contracts, other than renewals of contracts and leases without material
adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment agreement with or for the
benefit of any employee other than in the ordinary course of business
consistent with past practice or accelerate the vesting of any stock
options or other stock-based compensation;
(g) solicit, encourage or authorize any individual, corporation or
other entity to solicit from any third party any inquiries or proposals
relating to the disposition of its business or assets, or the acquisition
of its voting securities, or the merger of it or any of its Subsidiaries
with any corporation or other entity other than as provided by this
Agreement (and each party shall promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it may
receive relating to any of such matters);
(h) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(i) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of Parent or
Subject Company to exercise its rights under the Subject Company Option
Agreement or the Parent Option Agreement, as the case may be;
(j) amend its certificate of incorporation or articles of
incorporation, as the case maybe, or its bylaws; or
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or reported;
(l) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision
of this Agreement, except, in every case, as may be required by applicable
law; or
(m) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Parent and Subject Company shall promptly
prepare and file with the SEC the Joint Proxy Statement and Parent shall
promptly prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of Parent and Subject Company
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and Parent and
Subject Company shall thereafter mail the Joint Proxy Statement to their
respective stockholders. Parent shall also use all reasonable 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 Subject
Company shall furnish all information concerning Subject Company and the holders
of Subject Company Capital Stock as may be reasonably requested in connection
with any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger), and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities. Parent
and Subject Company shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
Subject 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 Subject Company shall, upon request, furnish each other with
all information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, Subject
Company or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) Parent and Subject Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Parent and
Subject Company shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Parent and Subject
Company shall, and shall cause their respective Subsidiaries to, make available
to the other party (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of Federal securities laws or Federal or state banking laws,
savings and loan or savings association laws (other than reports or documents
which Parent or Subject Company, as the case may be, is not permitted to
disclose under applicable law) and (ii) all other information concerning its
business, properties and personnel as such party may reasonably request. Neither
Parent nor Subject Company nor any of their respective Subsidiaries shall be
required to provide access to or to disclose information where such
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access or disclosure would violate or prejudice the rights of Parent's or
Subject Company's, as the case may be, customers, jeopardize the attorney-client
privilege of the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(b) Each of Parent and Subject Company shall hold all information furnished
by the other party or any of such party's Subsidiaries or representatives
pursuant to Section 6.2(a) in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement, dated February
13, 1995 between Parent and Subject Company (the "Confidentiality Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 Stockholders' Approvals. Each of Parent and Subject Company shall
call a meeting of its stockholders to be held as soon as practicable for the
purpose of voting upon the requisite stockholder approvals required in
connection with this Agreement and the Merger, and each shall use its best
efforts to cause such meetings to occur on the same date.
6.4 Legal Conditions to Merger. Each of Parent and Subject Company shall,
and shall cause its Subsidiaries to, use their 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 Subsidiary 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 Subject Company or Parent or any of their respective
Subsidiaries in connection with the Merger and the Subsidiary Merger and the
other transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results. (a) Each of
Parent and Subject Company shall use its best efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders meetings called by Parent and Subject
Company to approve this Agreement, a written agreement, in the form of Exhibit
6.5(a) hereto, providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of Parent Capital Stock or Subject Company
Capital Stock held by such "affiliate" and, in the case of the "affiliates" of
Subject Company, the shares of Parent Capital Stock to be received by such
"affiliate" in the Merger: (1) in the case of shares of Parent Capital Stock to
be received by "affiliates" of Subject Company in the Merger, except in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder; and (2) during the period commencing 30 days prior
to the Merger and ending at the time of the publication of financial results
covering at least 30 days of combined operations of Parent and Subject Company.
(b) Parent shall use its best efforts to publish no later than ninety (90)
days after the end of the first month after the Effective Time in which there
are at least thirty (30) days of post-Merger combined operations (which month
may be the month in which the Effective Time occurs), combined sales and net
income figures as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Parent shall cause the shares of Parent
Common Stock to be issued in the Merger to be approved for listing on the New
York Stock Exchange, Inc. (the "NYSE"), subject to official notice of issuance,
prior to the Effective Time and shall use its best efforts to cause the shares
of Parent 9.30% Preferred and Parent 9.35% Cumulative Preferred to be so
approved.
6.7 Employee Benefit Plans. (a) From and after the Effective Time, and
subject to applicable law, Parent shall provide to the employees of Parent and
its Subsidiaries who formerly were employees of Subject
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Company and its Subsidiaries employee benefits, including but not limited to
pension plans, thrift plans, management incentive plans, group life plans,
accidental death and dismemberment plans, travel accident plans, medical and
hospitalization plans and long term disability plans, substantially the same as
those provided to similarly situated employees of Parent and its Subsidiaries.
From and after the Effective Time, employees of Parent or its Subsidiaries who
were employees of the Subject Company and its Subsidiaries immediately prior to
the Effective Time shall receive full credit for all purposes under such plans,
except the accrual of benefits, for their years of service prior to the
Effective Time with the Subject Company or any of its Subsidiaries (and any
predecessors thereto).
(b) Parent agrees to honor in accordance with their terms (i) all Plans and
(ii) all contracts, arrangements, commitments, or understandings described in
Section 3.14(a)(i) disclosed on the Subject Company Disclosure Schedule and
(iii) all benefits vested thereunder as of the Effective Time; provided,
however, that nothing in this sentence shall be interpreted as preventing Parent
from amending, modifying or terminating any Plans, contracts, arrangements,
commitments or understandings, in accordance with their terms. The provisions of
this Section 6.7(b) are intended to be for the benefit for, and enforceable by,
each of the persons set forth in Section 6.7(b) of the Subject Company
Disclosure Schedule and their heirs and representatives.
(c) Subject Company shall take all actions necessary, including securing
the consent of optionees, to amend the terms of the Subject Company Stock Option
Plans and any severance or other agreements that provide for the surrender of
stock options issued under the Subject Company Stock Option Plans in exchange
for a cash payment ("LSARs") to provide that such LSARs shall be settled in
stock with a fair market value equal to the cash that would otherwise have been
payable thereunder.
(d) Parent and Subject Company acknowledge and agree that awards under the
Subject Company's Performance Equity Plan ("PEP") are subject to Section 11(f)
of the Subject Company Stock Option and Restricted Stock Award Plan.
6.8 Indemnification; Directors' and Officers' Insurance. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any 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 Subject
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 Subject Company, any of the Subject Company Subsidiaries
or any of their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or thereby, whether in
any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the Effective Time,
Parent shall indemnify and hold harmless, as and to the fullest extent permitted
by law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and expenses
in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted of arising before or after the Effective Time), the Indemnified Parties
may retain counsel reasonably satisfactory to them after consultation with
Parent; provided, however, that (1) Parent shall have the right to assume the
defense thereof and upon such assumption Parent shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if Parent elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified Parties that there
are issues which raise conflicts of interest between Parent and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory to
them after consultation with Parent, and Parent shall pay the reasonable fees
and expenses of such counsel for the Indemnified Parties, (2) Parent shall be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Parent shall not
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be liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) 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 nonappealable, 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 6.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify Parent thereof, provided that the failure to so notify shall not affect
the obligations of Parent under this Section 6.8 except to the extent such
failure to notify materially prejudices Parent. Parent's obligations under this
Section 6.8 continue in full force and effect for a period of 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 final disposition of such Claim.
(b) Parent shall use its best efforts to cause the persons serving as
officers and directors of Subject Company immediately prior to the Effective
Time to be covered for a period of six (6) years from the Effective Time by the
directors' and officers' liability insurance policy maintained by Subject
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 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 200% of the current amount expended by Subject
Company (the "Insurance Amount") to maintain or procure insurance coverage
pursuant hereto and further provided that if Parent is unable to maintain or
obtain the insurance called for by this Section 6.8(b), Parent shall use its
best efforts to obtain as much comparable insurance as available for the
Insurance Amount.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.9 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Parent and a Subsidiary of Subject Company) or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the Merger, the proper officers and
directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, Parent.
6.10 Advice of Changes. Parent and Subject Company shall promptly advise
the other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein.
6.11 Dividends. After the date of this Agreement, each of Parent and
Subject Company shall coordinate with the other the declaration of any dividends
in respect of Parent Common Stock and Subject Company Common Stock and the
record dates and payment dates relating thereto, it being the intention of the
parties hereto that holders of Parent Common Stock or Subject Company Common
Stock shall not receive two dividends, or fail to receive one dividend, for any
single calendar quarter with respect to their shares of Parent Common Stock
and/or Subject Company Common Stock and any shares of Parent Common Stock any
such holder receives in exchange therefor in the Merger.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 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) Stockholder Approval. This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the respective requisite
affirmative votes of the holders of Subject Company Common Stock and Parent
Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock which shall be issued
to the stockholders of Subject Company upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) Other Approvals. All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting periods
being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. Parent shall have received an opinion of
Wachtell, Lipton, Rosen & Katz, counsel to Parent, and Subject Company shall
have received an opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to
Subject Company, in form and substance reasonably satisfactory to Parent and
Subject Company, dated as of the Effective Time, substantially to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the Effective
Time, the Merger will be treated for Federal income tax purposes as part of one
or more reorganizations within the meaning of Section 368 of the Code and that
accordingly:
(i) No gain or loss will be recognized by Parent or Subject Company as
a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of Subject
Company who exchange their Subject Company Capital Stock solely for Parent
Capital Stock pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in Parent Capital Stock); and
(iii) The tax basis of the Parent Capital Stock received by
stockholders who exchange all of their Subject Company Capital Stock solely
for Parent Capital Stock in the Merger will be the same as the tax basis of
the Subject Company Capital Stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional share interest for which cash is
received).
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of Parent, Subject Company
and others.
(g) Pooling of Interests. Parent and Subject Company shall each have
received a letter from KPMG Peat Marwick addressed to Subject Company and
Parent, to the effect that the Merger will qualify for "pooling of interests"
accounting treatment.
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7.2 Conditions to Obligations of Parent. The obligation of Parent 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
Subject 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. Parent shall have
received a certificate signed on behalf of Subject Company by the Chief
Executive Officer and the Chief Financial Officer of Subject Company to the
foregoing effect.
(b) Performance of Obligations of Subject Company. Subject 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 Subject Company by the Chief
Executive Officer and the Chief Financial Officer of Subject Company to such
effect.
(c) Subject Company Rights Agreement. The rights issued pursuant to the
Subject Company Rights Agreement shall not have become nonredeemable,
exercisable, distributed or triggered pursuant to the terms of such agreement.
7.3 Conditions to Obligations of Subject Company. The obligation of
Subject Company to effect the Merger is also subject to the satisfaction or
waiver by Subject Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
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. Subject Company shall have
received a certificate signed on behalf of Parent by the Chief Executive Officer
and the Chief Financial Officer of Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent 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 Subject 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) Parent Rights Agreement. The rights issued pursuant to the Parent
Rights Agreement shall not have become nonredeemable, exercisable, distributed
or triggered pursuant to the terms of such agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Subject Company:
(a) by mutual consent of Parent and Subject 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 the Board of Directors of Parent or the Board of Directors of
Subject Company if any Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has become
final and nonappealable or (ii) any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement;
(c) by either the Board of Directors of Parent or the Board of Directors of
Subject Company if the Merger shall not have been consummated on or before
February 20, 1996, unless the failure of the Closing to occur by such date shall
be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
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(d) by either the Board of Directors of Parent or the Board of Directors of
Subject 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 or any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
forty-five (45) days following written notice to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the Closing; or
(e) by either Parent or the Subject Company if any approval of the
stockholders of Parent or the Subject 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 stockholders or at any adjournment or
postponement thereof.
8.2 Effect of Termination. In the event of termination of this Agreement
by either Parent or Subject Company as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of Parent, Subject
Company, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
(i) Sections 6.2(b), 8.2, 9.2 and 9.3, shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Subject Company shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 Amendment. Subject to compliance with applicable law, 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 stockholders of Subject
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by Subject Company's stockholders, there may not
be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Subject Company stockholders 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.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
Subject Company's stockholders, there may not be, without further approval of
such stockholders, any extension or waiver of this Agreement or any portion
thereof which reduces the amount or changes the form of the consideration to be
delivered to the Subject Company stockholders hereunder other than as
contemplated by this Agreement. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement and
the Merger Agreement, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date to be specified by the parties, which shall be no later
than two business days after the satisfaction or waiver (subject to applicable
law) of the latest to occur of the conditions set forth in Article VII hereof
(the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the Option Agreements, which shall terminate in accordance with its terms) 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.
9.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by Parent
and Subject Company.
9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, to:
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Fax: (401) 278-5527
Attn: William C. Mutterperl, Esq.
with a copy to each of:
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Fax: (401) 276-6611
Attn: V. Duncan Johnson, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd
New York, New York 10019
Fax: (212) 402-2000
Attn: Edward D. Herlihy, Esq.
and
(b) if to Subject Company, to:
Shawmut National Corporation
777 Main Street
Hartford, Connecticut 06115
Fax: (203) 728-4205
Attn: J. Michael Shepherd, Esq.
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with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attn: William S. Rubenstein, Esq.
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". No provision of this Agreement shall be construed to require
Subject Company, Parent or any of their respective Subsidiaries or affiliates to
take any action which would violate any applicable law, rule or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) 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 Option
Agreements and the Confidentiality Agreement.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Rhode Island, without regard to any
applicable conflicts of law.
9.9 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.
9.10 Publicity. Except as otherwise required by applicable law or the
rules of the NYSE, neither Parent nor Subject 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.
9.11 Assignment. Neither this Agreement nor any of the rights, interests
or obligations shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise specifically provided in Section
6.7(b) and Section 6.8 hereof, 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.
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IN WITNESS WHEREOF, Parent and Subject Company have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
FLEET FINANCIAL GROUP, INC.
By: /s/ TERRENCE MURRAY
----------------------------------
Name:
Title:
SHAWMUT NATIONAL CORPORATION
By: /s/ JOEL B. ALVORD
----------------------------------
Name:
Title:
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EXHIBIT B
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated February 20, 1995, between FLEET FINANCIAL
GROUP, INC., a Rhode Island corporation ("Issuer"), and SHAWMUT NATIONAL
CORPORATION, a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 28,171,050 fully
paid and nonassessable shares of Issuer's Common Stock, par value $1.00 per
share ("Common Stock"), at a price of $33.625 per share (the "Option Price");
provided further that in no event shall the number of shares of Common Stock for
which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, it equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an Exercise Termination Event: (i) the Effective Time of
the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of twelve months
after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional) (provided that if an
Initial Triggering Event continues or occurs beyond such termination and prior
to the passage of such twelve-month period, the Exercise Termination Event shall
be twelve months from the expiration of the Last Triggering Event but in no
event more than 18 months after such termination).
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The "Last Triggering Event" shall mean the last Initial Triggering Event to
expire. The term "Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer or any
Significant Subsidiary of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall any (i) merger,
consolidation or similar transaction involving Issuer or any Significant
Subsidiary in which the voting securities of Issuer outstanding immediately
prior thereto continue to represent (by either remaining outstanding or
being converted into the voting securities of the surviving entity of any
such transaction) at least 65% of the combined voting power of the voting
securities of the Issuer or the surviving entity outstanding immediately
after the consummation of such merger, consolidation, or similar
transaction, or (ii) any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of its Subsidiaries
or involving only any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided any such transaction is not entered into
in violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its interest to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by
the Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
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(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or
more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
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(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. sec.18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the Federal Reserve Board
or to any state regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such applications or
notices and providing such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the Option
Price shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration
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statement under the 1933 Act covering this Option and any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of this Option and any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer
will use its reasonable best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in excess
of 180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; and provided, however, that after
any such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for the Issuer. Upon
receiving any request under this Section 6 from any Holder, Issuer agrees to
send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price multiplied by
the number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, divided by the number of shares of
Common Stock of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a
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written notice or notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or the Option Shares
in accordance with the provisions of this Section 7. Within the latter to occur
of (x) five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto and (y) the time that is immediately prior to the occurrence of a
Repurchase Event, Issuer shall deliver or cause to be delivered to the Holder
the Option Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the acquisition by any person
of beneficial ownership of 50% or more of the then outstanding shares of Common
Stock, provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
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(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as defined in
Section 7.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised plus (y) Grantee's Out-of-Pocket Expenses (to the extent
not previously reimbursed), and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"),
the Substitute Option Issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to (x) the Highest Closing Price
multiplied by the number of Substitute Shares so designated plus (y) Grantee's
Out-of-Pocket Expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute
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Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2, 6, 7
and 13 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to
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authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not subject to
any preemptive rights.
(c) Issuer has taken all action (including if required redeeming all
of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and
will not result in the grant of any rights to any person under the Rights
Agreement or enable or require the Rights to be exercised, distributed or
triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder
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of the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Rhode Island, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
FLEET FINANCIAL GROUP, INC.
By: /s/ TERRENCE MURRAY
----------------------------------
SHAWMUT NATIONAL CORPORATION
By: /s/ JOEL B. ALVORD
----------------------------------
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EXHIBIT C
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated February 20, 1995, between SHAWMUT NATIONAL
CORPORATION, a Delaware corporation ("Issuer"), and FLEET FINANCIAL GROUP, INC.,
a Rhode Island corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, subject to the terms hereof, up to 24,195,625 fully
paid and nonassessable shares of Issuer's Common Stock, par value $0.01 per
share ("Common Stock"), at a price of $24.50 per share (the "Option Price");
provided further that in no event shall the number of shares of Common Stock for
which this Option is exercisable exceed 19.9% of the Issuer's issued and
outstanding shares of Common Stock. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to the
Option shall be increased so that, after such issuance, it equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section 1(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an Exercise Termination Event: (i) the Effective Time of
the Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of twelve months
after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional) (provided that if an
Initial Triggering Event continues or occurs beyond such termination and prior
to the passage of such twelve-month period, the Exercise Termination Event shall
be twelve months from the expiration of the Last Triggering Event but in no
event more than 18 months after such termination). The "Last Triggering Event"
shall mean the last Initial Triggering Event to expire. The term "Holder" shall
mean the holder or holders of the Option.
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(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer or any
Significant Subsidiary of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall any (i) merger,
consolidation or similar transaction involving Issuer or any Significant
Subsidiary in which the voting securities of Issuer outstanding immediately
prior thereto continue to represent (by either remaining outstanding or
being converted into the voting securities of the surviving entity of any
such transaction) at least 65% of the combined voting power of the voting
securities of the Issuer or the surviving entity outstanding immediately
after the consummation of such merger, consolidation, or similar
transaction, or (ii) any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more of its Subsidiaries
or involving only any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided any such transaction is not entered into
in violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its interest to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by
the Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
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(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20% or
more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board or any other regulatory
agency is required in connection with such purchase, the Holder shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions to this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall be removed
in its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
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(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. sec.18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the Federal Reserve Board
or to any state regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in preparing such applications or
notices and providing such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other Agreements providing for
Options of different denominations entitling the holder thereof to purchase, on
the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the Option
Price shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration
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statement under the 1933 Act covering this Option and any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of this Option and any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer
will use its reasonable best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in excess
of 180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; and provided, however, that after
any such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for the Issuer. Upon
receiving any request under this Section 6 from any Holder, Issuer agrees to
send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price multiplied by
the number of Option Shares so designated. The term "market/offer price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, divided by the number of shares of
Common Stock of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by the
Holder or Owner, as the case may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a
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written notice or notices stating that the Holder or the Owner, as the case may
be, elects to require Issuer to repurchase this Option and/or the Option Shares
in accordance with the provisions of this Section 7. Within the latter to occur
of (x) five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto and (y) the time that is immediately prior to the occurrence of a
Repurchase Event, Issuer shall deliver or cause to be delivered to the Holder
the Option Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or (B)
to the Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of Issuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the acquisition by any person
of beneficial ownership of 50% or more of the then outstanding shares of Common
Stock, provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
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(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as defined in
Section 7.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or by
any company which controls or is controlled by such person, as the Holder
may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection (a)
of this Section 8 unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised plus (y) Grantee's Out-of-Pocket Expenses (to the extent
not previously reimbursed), and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the "Substitute Shares"),
the Substitute Option Issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to (x) the Highest Closing Price
multiplied by the number of Substitute Shares so designated plus (y) Grantee's
Out-of-Pocket Expenses (to the extent not previously reimbursed). The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute
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Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the
case may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation from delivering to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively, in
full (and the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2, 6, 7
and 13 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and for the expiration of all
statutory waiting periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to
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authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrance and security interests and not subject to
any preemptive rights.
(c) Issuer has taken all action (including if required redeeming all
of the Rights or amending or terminating the Rights Agreement) so that the
entering into of this Option Agreement, the acquisition of shares of Common
Stock hereunder and the other transactions contemplated hereby do not and
will not result in the grant of any rights to any person under the Rights
Agreement or enable or require the Rights to be exercised, distributed or
triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder
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of the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Rhode Island, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
SHAWMUT NATIONAL CORPORATION
By: /s/ JOEL B. ALVORD
----------------------------------
FLEET FINANCIAL GROUP, INC.
By: /s/ TERRENCE MURRAY
----------------------------------
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SALOMON BROTHERS INC EXHIBIT D
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
212-783-7000
- ------------------------- ---------------------
SALOMON BROTHERS
--------------------
May 8, 1995
Board of Directors
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of shares of common stock, par
value $1.00 per share (the "Fleet Common Stock"), of Fleet Financial Group, Inc.
(the "Company") of the exchange ratio (the "Exchange Ratio") in the proposed
merger (the "Merger") of Shawmut National Corporation ("Shawmut") with and into
the Company pursuant to the Agreement and Plan of Merger dated as of February
20, 1995 (the "Agreement") between the Company and Shawmut. Pursuant to the
Agreement, each outstanding share of common stock, par value $.01 per share, of
Shawmut (the "Shawmut Common Stock") will be converted into the right to receive
0.8922 shares of Fleet Common Stock.
We understand that the Merger is conditioned upon, among other things,
receipt of a letter from the Company's independent auditors to the effect that
the Merger will qualify for pooling-of-interests accounting treatment and an
opinion of counsel to the effect that the Merger constitutes a tax-free
transaction under the Internal Revenue Code. Pursuant to the Agreement, the
Company and Shawmut entered into separate Stock Option Agreements (the "Stock
Option Agreements") under which Shawmut has granted to the Company an option to
purchase up to 19.9% of the outstanding shares of Shawmut Common Stock at the
time of exercise at an exercise price of $24.50 per share and the Company has
granted to Shawmut an option to purchase up to 19.9% of the outstanding shares
of Fleet Common Stock at an exercise price of $33.625 per share. The terms of
the Merger are more fully 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 and its
subsidiaries, including Fleet Mortgage Group, for which we have received
customary compensation. Such services have included acting as a managing
underwriter of debt and equity securities, as an agent for medium term notes and
as a financial advisor in connection with various mergers and acquisitions. In
addition, Salomon Brothers Inc from time to time has provided investment banking
and financial advisory services to Shawmut and its subsidiaries for which we
have received customary compensation. In addition, in the ordinary course of our
business, we actively trade the debt and equity securities of the Company and
Shawmut for our own account and 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 Agreement and the Stock Option Agreements; (ii)
Annual Reports to Shareholders and Annual Reports on Form 10-K of the Company
and Shawmut for each year in the three-year period ended December 31, 1994;
(iii) Current Reports on Form 8-K filed by the Company on January 18, 1995,
January 27, 1995, February 20, 1995 and February 21, 1995 and Current Reports on
Form 8-K filed by Shawmut on January 6, 1995, January 11, 1995, January 17,
1995, January 26, 1995, February 7, 1995, February 20, 1995 and February 21,
1995; (iv) the Prospectus Supplement of the Company dated April 24, 1995 with
respect to $250 million principal amount of 7 1/8% Series Notes Due May 1, 2000;
(v) the Offering Circular Supplement of Shawmut Bank Connecticut, National
Association dated February 7, 1995 with respect to a $250 million subordinated
bank note issuance; (vi) the Prospectus Supplement of Shawmut National
Corporation dated January 20, 1995 with respect to a 5,000,000 depositary share
issuance (each representing a one-tenth interest in a share of
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cumulative preferred stock); (vii) the Joint Proxy Statement-Prospectus of the
Company and Shawmut dated the date hereof; (viii) consolidated financial
statements for the Company and for Shawmut as at and for the quarter ended March
31, 1995; (ix) certain other publicly available financial and other information
concerning the Company and Shawmut and the trading markets for the publicly
traded securities of the Company and Shawmut; (x) certain other internal
information, including pro forma financial statements prepared by the management
of each of the Company and Shawmut giving effect to recently completed and
pending acquisitions, and projections relating to the Company and Shawmut
prepared by the management of the Company, all furnished to us for purposes of
our analysis; and (xi) certain other publicly available information concerning
other banks and bank 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 Shawmut to discuss the foregoing as well as
other matters we believe 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 assumed any
responsibility for independently verifying the same. We have relied upon the
management of the Company and of Shawmut as to the reasonableness of the
assumptions underlying the pro forma financial statements giving effect to
recently completed and pending acquisitions provided to us, the appropriateness
of the adjustments made to give effect to such assumptions in such pro forma
financial statements and the proper allocation of such adjustments to the
respective historical financial statements. We have relied upon the management
of the Company as to the reasonableness and achievability of the projections
(and the assumptions and bases therefor) for each of the Company and Shawmut
provided to us by management of the Company, and we have assumed that such
projections reflect the best currently available estimates and judgments of such
management and that such projections will be realized in the amounts and in the
time periods estimated by such management. We have also assumed, without
independent verification, that the aggregate allowances for loan losses for the
Company and Shawmut were adequate to cover such losses. We have not made or
obtained any evaluations or appraisals of the property or assets of the Company,
nor have we examined any individual loan credit files of the Company or Shawmut.
It is understood that we were retained by the Board of Directors of the Company
and that the Board of Directors has not looked to Salomon Brothers Inc to
independently verify the accuracy and completeness of the financial and other
information provided to us by the Company or Shawmut or publicly available,
including the pro forma financial statements or the projections provided to us
by the Company or Shawmut, or to obtain any evaluations or appraisals of the
property or assets of the Company or Shawmut. Our opinion as expressed herein is
limited to the fairness, from a financial point of view, to the holders of
shares of Common Stock of the Exchange Ratio 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 Shawmut, 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 Shawmut; (ii) the
assets and liabilities of the Company and Shawmut, 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 Shawmut; (iv) historical and current
market data for the Company and Shawmut; and (v) the nature and terms of certain
other merger and acquisition transactions involving banks and bank holding
companies. We have also taken into account our assessment of general economic,
market and financial conditions and our experience in similar transactions, as
well as our experience in securities valuation and our knowledge of the banking
industry generally.
Our opinion is necessarily based upon conditions as they exist and can be
evaluated on the date hereof and the information made available to us through
the date hereof. We understand that the Board of Directors
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has reached an independent business determination that the Merger is in the best
interest of the Company. This letter does not constitute a recommendation to the
Board of Directors or to any shareholder of the Company with respect to the
Merger.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the Exchange Ratio is fair, from a
financial point of view, to the holders of shares of Common Stock.
Very truly yours,
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EXHIBIT E
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
(212) 703-4000
May , 1995
Board of Directors
Shawmut National Corporation
777 Main Street
Hartford, CT 06115
Members of the Board:
We understand that Shawmut National Corporation ("Shawmut" or the
"Company") and Fleet Financial Group, Inc. ("Fleet") propose to enter into an
Agreement and Plan of Merger, dated as of February 20, 1995 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Shawmut with and into Fleet. Pursuant to the Merger, each outstanding share
of common stock, par value $0.01 per share, of Shawmut, other than shares held
directly or indirectly by Fleet will be converted into 0.8922 shares (the
"Exchange Ratio") of common stock, par value $1.00 per share, of Fleet (and cash
in lieu of fractional shares). The terms and conditions of the Merger are more
fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to Shawmut's common
stockholders (other than Fleet and its affiliates).
For purposes of the opinion set forth herein, we have:
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(i) analyzed certain publicly available financial statements and other
information of Shawmut and Fleet;
(ii) analyzed certain internal financial statements and other financial and
operating data concerning Shawmut and Fleet prepared by the managements of
Shawmut and Fleet, respectively;
(iii) analyzed certain financial projections prepared by the managements of Shawmut
and Fleet;
(iv) discussed the past and current operations and financial condition and the
prospects of Shawmut and Fleet with senior executives of the two companies,
respectively;
(v) reviewed the reported prices and trading activity for the common stock of
Shawmut and Fleet;
(vi) compared the financial performance of Shawmut and Fleet and the prices and
trading activity of the common stock of Shawmut and Fleet with that of
certain other comparable bank holding companies and their securities;
(vii) discussed the results of regulatory examinations of Shawmut and Fleet with
senior management of the respective companies;
(viii) reviewed and discussed with senior management of Shawmut and Fleet the
strategic objectives of the Merger and the synergies and other benefits of
the Merger for the combined company;
(ix) analyzed certain pro forma financial projections for the combined company
prepared by Shawmut and Fleet;
(x) reviewed the amount and timing of the cost savings projected by Shawmut and
Fleet for the combined company;
</TABLE>
<PAGE> 232
<TABLE>
<S> <C>
(xi) reviewed the financial terms, to the extent publicly available, of certain
comparable bank holding company merger transactions;
(xii) participated in discussions and negotiations among representatives of Shawmut
and Fleet and their financial and legal advisors;
(xiii) reviewed the Merger Agreement, the Stock Option Agreements between Shawmut
and Fleet and certain related documents; and
(xiv) performed such other analyses as we have deemed appropriate.
</TABLE>
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of Shawmut and
Fleet. We have not made any independent valuation or appraisal of the assets or
liabilities of Shawmut and Fleet, nor have we been furnished with any such
appraisals and we have not examined any loan files of Shawmut and Fleet. Our
opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of Shawmut or
any of its assets.
We have acted as financial advisor to the Board of Directors of Shawmut in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services to Shawmut and have received fees for
the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Shawmut only and may not be used for any other purpose without our
prior written consent.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from
financial point of view to Shawmut's common stockholders (other than Fleet and
its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By:.....................................
Donald A. Moore, Jr.
Managing Director
2
<PAGE> 233
EXHIBIT F
DELAWARE GENERAL CORPORATION LAW
SEC.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.
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<PAGE> 234
(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
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<PAGE> 235
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.
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<PAGE> 236
[ALTERNATE SHAWMUT PAGE]
EXHIBIT G
CERTAIN COMPENSATION INFORMATION
RELATING TO FLEET
The following table shows, for the fiscal years ending December 31, 1994,
1993 and 1992, the compensation of the Chief Executive Officer and the four
other most highly compensated executive officers of Fleet (the "Named Executive
Officers"). Capitalized terms used but not defined herein shall have the
meanings given such terms in the Joint Proxy Statement-Prospectus.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- --------------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS COMPENSATION
POSITION YEAR ($) ($) ($)(2) ($)(3)(4)(5) (#)(5)(6) ($)(7)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Terrence Murray 1994 $993,936(1) $1,400,000 -- $1,160,156 100,000 $ 86,967
Chairman, President and 1993 902,000 990,000 -- -- 90,000 67,622
Chief Executive Officer 1992 917,461 750,000 -- -- 75,000 55,126
Robert J. Higgins 1994 524,999 600,000 $ 75,276 556,875 45,000 40,632
Vice Chairman 1993 505,769 350,000 -- -- 40,000 37,946
1992 441,346 200,000 -- 468,750 32,500 26,893
H. Jay Sarles 1994 524,999 550,000 -- 556,875 45,000 55,135
Vice Chairman 1993 512,692 350,000 -- -- 40,000 43,343
1992 478,731 225,000 124,532 625,000 32,500 33,485
Michael R. Zucchini 1994 524,999 600,000 -- 556,875 45,000 38,867
Vice Chairman 1993 510,769 350,000 -- -- 40,000 30,503
1992 458,731 250,000 -- -- 32,500 19,832
Eugene M. McQuade 1994 358,654 500,000 -- 556,875 45,000 23,585
Executive Vice President 1993 330,769 300,000 -- -- 35,000 20,451
and Chief Financial Officer 1992 254,808 125,000 159,123 -- 27,000 2,088
<FN>
- ---------------
(1) The discrepancy between Mr. Murray's approved base salary for 1994
($992,200) and the amount paid in 1994 ($993,936) is the result of Fleet's
payroll practice of paying employees on a bi-weekly basis.
(2) Perquisites and other personal benefits paid to each of the Named Executive
Officers (including tax preparation assistance) in each instance aggregated
less than $50,000, other than Messrs. Higgins, Sarles and McQuade and,
accordingly, are omitted from the table as permitted by Commission
regulations. In 1994, Mr. Higgins' perquisites and other personal benefits
included a relocation expense and moving allowance aggregating $60,157. In
1992, each of Messrs. Sarles and McQuade's perquisites and other personal
benefits included a relocation expense and moving allowance aggregating
$106,119 and $156,746, respectively.
(3) In September 1994, Fleet awarded performance-based restricted stock to each
of the Named Executive Officers under Fleet's Amended and Restated 1992
Stock Option and Restricted Stock Plan (the "1992 Stock Plan"). In
accordance with the terms of the awards, the restrictions on transfer will
lapse, if at all, only if cumulative earnings per share growth, measured
over a three year period, exceeds a threshold target. To the extent
cumulative earnings per share growth exceeds the threshold, each Named
Executive Officer will vest in a percentage of the shares awarded, ranging
from 40% to 100%. The amount and year-end value of the performance-based
restricted stock awarded in 1994 under the 1992 Stock Plan, based on a
December 30, 1994 closing market price of the Fleet Common Stock of $32.50,
are: Mr. Murray, 31,250 and $1,015,625; and each of Messrs. Higgins, Sarles,
Zucchini and McQuade, 15,000 and $487,500. Dividends will be paid on the
shares of performance-based restricted stock if, and to the extent, paid on
Fleet Common Stock generally. If a change of control were to occur, the
performance-based restricted stock would immediately vest in full.
(4) In December 1991, Fleet awarded shares of restricted stock to certain Named
Executive Officers under Fleet's Amended and Restated 1988 Stock Option and
Restricted Stock Plan (the "1988 Stock Plan"). In accordance with the terms
of the awards, the restrictions on fifty percent of the stock lapsed as of
January 1, 1995 as a result of the performance of Fleet Common Stock during
1994 when the Average
</TABLE>
G-1
<PAGE> 237
[ALTERNATE SHAWMUT PAGE]
Closing Price of Fleet Common Stock was or exceeded $34 per share for four
consecutive months. The Average Closing Price for each of the four
consecutive months was deemed to be or exceed $34 per share when the average
of the daily closing prices of Fleet Common Stock on the Stock Exchange for
such month was or exceeded $34 per share. The number and year-end value of
the remaining fifty percent of the restricted stock shares awarded to
certain Named Executive Officers in 1991 under the 1988 Stock Plan, based on
a December 30, 1994 closing market price of Fleet Common Stock of $32.50 per
share, are: Mr. Murray, 25,000 and $812,500; and Mr. Zucchini, 12,500 and
$406,250. Messrs. Higgins and Sarles were not awarded any restricted stock
in 1991. In December 1992, Fleet awarded shares of restricted stock to
Messrs. Higgins and Sarles under the 1992 Stock Plan. Mr. McQuade, who did
not join Fleet until January 1992, was not awarded any restricted stock in
1992. The awards to Messrs. Higgins and Sarles provide that the restrictions
will lapse on January 1, 1998 if the executive remains in the continuous
employ of Fleet; however, the restrictions on fifty percent of the stock
will lapse as of January 1, 1996 if, during 1995, the Average Closing Price
of Fleet Common Stock is or exceeds $47 per share for four consecutive
months. The Average Closing Price for a month shall be deemed to be or
exceed $47 per share if the average of the daily closing prices of Fleet
Common Stock on the Stock Exchange for such month is or exceeds $47 per
share. The number and year-end value of the shares of restricted stock
awarded to certain Named Executive Officers under the 1992 Stock Plan, based
on a December 30, 1994 closing market price of Fleet Common Stock of $32.50
per share, are: Mr. Higgins, 15,000 and $487,500; and Mr. Sarles, 20,000 and
$650,000. Dividends will be paid on the shares of restricted stock if, and
to the extent, paid on Fleet Common Stock generally. If a change of control
were to occur, the restricted stock would immediately vest in full.
(5) The Merger will not constitute a change of control for purposes of any
restricted stock awarded, or any stock options or stock appreciation rights
("SARs") granted, under the 1992 Stock Plan, or any predecessor plan.
(6) All stock options include tandem SARs, except for the stock options granted
in 1994.
(7) Amounts of All Other Compensation include the following: (i) contributions
by Fleet under Fleet's Savings Plan or amounts accrued under Fleet's
Executive Supplemental Plan for the Named Executive Officers: Mr. Murray,
$44,961; Mr. Higgins, $23,852; Mr. Sarles, $23,852; Mr. Zucchini, $23,852;
and Mr. McQuade, $16,205; (ii) term life insurance premiums paid by Fleet on
behalf of each of the Named Executive Officers in 1994 (the Named Executive
Officers have the option of applying these payments to whole life policies):
Mr. Murray, $21,040; Mr. Higgins, $4,957; Mr. Sarles, $5,908; Mr. Zucchini,
$5,683; and Mr. McQuade, $2,268; (iii) an interest free loan in the amount
of $100,000 provided to Mr. Sarles in 1992 which provided a benefit of
$6,089 to Mr. Sarles in 1994 based on the applicable federal rate in effect
on the date of issuance of such loan; and (iv) preferential earnings on
deferred compensation: Mr. Murray, $20,966; Mr. Higgins, $11,823; Mr.
Sarles, $19,286; Mr. Zucchini, $9,332; and Mr. McQuade, $5,112. Mr. Sarles
repaid his loan on January 13, 1995; see "Indebtedness and Other
Transactions".
G-2
<PAGE> 238
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 interest, (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.
<TABLE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following is a list of Exhibits to this Registration
Statement:
<S> <C> <C>
2 -- Agreement and Plan of Merger dated as of February 20, 1995, between
Fleet Financial Group, Inc. ("Fleet") and Shawmut National Corporation
("Shawmut") (included in Part I as Exhibit A to the Joint Proxy
Statement-Prospectus included in this Registration Statement)
3 -- Form of Proposed Restated Articles of Incorporation of Fleet
4(a) -- Rights Agreement dated November 21, 1990 between Fleet and Fleet
National Bank, as rights agent (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 a
Second Amendment to Rights Agreement dated July 12, 1991 (incorporated
by reference to Fleet's Form 8 Amendment to Application or Report dated
September 6, 1991) and as further amended by a Third Amendment to Rights
Agreement dated February 20, 1995 (incorporated by reference to Fleet's
Form 8-A/A dated March 17, 1995)
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 Current Report on Form 8-K dated July 12,
1991)
4(d) -- Form of Warrant Agreement for Warrants to purchase Fleet Common Stock
4(e) -- Form of Warrant (included as Exhibit A to Exhibit 4(d))
4(f) -- Form of Stock Certificate for Fleet Preferred Stock with Cumulative and
Adjustable Dividends
4(g) -- Form of Stock Certificate for Fleet 9.30% Cumulative Preferred Stock
4(h) -- Form of Stock Certificate for Fleet 9.35% Cumulative Preferred Stock
</TABLE>
II-1
<PAGE> 239
<TABLE>
<S> <C> <C>
4(i) -- Form of Deposit Agreement for Depositary Shares, each representing a
1/10 interest in a share of 9.30% Cumulative Preferred Stock
4(j) -- Form of Depositary Receipt evidencing the 9.30% Depositary Shares
(included as Exhibit A to Exhibit 4(i))
4(k) -- Form of Deposit Agreement for Depositary Shares, each representing a
1/10 interest in a share of 9.35% Cumulative Preferred Stock
4(l) -- Form of Depositary Receipt evidencing the 9.35% Depositary Shares
(included as Exhibit A to Exhibit 4(k))
5 -- Opinion of Edwards & Angell as to legality
8(a) -- Form of Opinion of Wachtell, Lipton, Rosen & Katz as to federal income
tax matters
8(b) -- Form of Opinion of Skadden, Arps, Slate, Meagher & Flom as to federal
income tax matters
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
23(b) -- Consent of Price Waterhouse LLP (as to Shawmut)
23(c) -- Consent of Price Waterhouse LLP (as to the Business Finance Division of
Barclays Business Credit, Inc.)
23(d) -- Consent of Deloitte & Touche, LLP
23(e) -- Consent of Salomon Brothers Inc
23(f) -- Consent of Morgan Stanley & Co., Incorporated
23(g) -- Consent of Edwards & Angell (included in Exhibit 5)
24 -- Powers of Attorney (included on signature pages to this Registration
Statement)
99(a)(i) -- Form of Proxy for Fleet
99(a)(ii) -- Form of Proxy for Shawmut
99(b) -- Stock Option Agreement dated February 20, 1995 between Fleet and Shawmut
as to stock of Fleet (included in Part I as Exhibit B to the Joint Proxy
Statement-Prospectus included in this Registration Statement)
99(c) -- Stock Option Agreement dated February 20, 1995 between Fleet and Shawmut
as to stock of Shawmut (included in Part I as Exhibit C to the Joint
Proxy Statement-Prospectus included in this Registration Statement)
</TABLE>
(b) Financial Statement Schedules.
Not Applicable.
(c) Fairness Opinions.
Included in Part I as Exhibits D and E to the Joint Proxy
Statement-Prospectus included in this Registration Statement.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(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;
II-2
<PAGE> 240
(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 and Shawmut'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 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.
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> 241
SIGNATURES AND AMENDMENTS
Each person whose signature appears below hereby constitutes and appoints
the Chairman and President, the Executive Vice President 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 Form S-4
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 April
28, 1995.
FLEET FINANCIAL GROUP, INC.
By: 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 April 28, 1995.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
TERRENCE MURRAY Chairman and President, Chief
- ------------------------------------------ Executive Officer and Director
Terrence Murray
EUGENE M. MCQUADE Executive Vice President and
- ------------------------------------------ Chief Financial Officer
Eugene M. McQuade
ROBERT C. LAMB, JR. Controller
- ------------------------------------------
Robert C. Lamb, Jr.
WILLIAM BARNET, III Director
- ------------------------------------------
William Barnet, III
BRADFORD R. BOSS Director
- ------------------------------------------
Bradford R. Boss
PAUL J. CHOQUETTE, JR. Director
- ------------------------------------------
Paul J. Choquette, Jr.
JAMES F. HARDYMON Director
- ------------------------------------------
James F. Hardymon
ROBERT M. KAVNER Director
- ------------------------------------------
Robert M. Kavner
</TABLE>
II-4
<PAGE> 242
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
LAFAYETTE KEENEY Director
- ------------------------------------------
Lafayette Keeney
RAYMOND C. KENNEDY Director
- ------------------------------------------
Raymond C. Kennedy
RUTH R. MCMULLIN Director
- ------------------------------------------
Ruth R. McMullin
ARTHUR C. MILOT Director
- ------------------------------------------
Arthur C. Milot
THOMAS D. O,CONNOR Director
- ------------------------------------------
Thomas D. O'Connor
MICHAEL B. PICOTTE Director
- ------------------------------------------
Michael B. Picotte
JOHN A. REEVES Director
- ------------------------------------------
John A. Reeves
JOHN R. RIEDMAN Director
- ------------------------------------------
John R. Riedman
JOHN S. SCOTT Director
- ------------------------------------------
John S. Scott
</TABLE>
II-5
<PAGE> 1
EXHIBIT 3
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
BUSINESS CORPORATION
RESTATED ARTICLES OF INCORPORATION
OF
FLEET FINANCIAL GROUP, INC.
(AS AMENDED)
Pursuant to the provisions of Section 7-1.1-59 of the General Laws, 1956,
as amended, the undersigned corporation adopts the following Restated Articles
of Incorporation:
FIRST: The name of the corporation (hereinafter called the Corporation) is
FLEET FINANCIAL GROUP, INC.
SECOND: The period of its duration is perpetual.
THIRD: The nature of the business of the Corporation and the objects or
purposes to be transacted, promoted or carried on by it are as follows:
1. To purchase or otherwise acquire and to hold, pledge, sell, exchange or
otherwise dispose of securities (which term includes any shares of stock, bonds,
debentures, notes, mortgages or other instruments representing rights to
receive, purchase or subscribe for the same or representing any other rights or
interest therein or in any property or assets) created or issued by any person,
firm, association, corporation (including, to the extent permitted by the laws
of the State of Rhode Island, the Corporation) or government or subdivision,
agency or instrumentality thereof; to make payment therefor in any lawful
manner; and to exercise, as owner or holder thereof, any and all rights, powers
and privileges in respect thereof (to the extent aforesaid).
2. To make, manufacture, produce, prepare, process, purchase or otherwise
acquire, and to hold, use, sell, import, export, or otherwise trade or deal in
and with, goods, wares, products, merchandise, machines, machinery, appliances
and apparatus, of every kind, nature and any manufacturing or other business of
any kind or character whatsoever, including, but not by way of limitation,
importing, exporting, mining, quarrying, producing, farming, agriculture,
forestry, construction, management, advisory, mercantile, financial or
investment business, any business engaged in rendering any manner of services
and any business of buying, selling, leasing or dealing in properties of any and
all kinds, whether any such business is located in the United States of America
or any foreign country, and whether or not related to, conducive to, incidental
to, or in any way connected with, the foregoing business.
3. To engage in research, exploration, laboratory and development work
relating to any material, substance, compound or mixture now known or which may
hereafter be known, discovered or developed and to perfect, develop,
manufacture, use, apply and generally to deal in and with any such material,
substance, compound or mixture.
4. To purchase, lease or otherwise acquire, to hold, own, use, develop,
maintain, manage and operate, to sell, transfer, lease, assign, convey,
exchange, or otherwise turn to account or dispose of, and, generally, to deal in
and with, personal and real property, tangible or intangible, of every kind and
description, wheresoever situated, and any and all rights, concessions,
interests and privileges therein.
5. To adopt, apply for, obtain, register, purchase, lease or otherwise
acquire, to maintain, protect, hold, use, own, exercise, develop, manufacture
under, operate and introduce and to sell and grant licenses or other rights in
respect of, assign or otherwise dispose of, turn to account, or in any manner
deal with, and contract with reference to, any trademarks, trade names, patents,
patent rights, concessions, franchises, designs, copyrights and distinctive
marks and rights analogous thereto and inventions, devices, improvements,
processes, recipes, formulae and the like, including, but not by way of
limitation, such thereof as may be
<PAGE> 2
covered by, used in connection with, or secured or received under, Letters
Patent of the United States of America or elsewhere, and any licenses and rights
in respect thereof, in connection therewith or appertaining thereto.
6. To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
subdivision, agency or instrumentality thereof; to endorse or guarantee the
payment of principal, interest or dividends upon, and to guarantee the
performance of sinking fund or other obligations of, any securities or the
payment of a certain amount per share in liquidation of the capital stock of any
other corporation; and to guarantee in any way permitted by law the performance
of any of the contracts or other undertakings of any person, firm, association,
corporation or government or subdivision, agency or instrumentality thereof.
7. To acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets, business and good will of any one or
more persons, firms, associations or corporations heretofore or hereafter
engaged in any business whatsoever; to pay for the same in cash, property or its
own or other securities; to hold, operate, lease, reorganize, liquidate, sell or
in any manner dispose of the whole or any part thereof; to assume or guarantee,
in connection therewith, the performance of any liabilities, obligations or
contracts of such persons, firms, associations or corporations; and to conduct
the whole or any part of any business thus acquired.
8. To lend its uninvested funds from time to time to such extent, to such
persons, firms, associations, corporations or governments or subdivisions,
agencies or instrumentalities thereof, and on such terms and on such security,
if any, as the Board of Directors of the Corporation (hereinafter called the
Board of Directors) may determine.
9. To borrow money for any of the purposes of the Corporation, from time
to time, and without limits as to amount; to issue and sell from time to time
its own securities in such amounts, on such terms and conditions, for such
purposes and for such consideration, as may now be or hereafter shall be
permitted by the laws of the State of Rhode Island; and to secure such
securities by mortgage upon, or the pledge of, or the conveyance or assignment
in trust of, the whole or any part of the properties, assets, business and good
will of the Corporation then owned or thereafter acquired.
10. To promote, organize, manage, aid or assist, financially or otherwise,
persons, firms, associations or corporations engaged in any business whatsoever;
and to assume or underwrite the performance of all or any of their obligations.
11. To organize or cause to be organized under the laws of the State of
Rhode Island, any other state or states of the United States of America, the
District of Columbia, any territory, dependency, colony or possession of the
United States of America, or of any foreign country, a corporation or
corporations for the purpose of transacting, promoting or carrying on any or all
objects or purposes for which the Corporation is organized; to dissolve, wind
up, liquidate, merge or consolidate any such corporation or corporations or to
cause the same to be dissolved, wound up, liquidated, merged or consolidated;
and, subject to the laws of the State of Rhode Island, to consolidate or merge
with or into one or more other corporations organized under the laws of the
State of Rhode Island or under the laws of any other state or states in the
United States of America, the District of Columbia, any territory, dependency,
colony or possession of the United States of America or of any foreign country
if the laws under which said other corporation or corporations are formed shall
permit such consolidation or merger.
12. To conduct its business in any and all of its branches and maintain
offices both within and without the State of Rhode Island in any and all states
of the United States of America, in the District of Columbia, in any or all
territories, dependencies, colonies or possessions of the United States of
America and in foreign countries.
13. To such extent as a business corporation organized under the laws of
the State of Rhode Island may now or hereafter lawfully do, to do, either as
principal or agent and either alone or through subsidiaries or in connection
with other persons, firms, associations or corporations, all and everything
necessary, suitable, convenient or proper for, or in connection with, or
incident to, the accomplishment of any of the purposes or
2
<PAGE> 3
the attainment of any one or more of the objects herein enumerated or designed
directly or indirectly to promote the interests of the Corporation or to enhance
the value of its properties and in general to engage in any lawful act or
activity for which corporations may be organized under the General Laws of Rhode
Island; and to do any and all things and exercise all powers, rights and
privileges which a business corporation may now or hereafter be organized or
authorized to do or to exercise under the laws of the State of Rhode Island.
14. Whenever the context permits, the following provisions shall govern
the construction of the paragraphs of these purposes: no specified enumeration
shall be construed as restricting in any way any general language; any word,
whether in the singular or plural shall be construed to mean both the singular
and the plural; any phrase in the conjunctive or in the disjunctive shall
include both the conjunctive and disjunctive; the mention of the whole shall
include any part or parts; any one or more or all of the purposes set forth may
be pursued from time to time and whenever deemed desirable; verbs in the present
or future tense shall be construed to include both the present and future tenses
or either of them.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 617,763,700, of which 600,000,000
shares of the par value of $0.01 each are to be of a class designated "Common
Stock ", 16,000,000 shares of the par value of $1 each are to be of a class
designated "Preferred Stock", 688,700 shares of no par value each are to be of a
class designated "Preferred Stock with Cumulative and Adjustable Dividends, no
par value", 575,000 shares of no par value each are to be of a class designated
"9.30% Cumulative Preferred Stock, no par value" and 500,000 shares of no par
value each are to be of a class designated "9.35% Cumulative Preferred Stock, no
par value". The terms and conditions of the Preferred Stock with Cumulative and
Adjustable Dividends, no par value, 9.30% Cumulative Preferred Stock, no par
value, and 9.35% Cumulative Preferred Stock, no par value, are attached as
Exhibits E, F and G hereto, respectively, and incorporated by reference in this
Article FOURTH as if set forth in full herein.
The voting powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of the classes of stock of the Corporation which are fixed
by these Articles of Incorporation, and the authority vested in the Board of
Directors to fix by vote or votes providing for the issue of Preferred Stock,
the voting powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of Preferred Stock which are not fixed by
these Articles of Incorporation, are as follows:
(a) The Preferred Stock may be issued from time to time in one or more
series of any number of shares; provided that the aggregate number of shares
issued and not canceled of any and all such series shall not exceed the total
number of shares of Preferred Stock hereinabove authorized. Each series of
Preferred Stock shall be distinctively designated by letter or descriptive
words. All series of Preferred Stock shall rank equally and be identical in all
respects except as permitted by the provisions of paragraph (b) of this Article
FOURTH.
(b) Authority is hereby vested in the Board of Directors from time to time
to issue the Preferred Stock of any series and in connection with the creation
of each such series to fix by vote or votes providing for the issue of shares
thereof the voting powers, if any, the designation, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such series to the full extent now or
hereafter permitted by these Articles of Incorporation and the laws of the State
of Rhode Island, in respect of the matters set forth in the following
subparagraphs (1) to (8), inclusive:
(1) The distinctive designation of such series and the number of
shares which shall constitute such series, which number may be increased or
decreased (but not below the number of shares thereof then outstanding)
from time to time by action of the Board of Directors;
(2) The dividend rate of such series, any preferences to or provisions
in relation to the dividends payable on any other class or classes or of
any other series of stock, and any limitations, restrictions or conditions
on the payment of dividends;
(3) The price or prices at which, and the terms and conditions on
which, the shares of such series may be redeemed by the Corporation;
3
<PAGE> 4
(4) The amount or amounts payable upon the shares of such series in
the event of any liquidation, dissolution or winding up of the Corporation;
(5) Whether or not the shares of such series shall be entitled to the
benefit of a sinking fund to be applied to the purchase or redemption of
shares of such series and, if so entitled, the amount of such fund and the
manner of its application;
(6) Whether or not the shares of such series shall be made convertible
into, or exchangeable for, shares of any other class or classes of stock of
the Corporation or shares of any other series of Preferred Stock, and, if
made so convertible or exchangeable, the conversion price or prices, or the
rate or rates of exchange, and the adjustments thereof, if any, at which
such conversion or exchange may be made, and any other terms and conditions
of such conversion or exchange;
(7) Whether or not the shares of such series shall have any voting
powers and, if voting powers are so granted, the extent of such voting
powers; and
(8) Whether or not the issue of any additional shares of such series
or of any future series in addition to such series shall be subject to
restrictions in addition to the restrictions, if any, on the issue of
additional shares imposed in the vote or votes fixing the terms of any
outstanding series of Preferred Stock theretofore issued pursuant to this
Article FOURTH and, if subject to additional restrictions, the extent of
such additional restrictions.
(c) The holders of Preferred Stock of each series shall be entitled to
receive, when and as declared by the Board of Directors, dividends in cash at
the rate for such series fixed by the Board of Directors as provided in
paragraph (b) of this Article FOURTH, and no more, payable quarterly on the
first days of January, April, July and October or of such other months as may be
designated by the Board of Directors (each of the quarterly periods ending on
the first day of January, April, July and October in each year, or on the first
days of such other months, respectively, being hereinafter called a dividend
period), in each case from the date of cumulation (as defined in paragraph (h)
of this Article FOURTH) of such series. Except as may otherwise be provided in
the vote or votes providing for the issue of any given series of Preferred
Stock, dividends on Preferred Stock shall be cumulative (whether or not there
shall be net profits or net assets of the Corporation legally available for the
payment of such dividends), so that, if at any time full cumulative dividends
(as defined in paragraph (h) of this Article FOURTH) upon the Preferred Stock of
all series to the end of the last completed dividend period shall not have been
paid or declared and a sum sufficient for payment thereof set apart, the amount
of the deficiency shall be fully paid, but without interest, or dividends in
such amount shall have been declared on each such series and a sum sufficient
for the payment thereof shall have been set apart for such payment, before any
sum or sums shall be set aside for or applied to the purchase or redemption of
Preferred Stock of any series (either pursuant to any applicable sinking fund
provisions or any redemptions authorized pursuant to paragraph (g) of this
Article FOURTH or otherwise) or set aside for or applied to the purchase of
Common Stock and before any dividend shall be declared or paid or any other
distribution ordered or made upon the Common Stock (other than a dividend
payable in Common Stock); provided, however, that any moneys deposited in the
sinking fund provided for any series of Preferred Stock in the vote or votes
providing for the issue of shares of said series, in compliance with the
provisions of such sinking fund and of this paragraph (c), may thereafter be
applied to the purchase or redemption of Preferred Stock in accordance with the
terms of such sinking fund, whether or not at the time of such application full
cumulative dividends upon the outstanding Preferred Stock of all series to the
end of the last completed dividend period shall have been paid or declared and
set apart for payment. All dividends declared upon the Preferred Stock of the
respective series outstanding shall be declared pro rata, so that the amounts of
dividends declared per share on the Preferred Stock of different series shall in
all cases bear to each other the same ratio that accrued dividends per share on
the shares of such respective series bear to each other.
(d) Before any sum or sums shall be set aside for or applied to the
purchase of Common Stock and before any dividends shall be declared or paid or
any distribution ordered or made upon the Common Stock (other than a dividend
payable in Common Stock), the Corporation shall comply with the sinking fund
provisions, if any, of any vote or votes providing for the issue of any series
of Preferred Stock any shares of which shall at the time be outstanding.
4
<PAGE> 5
(e) Subject to the provisions of paragraphs (c) and (d) of this Article
FOURTH, the holders of Common Stock shall be entitled, to the exclusion of the
holders of Preferred Stock of any and all series, to receive such dividends as
from time to time may be declared by the Board of Directors.
(f) In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of Preferred Stock of each series then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any payment shall be made to the holders of Common Stock, an amount
determined as provided in paragraph (b) of this Article FOURTH for every share
of their holdings of Preferred Stock of such series. If upon any liquidation,
dissolution or winding up of the Corporation the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the
holders of Preferred Stock of all series the full amounts to which they
respectively shall be entitled, the holders of Preferred Stock of all series
shall share ratably in any distribution of assets according to the respective
amounts which would be payable in respect of the shares of Preferred Stock held
by them upon such distribution if all amounts payable on or with respect to
Preferred Stock of all series were paid in full. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amount to which they shall be entitled as aforesaid, the
holders of Common Stock shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to share, ratably according to the number
of shares of Common Stock held by them, in all remaining assets of the
Corporation available for distribution to its stockholders. Neither the merger
or consolidation of the Corporation into or with another corporation nor the
merger or consolidation of any other corporation into or with the Corporation,
nor the sale, transfer or lease of all or substantially all the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation.
(g) Subject to any requirements which may be applicable to the redemption
of any given series of Preferred Stock as provided in any vote or votes
providing for the issue of such series of Preferred Stock, the Preferred Stock
of all series, or of any series thereof, or any part of any series thereof, at
any time outstanding, may be redeemed by the Corporation, at its election
expressed by vote of the Board of Directors, any time or from time to time, upon
not less than 30 days previous notice to the holders of record of Preferred
Stock to be redeemed, given by mail in such manner as may be prescribed by vote
or votes of the Board of Directors,
(1) If such redemption shall be otherwise than by the application of
moneys in any sinking fund referred to in paragraph (d) of this Article
FOURTH, at the redemption price, fixed as provided in paragraph (b) of this
Article FOURTH, at which shares of Preferred Stock of the particular series
may then be redeemed at the option of the Corporation and
(2) If such redemption shall be by the application of moneys in any
sinking fund referred to in paragraph (d) of this Article FOURTH, at the
redemption price, fixed as provided in paragraph (b) of this Article
FOURTH, at which shares of Preferred Stock of the particular series may
then be redeemed for such sinking fund;
provided, however, that, before any Preferred Stock of any series shall be
redeemed at said redemption price thereof specified in clause (1) of this
paragraph (g), all moneys at the time in the sinking fund, if any, for Preferred
Stock of that series shall first be applied, as nearly as may be, to the
purchase or redemption of Preferred Stock of that series as provided in the vote
or votes of the Board of Directors providing for such sinking fund. If less than
all the outstanding shares of Preferred Stock of any series are to be redeemed,
the redemption may be made either by lot or pro rata in such manner as may be
prescribed by vote of the Board of Directors. The Corporation may, if it shall
so elect, provide moneys for the payment of the redemption price by depositing
the amount thereof for the account of the holders of Preferred Stock entitled
thereto with a bank or trust company doing business in the City of New York, in
the State of New York, or in the City of Providence, in the State of Rhode
Island, and having capital and surplus of at least $5,000,000. The date upon
which such deposit may be made by the Corporation (hereinafter called the "date
of deposit") shall be prior to the date fixed as the date of redemption. In any
such case there shall be included in the notice of redemption a statement of the
date of deposit and of the name and address of the bank or trust company with
which the deposit has been or will be made. On and after the date fixed in any
such notice of redemption as
5
<PAGE> 6
the date of redemption (unless default shall be made by the Corporation in
providing moneys for the payment of the redemption price pursuant to such
notice) or, if the Corporation shall have made such deposit on or before the
date specified therefor in the notice, then on and after the date of deposit all
rights of the holders of the Preferred Stock to be redeemed as stockholders of
the Corporation, except the right to receive the redemption price as hereinafter
provided, and, in the case of such deposit, any conversion rights not
theretofore expired, shall cease and terminate. Such conversion rights, however,
in any event shall cease and terminate upon the date fixed for redemption or
upon any earlier date fixed by the Board of Directors pursuant to paragraph (b)
of this Article FOURTH for termination of such conversion rights. Anything
herein contained to the contrary notwithstanding, said redemption price shall
include an amount equal to accrued dividends on the Preferred Stock to be
redeemed to the date fixed for the redemption thereof and the Corporation shall
not be required to declare or pay on such Preferred Stock to be redeemed, and
the holders thereof shall not be entitled to receive, any dividends in addition
to those thus included in the redemption price, provided, however, that the
Corporation may pay in regular course any dividends thus included in the
redemption price either to the holders of record on the record date fixed for
the determination of stockholders entitled to receive such dividends (in which
event, anything herein to the contrary notwithstanding, the amount so deposited
need not include any dividends so paid or to be paid) or as part of the
redemption price upon surrender of the certificates for the shares redeemed. At
any time on or after the date fixed as aforesaid for such redemption or, if the
Corporation shall elect to deposit the money for such redemption as herein
provided, then at any time on or after the date of deposit and without awaiting
the date fixed as aforesaid for such redemption, the respective holders of
record of the Preferred Stock to be redeemed shall be entitled to receive the
redemption price upon actual delivery to the Corporation, or, in the event of
such deposit, to the bank or trust company with which such deposit shall be
made, of certificates for the shares to be redeemed, such certificates, if
required, to be properly stamped for transfer and duly endorsed in blank or
accompanied by proper instruments of assignment and transfer thereof duly
executed in blank. Any moneys so deposited which shall remain unclaimed by the
holders of such Preferred Stock at the end of five years after the redemption
date shall be paid by such bank or trust company to the Corporation and any
interest accrued on moneys so deposited shall belong to the Corporation and
shall be paid to it from time to time. Preferred Stock redeemed pursuant to the
provisions of this paragraph (g) shall be canceled and shall thereafter have the
status of authorized and unissued shares of Preferred Stock.
(h) The term "date of cumulation" as used with reference to any series of
Preferred Stock shall be deemed to mean the date fixed by the Board of Directors
as the date of cumulation of such series at the time of creation thereof or, if
no date shall have been fixed, the date on which shares of such series are first
issued. Whenever used with reference to any share of any series of Preferred
Stock, the term "full cumulative dividends" shall be deemed to mean (whether or
not in any dividend period, or any part thereof, in respect of which such term
is used there shall have been net profits or net assets of the Corporation
legally available for the payment of such dividends) that amount which shall be
equal to dividends at the full rate fixed for such series as provided in
paragraph (b) of this Article FOURTH for the period of time elapsed from the
date of cumulation of such series to the date as of which full cumulative
dividends are to be computed (including an amount equal to the dividend at such
rate for any fraction of a dividend period included in such period of time); and
the term "accrued dividends" shall be deemed to mean full cumulative dividends
to the date as of which accrued dividends are to be computed, less the amount of
all dividends paid, or deemed paid as hereinafter in this paragraph (h)
provided, upon said share. In the event of the issue of additional shares of
Preferred Stock of any series after the original issue of shares of Preferred
Stock of such series, all dividends paid or accrued on Preferred Stock of such
series prior to the date of issue of such additional Preferred Stock shall be
deemed to have been paid on the additional Preferred Stock so issued.
(i) No holder of stock of any class of the Corporation, whether now or
hereafter authorized, shall have any preemptive, preferential or other rights to
subscribe for or purchase or acquire any shares of any class or any other
securities of the Corporation, whether now or hereafter authorized, and whether
or not convertible into, or evidencing or carrying the right to purchase, shares
of any class or any other securities now or hereafter authorized, and whether
the same shall be issued for cash, services or property, or by way of dividend
or otherwise.
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(j) Subject to the provisions of these Articles of Incorporation and except
as otherwise provided by law, the shares of stock of the Corporation, regardless
of class, may be issued for such consideration and for such corporate purposes
as the Board of Directors may from time to time determine.
(k) Except as otherwise provided by law, or these Articles of
Incorporation, or by the vote or votes providing for the issue of any series of
Preferred Stock, the holders of shares of Preferred Stock as such holders, shall
not have any right to vote, and are hereby specifically excluded from the right
to vote, in the election of directors or for any other purpose. Except as
aforesaid, the holders of Preferred Stock, as such holders, shall not be
entitled to notice of any meeting of stockholders.
(l) Subject to the provisions of any applicable law, or of the Bylaws of
the Corporation as from time to time amended, with respect to the closing of the
transfer books or the fixing of a record date for the determination of
stockholders entitled to vote and except as otherwise provided by law or by
these Articles of Incorporation, or by the vote or votes providing for the issue
of any series of Preferred Stock, the holders of outstanding shares of Common
Stock shall exclusively possess voting power for the election of directors and
for all other purposes, each holder of record of shares of Common Stock being
entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation.
(As of the date of these Restated Articles of Incorporation, the following
series of Preferred Stock have been authorized by the Board of Directors of the
Corporation: (i) Series III 10.12% Perpetual Preferred Stock, the terms and
provisions of which are set forth in Exhibit A hereto, (ii) Series IV 9.375%
Perpetual Preferred Stock, the terms and provisions of which are set forth in
Exhibit B hereto, (iii) Dual Convertible Preferred Stock, the terms and
provisions of which are set forth in Exhibit C hereto and (iv) Cumulative
Participating Junior Preferred Stock, the terms and provisions of which are set
forth in Exhibit D hereto, said Exhibits A through D being hereby incorporated
by reference in this Article FOURTH as if set forth in full herein.)
FIFTH: The private property of the stockholders of the Corporation shall
not be subject to the payment of corporate debts to any extent whatsoever.
SIXTH: Whenever the vote of stockholders at a meeting thereof is required
or permitted to be taken for or in connection with any corporate action, the
meeting and vote of stockholders may be dispensed with and such action may be
taken with the written consent of stockholders having not less than the minimum
percentage of the total vote required by statute for the proposed corporate
action, and provided that prompt notice of such action be given to all
stockholders who would have been entitled to vote upon the action if such
meeting were held.
SEVENTH: (a) Directors of the Corporation need not be stockholders, but no
person shall be elected a Director who has attained the age of 72 and no person
shall continue to serve as Director after the date of the first meeting of the
stockholders of the Corporation held on or after the date on which such person
attained the age of 72.
The powers and authorities herein conferred upon the Board of Directors are
in furtherance and not in limitation of those conferred by the laws of the State
of Rhode Island. In addition to the powers and authorities herein or by statute
expressly conferred upon it, the Board of Directors may exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of the laws of the State of Rhode
Island, of these Articles of Incorporation and of the Bylaws of the Corporation.
(b) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of directors of the
Corporation (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
from time to time by resolution adopted by the affirmative vote of:
(1) At least 80% of the Board of Directors, and
(2) A majority of the Continuing Directors.
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(c) Subject to applicable law, the Directors shall be divided into three
(3) classes, each class to be as nearly equal in number as possible. The term of
office of Directors of the first class shall expire at the annual meeting of
stockholders to be held in 1984 and until their respective successors are duly
elected and qualified. The term of office of Directors of the second class shall
expire at the annual meeting of stockholders to be held in 1985 and until their
respective successors are duly elected and qualified. The term of office of
Directors of the third class shall expire at the annual meeting of stockholders
to be held in 1986 and until their respective successors are duly elected and
qualified. Subject to the foregoing, at each annual meeting of stockholders,
commencing at the annual meeting to be held in 1984, the successors to the class
of directors whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting and until their successors
shall be duly elected and qualified. Any vacancies in the Board of Directors for
any reason, and any newly created directorships resulting from any increase in
the number of directors, may be filled only by the Board of Directors, acting by
vote of 80% of the directors then in office, although less than a quorum, and
any directors so chosen shall hold office until the next election of the class
for which such directors shall have been chosen and until their respective
successors shall be duly elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director. Notwithstanding the
foregoing, and except as otherwise required by law, whenever the holders of any
one or more series of Preferred Stock shall have the right, voting separately as
a class, to elect one or more directors of the Corporation, (i) the terms of the
director or directors elected by such holders shall expire at the next
succeeding annual meeting of stockholders and vacancies created with respect to
any directorship of the directors so elected may be filled in the manner
specified by such Preferred Stock, and (ii) this Article SEVENTH shall be deemed
to be construed and/or modified so as to permit the full implementation of the
terms and conditions relating to election of directors of any series of
Preferred Stock that has been or will be designated by the Board of Directors.
(d) Notwithstanding any other provisions of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the Corporation), any one or more directors of the Corporation may be
removed at any time, but only for cause and only by either (1) the affirmative
vote of a majority of the Continuing Directors and a majority of the Board of
Directors or (2) the affirmative vote, at a meeting of the stockholders called
for that purpose, as to all stock held by the holders of 80% or more of the
outstanding Voting Shares, voting separately as a class.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a class, to elect one or more directors of the
Corporation, the provisions of this Section (d) shall not apply with respect to
the director or directors elected by such holders of Preferred Stock.
(e) For purposes of this Article SEVENTH, the following definitions shall
apply:
(1) Affiliate. An "Affiliate" of, or a Person "affiliated with", a
specified Person, means a Person that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(2) Associate. The term "Associate" used to indicate a relationship
with any Person means:
(A) Any corporation or organization (other than the Corporation or
a Subsidiary of the Corporation) of which such Person is an officer or
partner or is, directly or indirectly, the beneficial owner of ten
percent or more of any class of equity securities;
(B) Any trust or other estate in which such Person has a ten
percent or greater beneficial interest or as to which such Person serves
as trustee or in a similar fiduciary capacity;
(C) Any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person; or
(D) Any investment company registered under the Investment Company
Act of 1940 for which such Person or any Affiliate or Associate of such
Person serves as investment adviser.
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(3) Beneficial Owner. A Person shall be considered the "Beneficial
Owner" of any shares of stock (whether or not owned of record):
(A) With respect to which such Person or any Affiliate or Associate
of such Person directly or indirectly has or shares (i) voting power,
including the power to vote or to direct the voting of such shares of
stock, and/or (ii) investment power, including the power to dispose of
or to direct the disposition of such shares of stock;
(B) Which such Person or any Affiliate or Associate of such Person
has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
and/or (ii) the right to vote pursuant to any agreement, arrangement or
understanding (whether such right is exercisable immediately or only
after the passage of time); or
(C) Which are Beneficially Owned within the meaning of (A) or (B)
of this Section (3) by any other Person with which such first mentioned
Person or any of its Affiliates or Associates has any agreement,
arrangement or understanding, written or oral, with respect to
acquiring, holding, voting or disposing of any shares of stock of the
Corporation or any Subsidiary of the Corporation or acquiring, holding
or disposing of all or substantially all, or any Substantial Part, of
the assets or business of the Corporation or a Subsidiary of the
Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article SEVENTH of the outstanding
Voting Shares, such shares shall be deemed to include any Voting Shares which
may be issuable pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants, options or
otherwise and which are deemed to be beneficially owned by only such Person
pursuant to the foregoing provisions of this Section (3).
(4) Business Combination. A "Business Combination" means:
(A) The sale, exchange, lease, transfer or other disposition to or
with a Related Person or any Affiliate or Associate of such Related
Person by the Corporation or any of its Subsidiaries (in a single
transaction or a series of related transactions) of all or substantially
all, or any Substantial Part, of its or their assets or businesses
(including, without limitation, any securities issued by a Subsidiary);
(B) The purchase, exchange, lease or other acquisition by the
Corporation or any of its Subsidiaries (in a single transaction or a
series of related transactions) of all or substantially all, or any
Substantial Part, of the assets or business of a Related Person or any
Affiliate or Associate of such Related Person;
(C) Any merger or consolidation of the Corporation or any
Subsidiary thereof into or with a Related Person or any Affiliate or
Associate of such 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 a 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 the Corporation
or any Subsidiary thereof which are Beneficially Owned by a Related
Person, or any partial or complete liquidation, spinoff, split off or
split up of the Corporation or any Subsidiary thereof; provided however,
that this Section (4)(D) shall not relate to any transaction of the
types specified herein that has been approved by (i) a majority of the
Board of Directors, and (ii) 80% of the Continuing Directors; or
(E) The acquisition upon the 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 the Corporation, or the
acquisition upon the issuance thereof of Beneficial Ownership by a
Related Person of any rights, warrants or options to
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acquire any of the foregoing or any combination of the foregoing Voting
Shares or voting securities of a Subsidiary of the Corporation.
As used in this definition, a "series of related transactions" shall be
deemed to include not only a series of transactions with the same Related Person
but also a series of separate transactions with a Related Person or any
Affiliate or Associate of such Related Person.
Anything in this definition to the contrary notwithstanding, this
definition shall not be deemed to include any transaction of the type set forth
in Sections (4)(A) through (4)(C) above between or among any two or more
Subsidiaries of the Corporation or the Corporation and one or more Subsidiaries
of the Corporation if such transaction has been approved by the affirmative vote
of at least 80% of the Board of Directors and a majority of the Continuing
Directors on or prior to the Date of Determination.
(5) Continuing Director. A "Continuing Director" shall mean:
(A) An individual who was a member of the Board of Directors of the
Corporation first elected by the stockholders or by the Board of
Directors prior to April 13, 1983 or prior to the time that a Related
Person became the Beneficial Owner of in excess of 10% of the Voting
Shares of the Corporation entitled to vote in the election of directors;
or
(B) An individual designated (before such individual's initial
election as a director) as a Continuing Director by a majority of the
then Continuing Directors.
(6) Date of Determination. The term "Date of Determination" means:
(A) The date on which a binding agreement (except for the
fulfillment of conditions precedent, including, without limitation,
votes of stockholders to approve such transaction) is entered into by
the Corporation, as authorized by its Board of Directors, and another
Person providing for any Business Combination; or
(B) If such an agreement as referred to in Section (6)(A) above is
amended so as to make it less favorable to the Corporation and its
stockholders, the date on which such amendment is approved by the Board
of Directors of the Corporation; or
(C) In cases where neither Section (6)(A) or (6)(B) above shall be
applicable, the record date for the determination of stockholders of the
Corporation entitled to notice of and to vote upon the transaction in
question. A majority of the Continuing Directors shall have the power
and duty to determine the Date of Determination as to any transaction
under this Article SEVENTH. Any such determination shall be conclusive
and binding for all purposes of this Article.
(7) Person. The term "Person" shall mean any individual, partnership,
corporation, group or other entity (other than the Corporation, any
Subsidiary of the Corporation for itself or as a fiduciary for customers in
the ordinary course, or a trustee holding stock for the benefit of
employees of the Corporation or its Subsidiaries, or any one of them,
pursuant to one or more employee benefit plans or arrangements). When two
or more Persons act as a partnership, limited partnership, syndicate,
association or other group for the purpose of acquiring, holding or
disposing of shares of stock, such partnership, syndicate, association or
group shall be deemed a "Person".
(8) Related Person. "Related Person" means any Person which is the
Beneficial Owner, as of the Date of Determination or immediately prior to
the consummation of a Business Combination, or both, of 10% or more of the
Voting Shares, or any Person who is an Affiliate of the Corporation and at
any time within five years preceding the Date of Determination was the
Beneficial Owner of 10% or more of the then outstanding Voting Shares, but
does not include any one group of more than one Continuing Director.
(9) Substantial Part. The term "Substantial Part" as used with
reference to the assets of the Corporation, of any Subsidiary or of any
Related Person means assets having a value of more than five percent of the
total consolidated assets of the Corporation and its Subsidiaries as of the
end of the Corporation's most recent fiscal year ending prior to the time
the determination is being made.
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(10) Subsidiary. "Subsidiary" shall mean any corporation or entity of
which the Person in question owns not less than 50% of any class of equity
securities, directly or indirectly.
(11) Voting Shares. "Voting Shares" shall mean shares of the
Corporation's capital stock entitled to vote generally in the election of
directors.
(12) Certain Determinations With Respect to Article SEVENTH. (A) A
majority of the Continuing Directors shall have the conclusive power and
authority to determine, for the purposes of this Article SEVENTH, on the
basis of information known to them: (i) the number of Voting Shares of
which any Person is the Beneficial Owner, (ii) whether a Person is an
Affiliate or Associate of another, (iii) whether a Person has an agreement,
arrangement or understanding with another as to the matters referred to in
the definition of "Beneficial Owner" as hereinabove defined, (iv) whether
the assets subject to any Business Combination constitute a "Substantial
Part" as hereinabove defined, (v) whether two or more transactions
constitute a "series of related transactions" as hereinabove defined, (vi)
any matters referred to in subsection (12)(B) below, and (vii) such other
matters with respect to which a determination is required under this
Article SEVENTH. Any such determination shall be final and binding for all
purposes hereunder.
(B) A Related Person shall be deemed to have acquired a Voting Share
of the Corporation at the time when such Related Person became the
Beneficial Owner thereof. With respect to Voting Shares owned by
Affiliates, Associates or other Persons whose ownership is attributed to a
Related Person under the foregoing definition of Beneficial Owner, if the
price paid by such Related Person for such shares is not determinable, the
price so paid shall be deemed to be the higher of (i) the price paid upon
acquisition thereof by the Affiliate, Associate or other Person or (ii) the
market price of the shares in question (as determined by a majority of the
Continuing Directors) at the time when the Related Person became the
Beneficial Owner thereof.
(f) Notwithstanding any other provisions of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the Corporation), and in addition to such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof or by
applicable law, this Article SEVENTH shall not be amended, altered, changed or
repealed without:
(1) The affirmative vote of 80% of the Board of Directors and of a
majority of Continuing Directors, and
(2) The affirmative vote as to all stock held by the holders of 80% or
more of the outstanding Voting Shares, voting separately as a class.
EIGHTH: (a) The Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in these Articles
of Incorporation, and other provisions authorized by the laws of the State of
Rhode Island at the time in force may be added or inserted in these Articles of
Incorporation, in the manner (i) now or hereafter prescribed by law, and (ii) as
has otherwise been provided in Articles SEVENTH and NINTH of these Articles of
Incorporation; and all rights, preferences and privileges of whatsoever nature
conferred upon stockholders, directors or any other persons whomsoever by and
pursuant to these Articles of Incorporation in their present form or as
hereafter amended are granted subject to the right reserved in this Article
EIGHTH.
(b) Notwithstanding any other provisions of these Articles of Incorporation
or the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the Corporation), and in addition to such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof or by
applicable law, this Article EIGHTH shall not be amended, altered, changed or
repealed without the affirmative vote as to all stock held by the holders of 80%
or more of the outstanding shares of the Corporation's capital stock entitled to
vote generally in the election of directors, voting separately as class.
NINTH: (a) Definitions and Related Matters as to Certain Business
Combinations.
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1.1 Affiliate. An "Affiliate" of, or a Person "affiliated with", a
specified Person, means a Person that directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
1.2 Associate. The term "Associate" used to indicate a relationship with
any Person means:
(1) Any corporation or organization (other than the Corporation or a
Subsidiary of the Corporation) of which such Person is an officer or
partner or is, directly or indirectly, the beneficial owner of ten percent
or more of any class of equity securities;
(2) Any trust or other estate in which such Person has a ten percent
or greater beneficial interest or as to which such Person serves as trustee
or in a similar fiduciary capacity;
(3) Any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person; or
(4) Any investment company registered under the Investment Company Act
of 1940 for which such Person or any Affiliate or Associate of such Person
serves as investment adviser.
1.3 Beneficial Owner. A Person shall be considered the "Beneficial Owner"
of any shares of stock (whether or not owned of record):
(1) With respect to which such Person or any Affiliate or Associate of
such Person directly or indirectly has or shares (i) voting power,
including the power to vote or to direct the voting of such shares of
stock, and/or (ii) investment power, including the power to dispose of or
to direct the disposition of such shares of stock;
(2) Which such Person or any Affiliate or Associate of such Person has
(i) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, and/or (ii) the right to vote pursuant
to any agreement, arrangement or understanding (whether such right is
exercisable immediately or only after the passage of time); or
(3) Which are Beneficially Owned within the meaning of (1) or (2) of
this Section 1.3 by any other Person with which such first-mentioned Person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding, written or oral, with respect to acquiring, holding, voting
or disposing of any shares of stock of the Corporation or any Subsidiary of
the Corporation or acquiring, holding or disposing of all or substantially
all, or any Substantial Part, of the assets or business of the Corporation
or a Subsidiary of the Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article NINTH of the outstanding Voting
Shares, such shares shall be deemed to include any Voting Shares which may be
issuable pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants, options or otherwise
and which are deemed to be beneficially owned by only such Person pursuant to
the foregoing provisions of this Section 1.3.
1.4 Business Combination. A "Business Combination" means:
(1) The sale, exchange, lease, transfer or other disposition to or
with a Related Person or any Affiliate or Associate of such Related Person
by the Corporation or any of its Subsidiaries (in a single transaction or a
series of related transactions) of all or substantially all, or any
Substantial Part, of its or their assets or business (including, without
limitation, any securities issued by a Subsidiary);
(2) The purchase, exchange, lease or other acquisition by the
Corporation or any of its Subsidiaries (in a single transaction or a series
of related transactions) of all, or any Substantial Part, of the assets or
business of a Related Person or any Affiliate or Associate of such Related
Person;
(3) Any merger or consolidation of the Corporation or any Subsidiary
thereof into or with a Related Person or any Affiliate or Associate of such
Related Person, irrespective of which Person is the surviving entity in
such merger or consolidation;
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(4) Any reclassification of securities, recapitalization or other
transaction (other than a 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 the Corporation 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 the
Corporation or any Subsidiary thereof; provided, however, that this Section
1.4(4) shall not relate to any transaction of the types specified herein
that has been approved by (i) a majority of the Board of Directors and (ii)
80% of the Continuing Directors; or
(5) The acquisition upon the 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 the Corporation, 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 the Corporation.
As used in this definition, a "series of related transactions" shall
be deemed to include not only a series of transactions with the same
Related Person but also a series of separate transactions with a Related
Person or any Affiliate or Associate of such Related Person.
Anything in this definition to the contrary notwithstanding, this
definition shall not be deemed to include any transaction of the type set
forth in Section 1.4(1) through 1.4(3) above between or among any two or
more Subsidiaries of the Corporation or the Corporation and one or more
Subsidiaries of the Corporation if such transaction has been approved by
the affirmative vote of at least 80% of the Board of Directors and a
majority of the Continuing Directors on or prior to the Date of
Determination.
1.5 Continuing Director. A "Continuing Director" shall mean:
(1) An individual who was a member of the Board of Directors of the
Corporation first elected by the stockholders or by the Board of Directors
prior to April 13, 1983 or prior to the time that a Related Person became
the Beneficial Owner of in excess of 10% of the Voting Shares of the
Corporation entitled to vote in the election of directors; or
(2) An individual designated (before such individual's initial
election as a director) as a Continuing Director by a majority of the then
Continuing Directors.
1.6 Date of Determination. The term "Date of Determination" means:
(1) The date on which a binding agreement (except for the fulfillment
of conditions precedent, including, without limitation, votes of
stockholders to approve such transaction) is entered into by the
Corporation, as authorized by its Board of Directors, and another Person
providing for any Business Combination; or
(2) If such an agreement as referred to in Section 1.6(1) above is
amended so as to make it less favorable to the Corporation and its
stockholders, the date on which such amendment is approved by the Board of
Directors of the Corporation; or
(3) In cases where neither Section 1.6(1) or (2) above shall be
applicable, the record date for the determination of stockholders of the
Corporation entitled to notice of and to vote upon the transaction in
question.
A majority of the Continuing Directors shall have the power and duty to
determine the Date of Determination as to any transaction under this Article
NINTH. Any such determination shall be conclusive and binding for all purposes
of this Article.
1.7 Person. The term "Person" shall mean any individual, partnership,
corporation, group or other entity (other than the Corporation, any Subsidiary
of the Corporation for itself or as a fiduciary for customers in the ordinary
course, or a trustee holding stock for the benefit of employees of the
Corporation or its Subsidiaries, or any one of them, pursuant to one or more
employee benefit plans or arrangements). When two or more Persons act as a
partnership, limited partnership, syndicate, association or other group for the
purpose of
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acquiring, holding or disposing of shares of stock, such partnership, syndicate,
association or group shall be deemed a "Person".
1.8 Related Person. "Related Person" means any Person which is the
Beneficial Owner, as of the Date of Determination or immediately prior to the
consummation of a Business Combination or both, of 10% or more of the Voting
Shares, or any Person who is an Affiliate of the Corporation and at any time
within five years preceding the Date of Determination was the Beneficial Owner
of 10% or more of the then outstanding Voting Shares, but does not include any
one or group of more than one Continuing Director.
1.9 Substantial Part. The term "Substantial Part" as used with reference to
the assets of the Corporation, of any Subsidiary or of any Related Person means
assets having a value of more than five percent of the total consolidated assets
of the Corporation and its Subsidiaries as of the end of the Corporation's most
recent fiscal year ending prior to the time the determination is being made.
1.10 Subsidiary. "Subsidiary" shall mean any corporation or entity of which
the Person in question owns not less than 50% of any class of equity securities,
directly or indirectly.
1.11 Voting Shares. "Voting Shares" shall mean shares of the Corporation's
capital stock entitled to vote generally in the election of directors.
1.12 Certain Determinations With Respect to Article NINTH.
(1) A majority of the Continuing Directors shall have the conclusive
power and authority to determine, for the purposes of this Article NINTH,
on the basis of information known to them: (i) the number of Voting Shares
of which any Person is the Beneficial Owner, (ii) whether a Person is an
Affiliate or Associate of another, (iii) whether a Person has an agreement,
arrangement or understanding with another as to the matters referred to in
the definition of "Beneficial Owner" as hereinabove defined, (iv) whether
the assets subject to any Business Combination constitute a "Substantial
Part" as hereinabove defined, (v) whether two or more transactions
constitute a "series of related transactions" as hereinabove defined, (vi)
any matters referred to in subsection 1.12(2) below, and (vii) such other
matters with respect to which a determination is required under this
Article NINTH. Any such determination shall be final and binding for all
purposes hereunder.
(2) A Related Person shall be deemed to have acquired a Voting Share
of the Corporation at the time when such Related Person became the
Beneficial Owner thereof. With respect to Voting Shares owned by
Affiliates, Associates or other Persons whose ownership is attributed to a
Related Person under the foregoing definition of Beneficial Owner, if the
price paid by such Related Person for such shares is not determinable, the
price so paid shall be deemed to be the higher of (i) the price paid upon
acquisition thereof by the Affiliate, Associate or other Person or (ii) the
market price of the shares in question (as determined by a majority of the
Continuing Directors) at the time when the Related Person became the
Beneficial Owner thereof.
(b) Approval of Certain Business Combinations.
Whether or not a vote of the stockholders is otherwise required in
connection with the transaction, neither the Corporation nor any of its
Subsidiaries shall become a party to any Business Combination without prior
compliance with the provisions of Section 1.1 or 1.2 or 1.3 hereinbelow, in
addition to such additional vote of the Preferred Stock as may be required by
the provisions of any series thereof or by applicable law.
1.1 Prior Approval by the Board of Directors. Such Business Combination was
approved by the Board of Directors of the Corporation by the affirmative vote of
at least 80% of the Board of Directors of the Corporation either (a) at a time
prior to the acquisition of 10% or more of the outstanding Voting Shares of the
Corporation by the Related Person, or (b) after such acquisition, but only so
long as such Related Person sought and obtained the approval, by the affirmative
vote of at least 80% of the Board of Directors of the Corporation, of the
acquisition of 10% or more of the outstanding Voting Shares prior to such
acquisition being consummated.
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<PAGE> 15
1.2 Approval by Continuing Directors and Additional Requirements.
Such Business Combination (a) shall be approved at a meeting of the Board
of Directors by the affirmative vote of 80% of the Continuing Directors and a
majority of the Board of Directors, and (b) all of the conditions hereinafter
set forth in subsections (1) through (5) shall be satisfied:
(1) The ratio of (i) the aggregate amount of the cash and the fair
market value of other consideration to be received per share of Common
Stock in such Business Combination by holders of Common Stock other than
the Related Person involved in such Business Combination, to (ii) the
market price per share of the Common Stock immediately prior to the
announcement of the proposed Business Combination, is at least as great as
the ratio of (x) the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fees) which such
Related Person has theretofore paid in acquiring any Common Stock prior to
such Business Combination, to (y) the market price per share of Common
Stock immediately prior to the initial acquisition by such Related Person
of any shares of Common Stock; and
(2) The aggregate amount of the cash and the fair market value of
other consideration to be received per share of Common Stock in such
Business Combination by holders of Common Stock, other than the Related
Person involved in such Business Combination, (i) is not less than the
highest per share price (including brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by such Related Person in acquiring any
of its holdings of Common Stock, (ii) is not less than the earnings per
share of Common Stock for the four consecutive fiscal quarters of the
Corporation immediately preceding the Date of Determination of such
Business Combination multiplied by the then price/earnings multiple (if
any) of such Related Person as customarily computed and reported in the
financial community; provided, that for the purposes of this clause (ii),
if more than one Person constitutes the Related Person involved in the
Business Combination, the price/earnings multiple (if any) of the Person
having the highest price/earnings multiple shall be used for the
computation in this clause (ii), and (iii) is not less than the book value
of a share of the Common Stock, as reflected in the balance sheet of the
Corporation as of the last day of the last fiscal quarter of the
Corporation preceding the Date of Determination; and
(3) The consideration (if any) to be received in such Business
Combination by holders of Common Stock other than the Related Person
involved shall, except to the extent that a stockholder agrees otherwise as
to all or part of the shares which he or she owns, be in the same form and
of the same kind as the consideration paid by the Related Person in
acquiring Common Stock already owned by it; and
(4) After such Related Person became a Related Person and prior to the
consummation of such Business Combination: (i) such Related Person shall
have taken steps to ensure that the Board of Directors of the Corporation
included at all times representation by Continuing Directors proportionate
to the ratio that the number of Voting Shares of the Corporation from time
to time owned by stockholders who are not Related Persons bears to all
Voting Shares of the Corporation outstanding at the time in question (with
a Continuing Director to occupy any resulting fractional position among the
directors); (ii) such Related Person shall not have acquired from the
Corporation, directly or indirectly, any shares of the Corporation (except
(x) upon conversion of convertible securities acquired by it prior to
becoming a Related Person or (y) as a result of a pro rata stock dividend,
stock split or division of shares or (z) in a transaction consummated after
this Article NINTH was added to these Articles of Incorporation and which
satisfied all applicable requirements of this Article NINTH); (iii) such
Related Person shall not have acquired any additional Voting Shares of the
Corporation or securities convertible into or exchangeable for Voting
Shares except as a part of the transaction which resulted in such Related
Person's becoming a Related Person; and (iv) such Related Person shall not
have (x) received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances, guarantees,
pledges or other financial assistance or tax credits provided by the
Corporation or any Subsidiary, or (y) made any major change in the
Corporation's business or equity capital structure or entered into any
contract, arrangement or understanding with the Corporation except any such
change, contract, arrangement or understanding as may have been approved by
the favorable vote of not less than 80% of the Continuing Directors and a
majority of the Board of Directors of the Corporation; and
15
<PAGE> 16
(5) A proxy statement complying with the requirements of the
Securities Exchange Act of 1934 shall have been mailed to all holders of
Voting Shares for the purpose of soliciting stockholder approval of such
Business Combination. Such proxy statement shall contain at the front
thereof, in a prominent place, any recommendations as to the advisability
(or inadvisability) of the Business Combination which the Continuing
Directors, or any of them, may have furnished in writing and, if deemed
advisable by two thirds of the Continuing Directors, an opinion of a
reputable investment banking firm as to the fairness (or lack of fairness)
of the terms of such Business Combination from the point of view of the
holders of Voting Shares other than any Related Person (such investment
banking firm to be selected by two thirds of the Continuing Directors, to
be furnished with all information it reasonably requests, and to be paid by
the Corporation a reasonable fee for its services upon receipt by the
Corporation of such opinion).
For purposes of Sections 1.1 (1) and (2) hereof, in the event of a
Business Combination upon consummation of which the Corporation would be
the surviving corporation or company or would continue to exist (unless it
is provided, contemplated or intended that as part of such Business
Combination or within one year after consummation thereof a plan of
liquidation or dissolution of the Corporation will be effected), the term
"other consideration to be received" shall include (without limitation)
Common Stock retained by stockholders of the Corporation other than Related
Persons who are parties to such Business Combination.
1.3 Approval by Stockholders. If there is not full compliance with the
provisions of Section 1.1 or 1.2 of paragraph (b) of this Article, such Business
Combination shall be approved by the affirmative vote of 80% of the Voting
Shares, voting as a single class; provided that a proxy statement complying with
the requirements of the Securities Exchange Act of 1934 shall have been mailed
to all holders of Voting Shares for the purpose of soliciting stockholder
approval of such Business Combination. Such proxy statement shall contain at the
front thereof, in a prominent place, any recommendations as to the advisability
(or inadvisability) of the Business Combination which the Continuing Directors,
or any of them, may have furnished in writing and, if deemed advisable by two
thirds of the Continuing Directors, an opinion of a reputable investment banking
firm as to the fairness (or lack of fairness) of the terms of such Business
Combination from the point of view of the holders of Voting Shares other than
any Related Person (such investment banking firm to be selected by two thirds of
the Continuing Directors, to be furnished with all information it reasonably
requests, and to be paid a reasonable fee by the Corporation for its services
upon receipt by the Corporation of such opinion).
(c) Amendments to this Article NINTH.
Notwithstanding any other provisions of these Articles of Incorporation or
the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the Corporation), and in addition to such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof or by
applicable law, this Article NINTH shall not be amended, altered, changed or
repealed without:
(1) The affirmative vote of 80% of the Board of Directors and a
majority of the Continuing Directors, and
(2) The affirmative vote as to all stock held by the holders of 80% or
more of the outstanding Voting Shares, voting separately as a class.
(d) Amendments Recommended by Directors.
The provisions of paragraph (c) of this Article NINTH shall not apply to,
and the vote referred to therein shall not be required for, any amendment,
addition, alteration or repeal of any provision of this Article NINTH that is
recommended to the stockholders by the favorable vote of (1) a majority of the
Board of Directors, and (2) not less than 80% of the Continuing Directors, and
any such amendment, addition, alteration or repeal so recommended shall require
only the vote, if any, required under the applicable provisions of the Rhode
Island Business Corporation Law.
16
<PAGE> 17
TENTH: (a) No director of the Corporation shall be liable to the
Corporation or to its stockholders for monetary damages for breach of the
director's duty as a director; provided, however, that this Article TENTH shall
not eliminate or limit the liability of a director: (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) the liability imposed pursuant to the provisions
of R.I.G.L. Section 7-1.1-43 (as in effect or as hereafter amended); or (iv) for
any transaction from which the director derived an improper personal benefit
unless said transaction is permitted by R.I.G.L. Section 7-1.1-37.1 (as in
effect or as hereafter amended). If the Rhode Island General Laws are amended
after the adoption of this Article TENTH to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Rhode Island General Laws, as so amended.
Neither the amendment nor repeal of this Article TENTH nor the adoption of any
provision of these Articles of Incorporation inconsistent with this Article
TENTH shall eliminate or reduce the effect of this Article TENTH in respect of
any matter occurring, or any cause of action, suit or claim that, but for this
Article TENTH, would occur or arise, prior to such amendment, repeal or adoption
of an inconsistent provision.
(b) Notwithstanding any other provision of these Articles of Incorporation,
including Section EIGHTH (a), or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
these Articles of Incorporation or the Bylaws of the Corporation), and in
addition to such additional vote of the Preferred Stock as may be required by
the provisions of any series thereof or by applicable law, this Article TENTH
shall not be amended, altered, changed or repealed without:
(1) the affirmative vote of 80% of the Board of Directors and a
majority of Continuing Directors (as defined in Article SEVENTH of these
Articles of Incorporation), and
(2) the affirmative vote as to all stock held by the holders of 80% or
more of the outstanding Voting Shares (as defined in Article SEVENTH of
these Articles of Incorporation), voting separately as a class.
ELEVENTH: The Restated Articles of Incorporation correctly set forth
without change the corresponding provisions of the Articles of Incorporation as
heretofore amended, and supersede the original Articles of Incorporation and all
amendments thereto.
FLEET FINANCIAL GROUP, INC.
Date: June , 1995 By ........................
Its President
and........................
Its Secretary
STATE OF RHODE ISLAND
Sc.
COUNTY OF PROVIDENCE
At Providence in said county on this day of June, 1995, personally
appeared before me Terrence Murray, who being by me first duly sworn, declared
that he is the President of Fleet Financial Group, Inc., that he signed the
foregoing document as President of the Corporation, and that the statements
therein contained are true.
------------------------------------
[Notarial Seal]
17
<PAGE> 18
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
OFFICE OF THE SECRETARY OF STATE
RESTATED ARTICLES OF INCORPORATION
OF
FLEET FINANCIAL GROUP, INC.
I, , Acting Deputy Secretary of State, hereby certify that
duplicate originals of Restated Articles of Incorporation of Fleet Financial
Group, Inc., duly signed and verified pursuant to the provisions of Chapter
7-1.1 of the General Laws, 1956, as amended, have been received in this office
and are found to conform to law, and that the foregoing is a duplicate original
of the Restated Articles of Incorporation.
Witness my hand and the seal of the
State of
Rhode Island this day of June,
1995.
------------------------------------
Acting Deputy Secretary of State
[State Seal]
- ------------------------------
DEPARTMENT OF STATE
OFFICE OF
SECRETARY OF STATE
PROVIDENCE, R.I.
- ------------------------------
RECEIVED & FILED JUNE , 1995.
18
<PAGE> 19
EXHIBIT A
FLEET FINANCIAL GROUP, INC.
SERIES III 10.12% PERPETUAL PREFERRED STOCK
(a) DESIGNATION. The designation of the series of Preferred Stock shall be
"Series III 10.12% Perpetual Preferred Stock" (hereinafter called this "Series")
and the number of shares constituting this Series is One Million One Hundred
Thousand (1,100,000).
(b) DIVIDEND RATE.
(1) The holders of shares of this Series shall be entitled to receive
dividends thereon at a rate of 10.12% per annum computed on the basis of an
issue price thereof of $100 per share, and no more, payable quarterly out
of the funds of the Corporation legally available for the payment of
dividends. Such dividends shall be cumulative from the date of original
issue of such shares and shall be payable, when, as and if declared by the
Board, on March 1, June 1, September 1 and December 1 of each year,
commencing September 1, 1991. Each such dividend shall be paid to the
holders of record of shares of this Series as they appear on the stock
register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board.
Dividends on account of arrears for any past quarters may be declared and
paid at any time, without reference to any regular dividend payment date,
to holders of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed by the Board.
(2) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
this Series for all dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are not
paid in full, as aforesaid, upon the shares of this Series and any other
preferred stock ranking on a parity as to dividends with this Series, all
dividends declared upon shares of this Series and any other class or series
of preferred stock of the Corporation ranking on a parity as to dividends
with this Series shall be declared pro rata so that the amount of dividends
declared per share on this Series and such other preferred stock shall in
all cases bear to each other the same ratio that accrued dividends per
share on the shares of this Series and such other preferred stock bear to
each other. Holders of shares of this Series shall not be entitled to any
dividend, whether payable in cash, property or stocks, in excess of full
cumulative dividends, as herein provided, on this Series. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on this Series which may be in arrears.
(3) So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior
to this Series as to dividends and upon liquidation and other than as
provided in paragraph (2) of this Section (b)) shall be declared or paid or
set aside for payment or other distribution declared or made upon the
Common Stock or upon any other stock ranking junior to or on a parity with
this Series as to dividends or upon liquidation, nor shall any Common Stock
nor any other stock of the Corporation ranking junior to or on a parity
with this Series as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for
stock of the Corporation ranking junior to this Series as to dividends and
upon liquidation) unless, in each case, the full cumulative dividends on
all outstanding shares of this Series shall have been paid for all past
dividend payment periods.
(4) Dividends payable on this Series for any period, including the
period from the original issue of such shares until September 1, 1991,
shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
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(c) REDEMPTION.
(1) The shares of this Series shall not be redeemable prior to June 1,
1996. On and after June 1, 1996, the Corporation, at its option, may redeem
shares of this Series, as a whole or in part, at any time or from time to
time, at a redemption price per share as follows:
If redeemed during the twelve-month period beginning June 1, 1996 --
$105.060 per share
If redeemed during the twelve-month period beginning June 1, 1997 --
$104.048 per share
If redeemed during the twelve-month period beginning June 1, 1998 --
$103.036 per share
If redeemed during the twelve-month period beginning June 1, 1999 --
$102.024 per share
If redeemed during the twelve-month period beginning June 1, 2000 --
$101.012 per share
If redeemed at any time from and after June 1, 2001 -- $100.000 per
share
plus, in each case, accrued and unpaid dividends thereon to the date fixed
for redemption.
(2) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board or by any other method
as may be determined by the Board in its sole discretion to be equitable.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board shall
so require and the notice shall so state), such shares shall be redeemed by
the Corporation at the aforesaid redemption price. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(5) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series shall
be redeemed unless all outstanding shares of this Series are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any
shares of this Series; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of this Series pursuant to a
purchase or exchange offer made on the same terms to holders of all
outstanding shares of this Series.
(d) LIQUIDATION RIGHTS.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or on any other class of stock ranking junior
to the shares of this Series upon liquidation, the amount of $100 per
share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the date of final
distribution.
A-2
<PAGE> 21
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the holders
of this Series as such shall have no right or claim to any of the remaining
assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (1) of this Section (d), no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this
Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) CONVERSION OR EXCHANGE. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(f) VOTING. The shares of this Series shall not have any voting powers,
either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and the Qualifications, Limitations or
Restrictions thereof, or any similar document relating to any series of
Preferred Stock) which would adversely affect the preferences, rights,
powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other series
of Preferred Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting, increasing or
validating the creation, authorization or issue of any shares of any class
of stock of the Corporation ranking prior to the shares of this Series as
to dividends or upon liquidation, or the reclassification of any authorized
stock of the Corporation into any such prior shares, or the creation,
authorization or issue of any obligation or security convertible into or
evidencing the right to purchase any such prior shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than the Corporation's Series II 6 1/2% Cumulative
Convertible Preferred Stock (the "Series II Preferred") and any other class
or series of the Corporation's preferred stock expressly entitled to elect
additional directors to the Board by a vote separate and distinct from the
vote provided for in this paragraph (3) ("Voting Preferred")) shall exist,
the number of directors constituting the Board shall be increased by two
(without duplication of any increase made pursuant to the terms of any
other class or series of the Corporation's preferred stock other than the
Series II Preferred and any Voting Preferred) and the holders of the
Corporation's preferred stock of all classes and series (other than the
A-3
<PAGE> 22
Series II Preferred and any such Voting Preferred) shall have the right at
such meeting, voting together as a single class without regard to class or
series, to the exclusion of the holders of Common Stock, the Series II
Preferred and the Voting Preferred, to elect two directors of the
Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon shares of any class
or series of the Corporation's preferred stock ranking prior to or on a
parity with shares of this Series as to dividends (other than the Series II
Preferred and any Voting Preferred). Each director elected by the holders
of shares of any series of the Preferred Stock or any other class or series
of the Corporation's preferred stock in an election provided for by this
paragraph (3) (herein called a "Preferred Director") shall continue to
serve as such director for the full term for which he shall have been
elected, notwithstanding that prior to the end of such term a default in
preference dividends shall cease to exist. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of the Corporation's preferred stock
entitled to have originally voted for such director's election, voting
together as a single class without regard to class or series, at a meeting
of the stockholders, or of the holders of shares of the Corporation's
preferred stock, called for that purpose. So long as a default in any
preference dividends on any series of the Preferred Stock or any other
class or series of preferred stock of the Corporation shall exist (other
then the Series II Preferred and any Voting Preferred) (A) any vacancy in
the office of a Preferred Director may be filled (except as provided in the
following clause (B)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (B) in the case of
the removal of any Preferred Director, the vacancy may be filled by the
vote of the holders of the outstanding shares of the Corporation's
preferred stock entitled to have originally voted for the removed
director's election, voting together as a single class without regard to
class or series, at the same meeting at which such removal shall be voted.
Each director appointed as aforesaid shall be deemed for all purposes
hereto to be a Preferred Director. Whenever the term of office of the
Preferred Directors shall end and a default in preference dividends shall
no longer exist, the number of directors constituting the Board shall be
reduced by two. For purposes hereof, a "default in preference dividends" on
any series of the Preferred Stock or any other class or series of preferred
stock of the Corporation shall be deemed to have occurred whenever the
amount of accrued dividends upon such class or series of the Corporation's
preferred stock shall be equivalent to six full quarterly dividends or
more, and, having so occurred, such default shall be deemed to exist
thereafter until, but only until, all accrued dividends on all such shares
of the Corporation's preferred stock of each and every series then
outstanding (other than the Series II Preferred, any Voting Preferred or
shares of any class or series ranking junior to shares of this Series as to
dividends) shall have been paid to the end of the last preceding quarterly
dividend period.
(g) REACQUIRED SHARES. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued,
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
(h) RELATION TO EXISTING PREFERRED CLASSES OF STOCK. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of original issue of the shares of this Series and the
Preferred Stock with Cumulative and Adjustable Dividends, $20.00 par value, and
are senior in rank and preference to the Common Stock and the Cumulative
Participating Junior Preferred Stock of the Corporation.
(i) RELATION TO OTHER PREFERRED CLASSES OF STOCK. For purposes of this
resolution, any stock of any class or classes of the Corporation shall be deemed
to rank:
(1) prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in
preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund
A-4
<PAGE> 23
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority, one over the
other, as between the holders of such stock and the holders of shares of
this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
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EXHIBIT B
FLEET FINANCIAL GROUP, INC.
SERIES IV 9.375% PERPETUAL PREFERRED STOCK
(a) DESIGNATION. The designation of the series of Preferred Stock shall be
"Series IV 9.375% Perpetual Preferred Stock" (hereinafter called this "Series")
and the number of shares constituting this Series is One Million (1,000,000).
(b) DIVIDEND RATE.
(1) The holders of shares of this Series shall be entitled to receive
dividends thereon at a rate of 9.375% per annum computed on the basis of an
issue price thereof of $100 per share, and no more, payable quarterly out
of the funds of the Corporation legally available for the payment of
dividends. Such dividends shall be cumulative from the date of original
issue of such shares and shall be payable, when, as and if declared by the
Board, on March 1, June 1, September 1 and December 1 of each year,
commencing March 1, 1992. Each such dividend shall be paid to the holders
of record of shares of this Series as they appear on the stock register of
the Corporation on such record date, not exceeding 30 days preceding the
payment date thereof, as shall be fixed by the Board. Dividends on account
of arrears for any past quarters may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board.
(2) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
this Series for all dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are not
paid in full, as aforesaid, upon the shares of this Series and any other
preferred stock ranking on a parity as to dividends with this Series, all
dividends declared upon shares of this Series and any other class or series
of preferred stock of the Corporation ranking on a parity as to dividends
with this Series shall be declared pro rata so that the amount of dividends
declared per share on this Series and such other preferred stock shall in
all cases bear to each other the same ratio that accrued dividends per
share on the shares of this Series and such other preferred stock bear to
each other. Holders of shares of this Series shall not be entitled to any
dividend, whether payable in cash, property or stocks, in excess of full
cumulative dividends, as herein provided, on this Series. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
dividend payment or payments on this Series which may be in arrears.
(3) So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior
to this Series as to dividends and upon liquidation and other than as
provided in paragraph (2) of this Section (b)) shall be declared or paid or
set aside for payment or other distribution declared or made upon the
Common Stock or upon any other stock ranking junior to or on a parity with
this Series as to dividends or upon liquidation, nor shall any Common Stock
nor any other stock of the Corporation ranking junior to or on a parity
with this Series as to dividends or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for
stock of the Corporation ranking junior to this Series as to dividends and
upon liquidation) unless, in each case, the full cumulative dividends on
all outstanding shares of this Series shall have been paid for all past
dividend payment periods.
(4) Dividends payable on this Series for any period, including the
period from the original issue of such shares until March 1, 1992, shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
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(c) REDEMPTION.
(1) The shares of this Series shall not be redeemable prior to
December 1, 1996. On and after December 1, 1996, the Corporation, at its
option, may redeem shares of this Series, in whole or in part, at any time
or from time to time, at a redemption price of $100 per share, plus accrued
and unpaid dividends thereon to the date fixed for redemption.
(2) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board or by any other method
as may be determined by the Board in its sole discretion to be equitable.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board shall
so require and the notice shall so state), such shares shall be redeemed by
the Corporation at the aforesaid redemption price. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(5) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series shall
be redeemed unless all outstanding shares of this Series are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any
shares of this Series; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of this Series pursuant to a
purchase or exchange offer made on the same terms to holders of all
outstanding shares of this Series.
(d) LIQUIDATION RIGHTS.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or on any other class of stock ranking junior
to the shares of this Series upon liquidation, the amount of $100 per
share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the date of final
distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the holders
of this Series as such shall have no right or claim to any of the remaining
assets of the Corporation.
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(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (1) of this Section (d), no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the shares of this
Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) CONVERSION OR EXCHANGE. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(f) VOTING. The shares of this Series shall not have any voting powers,
either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and the Qualifications, Limitations or
Restrictions thereof, or any similar document relating to any series of
Preferred Stock) which would adversely affect the preferences, rights,
powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other series
of Preferred Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting, increasing or
validating the creation, authorization or issue of any shares of any class
of stock of the Corporation ranking prior to the shares of this Series as
to dividends or upon liquidation, or the reclassification of any authorized
stock of the Corporation into any such prior shares, or the creation,
authorization or issue of any obligation or security convertible into or
evidencing the right to purchase any such prior shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than the Corporation's Series II 6 1/2% Cumulative
Convertible Preferred Stock (the "Series II Preferred") and any other class
or series of the Corporation's preferred stock expressly entitled to elect
additional directors to the Board by a vote separate and distinct from the
vote provided for in this paragraph (3) ("Voting Preferred")) shall exist,
the number of directors constituting the Board shall be increased by two
(without duplication of any increase made pursuant to the terms of any
other class or series of the Corporation's preferred stock other than the
Series II Preferred and any Voting Preferred) and the holders of the
Corporation's preferred stock of all classes and series (other than the
Series II Preferred and any such Voting Preferred) shall have the right at
such meeting, voting together as a single class without regard to class or
series, to the exclusion of the holders of Common Stock, the Series II
Preferred and the Voting Preferred, to elect two directors of the
Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon shares of any class
or series of the Corporation's preferred stock ranking prior to or on a
parity with shares of this Series as to dividends (other than the Series II
Preferred and any Voting Preferred). Each director elected by the holders
of shares of any series of the Preferred Stock or any other class or series
of the Corporation's preferred stock in an election provided for by this
paragraph (3) (herein called a "Preferred Director")
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shall continue to serve as such director for the full term for which he
shall have been elected, notwithstanding that prior to the end of such term
a default in preference dividends shall cease to exist. Any Preferred
Director may be removed by, and shall not be removed except by, the vote of
the holders of record of the outstanding shares of the Corporation's
preferred stock entitled to have originally voted for such director's
election, voting together as a single class without regard to class or
series, at a meeting of the stockholders, or of the holders of shares of
the Corporation's preferred stock, called for that purpose. So long as a
default in any preference dividends on any series of the Preferred Stock or
any other class or series of preferred stock of the Corporation shall exist
(other than the Series II Preferred and any Voting Preferred) (A) any
vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (B)) by an instrument in writing signed by
the remaining Preferred Director and filed with the Corporation and (B) in
the case of the removal of any Preferred Director, the vacancy may be
filled by the vote of the holders of the outstanding shares of the
Corporation's preferred stock entitled to have originally voted for the
removed director's election, voting together as a single class without
regard to class or series, at the same meeting at which such removal shall
be voted. Each director appointed as aforesaid shall be deemed for all
purposes hereto to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and a
default in preference dividends shall no longer exist, the number of
directors constituting the Board shall be reduced by two. For purposes
hereof, a "default in preference dividends" on any series of the Preferred
Stock or any other class or series of preferred stock of the Corporation
shall be deemed to have occurred whenever the amount of accrued dividends
upon such class or series of the Corporation's preferred stock shall be
equivalent to six full quarterly dividends or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all such shares of the Corporation's
preferred stock of each and every series then outstanding (other than the
Series II Preferred, any Voting Preferred or shares of any class or series
ranking junior to shares of this Series as to dividends) shall have been
paid to the end of the last preceding quarterly dividend period.
(g) REACQUIRED SHARES. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
(h) RELATION TO EXISTING PREFERRED CLASSES OF STOCK. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of original issue of the shares of this Series and the
Preferred Stock with Cumulative and Adjustable Dividends, $20.00 par value, and
are senior in rank and preference to the Common Stock and the Cumulative
Participating Junior Preferred Stock of the Corporation.
(i) RELATION TO OTHER PREFERRED CLASSES OF STOCK. For purposes of this
resolution, any stock of any class or classes of the Corporation shall be deemed
to rank:
(1) prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in
preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund provisions,
if any, be different from those of this Series, if the holders of such
stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority, one over the
other, as between the holders of such stock and the holders of shares of
this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
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EXHIBIT C
FLEET FINANCIAL GROUP, INC.
DUAL CONVERTIBLE PREFERRED STOCK
(a) DESIGNATION. The designation of this series of Preferred Stock shall
be "Dual Convertible Preferred Stock" (the "Dual Convertible Preferred Stock")
consisting of 1,415,000 shares. The stated value of the Dual Convertible
Preferred Stock shall be $200 per share.
(b) RANK. The Dual Convertible Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
prior to the Common Stock, par value $1.00 per share (the "Common Stock"), of
the Corporation. (All equity securities of the Corporation to which the Dual
Convertible Preferred Stock ranks prior with respect to dividend rights and
rights on liquidation, winding up and dissolution, including the Common Stock,
are collectively referred to herein as the "Junior Securities", all equity
securities of the Corporation with which the Dual Convertible Preferred Stock
ranks on a parity with respect to dividend rights and rights on liquidation,
winding up and dissolution are collectively referred to herein as the "Parity
Securities" and all equity securities of the Corporation to which the Dual
Convertible Preferred Stock ranks junior, whether with respect to dividends or
upon liquidation, dissolution, winding-up or otherwise, are collectively
referred to herein as the "Senior Securities.") The Dual Convertible Preferred
Stock shall be subject to the creation of Junior Securities, Parity Securities
and Senior Securities, subject, in the case of Senior Securities, to obtaining
the approval of the holders of the shares of the Dual Convertible Preferred
Stock in accordance with paragraph (h).
(c) DIVIDENDS. (i) The holders of the shares of Dual Convertible Preferred
Stock shall be entitled to receive, out of funds legally available for the
payment of dividends, cumulative dividends in an amount equal to 50% of the
dividends declared on the common stock, par value $.01 per share ("Holding
Common Stock"), of Fleet/Norstar Holding Company, Inc., a Rhode Island
corporation ("Holding"), and its successor or assign; provided, however, that
dividends shall not become payable on the shares of the Dual Convertible
Preferred Stock until an aggregate of $15 million of dividends have been
declared by Holding and shall only become payable to the extent of dividends
declared by Holding in excess of such amount; and, provided further, that the
amount of such dividends shall be subject to reduction in accordance with
paragraph (f) (iv); and, provided further, that dividends shall not become
payable on the shares of the Dual Convertible Preferred Stock as a result of the
declaration of the Dividend Note (as hereinafter defined) or other amounts
payable as dividends by Holding to the Corporation pursuant to the Tax
Allocation Agreement (as hereinafter defined). Such dividends shall be payable
from time to time as declared by the Board (each of such dates being a "dividend
payment date"), in preference to dividends on the Junior Securities. Such
dividends shall be paid to the holders of record at the close of business on the
tenth business day immediately preceding each dividend payment date (each of
such dates being a "dividend payment record date"). Each of such dividends shall
be fully cumulative and shall accrue without interest, until paid.
(ii) All dividends paid with respect to shares of the Dual Convertible
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
holders entitled thereto.
(iii) No full dividends shall be declared by the Board of Directors or paid
or set apart for payment by the Corporation on any Parity Securities for any
period unless full cumulative accrued dividends have been or contemporaneously
are declared and paid or declared and a sum set apart sufficient for such
payment on the Dual Convertible Preferred Stock. If any dividends are not paid
in full upon the shares of the Dual Convertible Preferred Stock and any other
Parity Securities, all dividends declared upon shares of the Dual Convertible
Preferred Stock and any other Parity Securities shall be declared pro rata so
that the amount of dividends declared per share of the Dual Convertible
Preferred Stock and such Parity Securities shall in all cases bear to each other
the same ratio that accrued dividends per share on the Dual Convertible
Preferred Stock and such Parity Securities bear to each other. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Dual Convertible Preferred Stock or any other Parity
Securities which may be in arrears. Any dividend not paid pursuant to paragraph
(c)(i) hereof or this
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paragraph (c)(iii) shall be fully cumulative and shall accrue (whether or not
declared), without interest, as set forth in paragraph (c)(i) hereof.
(iv) (A) Holders of shares of the Dual Convertible Preferred Stock shall be
entitled to receive the dividends provided for in paragraph (c)(i) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.
(B) So long as any shares of the Dual Convertible Preferred Stock are
outstanding, the Board of Directors shall not declare, and the Corporation shall
not pay or set apart for payment, any dividend on any of the Junior Securities
or make any payment on account of, or set apart for payment money for a sinking
or other similar fund for, the repurchase, redemption or other retirement of,
any of the Junior Securities or Parity Securities or any warrants, rights or
options exercisable for or convertible into any of the Junior Securities or
Parity Securities, or make any distribution in respect of the Junior Securities,
either directly or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than distributions or dividends in Junior
Securities to the holders of Junior Securities), and shall not permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase or redeem any of the Junior Securities or Parity Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Junior Securities or Parity Securities unless prior to or concurrently with
such declaration, payment, setting apart for payment, repurchase, redemption or
other retirement or distribution, as the case may be, all accrued and unpaid
dividends on shares of the Dual Convertible Preferred Stock not paid on the
dates provided for in paragraph (c) (i) hereof shall have been or be paid;
provided, however, that the foregoing restriction shall not prohibit the
Corporation from redeeming the rights outstanding under that certain Rights
Agreement dated as of November 21, 1990, as amended, between the Corporation and
Fleet National Bank, for a redemption price not in excess of $.01 per right.
(d) PAYMENT IN LIQUIDATION. (i) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Dual Convertible Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders an amount in cash equal to $200
for each share outstanding, plus an amount in cash equal to all accrued but
unpaid dividends thereon to the date of liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of the Junior Securities. If the assets of the Corporation are not sufficient to
pay in full the liquidation payments payable to the holders of outstanding
shares of the Dual Convertible Preferred Stock and any Parity Securities, then
the holders of all such shares shall share ratably in such distribution of
assets in accordance with the amount which would be payable on such distribution
if the amounts to which the holders of outstanding shares of Dual Convertible
Preferred Stock and the holders of outstanding shares of such Parity Securities
are entitled were paid in full.
(ii) For the purposes of this paragraph (d), neither the voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the Corporation with or into
one or more other corporations nor the consolidation or merger of one or more
corporations with or into the Corporation shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up.
(e) COMMON STOCK CONVERSION. (i) Upon the terms and in the manner set
forth in this paragraph (e) and subject to the provisions for adjustment
contained in paragraph (e) (vii), (A) the shares of the Dual Convertible
Preferred Stock shall be convertible, in whole, but not in part, at the option
of the holders thereof, at any time after the date that is one year after the
Issue Date (as hereinafter defined) and (B) each share of the Dual Convertible
Preferred Stock shall be convertible, from time to time in part, after the date
that is ten years after the Issue Date, or such earlier date as provided in
paragraph (e)(ii), in either case, upon surrender to the Corporation of the
certificates for the shares to be converted, into a number of fully paid and
nonassessable shares of Common Stock equal to the aggregate stated value of the
Dual Convertible Preferred Stock to be converted divided by a conversion price
(the "Conversion Price") of $17.65. As used herein, the term "Issue Date" shall
mean the date of initial issuance of the Dual Convertible Preferred Stock.
(ii) If, prior to the date that is one year after the Issue Date, there
occurs a sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
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or assets of the Corporation or a consolidation or merger of the Corporation
with or into another corporation in which the shares of Common Stock are
converted into cash, assets or securities (other than shares of Common Stock
where the Corporation is the surviving corporation), the time when the
conversion rights of holders of shares of Dual Convertible Preferred Stock into
Common Stock become effective shall be accelerated and such conversion rights
shall be effective at and after a time at least 20 business days prior to the
consummation of such transaction.
(iii) In order to convert shares of the Dual Convertible Preferred Stock
into Common Stock, (x) if such shares are converted in whole, but not in part,
pursuant to paragraph (e)(i)(A) above, there shall be delivered to the
Corporation written evidence reasonably satisfactory to it that the holders of a
majority of the shares of Dual Convertible Preferred Stock have elected to
convert the Dual Convertible Preferred Stock into Common Stock (the "Common
Stock Conversion Election"), and (y) if such shares are converted in part, the
holder thereof shall deliver a properly completed and duly executed written
notice of election to convert specifying the number (in whole shares) of the
shares of the Dual Convertible Preferred Stock to be converted. In either case,
each holder of shares of the Dual Convertible Preferred Stock shall (A) deliver
a written notice to the Corporation at its principal office or at the office of
the agency which may be maintained for such purpose (the "Common Stock
Conversion Agent") specifying the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued, (B)
surrender the certificate for such shares of Dual Convertible Preferred Stock to
the Corporation or the Common Stock Conversion Agent, accompanied, if so
required by the Corporation or the Common Stock Conversion Agent, by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Corporation or the Common Stock Conversion Agent duly executed by the holder or
his attorney duly authorized in writing, and (C) pay any transfer or similar tax
required by paragraph (e)(ix).
(iv) (A) A "Common Stock Conversion" shall be deemed to have been effected
at the close of business on the date (the "Common Stock Conversion Date") on
which the Corporation or the Common Stock Conversion Agent shall have received
(x) the written notice of Common Stock Conversion Election or (y) a notice of
election to convert, a surrendered certificate, any required payments
contemplated by paragraph (e) (ix) below, and all other required documents.
Immediately upon conversion, the rights of the holders of converted shares of
Dual Convertible Preferred Stock shall cease and the persons entitled to receive
the shares of Common Stock upon the conversion of such shares of Dual
Convertible Preferred Stock shall be treated for all purposes as having become
the beneficial owners of such shares of Common Stock; provided, however, that
such persons shall be entitled to receive when paid dividends accrued on such
shares of Dual Convertible Preferred Stock to the last preceding dividend
payment date and unpaid as of the date of such conversion. A Common Stock
Conversion shall be at the Conversion Price in effect on such date, unless the
stock transfer books of the Corporation shall be closed on that date, in which
event such person or persons shall be deemed to have become such holder or
holders of record of the Common Stock at the close of business on the next
succeeding day on which such stock transfer books are open, but such conversion
shall be at the Conversion Price in effect on the Common Stock Conversion Date.
(B) As promptly as practicable after the Common Stock Conversion Date, the
Corporation shall deliver or cause to be delivered at the office or agency of
the Common Stock Conversion Agent, to or upon the written order of the holders
of the surrendered shares of Dual Convertible Preferred Stock, a certificate or
certificates representing the number of fully paid and nonassessable shares of
Common Stock, with no personal liability attaching to the ownership thereof,
free of all taxes with respect to the issuance thereof, liens, charges and
security interests and not subject to any preemptive rights, into which such
shares of Dual Convertible Preferred Stock have been converted in accordance
with the provisions of this paragraph (e), and any cash payable in respect of
fractional shares as provided in paragraph (e)(v).
(C) Upon the surrender of a certificate representing shares of Dual
Convertible Preferred Stock that is converted in part, the Corporation shall
issue or cause to be issued for the holder a new certificate representing shares
of Dual Convertible Preferred Stock equal in number to the unconverted portion
of the shares of Dual Convertible Preferred Stock represented by the certificate
so surrendered.
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(v) No fractional shares or scrip representing fractional shares of Common
Stock shall be issued upon the conversion or redemption of any shares of Dual
Convertible Preferred Stock. Instead of any fractional interest in a share of
Common Stock which would otherwise be deliverable upon the conversion or
redemption of a share of Dual Convertible Preferred Stock, the Corporation shall
pay to the holder of such share (a "Fractional Shareholder") an amount in cash
(computed to the nearest cent) equal to the current market price (as defined in
paragraph (e)(vii)(E) below) thereof on the business day next preceding the day
of conversion or redemption. If more than one share shall be surrendered for
conversion or redemption at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion or redemption thereof shall be
computed on the basis of the aggregate stated value of the shares of Dual
Convertible Preferred Stock so surrendered.
(vi) The holders of shares of Dual Convertible Preferred Stock at the
close of business on a dividend payment record date shall be entitled to
receive the dividend payable on such shares on the corresponding dividend
payment date notwithstanding the conversion thereof or the Corporation's
default in payment of the dividend due on such dividend payment date.
(vii) The Conversion Price shall be subject to adjustment as follows:
(A) If the Corporation shall (1) declare or pay a dividend on its
outstanding Common Stock in shares of Common Stock or make a distribution
to holders of its Common Stock in shares of Common Stock, (2) subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, (3) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (4) issue by reclassification
of its shares of Common Stock other securities of the Corporation, then the
Conversion Price in effect immediately prior thereto shall be adjusted so
that the holder of any shares of Dual Convertible Preferred Stock
thereafter converted shall be entitled to receive the number and kind of
shares of Common Stock or other securities that the holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such shares of Dual Convertible Preferred Stock been
converted immediately prior to the happening of such event or any record
date with respect thereto. An adjustment made pursuant to this paragraph
(e)(vii)(A) shall become effective on the date of the dividend payment,
subdivision, combination or issuance retroactive to the record date with
respect thereto, if any, for such event. Such adjustment shall be made
successively.
(B) If the Corporation shall issue to all holders of its Common Stock
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock at a price per
share that is lower than the then current market price per share of Common Stock
(as defined in paragraph (e)(vii)(E) below), then the Conversion Price shall be
adjusted in accordance with the following formula:
(N x P)
-------
AC = C x 0 + (M)
--------------
0 + N
where
<TABLE>
<C> <C> <S>
AC = the adjusted Conversion Price.
C = the current Conversion Price.
0 = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
</TABLE>
The adjustment shall be made successively whenever any such rights,
options, warrants or convertible or exchangeable securities are issued, and
shall become effective immediately after the record date for the
determination of shareholders entitled to receive the rights, options,
warrants or convertible or exchangeable securities.
(C) Upon the expiration of any rights, options, warrants or
convertible or exchangeable securities issued by the Corporation to all
holders of its Common Stock which caused an adjustment to the
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<PAGE> 32
Conversion Price pursuant to paragraph (e) (vii) (B), if any thereof shall
not have been exercised, then the Conversion Price shall be increased by
the amount of the initial adjustment of the Conversion Price pursuant to
paragraph (e) (vii) (B) in respect of such expired rights, options,
warrants or convertible or exchangeable securities.
(D) If the Corporation shall distribute to all holders of its
outstanding Common Stock any shares of capital stock of the Corporation
(other than Common Stock) or evidences of indebtedness or assets (excluding
ordinary cash dividends and dividends or distributions referred to in
paragraphs (e) (vii) (A) and (B) above) or rights or warrants to subscribe
for or purchase any of its securities (excluding those referred to in
paragraph (e) (vii) (B) above), (any of the foregoing being hereinafter in
this paragraph (e) (vii) (D) called the "Securities or Assets"), then in
each such case, unless the Corporation elects to reserve shares or other
units of such Securities or Assets for distribution to the holders of the
Dual Convertible Preferred Stock upon the conversion of the shares of Dual
Convertible Preferred Stock so that any such holder converting shares of
Dual Convertible Preferred Stock will receive upon such conversion, in
addition to the shares of the Common Stock to which such holder is
entitled, the amount and kind of such Securities or Assets which such
holder would have received if such holder had, immediately prior to the
record date for the distribution of the Securities or Assets, converted its
shares of Dual Convertible Preferred Stock into Common Stock, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall
be the current market price per share (as defined in paragraph (e) (vii)
(E) below) of the Common Stock on the record date mentioned below less the
then fair market value (as determined by the Board in good faith) of the
portion of the capital stock or assets or evidences of indebtedness so
distributed or of such rights or warrants applicable to one share of Common
Stock, and of which the denominator shall be the current market price per
share of the Common Stock on such record date; provided, however, that if
the then fair market value (as so determined) of the portion of the
Securities or Assets so distributed applicable to one share of Common Stock
is equal to or greater than the current market price per share of the
Common Stock on the record date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of shares
of the Dual Convertible Preferred Stock shall have the right to receive the
amount and kind of Securities and Assets such holder would have received
had such holder converted each such share of the Dual Convertible Preferred
Stock immediately prior to the record date for the distribution of the
Securities or Assets. Such adjustment shall become effective immediately
after the record date for the determination of shareholders entitled to
receive such distribution.
(E) For the purposes of any computation under paragraph (e) (vii), and
for the purposes of paragraphs (e) (v) and (g)(ii), the current market
price per share of Common Stock at any date shall be deemed to be the
average of the daily closing prices for the 20 consecutive trading days
commencing on the 30th trading day prior to the date in question. The
closing price for each day shall be (i) if the Common Stock is listed or
admitted to trading on a national securities exchange, the closing price on
the New York Stock Exchange Consolidated Tape (or any successor composite
tape reporting transactions on national securities exchanges) or, if such a
composite tape shall not be in use or shall not report transactions in the
Common Stock, the last reported sales price regular way on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading (which shall be the national securities exchange on
which the greatest number of shares of Common Stock has been traded during
such 20 consecutive trading days), or, if there is no transaction on any
such day in any such situation, the mean of the bid and asked prices on
such day or, (ii) if the Common Stock is not listed or admitted to trading
on any such exchange, the closing price, if reported, or, if the closing
price is not reported, the average of the closing bid and asked prices as
reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or, (iii) if bid and asked prices for the
Common Stock on each such day shall not have been reported through NASDAQ,
the average of the bid and asked prices for such date as furnished by any
three New York Stock Exchange member firms regularly making a market in the
Common Stock and not affiliated with the Corporation selected for such
purpose by the Board or, (iv) if no such quotations are available, the fair
market value of the Common
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<PAGE> 33
Stock as determined by a New York Stock Exchange member firm regularly
making a market in the Common Stock selected for such purpose by the Board.
(F) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% of
such price; provided, however, that any adjustments which by reason of this
paragraph (e) (vii) (F) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this paragraph (e) (vii) shall be made to the nearest
one hundredth of a cent or to the nearest one-hundredth of a share, as the
case may be.
(G) If the Corporation shall be a party to any transaction, including
without limitation a merger, consolidation, sale of all or substantially
all of the Corporation's assets, liquidation or recapitalization of the
Common Stock (each of the foregoing being referred to as a "Transaction"),
in each case (except in the case of a Common Stock Fundamental Change (as
hereinafter defined)) as a result of which shares of Common Stock shall be
converted into the right to receive stock, securities or other property
(including cash or any combination thereof), in addition to the right to
exchange the Dual Convertible Preferred Stock for Holding Common Stock,
which shall survive the consummation of any such Transaction, each share of
Dual Convertible Preferred Stock shall thereafter be convertible into the
kind and amount of shares of stock and other securities and property
receivable (including cash) upon the consummation of such Transaction by a
holder of that number of shares of Common Stock into which one share of
Dual Convertible Preferred Stock was convertible immediately prior to such
Transaction. The Corporation shall not be a party to any Transaction unless
the terms of such Transaction are consistent with the provisions of this
paragraph (e) (vii) (G) and it shall not consent or agree to the occurrence
of any Transaction until the corporation has entered into an agreement with
the successor or purchasing entity, as the case may be, for the benefit of
the holders of the Dual Convertible Preferred Stock, which shall contain
provisions (i) enabling the holders of the Dual Convertible Preferred Stock
to convert into the consideration received by holders of Common Stock at
the Conversion Price immediately after such Transaction and (ii)
acknowledging the right of the Dual Convertible Preferred Stock to be
exchanged for Holding Common Stock and assuming any obligations with
respect thereto. The provisions of this paragraph (e) (vii) (G) shall
similarly apply to successive Transactions.
(H) In the event of a Common Stock Fundamental Change, in addition to
the right to exchange the Dual Convertible Preferred Stock for Holding
Common Stock, which shall survive the consummation of any such Common Stock
Fundamental Change, each share of Dual Convertible Preferred Stock shall be
convertible into common stock of the kind received by holders of Common
Stock as the result of such Common Stock Fundamental Change. The Conversion
Price immediately following such Common Stock Fundamental Change shall be
the Conversion Price in effect immediately prior to such Common Stock
Fundamental Change multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as hereinafter defined) and the denominator of which
is the Applicable Price (as hereinafter defined). The Corporation shall not
consent or agree to the occurrence of any Common Stock Fundamental Change
until the Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of
the Dual Convertible Preferred Stock, which shall contain provisions (i)
enabling the holders of the Dual Convertible Preferred Stock to convert
into the consideration received by holders of Common Stock at the
Conversion Price immediately after such Fundamental Change and (ii)
acknowledging the right of the Dual Convertible Preferred Stock to be
exchanged for Holding Common Stock and assuming any obligations with
respect thereto. The provisions of this paragraph (e)(vii)(H) shall
similarly apply to successive Common Stock Fundamental Changes.
(I) As used herein:
(1) The term "Applicable Price" means the current market price for
one share of the Common Stock (determined in accordance with paragraph
(e)(vii)(E)) on the record date for the determination of the holders of
Common Stock entitled to receive common stock in connection with such
Common Stock Fundamental Change, or, if there is no such record date, on
the date upon which the holders of Common Stock shall have the right to
receive such common stock.
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<PAGE> 34
(2) The term "Common Stock Fundamental Change" shall mean the
occurrence of any transaction or event in connection with which all or
substantially all the Common Stock shall be exchanged for, converted
into, acquired for or shall constitute solely the right to receive
common stock that, for the ten consecutive trading days immediately
prior to such Common Stock Fundamental Change, has been admitted for
listing on a national securities exchange or quoted on the National
Market System of NASDAQ (whether by means of an exchange order,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise).
(3) The term "Purchaser Stock Price" shall mean, with respect to
any Common Stock Fundamental Change, the current market price for one
share of the common stock received by holders of Common Stock in such
Common Stock Fundamental Change (determined in accordance with paragraph
(e)(vii)(E) as if such paragraph were applicable to such common stock)
on the record date for the determination of the holders of Common Stock
entitled to receive such common stock or, if there is no such record
date, on the date upon which the holders of Common Stock shall have the
right to receive such common stock.
(J) For the purposes of this paragraph (e)(vii) and paragraph (e)(x),
the term "shares of Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Corporation at the date hereof or
(ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value,
or from no par value to par value. If at any time, as a result of an
adjustment made pursuant to paragraphs (e) (vii) (A), (D), (G) or (H)
above, the holders of Dual Convertible Preferred Stock shall become
entitled to receive any securities other than shares of Common Stock,
thereafter the number of such other securities so issuable upon conversion
of the shares of Dual Convertible Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the shares of Dual
Convertible Preferred Stock contained in this paragraph (e) (vii).
(K) Notwithstanding the foregoing, in any case which this paragraph
(e) (vii) provides that an adjustment shall become effective immediately
after a record date for an event, the Corporation may defer until the
occurrence of such event (i) issuing to the holder of any share of Dual
Convertible Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion before giving effect to such adjustment and (ii)
paying to such holder any amount in cash in lieu of any fraction pursuant
to paragraph (e)(v).
(L) If the Corporation shall take any action affecting the Common
Stock, other than action described in this paragraph (e) (vii), which in
the opinion of the Board would materially adversely affect the conversion
rights of the holders of the shares of Dual Convertible Preferred Stock,
the Conversion Price for the Dual Convertible Preferred Stock may be
adjusted, to the extent permitted by law, in such manner, if any, and at
such time, as the Board may determine in good faith to be equitable in the
circumstances. Failure of the Board to provide for any such adjustment
prior to the effective date of any such action by the Corporation affecting
the Common Stock shall be evidence that such Board has determined that it
is equitable to make no adjustments in the circumstances.
(viii) Whenever the Conversion Price is adjusted as herein provided,
the Chief Financial Officer of the Corporation shall compute the adjusted
Conversion Price in accordance with the foregoing provisions and shall
prepare a certificate setting forth such adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based.
A copy of such certificate shall be filed promptly with the Common Stock
Conversion Agent. Promptly after delivery of such certificate, the
Corporation shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the date on which
such adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holder of each share of Dual
Convertible Preferred Stock at his last address as shown on the stock books
of the Corporation.
(ix) The Corporation will pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Common Stock on the conversion of shares of Dual Convertible
Preferred Stock pursuant to this paragraph (e); provided, however, that the
Corporation shall
C-7
<PAGE> 35
not be required to pay any tax which may be payable in respect of any
registration or transfer involved in the issue or delivery of shares of
Common Stock in a name other than that of the registered holder of Dual
Convertible Preferred Stock converted or to be converted, and no such issue
or delivery shall be made unless and until the person requesting such issue
has paid to the Corporation the amount of any such tax or has established,
to the satisfaction of the Corporation, that such tax has been paid.
(x) (A) The Corporation shall at all times reserve and keep available,
free from all liens, charges and security interests and not subject to any
preemptive rights, out of the aggregate of its authorized but unissued
Common Stock or its issued Common Stock held in its treasury, or both, for
the purpose of effecting the conversion of the Dual Convertible Preferred
Stock, the full number of shares of Common Stock then deliverable upon the
conversion of all outstanding shares of the Dual Convertible Preferred
Stock.
(B) Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value (if any) of the Common Stock
issuable upon conversion of the Dual Convertible Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such
adjusted Conversion Price.
(xi) If (A) the Corporation shall declare a dividend on its
outstanding Common Stock (excluding ordinary cash dividends) or make a
distribution to holders of its Common Stock; (B) the Corporation shall
authorize the granting to the holders of the Common Stock of rights,
options, warrants or convertible or exchangeable securities containing the
right to subscribe for or purchase any shares of Common Stock or any of its
securities; (C) there shall be any reclassification of the Common Stock or
any consolidation or merger to which the Corporation is a party and for
which approval of any shareholders of the Corporation is required, or the
sale or transfer of all or substantially all of the assets of the
Corporation; or (D) there shall be any Common Stock Fundamental Change;
then the Corporation shall cause to be mailed to the holders of shares of
the Dual Convertible Preferred Stock at their addresses as shown on the
stock books of the Corporation, as promptly as possible, but at least 15
days, prior to the applicable date hereinafter specified, a notice stating
(l) the date on which a record is to be taken for the purpose of such
dividend or distribution, or, if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such
dividend or distribution are to be determined or (2) the date on which such
reclassification, consolidation, merger, sale, transfer or Common Stock
Fundamental Change is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer or Common Stock Fundamental Change.
(f) HOLDING EXCHANGE. (i) Upon the terms and in the manner set forth in
this paragraph (f), the shares of Dual Convertible Preferred Stock shall be
exchangeable, in whole, but not in part, at the option of the holders thereof,
upon surrender to the Corporation of the certificates representing such shares
of Dual Convertible Preferred Stock, for a number of fully paid and
nonassessable shares of Holding Common Stock equal to 50% of the shares of
Holding Common Stock on a fully diluted basis on the Holding Exchange Date (as
hereinafter defined).
(ii) On the Issue Date, all of the shares of Dual Convertible Preferred
Stock will be issued to one or more limited partnerships (the "Partnerships"),
for which Kohlberg Kravis Roberts & Co. or one of its affiliates acts as sole
general partner. The Partnerships shall distribute all shares of Dual
Convertible Preferred Stock then owned by the Partnerships to the partners
thereof (the "Distribution") upon the earlier to occur of (A) the date of the
Automatic Early Distribution (as hereinafter defined) or (B) the date that is
six years after the Issue Date, unless the Partnerships shall have received the
consent of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") to an alternative date on which to effect the Distribution
(which shall not be earlier than the date that is four years after the Issue
Date). The Partnerships shall promptly notify the Corporation of the
Distribution.
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<PAGE> 36
(iii) The shares of Dual Convertible Preferred Stock shall be exchangeable
for Holding Common Stock, in whole, but not in part, in accordance with this
paragraph (f), (A) at any time after the Automatic Early Distribution shall have
been effected and before the date that is ten years after the Issue Date, or (B)
from time to time after the date that is (x) four years after the Issue Date or
at any time after such date, if the Partnerships do not own any shares of Dual
Convertible Preferred Stock on any such date and before the date that is ten
years after the Issue Date, or (y) the date that the Distribution shall have
been effected, which shall be six years after the Issue Date unless the
Partnerships shall have received the consent of the Federal Reserve Board to an
alternative date on which to effect the Distribution (which shall not be earlier
than the date that is four years after the Issue Date) and before the date that
is ten years after the Issue Date (the period of time set forth in either clause
(x) or (y) of this paragraph (f)(iii)(B) is referred to herein as the "Exchange
Period").
(iv) At any time and from time to time during the Exchange Period, the
holders of a majority of the shares of the Dual Convertible Preferred Stock
shall have the right to have an independent nationally recognized investment
banking firm render an opinion (an "Appraisal") of the fair price for all the
outstanding shares of Holding Common Stock as if all such shares were to be sold
to a third party in their entirety reflecting a full control premium (the
"Appraised Price"). The fees and expenses of such investment banking firm shall
be paid by the Corporation. The Corporation shall be entitled to reduce the
amount of dividends that would otherwise be payable on the Dual Convertible
Preferred Stock pursuant to paragraph (c) (i) by the amount of such fees and
expenses paid by the Corporation. The investment banking firm that performs each
Appraisal shall be selected by the Corporation but shall be reasonably
acceptable to the holders of a majority of the shares of the Dual Convertible
Preferred Stock. The holders of a majority of the shares of the Dual Convertible
Preferred Stock shall have 30 days to accept or reject the Appraised Price set
by any Appraisal. The Dual Convertible Preferred Stock will become exchangeable
for Holding Common Stock for a period of 90 days commencing on the date that is
six months after the written acceptance by the holders of a majority of the
shares of the Dual Convertible Preferred Stock of the Appraised Price set by an
Appraisal. If the holders of the Dual Convertible Preferred Stock do not elect
to exchange their shares of the Dual Convertible Preferred Stock for Holding
Common Stock during any such 90-day period, in addition to their other rights
hereunder, the holders shall be entitled to have additional Appraisals rendered
and to otherwise comply with the requirements hereof to have the Dual
Convertible Preferred Stock again become exchangeable for Holding Common Stock.
(v) The right to exchange the Dual Convertible Preferred Stock for Holding
Common Stock may also be exercised at any time on or after the 60th day after
the Corporation shall have given notice to the holders of the shares of the Dual
Convertible Preferred Stock that the Corporation's consolidated Tier 1 capital
leverage ratio, based on the rules and regulations of the Federal Reserve Board
as currently in effect (using year end 1992 standards) as disclosed in any
report of condition filed by the Corporation with any bank regulatory authority,
adjusted to include the Corporation's goodwill existing at the Issue Date, shall
be less than 3%. The Corporation shall give the holders of the shares of the
Dual Convertible Preferred Stock immediate notice if its consolidated Tier 1
capital leverage ratio as reported in any such regulatory filing, adjusted to
include its goodwill existing at the Issue Date, falls below 3%. Prior to the
fifth day after the Partnerships shall have received such notice, unless the
Partnerships shall have received the consent of the Federal Reserve Board to an
extension of such date, the Partnerships shall effect the Distribution with
respect to all shares of Dual Convertible Preferred Stock then owned by the
Partnerships (the "Automatic Early Distribution"). The Corporation shall cause
an Appraisal to be prepared at the Corporation's expense and delivered to the
holders of the shares of the Dual Convertible Preferred Stock within 20 days
after the Corporation's notice of capital deficiency. The holders of a majority
of the shares of the Dual Convertible Preferred Stock shall have 20 days to
accept or reject such Appraisal. If such Appraisal is accepted, the Corporation
may redeem at its option, with the prior approval of the Federal Reserve Board,
the Dual Convertible Preferred Stock in whole, but not in part, for the Gross
Redemption Price, determined and payable in accordance with paragraph (g) below.
(vi) In order to exchange shares of the Dual Convertible Preferred Stock
into Holding Common Stock, there shall be delivered to the Corporation written
evidence reasonably satisfactory to it that the holders of a majority of the
shares of Dual Convertible Preferred Stock have elected to exchange the Dual
Convertible
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<PAGE> 37
Preferred Stock into Holding Common Stock (the "Holding Exchange Election"),
which election shall be binding on all the holders of the shares of the Dual
Convertible Preferred Stock. Each holder of shares of the Dual Convertible
Preferred Stock shall (A) deliver a written notice of the name or names in which
such holder wishes the certificate or certificates for shares of Holding Common
Stock to be issued to the Corporation at its principal office or at the office
of the agency which may be maintained for such purpose (the "Holding Exchange
Agent"), (B) surrender the certificate for such shares of Dual Convertible
Preferred Stock to the Corporation or the Holding Exchange Agent, accompanied,
if so required by the Corporation or the Holding Exchange Agent, by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Corporation or the Holding Exchange Agent duly executed by the holder or his
attorney duly authorized in writing, and (C) pay any transfer or similar tax
required by paragraph (f)(x)(A).
(vii) (A) The "Holding Exchange" shall be deemed to have been effected at
the close of business on the fifth business day after the date (the "Holding
Exchange Date") on which the Corporation shall have received the written notice
of the Holding Exchange Election. Immediately upon exchange, the rights of all
the holders of Dual Convertible Preferred Stock shall cease and the persons
entitled to receive the shares of Holding Common Stock upon the exchange of Dual
Convertible Preferred Stock shall be treated for all purposes as having become
the beneficial owners of such shares of Holding Common Stock; provided, however,
that such persons shall be entitled to receive when paid dividends accrued on
such shares of Dual Convertible Preferred Stock to the last preceding dividend
payment date and unpaid as of the date of such exchange.
(B) As promptly as practicable after the Holding Exchange Date subject to
the provisions of paragraph (f) (x), the Corporation shall deliver or cause to
be delivered at the office or agency of the Holding Exchange Agent, to or upon
the written order of the holders of the surrendered shares of Dual Convertible
Preferred Stock, a certificate or certificates representing the number of fully
paid and nonassessable shares of Holding Common Stock into which such shares of
Dual Convertible Preferred Stock have been exchanged in accordance with the
provisions of this paragraph (f).
(viii) No fractional shares or scrip representing fractional shares of
Holding Common Stock shall be issued upon the exchange of the Dual Convertible
Preferred Stock for Holding Common stock. The Corporation shall cause Holding to
effect a stock split or reverse stock split so that no fractional shares become
deliverable pursuant to the Holding Exchange.
(ix) The holders of shares of Dual Convertible Preferred Stock at the close
of business on a dividend payment record date shall be entitled to receive the
dividend payable on such shares on the corresponding dividend payment date
notwithstanding the exchange thereof or the Corporation's default in payment of
the dividend due on such dividend payment date.
(x) (A) The Corporation will pay any and all documentary, stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Holding Common Stock on the exchange of shares of Dual Convertible Preferred
Stock pursuant to this paragraph (f); provided, however, that the Corporation
shall not be required to pay any tax which may be payable in respect of any
registration or transfer involved in the issue or delivery of shares of Holding
Common Stock in a name other than that of the registered holder or Dual
Convertible Preferred Stock exchanged or to be exchanged, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(B) If the Board of Directors of Holding determines in good faith that (i)
the declaration and payment of the dividend note (the "Dividend Note") described
in Section 3 of the Supplemental Tax Allocation Agreement between the
Corporation and Holding, dated the Issue Date (the "Tax Allocation Agreement"),
would cause Holding to be unable to comply with regulatory capital maintenance
requirements and policies then in effect or with safe and sound banking
practices or (ii) Holding will have insufficient cash to pay the Dividend Note,
then the Corporation may condition the issuance of Holding Common Stock to any
holder of the Dual Convertible Preferred Stock upon the receipt of a cash
capital contribution (a "Capital Contribution") from such holder to Holding
concurrently with such issuance equal to the product of a fraction, the
numerator of which equals the number of shares of Holding Common Stock for which
such holder's Dual
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Convertible Preferred Stock may be exchanged and the denominator of which equals
the total number of shares of Holding Common Stock that will be outstanding (on
a fully diluted basis) after all of the shares of Dual Convertible Preferred
Stock have been exchanged, multiplied by the amount of the Dividend Note and, in
such event, the declaration and payment of the Dividend Note to the Corporation
will be conditioned upon Holding's receipt of a Capital Contribution from the
Corporation equal to 50% of the amount of the Dividend Note. Except as provided
in this paragraph (f) (x), the holders of the Dual Convertible Preferred Stock
shall have no obligation to make any capital contribution, including, without
limitation, with respect to the obligations of Holding to the Corporation under
the Tax Allocation Agreement.
(C) The Board of Directors of Holding shall give written notice of its
determination to require a Capital Contribution to each holder of record of the
shares of the Dual Convertible Preferred Stock, which notice shall state the
amount of such holder's required Capital Contribution and the consequences of
failing to make such Capital Contribution. If any holder of the Dual Convertible
Preferred Stock fails to make such holder's Capital Contribution within 90 days
of such notice, the shares of Holding Common Stock for which such holder's
shares of the Dual Convertible Preferred Stock may be exchanged (the "Escrowed
Shares") shall be deposited by the Corporation in escrow with an independent
trustee (the "Trustee") that is not affiliated with the Corporation. The Trustee
shall be empowered and directed to sell such of the Escrowed Shares as will be
sufficient to realize net proceeds (after the payment of the fees and expenses
of the Trustee) equal to such holder's required Capital Contribution, together
with interest on such amount at the prime rate then in effect at the
Corporation's banking subsidiaries commencing on the 90th day after the notice
of such Capital Contribution ("Interest"). The holder of the shares of the Dual
Convertible Preferred Stock to which such Escrowed Shares relate may obtain the
release of such Escrowed Shares from the Trustee at any time prior to the
Trustee's disposition thereof by paying the amount of the Capital Contribution,
together with Interest thereon, to the Trustee. The Trustee shall have the right
to sell such of the Escrowed Shares in a public offering or in one or more
private sales as will result in the receipt of sufficient proceeds, after the
payment of the fees and expenses of the Trustee therefrom, to pay the required
Capital Contribution, together with Interest thereon, with respect to such
Escrowed Shares. The Trustee shall use its best efforts to obtain the highest
price for the Escrowed Shares to be sold. The Trustee shall not be prohibited
from selling, and shall be specifically authorized to sell, any of the Escrowed
Shares to the Corporation provided that the Corporation purchases such shares
for a consideration at least equal to the book value thereof. Upon the receipt
of sufficient proceeds to pay the required Capital Contribution, together with
Interest thereon, the balance of such Escrowed Shares will be released to the
holder of the Dual Convertible Preferred Stock to which such Escrowed Shares
relate in exchange for the Dual Convertible Preferred Stock held by such holder.
(g) OPTIONAL REDEMPTION. (i) The Corporation may redeem at its option,
with the prior approval of the Federal Reserve Board, the Dual Convertible
Preferred Stock, in whole, but not in part, at any time during the period after
the acceptance of any Appraisal by the holders of a majority of the shares of
Dual Convertible Preferred Stock but before the 90-day period following the
acceptance of any Appraisal during which the Dual Convertible Preferred Stock
becomes exchangeable for Holding Common Stock in accordance with paragraph (f)
(iv) or before the Dual Convertible Preferred Stock becomes exchangeable for
Holding Common Stock in accordance with paragraph (f)(v) above (the "Optional
Redemption Period"), at a redemption price equal to 50% of the Appraised Price
(the "Gross Redemption Price"), together with accrued and unpaid dividends
thereon to the date of redemption. The Appraised Price that is applicable to any
Optional Redemption Period shall be the Appraised Price set forth in the
Appraisal, the acceptance of which gave rise to such Optional Redemption Period.
(ii) The Gross Redemption Price shall be reduced by the aggregate of (A)
the aggregate current market price of the shares of Common Stock into which the
Dual Convertible Preferred Stock would then be convertible, regardless of
whether such shares are actually convertible at such time (which current market
price shall be determined in accordance with paragraph (e) (vii) (E) and the
date in question for purposes thereof shall be the date that the Optional
Redemption Notice (as hereinafter defined) is mailed in accordance with
paragraph (g)(iii) below) or, if any Transaction has been effected in which
shares of Common Stock were converted into the right to receive stock,
securities or other property (including cash or any combination thereof) (the
"Transaction Consideration") and the Common Stock is no longer outstand-
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ing, the value of the Transaction Consideration into which the Dual Convertible
Preferred Stock would then be convertible, and (B) the value of the rights to
purchase Common Stock (the "Rights") issued to the Partnerships on the Issue
Date. The value of the Rights shall be determined as follows:
(1) with respect to any portion of the Rights that has been exercised
and the holder of such Rights received Common Stock upon the exorcise
thereof, the value of such Rights shall be equal to the aggregate current
market price of the Common Stock received upon the exercise of the Rights
on the date of exercise less the aggregate exercise price paid for such
Common Stock (which current market price shall be determined in accordance
with paragraph (e) (vii) (E) and the date in question for purposes thereof
shall be the date of exercise);
(2) with respect to any portion of the Rights that has not been
exercised, the value of such Rights shall be equal to the aggregate current
market price of the Common Stock that the holders of such Rights would then
be entitled to receive upon the exercise thereof in their entirety less the
aggregate exercise price that would then be payable upon such exercise
(which current market price shall be determined in accordance with
paragraph (e) (vii) (E) and the date in question for purposes thereof shall
be the date that the Optional Redemption Notice is mailed); and
(3) with respect to any portion of the Rights that has been exercised
and the Corporation exercised its option to purchase such Rights rather
than issue Common Stock upon the exercise thereof, the value of such Rights
shall be equal to the aggregate purchase price received by the holders
thereof upon the Corporation's purchase of such Rights.
The value of the Transaction Consideration shall be determined as follows:
(1) with respect to any portion of the Transaction Consideration that
consists of stock or securities, the value of such stock or securities
shall be equal to the aggregate current market price of such stock or
securities (determined in accordance with paragraph (e) (vii) (E) as if
such paragraph were applicable to such stock or securities and the date in
question for purposes thereof shall be the date that the Optional
Redemption Notice is mailed); and
(2) with respect to any portion of the Transaction Consideration that
consists of other property, the value of such other property shall be equal
to its then aggregate fair market value as determined by the Board in good
faith.
If the Corporation certifies in the Optional Redemption Notice that it must
report gain, and that it will do so on its tax return for the taxable year
of the redemption, that will result in an actual income tax liability or an
actual reduction in income tax refund (or combination thereof) on the
income tax return of the Corporation for the taxable year of the redemption
as a direct result of the actual redemption of the Dual Convertible
Preferred Stock for cash and/or the issuance of Common Stock or debt
securities of the Corporation pursuant to paragraph (g) (i), the Gross
Redemption Price shall be reduced by one-half of the amount of the total
income tax liability actually to be incurred as a result of, and/or the
actual reduction in income tax refund to occur caused by, such redemption,
as will be reported on the income tax return of the Corporation to be filed
for the taxable year of the redemption, including any income tax for which
the Corporation is liable as a result of such reduction. If the Corporation
does not expect to incur an actual tax liability or reduction in refund (or
combination thereof) in the year of the redemption, the Gross Redemption
Price shall be reduced by one-half of the amount determined by the Board of
Directors of the Corporation in good faith, equal to the projected tax
liability to be incurred by the Corporation in future years as a result of
the redemption appropriately discounted to take into account the period of
time before such tax liability will actually be paid by the Corporation.
The Corporation will not provide the certification in the Optional
Redemption Notice unless there is substantial authority that requires gain
to be recognized by the Corporation on the redemption and no substantial
authority supporting the position that gain is not recognized by the
Corporation on the redemption.
If the Corporation subsequently receives a refund of all or any portion of
the taxes paid or has a reduction in the tax liability that resulted in a
reduction of the Gross Redemption Price, the Corporation shall promptly pay
the former holders of the Dual Convertible Preferred Stock their respective
proportionate
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share of 50% of such refund or reduction in tax liability, together with
any interest at the underpayment rate set forth in Section 6621(a) (2) of
the Internal Revenue Code of 1986, as amended. The Gross Redemption Price
reduced by the value of the Rights in accordance with clause (B) above and
any reduction pursuant to the three preceding sentences shall be referred
to herein as the "Net Redemption Price", and further reduced by the
aggregate current market price of the Common Stock or the aggregate value
of the Transaction Consideration in accordance with clause (A) above shall
be referred to herein as the "Balance".
(iii) The Net Redemption Price shall be payable to the holders of the
shares of Dual Convertible Preferred Stock as follows:
(A) certificates representing the number of shares of Common Stock or,
if any Transaction has been effected, certificates representing the number
of shares of stock or securities together with any other property, into
which the Dual Convertible Preferred Stock would then be convertible,
regardless of whether such shares are actually convertible at such time,
and any cash payable in respect of fractional shares as provided in
paragraph (e)(v), shall be delivered to the holders of the Dual Convertible
Preferred Stock in accordance with the procedures for effecting a Common
Stock Conversion; and
(B) the Balance shall be payable, at the Corporation's option, in any
combination of cash or the Corporation's capital and other securities
having a realizable market value (as determined by an independent
nationally recognized investment banking firm selected and paid for by the
Corporation and reasonably acceptable to the holders of at least a majority
of the shares of the Dual Convertible Preferred Stock) equal to the
Balance.
(iv) The Corporation shall have the obligation to redeem, with the prior
approval of the Federal Reserve Board, the Dual Convertible Preferred Stock, in
whole, but not in part, if (A) the Corporation offers to redeem (the "Redemption
Offer") the Dual Convertible Preferred Stock at a redemption price other than
the Gross Redemption Price, which offer, if made after the Distribution shall
have been effected, may only be made during an Optional Redemption Period or
during the period after an Appraisal has been received and prior to the
acceptance or rejection thereof by the holders of the shares of the Dual
Convertible Preferred Stock, and (B) the holders of a majority of the
outstanding shares of the Dual Convertible Preferred Stock shall have elected to
accept the Redemption Offer, which election shall be binding on all the holders
of the shares of the Dual Convertible Preferred Stock. Written notice of every
Redemption Offer shall be given by first class mail, postage prepaid, to each
holder of record of the shares of the Dual Convertible Preferred Stock at such
holder's address as the same appears on the stock register of the Corporation.
Each Redemption Offer shall state: (A) the consideration offered by the
Corporation for all the shares of the Dual Convertible Preferred Stock (the
"Alternative Redemption Price"); (B) the proposed date on and the manner in
which the Alternative Redemption Price would be payable; and (C) the Gross
Redemption Price, the Net Redemption Price and the Balance, together with a
certificate of the Chief Financial Officer of the Corporation setting forth in
reasonable detail the facts upon and the manner in which each was determined.
(v) If the Corporation shall redeem shares of Dual Convertible Preferred
Stock pursuant to this paragraph (g), written notice of such redemption (the
"Optional Redemption Notice") shall be given by first class mail, postage
prepaid, mailed not less than 10 days nor more than 30 days prior to the
redemption date, to each holder of record of the shares of the Dual Convertible
Preferred Stock at such holder's address as the same appears on the stock
register of the Corporation. The Optional Redemption Notice shall state: (A) the
redemption date; (B) the Gross Redemption Price, the Net Redemption Price and
the Balance, together with a certificate of the Chief Financial Officer of the
Corporation setting forth in reasonable detail the facts upon and the manner in
which each was determined or the Alternative Redemption Price, as the case may
be; (C) that shares of Dual Convertible Preferred Stock called for redemption
may be converted in accordance with, and subject to the terms of, paragraph (e)
hereof at any time prior to the date fixed for redemption (unless the
Corporation shall default in payment of the Net Redemption Price or the
Alternative Redemption Price, in which case such right shall not terminate at
such date); (D) the place or places where certificates for such shares are to be
surrendered for payment of the Net Redemption Price or the Alternative
Redemption Price;
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(E) the amount of any accrued and unpaid dividends; and (F) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
(vi) The Optional Redemption Notice having been mailed as aforesaid, from
and after the redemption date (unless default shall be made by the Corporation
in providing money for the payment of the Net Redemption Price or the
Alternative Redemption Price) dividends on the shares of Dual Convertible
Preferred Stock shall cease to accrue and said shares shall no longer be deemed
to be outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, undesignated as to series, and all rights of the holders
thereof as shareholders of the Corporation (except the right to receive from the
Corporation the Net Redemption Price or the Alternative Redemption Price and any
accrued and unpaid dividends) shall cease. Upon surrender in accordance with the
Optional Redemption Notice of any certificates for the shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the Optional Redemption Notice shall so state),
such shares shall be redeemed by the Corporation at the Net Redemption Price or
the Alternative Redemption Price, as the case may be, plus any accrued and
unpaid dividends thereon.
(h) VOTING RIGHTS. (i) The holders of record of shares of Dual Convertible
Preferred Stock shall not be entitled to any voting rights except as hereinafter
provided in this paragraph (h) or as otherwise provided by law.
(ii) (A) Whenever any matter is required to be acted upon herein by the
holders of a majority of the Dual Convertible Preferred Stock, the affirmative
vote of the holders of a majority of the outstanding Dual Convertible Preferred
Stock, whether at a special meeting of such holders called as hereinafter
provided, or by the written consent of such holders pursuant to Section
7-1.1-30.3 of the Rhode Island Business Corporation Act, shall be required to
adopt such matter, which adoption shall be binding on all the holders of the
shares of Dual Convertible Preferred Stock.
(B) Upon the written request of the holders of at least 10% of the shares
of the Dual Convertible Preferred Stock, addressed to the Secretary of the
Corporation, a proper officer of the Corporation shall call a special meeting of
holders of Dual Convertible Preferred Stock. Such meeting shall be held at the
earliest practicable date upon the notice required for special meetings of
shareholders at a place designated by the holders of at least 10% of the shares
of the Dual Convertible Preferred Stock. If such meeting shall not be called by
the proper officers of the Corporation within 5 days after the personal service
of such written request upon the Secretary of the Corporation, or within 10 days
after mailing the same within the United States, by registered mail, addressed
to the Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of at least 10% of the shares of Dual Convertible Preferred Stock may
designate in writing a holder of Dual Convertible Preferred Stock to call such
meeting at the expense of the Corporation, and such meeting may be called by
such person designated upon the notice required for special meetings of
shareholders and shall be held at the same place as is elsewhere provided in
this paragraph (h)(ii)(B). Any holder of Dual Convertible Preferred Stock that
would be entitled to vote at such meeting shall have access to the stock books
of the Corporation relating to the Dual Convertible Preferred Stock and the
right to examine and to make extracts therefrom, in person or by agent or
attorney, at any reasonable time or times, for the purpose of causing a meeting
of shareholders to be called pursuant to the provisions of this paragraph or
otherwise communicating with the holders of the Dual Convertible Preferred Stock
or for any other proper purpose.
(C) At any meeting of the holders of the Dual Convertible Preferred Stock,
the presence in person or by proxy of the holders of a majority of the then
outstanding shares of Dual Convertible Preferred Stock shall be required and be
sufficient to constitute a quorum of such holders for the action to be taken by
such class. At any such meeting or adjournment thereof in the absence of a
quorum of the holders of shares of Dual Convertible Preferred Stock, the holders
of a majority of such shares present in person or by proxy shall have the power
to adjourn the meeting from time to time, without notice (except as required by
law) other than announcement at the meeting, until a quorum shall be present.
(D) At any meeting of the holders of the Dual Convertible Preferred Stock,
the holders of a majority of the outstanding shares of the Dual Convertible
Preferred Stock shall be entitled to designate a committee (the
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"Committee") consisting of as many holders of the Dual Convertible Preferred
Stock as the holders of a majority of such shares may determine to be
appropriate. The Committee may be empowered to act on behalf of all holders of
the Dual Convertible Preferred Stock with respect to certain matters affecting
the exchangeability of the Dual Convertible Preferred Stock specified in
paragraphs (f) (iv) and (f) (v) and the acceptability of the Corporation's
selection of an investment banking firm hereunder if so designated by the
holders of the Dual Convertible Preferred Stock pursuant to this paragraph
(h)(ii)(D); provided, however, that in no event may the Committee be empowered
to elect to convert the Dual Convertible Preferred Stock into Common Stock, to
accept any Redemption Offer or to exchange the Dual Convertible Preferred Stock
for Holding Common Stock on behalf of the holders thereof.
(iii) So long as any shares of the Dual Convertible Preferred Stock are
outstanding, the Corporation shall not, without 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,
authorize any new class of Senior Securities.
(iv) So long as any shares of the Dual Convertible Preferred Stock are
outstanding, the Corporation shall not, without 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,
amend the Certificate of Incorporation or this Certificate of Designation so as
to affect materially and adversely the specified rights, preferences, privileges
or voting rights of shares of Dual Convertible Preferred Stock.
(i) OTHER REDEMPTION RIGHTS. (i) If less than 10% of the shares of the
Dual Convertible Preferred Stock originally issued is then outstanding, the
Corporation may redeem at its option, with the prior approval of the Federal
Reserve Board, the Dual Convertible Preferred Stock, in whole, but not in part,
at any time on or after the date that is ten years after the Issue Date, at a
redemption price of $200 per share (the "Stated Value Redemption Price"),
together with accrued and unpaid dividends thereon to the date of redemption,
without interest.
(ii) The Corporation may redeem at its option, with the prior approval of
the Federal Reserve Board, the Dual Convertible Preferred Stock, in whole, but
not in part, at any time on or after the date that is 12 years after the Issue
Date, at a redemption price in cash equal to the Fair Market Value (as
hereinafter defined) of such shares. The Corporation shall have the right to
have an independent nationally recognized investment banking firm render an
opinion of the fair market value for all the outstanding shares of the Dual
Convertible Preferred Stock as if all such shares were to be sold to a third
party (the "Fair Market Value"). The investment banking firm that renders such
opinion shall be selected by the Corporation but shall be reasonably acceptable
to the holders of a majority of the outstanding shares of the Dual Convertible
Preferred Stock. Such determination of Fair Market Value shall be binding and
conclusive on the Corporation and the holders of the Dual Convertible Preferred
Stock. The fees and expenses of such investment banking firm shall be paid by
the Corporation.
(iii) If the Corporation shall redeem shares of Dual Convertible Preferred
Stock pursuant to this paragraph (i), written notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less than 90 days nor
more than 120 days prior to the redemption date, to each holder of record of the
shares of the Dual Convertible Preferred Stock at such holder's address as the
same appears on the stock register of the Corporation. Each such notice shall
state: (A) the redemption date; (B) the number of shares of Dual Convertible
Preferred Stock to be redeemed; (C) the Stated Value Redemption Price or the
Fair Market Value of such holder's shares, as the case may be; (D) that shares
of Dual Convertible Preferred Stock called for redemption may be converted in
accordance with, and subject to the terms of, paragraph (e) hereof at any time
prior to the date fixed for redemption (unless the Corporation shall default in
payment of the Stated Value Redemption Price or the Fair Market Value of such
shares, in which case such right shall not terminate at such date); (E) the
place or places where certificates for such shares are to be surrendered for
payment of the Stated Value Redemption Price or the Fair Market Value of such
shares; and (F) that dividends on the shares to be redeemed will cease to accrue
on such redemption date.
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(iv) Notice having been mailed as aforesaid, from and after the redemption
date (unless default shall be made by the Corporation in providing money for the
payment of the Stated Value Redemption Price or the Fair Market Value of such
shares) dividends on the shares of Dual Convertible Preferred Stock shall cease
to accrue and said shares shall no longer be deemed to be outstanding and shall
have the status of authorized but unissued shares of Preferred Stock,
undesignated as to series, and all rights of the holders thereof as shareholders
of the Corporation (except the right to receive from the Corporation the Stated
Value Redemption Price and any accrued and unpaid dividends or the Fair Market
Value of such shares) shall cease. Upon surrender in accordance with said notice
of any certificates for the shares so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors of the Corporation shall so require and
the notice shall so state), such shares shall be redeemed by the Corporation at
the Stated Value Redemption Price plus any accrued and unpaid dividends thereon
or the Fair Market Value of such shares, as the case may be.
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EXHIBIT D
FLEET FINANCIAL GROUP, INC.
CUMULATIVE PARTICIPATING JUNIOR PREFERRED STOCK
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Cumulative Participating Junior Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 1,500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) The holders of shares of Junior Preferred Stock, in preference to the
holders of Common Stock, par value $1.00 per share (the "Common Stock"), of the
Corporation, and of any other junior stock, but subject to the rights of holders
of any senior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first days of January, April, July and October
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Junior Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Corporation shall at any time after
November 21, 1990 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock), then in each such case the
amount to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Junior
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Junior
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the Record Date for the determination of holders
of shares of Junior Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on
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the shares of Junior Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Junior Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than 50 days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(A) Each share of Junior Preferred Stock shall entitle the holder
thereof to one hundred votes (subject to adjustment as set forth below) on
all matters submitted to a vote of the stockholders of the Corporation
(including, without limitation, the election of directors). In the event
the Corporation shall at any time after November 21, 1990, declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock), then in each such case the number of
votes to which holders of shares of Junior Preferred Stock were entitled to
immediately prior to such event shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Restated Articles of
Incorporation, or by law, the holders of shares of Junior Preferred Stock,
the holders of shares of Common Stock and the holders of any other capital
stock of the Corporation having general voting rights shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on any Junior Preferred Stock shall
be in arrears in an amount equal to the full accrued dividends for six (6)
or more quarterly dividend periods, whether or not consecutive, shall not
have been paid or declared and a sum sufficient for the payment thereof
irrevocably set aside in trust for the holders of all of such shares, the
Board of Directors of the Corporation shall promptly take all necessary
actions to increase the authorized number of directors of the Corporation
by one (1) and the holders of the shares of the Junior Preferred Stock then
outstanding shall be entitled (by series, voting as a single class) to
elect one (1) person director to the Board of Directors of the Corporation
(such right to elect one (1) director being hereinafter sometimes referred
to as the "special voting rights"), each outstanding share having such
right being entitled for such purpose to one vote; PROVIDED, HOWEVER, that
at such time as the arrearage in payment of dividends which gave rise to
the exercise of the special voting rights has been cured with regard to the
Junior Preferred Stock by waiver or payment of all accrued dividends, the
right of the holders of such shares so to vote as provided in this
paragraph (C)(i) of this Section 3 shall cease (subject to renewal from
time to time upon the same terms and conditions) and the term of office of
the person who is at that time a director elected by such holders shall
terminate and the number of directors of the Corporation shall be
automatically reduced by one (1).
(ii) At any time after the special voting rights shall have become
vested in the holders of the shares of the Junior Preferred Stock as
provided in paragraph (C)(i) of this Section 3, the Secretary of the
Corporation, as promptly as possible but in any event within twenty (20)
days after receipt of the written request of the holders of 10% of the
shares of the Junior Preferred Stock then outstanding, addressed to the
Corporation at its principal office, shall call a special meeting of the
holders of the shares of the Junior Preferred Stock for the purpose of
electing such additional director, such meeting to be held at any place as
provided by the Bylaws of the Corporation for meetings of the Corporation's
stockholders, and upon not less than ten (10) nor more than twenty (20)
days notice. If such meeting shall not be so called within twenty (20) days
after receipt of the request by the Secretary of the Corporation, then the
holders of 10% of the shares of the Junior Preferred Stock then outstanding
may, by written notice to the Secretary of the Corporation, designate any
person to call such meeting, and the person so designated may call such
meeting, at any such place as provided above and upon not less than ten
(10) nor more
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than twenty (20) days notice and for that purpose shall have access to the
stockholder record books of the Corporation. No such special meeting of the
holders of the shares of the Junior Preferred Stock and no adjournment
thereof shall be held on a date later than thirty (30) days before the
annual meeting of stockholders of the Corporation. At any meeting so called
or at any annual meeting held at any time when the special voting rights
are in effect, the holders of a majority of the shares of the Junior
Preferred Stock then outstanding, present in person or by proxy, shall be
sufficient to constitute a quorum for the election of such additional
director, and such additional director, together with any and all other
directors who are then members of the Board of Directors, shall constitute
the duly elected directors of the Corporation.
(iii) With respect to a vacancy arising in the directorship referred
to in paragraph (C)(i) of this Section 3 at any time when the special
voting rights are in effect pursuant to paragraph (C)(i) of this Section 3,
upon the written request of the holders of 10% of the shares of the Junior
Preferred Stock then outstanding, addressed to the Corporation at its
principal office, the Secretary of the Corporation shall give notice of a
special meeting of holders of the shares of the Junior Preferred Stock of
the election of a director to fill such vacancy caused by the death,
resignation or other inability to serve as a director elected by such
holders, to be held not less than ten (10) nor more than twenty (20) days
following receipt by the Secretary of the Corporation of such written
request. So long as special voting rights are in effect pursuant to
paragraph (i) of this Section 3(c), any director who shall have been so
elected by the holders of the Junior Preferred Stock may be removed at any
time, either with or without cause, only by the affirmative vote of the
holders of the shares at the time entitled to cast a majority of the votes
entitled to be cast for the election of such director at a special meeting
of such holders called for that purpose, and any vacancy thereby created
may be filled by the vote of such holders.
(D) Except as set forth herein, or as otherwise provided by the
Restated Articles of Incorporation or by law, holders of Junior Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
(E) Holders of Junior Preferred Stock shall be entitled to such notice
of each meeting of stockholders as is furnished to the holders of Common
Stock with respect to such meeting.
Section 4. CERTAIN RESTRICTIONS.
(A) Subject to the provisions of the Restated Articles of
Incorporation, whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in Section
2 are in arrears as of any Quarterly Dividend Payment Date, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Junior Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends
and upon dissolution, liquidation or winding up) to the Junior Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a
parity with the Junior Preferred Stock, except in
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accordance with the terms of the Restated Articles of Incorporation and
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. REACQUIRED SHARES. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Articles of Incorporation, or as otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Preferred Stock unless, prior thereto, the holders of
shares of Junior Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Junior Preferred Liquidation
Preference"). Following the payment of the full amount of the Junior Preferred
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Junior Preferred Stock unless, prior thereto, the holders of shares
of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Junior Preferred
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock) (such number in clause
(ii) immediately above being referred to as the "Adjustment Number"). Following
the payment of the full amount of the Junior Preferred Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Junior
Preferred Stock and Common Stock, respectively, holders of Junior Preferred
Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to one (1) with respect to such Junior Preferred Stock and
Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Junior Preferred Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Junior Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however, that there
are not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time after November 21, 1990,
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation should
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities,
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cash and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged. In the event
the Corporation shall at any time after November 21, 1990 declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange of change of shares of Junior Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. RANKING. The Junior Preferred Stock shall rank junior, as to
dividends and upon liquidation, dissolution or winding up, to (a) the Common
Stock, (b) the Preferred Stock with Cumulative and Adjustable Dividends, $20 par
value, (c) any other class of capital stock of the Corporation unless the terms
of such class shall expressly provide otherwise, and (d), to the extent
permitted by the Restated Articles of Incorporation, all other series of
Preferred Stock issued by the Corporation.
Section 9. NO REDEMPTION. The shares of Junior Preferred Stock shall not
be redeemable.
Section 10. FRACTIONAL SHARES. The Junior Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of shares of Junior Preferred Stock.
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EXHIBIT E
FLEET FINANCIAL GROUP, INC.
ADJUSTABLE RATE PREFERRED STOCK
(a) DESIGNATION. The designation of this class of Preferred Stock shall
be "Preferred Stock with Cumulative and Adjustable Dividends" (hereinafter
called this "Class") and the number of shares constituting this Class is
688,700. Shares of this Class shall have a stated value of $50 per share.
(b) DIVIDEND RATE. (1) The dividend rate on the shares of this Class shall
be $.8875 per share for the period (the "Initial Dividend Period") from the date
of their original issue to and including March 31, 1988. Dividend rates on the
shares of this Class shall be for each quarterly dividend period (hereinafter
referred to as a "Quarterly Dividend Period"; and the Initial Dividend Period or
any Quarterly Dividend Period being hereinafter individually referred to as a
"Dividend Period" and collectively referred to as "Dividend Periods")
thereafter, which Quarterly Dividend Periods shall commence on January 1, April
1, July 1, and October 1, in each year and shall end on and include the day next
preceding the first day of the next Quarterly Dividend Period, at a rate per
annum of the stated value thereof of 2.25% below the Applicable Rate (as defined
in paragraph (2) of this Section (b)) in respect of such Quarterly Dividend
Period. Anything to the contrary herein notwithstanding, the dividend rate for
any Quarterly Dividend Period shall in no event be less than 6% or greater than
12% per annum. Such dividends shall be cumulative from the date of original
issue of such shares and shall be payable, when and as declared by the Board of
Directors, on January 1, April 1, July 1, and October 1, of each year,
commencing on April 1, 1988. Each such dividend shall be paid to the holders of
record of shares of this Class as they appear on the stock register of the
Corporation on such record date, not exceeding 30 days preceding the payment
date thereof, as shall be fixed by the Board of Directors. Dividends on account
of arrears for any past Dividend Periods may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of record on
such date, not exceeding 45 days preceding the payment date thereof, as may be
fixed by the Board of Directors.
(2) Except as provided below in this paragraph, the "Applicable Rate" for
any Quarterly Dividend Period shall be the highest of the Treasury Bill Rate,
then Ten Year Constant Maturity Rate or the Twenty Year Constant Maturity Rate
(each as hereinafter defined) for such Dividend Period. In the event that the
Corporation determines in good faith that for any reason one or more of such
rates cannot be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Quarterly Dividend Period shall be the higher of
whichever of such rates can be so determined. In the event that the Corporation
determines in good faith that none of such rates can be determined for any
Quarterly Dividend Period, then the Applicable Rate in effect for the preceding
Dividend Period shall be continued for such Dividend Period.
(3) Except as provided below in this paragraph, the "Treasury Bill Rate"
for each Quarterly Dividend Period shall be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the last ten calendar days of the March, June, September or
December, as the case may be, prior to the Quarterly Dividend Period for which
the dividend rate on this Class is being determined. In the event that the
Federal Reserve Board does not publish such a weekly per annum market discount
rate during such Calendar Period, then the Treasury Bill Rate for such Dividend
Period shall be the arithmetic average of the two most recent weekly per annum
market discount rates (or the one weekly per annum market discount rate, if only
one such rate shall be published during the relevant Calendar Period as provided
below) for three-month U.S. Treasury bills, as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. In the event that a per annum market
discount rate for three-month U.S. Treasury bills shall not be published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury Bill Rate
for such Dividend Period shall be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate shall be published during the relevant
Calendar Period as provided below) for all of the U.S. Treasury bills then
having maturities of not
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less than 80 nor more than 100 days, as published during such Calendar Period by
the Federal Reserve Board or, if the Federal Reserve Board shall not publish
such rates, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the Corporation determines
in good faith that for any reason no such U.S. Treasury Bill Rates are published
as provided above during such Calendar Period, then the Treasury Bill Rate for
such Dividend Period shall be the arithmetic average of the per annum market
discount rates based upon the closing bids during such Calendar Period for each
of the issues of marketable noninterest-bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date of each such
quotation, as quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation. In the event that the Corporation determines in
good faith that for any reason the Corporation cannot determine the Treasury
Bill Rate for any Quarterly Dividend Period as provided above in this paragraph,
the Treasury Bill Rate for such Dividend Period shall be the arithmetic average
of the per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable interest-bearing U.S.
Treasury securities with a maturity of not less than 80 nor more than 100 days
from the date of each such quotation, as quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation.
(4) Except as provided in this paragraph, the "Ten Year Constant Maturity
Rate" for each Quarterly Dividend Period shall be the arithmetic average of the
two most recent weekly per annum Ten Year Average Yields (or the one weekly per
annum Ten Year Average Yield, if only one such Yield shall be published during
the relevant Calendar Period as provided below), as published weekly by the
Federal Reserve Board during the Calendar Period immediately prior to the last
ten calendar days of the March, June, September or December, as the case may be
prior to the Quarterly Dividend Period for which the dividend rate on this
Series is being determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Ten Year Average Yield during such Calendar
Period, then the Ten Year Constant Maturity Rate for such Dividend Period shall
be the arithmetic average of the two most recent weekly per annum Ten Year
Average Yields (or the one weekly per annum Ten Year Average Yield, if only one
such Yield shall be published during the relevant Calendar Period as provided
below), as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the Corporation.
In the event that a per annum Ten Year Average Yield shall not be published by
the Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, then the Ten Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic average
of the two most recent weekly per annum average yields to maturity (or the one
weekly average yield to maturity, if only one such yield shall be published
during the relevant Calendar Period as provided below) for all of the actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) then having maturities of not less than eight nor more than
twelve years, as published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board shall not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or agency selected by
the Corporation. In the event that the Corporation determines in good faith that
for any reason the Corporation cannot determine the Ten Year Constant Maturity
Rate for any Quarterly Dividend Period as provided above in this paragraph, then
the Ten Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the per annum average yields to maturity based upon the
closing bids during such Calendar Period for each of the issues of the actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor more than
twelve years from the date of each such quotation, as quoted daily for each
business day in New York City (or less frequently if daily quotations shall not
be generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
(5) Except as provided below in the paragraph, the "Twenty Year Constant
Maturity Rate" for each Quarterly dividend Period shall be the arithmetic
average of the two most recent weekly per annum Twenty Year Average Yields (or
the one weekly per annum Twenty Year Average Yield, if only one such Yield shall
be published during the relevant Calendar Period as provided below), as
published weekly by the Federal
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Reserve Board during the Calendar Period immediately prior to the last ten
calendar days of the March, June, September or December, as the case may be,
prior to the Quarterly Dividend Period for which the dividend rate on this
Series is being determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Twenty Year Average Yield during such Calendar
Period, then the Twenty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the two most recent weekly per annum Twenty
Year Average Yields (or the one weekly per annum Twenty Year Average Yield, if
only one such Yield shall be published during the relevant Calendar Period as
provided below), as published weekly during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Twenty Year Average Yield shall not
be published by the Federal Reserve Board or by any Federal Reserve Bank or by
any U.S. Government department or agency during such Calendar Period, then the
Twenty Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the two most recent weekly per annum average yields to
maturity (or the one weekly average yield to maturity, if only one such yield
shall be published during the relevant Calendar Period as provided below) for
all of the actively trade marketable U.S. Treasury fixed interest securities
(other than Special Securities) then having maturities of not less than eighteen
nor more than twenty-two years, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board shall not publish such
yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the Corporation determines
in good faith that for any reason the Corporation cannot determine the Twenty
Year Constant Maturity Rate for any Quarterly Dividend Period as provided above
in this paragraph, then the Twenty Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than eighteen nor more than twenty-two years from the date of each such
quotation, as quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
(6) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Twenty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percentage point.
(7) The dividend rate with respect to each Quarterly Dividend Period will
be calculated as promptly as practicable by the Corporation according to the
appropriate method described herein. The mathematical accuracy of each such
calculation will be confirmed in writing by independent accountants of
recognized standing. The Corporation will cause each dividend rate to be
published in a newspaper of general circulation in New York City prior to the
commencement of the new Quarterly Dividend Period to which it applies and will
cause notice of such dividend rate to be enclosed with the dividend payment
checks next mailed to the holders of shares of this Series.
(8) For purposes of this Section (b), the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at the
option of the holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the holder and are
priced to reflect such tax benefits or which were originally issued at a
deep or substantial discount.
(iii) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of 20 years).
(9) No full dividends shall be declared or paid or set apart for payment on
Preferred Stock of any series ranking, as to dividends, on a parity with or
junior to this Class for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on this Class for all dividend
payment periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full, as aforesaid, upon
the shares of this Class and any other Preferred Stock ranking on a parity as to
dividends with this Class, all dividends declared upon shares of this Class and
any other Preferred Stock ranking on a parity as to dividends
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with this Class shall be declared pro rata so that the amount of dividends
declared per share on this Class and such other Preferred Stock shall in all
cases bear to each other the same ratio that accrued dividends per share on the
shares of this Class and such other Preferred Stock bear to each other. Holders
of shares of this Class shall not be entitled to any dividend, whether payable
in cash, property or stocks, in excess of full cumulative dividends, as herein
provided, on this Class. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments on this Class which
may be in arrears.
(10) So long as any shares of this Class are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior to
this Class as to dividends and upon liquidation and other than as provided in
paragraph (9) of this Section (b)) shall be declared or paid or set aside for
payment or other distribution declared or made upon the Common Stock or upon any
other stock ranking junior to or on a parity with this Class as to dividends or
upon liquidation, nor shall any Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Class as to dividends or
upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation ranking junior to this
Class as to dividends and upon liquidation) unless, in each case, the full
cumulative dividends on all outstanding shares of this Class shall have been
paid for all past dividend payment periods.
(11) Dividends payable on each share of this Class for each full Quarterly
Dividend Period shall be computed by dividing the dividend rate for such
Quarterly Dividend Period by four and applying such rate against the stated
value, per share of this Class. Dividends payable on this Class for any period
less than a full Quarterly Dividend Period shall be computed on the basis of a
360-day year consisting of 30-day months.
(c) REDEMPTION. (1) The shares of this Class shall not be redeemable prior
to April 1, 1988. On and after April 1, 1988, the Corporation, at its option,
may redeem shares of this Class, as a whole or in part, at any time or from time
to time, at a redemption price (i) in the case of any redemption on a redemption
date occurring on or after April 1, 1988, and prior to April 1, 1993, of $51.50
per share, and (ii) in the case of any redemption on a redemption date occurring
on or after April 1, 1993, of $50.00 per share, plus, in each case, accrued and
unpaid dividends thereon to the date fixed for redemption.
(2) In the event that fewer than all the outstanding shares of this Class
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board of Directors and the shares to be redeemed shall be determined by lot
or pro rata as may be determined by the Board of Directors or by any other
method as may be determined by the Board of Directors in its sole discretion to
be equitable.
(3) In the event the Corporation shall redeem shares of this Class, notice
of such redemption shall be given by first class mail, postage prepaid, mailed
not less than 30 nor more than 60 days prior to the redemption date, to each
holder of record of the shares to be redeemed, at such holder's address as the
same appears on the stock register of the Corporation. Each such notice shall
state: (i) the redemption date; (ii) the number of shares of this Class to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(4) Notice having been mailed as aforesaid, from and after the redemption
date (unless default shall be made by the Corporation in providing money for the
payment of the redemption price) dividends on the shares of this Class so called
for redemption shall cease to accrue, and said shares shall no longer be deemed
to be outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the redemption price
aforesaid. In case fewer than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
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(5) Any shares of this Class which shall at any time have been redeemed
shall, after such redemption, have the status of authorized but unissued shares
of Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors.
(6) Notwithstanding the foregoing provisions of this Section (c), if any
dividends on this Class are in arrears, no shares of this Class shall be
redeemed unless all outstanding shares of this Class are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any shares
of this Class; provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of this Class pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
this Class.
(d) CONVERSION OR EXCHANGE. The holders of shares of this Class shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(e) VOTING. The shares of this Class shall not have any voting powers
either general or special, except that
(1) Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the consent of the holders of at least 66% of all
of the shares of this Class at the time outstanding, given in person or by
proxy, either in writing by a vote at a meeting called for the purpose at which
the holders of shares of this Class shall vote together as a separate class,
shall be necessary for authorizing, effecting or validating the amendment,
alteration or repeal of any of the provisions of this Restated Certificate of
Incorporation or of any certificate amendatory thereof or supplemental thereto
(including any Certificate of Designation, Preferences and Rights or any similar
document relating to any series of Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of this Class;
(2) Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the consent of the holders of at least 66% of all
of the shares of this Class and all other series of Preferred Stock ranking on a
parity with shares of this Class, either as to dividends or upon liquidation, at
the time outstanding, given in person or by proxy, either in writing or by a
vote at a meeting called for the purpose at which the holders of shares of this
Class and such other series of Preferred Stock shall vote together as a single
class without regard to series, shall be necessary for authorizing, effecting or
validating the creation, authorization or issue of any shares of any class of
stock of the Corporation ranking prior to the shares of this Class as to
dividends or upon liquidation, or the reclassification or any authorized stock
of the Corporation into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the right to
purchase any such prior shares;
(3) If at the time of any annual meeting of stockholders for the election
of directors a default in preference dividends on the Preferred Stock shall
exist, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two, and the holders of the Preferred Stock of
all series shall have the right at such meeting, voting together as a single
class without regard to series, to the exclusion of the holders of Common Stock,
to elect two directors of the Corporation to fill such newly created
directorships. Such right shall continue until there are no dividends in arrears
upon the Preferred Stock. Each director elected by the holders of shares of
Preferred Stock (herein called a "Preferred Director")shall continue to serve as
such director for the full term for which he shall have been elected,
notwithstanding that prior to the end of such term a default in preference
dividends shall cease to exist. Any Preferred Director may be removed by, and
shall not be removed except by, the vote of the holders of record of the
outstanding shares of Preferred Stock, voting together as a single class without
regard to series, at a meeting of the stockholders, or of the holders of shares
of Preferred Stock, called for that purpose. So long as a default in any
preference dividends on the Preferred Stock, called for that purpose. So long as
a default in any preference dividends on the Preferred Stock shall exist, (A)
any vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (B)) by an instrument in writing signed by the
remaining Preferred Director and filed with the Corporation and (B) in the case
of the removal of any Preferred Director, the vacancy may be filled by the vote
of the holders of the outstanding shares of Preferred Stock, voting together as
a single class without regard to series, at the same meeting at which such
removal shall be voted. Each director appointed as aforesaid by the remaining
Preferred Director shall be deemed, for all purposes hereof, to be a
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<PAGE> 54
Preferred Director. Whenever the term of office of the Preferred Directors shall
end and a default in preference dividends shall no longer exist, the number of
directors constituting the Board of Directors of the Corporation shall be
reduced by two. For the purposes hereof, a "default in preference dividends" on
the Preferred Stock shall be deemed to exist whenever the amount of accrued
dividends upon any series of the Preferred Stock shall be equivalent to six full
quarter-yearly dividends or more, and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all accrued dividends on all
shares of Preferred Stock of each and every series then outstanding shall have
been paid to the end of the last preceding quarterly dividend period.
(f) LIQUIDATION RIGHTS. (1) Upon the dissolution, liquidation or winding
up of the Corporation, the holders of the shares of this Class shall be entitled
to receive out of the assets of the Corporation, before any payment or
distribution shall be made on the Common Stock or on any other class of stock
ranking junior to the Preferred Stock upon liquidation, the amount of $50.00 per
share, plus a sum equal to all dividends (whether or not earned or declared) on
such shares accrued and unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all the property or business
of the Corporation, nor the merger or consolidation of the Corporation into or
with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purpose of this
Section (f).
(3) After the payment to the holders of the shares of this Class of the
full preferential amounts provided for in this Section (f), the holders of this
Class as such shall have no right or claim to any of the remaining assets of the
Corporation.
(4) In the event the assets of the Corporation available for distribution
to the holders of shares of this Class upon any dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are entitled
pursuant to paragraph 1 of this Section (f), no such distribution shall be made
on account of any shares of any other class or series of Preferred Stock ranking
on a parity with the shares of this Class upon such dissolution, liquidation or
winding up unless proportionate distributive amounts shall be paid on account of
the shares of this Class, ratably, in proportion to the full distributable
amounts for which holders of all such parity shares are respectively entitled
upon such dissolution, liquidation or winding up.
(5) Upon the dissolution, liquidation or winding up of the Corporation, the
holders of the shares of this Class then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders all amounts to which such holders are entitled pursuant to
paragraph (1) of this Section (f) before any payment shall be made to the
holders of any class of capital stock of the Corporation ranking junior upon
liquidation of this Class.
(g) RANKING OF CLASSES OF STOCK. Any stock of any class or classes of the
Corporation shall be deemed to rank:
(1) prior to the shares of this Class, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of this Class;
(2) on a parity with shares of this Class, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
be different from those of this Class, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of this Class; and
(3) junior to shares of this Class, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of shares of
this Class shall be entitled to receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of such class or classes.
E-6
<PAGE> 55
EXHIBIT F
FLEET FINANCIAL GROUP, INC.
9.30% CUMULATIVE PREFERRED STOCK
(a) DESIGNATION. The designation of this class of Preferred Stock shall
be "9.30% Cumulative Preferred Stock" (hereinafter called the "Preferred
Shares") and the number of shares constituting this class shall be 575,000. Such
Preferred Shares shall have a stated value of $250 per share.
(b) DIVIDENDS.
(1) Dividend periods ("Dividend Periods") shall commence on January
16, April 16, July 16 and October 16 in each year and shall end on and
include the day next preceding the first day of the next Dividend Period.
The dividend rate on the Preferred Shares from November 3, 1992 to and
including January 15, 1993 (the "Initial Dividend Period") and for each
Dividend Period thereafter will be 9.30% per annum of the stated value
thereof. Such dividends shall be cumulative from November 3, 1992 and shall
be payable when and as declared by the Board of Directors, on January 15th,
April 15th, July 15th and October 15th of each year, commencing January 15,
1993. Each such dividend shall be paid to the holders of record of
Preferred Shares as they appear on the stock register of the Corporation on
such record date, not exceeding 30 days preceding the payment date thereof,
as shall be fixed by the Board of Directors. Dividends on account of
arrears for any past Dividend Periods may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board of Directors.
(2) No full dividends shall be declared or paid or set apart for
payment on Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to the Preferred Shares for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for such
payment on the Preferred Shares for all dividend payment periods
terminating on or prior to the date of payment of such full cumulative
dividends. When dividends are not paid in full, as aforesaid, upon the
Preferred Shares and any other Preferred Stock ranking on a parity as to
dividends with the Preferred Shares, all dividends declared upon shares of
the Preferred Shares and any other Preferred Stock ranking on a parity as
to dividends with the Preferred Shares shall be declared pro rata so that
the amount of dividends declared per share on the Preferred Shares and such
other Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the Preferred Shares and such other
Preferred Stock bear to each other. Holders of the Preferred Shares shall
not be entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the
Preferred Shares. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments on the Preferred
Shares which may be in arrears.
(3) So long as any of the Preferred Shares are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to the Preferred Shares as to dividends and upon liquidation
and other than as provided in paragraph (2) of this Section (b)) shall be
declared or paid or set aside for payment or other distribution declared or
made upon the Common Stock or upon any other stock ranking junior to or on
a parity with the Preferred Shares as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with the Preferred Shares as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the Preferred Shares as to dividends and upon liquidation)
unless, in each case, the full cumulative dividends on all outstanding
Preferred Shares shall have been paid for all past dividend payment
periods.
(4) Dividends payable on each Preferred Share for each Dividend Period
shall be computed by annualizing the applicable dividend rate and dividing
by four. Dividends payable on the Preferred Shares
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<PAGE> 56
for any period less than a full Dividend Period shall be computed on the
basis of a 360-day year consisting of twelve 30-day months.
(c) REDEMPTION.
(1) The Preferred Shares shall not be redeemable prior to October 15,
1997. On and after October 15, 1997, the Corporation, at its option, may
redeem the Preferred Shares, as a whole or in part, at any time or from
time to time at a redemption price equal to $250 per share plus accrued and
unpaid dividends thereon to the date fixed for redemption.
(2) In the event that fewer than all the outstanding Preferred Shares
are to be redeemed, the number of shares to be redeemed shall be determined
by the Board of Directors and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board of Directors of the
Corporation or by any duly authorized committee thereof or by any other
method as may be determined by the Board of Directors of the Corporation or
by any duly authorized committee thereof in its sole discretion to be
equitable, provided that such method satisfies any applicable requirements
of any securities exchange on which the Preferred Shares are listed.
(3) In the event the Corporation shall redeem Preferred Shares, notice
of such redemption shall be given by first class mail, postage prepaid,
mailed not less that 30 nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed, at such holder's
address as the same appears on the stock register of the Corporation. Each
such notice shall state: (i) the redemption date; (ii) the number of
Preferred Shares to be redeemed and, if fewer than all the shares held by
such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
Preferred Shares so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation or any duly authorized committee thereof shall
so require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(5) Any of the Preferred Shares which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of Directors of the Corporation or any duly authorized committee
thereof.
(6) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on the Preferred Shares are in arrears, no Preferred Shares
shall be redeemed unless all outstanding Preferred Shares of this class are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any Preferred Shares; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Shares
pursuant to a purchase or exchange offer made on the same terms to holders
of all outstanding Preferred Shares.
(d) CONVERSION OR EXCHANGE. The holders of the Preferred Shares shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
F-2
<PAGE> 57
(e) VOTING. The Preferred Shares shall not have any voting powers, either
general or special, except that
(i) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares at the time outstanding, given
in person or by proxy, either in writing or by a vote at a meeting called
for the purpose at which the holders of Preferred Shares shall vote
together as a separate class, shall be necessary for authorizing, effecting
or validating the amendment, alteration or repeal of any of the provisions
of the Restated Certificate of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document relating to any
series of Preferred Stock) which would adversely affect the preferences,
rights, powers or privileges of the Preferred Shares;
(ii) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares and all other series of
Preferred Stock ranking on a party with the Preferred Shares, either as to
a parity with the Preferred Shares, either as to dividends or upon
liquidation, at the time outstanding, given in person or by proxy, either
in writing or by a vote at a meeting called for the purpose at which the
holders of Preferred Shares and such other series of Preferred Stock shall
vote together as a single class without regard to series, shall be
necessary for authorizing, effecting or validating the creation,
authorization or issue of any shares of any class of stock of the
Corporation ranking prior to the Preferred Shares as to dividends or upon
liquidation, or the reclassification of any authorized stock of the
Corporation into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the
right to purchase any such prior shares;
(iii) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends (as defined below)
on the Preferred Stock shall exist, the number of directors constituting
the Board of Directors of the Corporation shall be increased by two, and
the holders of the Preferred Stock of all series shall have the right at
such meeting, voting together as a single class without regard to series,
to the exclusion of the holders of common stock, to elect two directors of
the Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Preferred Stock.
Each director elected by the holders of shares of Preferred Stock (herein
called a "Preferred Director") shall continue to serve as such director for
the full term for which he or she shall have been elected, notwithstanding
that prior to the end of such term a default in preference dividends shall
cease to exist. Any Preferred Director may be removed by, and shall not be
removed except by, the vote of the holders of record of the outstanding
shares of Preferred Stock, voting together as a single class without regard
to series, at a meeting of the stockholders, or of the holders of shares of
Preferred Stock, called for the purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist, (a) any vacancy in
the office of a Preferred Director may be filled (except as provided in the
following clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in case of the
removal of any Preferred Director, the vacancy may be filled by the vote of
the holders of the outstanding shares of Preferred Stock, voting together
as a single class without regard to series, at the same meeting at which
such removal shall be voted. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof, to
be a Preferred Director. Whenever the term of office of the Preferred
Directors shall end and a default in preference dividends shall no longer
exist, the number of directors constituting the Board of Directors of the
Corporation shall be reduced by two. For the purposes hereof, a "default in
preference dividends" on the Preferred Stock shall be deemed to exist
whenever the amount of accrued dividends upon any series of Preferred Stock
shall be equivalent to six full quarter-yearly dividends or more, and,
having so occurred, such default shall be deemed to exist thereafter until,
but only until, all accrued dividends on all shares of Preferred Stock of
each and every series then outstanding shall have been paid to the end of
the last preceding quarterly dividend period.
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<PAGE> 58
(f) LIQUIDATION RIGHTS.
(1) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares shall be
entitled to receive, before any payment or distribution shall be made on
the Common Stock or on any other class of stock ranking junior to the
Preferred Shares upon liquidation, the amount of $250 per share, plus a sum
equal to all dividends (whether or not earned or declared) on such shares
accrued and unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all of the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purpose of this Section (f).
(3) After the payment to the holders of the Preferred Shares of the
full preferential amounts provided for in this Section (f), the holders of
the Preferred Shares as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of the Preferred Shares upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (l) of this Section (f), no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the Preferred Shares
upon such dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the Preferred Shares,
ratably, in proportion to the full distributable amounts for which holders
of all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(5) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders all amounts to
which such holders are entitled pursuant to paragraph (1) of this Section
(f) before any payment shall be made to the holders of any class of capital
stock of the Corporation ranking junior upon liquidation to the Preferred
Shares.
(g) RANKING OF CLASSES OF STOCK. For purposes of this resolution, any
stock of any class or classes of the Corporation shall be deemed to rank:
(1) prior to the Preferred Shares, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of the Preferred
Shares;
(2) on a parity with the Preferred Shares, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund provisions,
if any, be different from those of the Preferred Shares, if the holders of
such stock shall be entitled to the receipt of dividends or of amounts
distributable upon voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without preference or
priority, one over the other, as between the holders of such stock and the
holders of the Preferred Shares; and
(3) junior to the Preferred Shares, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of the
Preferred Shares shall be entitled to receipt of dividends or of amounts
distributable upon voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
F-4
<PAGE> 59
EXHIBIT G
FLEET FINANCIAL GROUP, INC.
9.35% CUMULATIVE PREFERRED STOCK
(a) DESIGNATION. The designation of this class of Preferred Stock shall
be "9.35% Cumulative Preferred Stock" (hereinafter called the "Preferred
Shares") and the number of shares constituting this class shall be 500,000. Such
Preferred Shares shall have a stated value of $250 per share.
(b) DIVIDENDS.
(1) Dividend periods ("Dividend Periods") shall commence on January
15, April 15, July 15 and October 15 in each year and shall end on and
include the day next preceding the first day of the next Dividend Period.
The dividend rate on the Preferred Shares from January 26, 1995 to and
including April 14, 1995 (the "Initial Dividend Period") and for each
Dividend Period thereafter will be 9.35% per annum of the stated value
thereof. Such dividends shall be cumulative from January 26, 1995 and shall
be payable when and as declared by the Board of Directors, on January 15,
April 15, July 15 and October 15 of each year, commencing April 15, 1995.
Each such dividend shall be paid to the holders of record of Preferred
Shares as they appear on the stock register of the Corporation on such
record date, not exceeding 30 days preceding the payment date thereof, as
shall be fixed by the Board of Directors. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of record on
such date, not exceeding 45 days preceding the payment date thereof, as may
be fixed by the Board of Directors.
(2) No full dividends shall be declared or paid or set apart for
payment on Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to the Preferred Shares for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for such
payment on the Preferred Shares for all dividend payment periods
terminating on or prior to the date of payment of such full cumulative
dividends. When dividends are not paid in full, as aforesaid, upon the
Preferred Shares and any other Preferred Stock ranking on a parity as to
dividends with the Preferred Shares, all dividends declared upon shares of
the Preferred Shares and any other Preferred Stock ranking on a parity as
to dividends with the Preferred Shares shall be declared pro rata so that
the amount of dividends declared per share on the Preferred Shares and such
other Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the Preferred Shares and such other
Preferred Stock bear to each other. Holders of the Preferred Shares shall
not be entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the
Preferred Shares. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments on the Preferred
Shares which may be in arrears.
(3) So long as any of the Preferred Shares are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to the Preferred Shares as to dividends and upon liquidation
and other than as provided in paragraph (2) of this Section (b)) shall be
declared or paid or set aside for payment or other distribution declared or
made upon the Common Stock or upon any other stock ranking junior to or on
a parity with the Preferred Shares as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with the Preferred Shares as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation ranking
junior to the Preferred Shares as to dividends and upon liquidation)
unless, in each case, the full cumulative dividends on all outstanding
Preferred Shares shall have been paid for all past dividend payment
periods.
(4) Dividends payable on each Preferred Share for each Dividend Period
shall be computed by annualizing the applicable dividend rate and dividing
by four. Dividends payable on the Preferred Shares
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<PAGE> 60
for any period less than a full Dividend Period shall be computed on the
basis of a 360-day year consisting of twelve 30-day months.
(c) REDEMPTION.
(1) The Preferred Shares shall not be redeemable prior to January 15,
2000. On and after January 15, 2000, the Corporation, at its option, may
redeem the Preferred Shares, as a whole or in part, at any time or from
time to time at a redemption price equal to $250 per share plus accrued and
unpaid dividends thereon to the date fixed for redemption. Notwithstanding
the foregoing, to the extent applicable law requires, the Preferred Shares
may not be redeemed by the Corporation without the prior approval of the
Board of Governors of the Federal Reserve System.
(2) In the event that fewer than all the outstanding Preferred Shares
are to be redeemed, the number of shares to be redeemed shall be determined
by the Board of Directors and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board of Directors of the
Corporation or by any duly authorized committee thereof or by any other
method as may be determined by the Board of Directors of the Corporation or
by any duly authorized committee thereof in its sole discretion to be
equitable, provided that such method satisfies any applicable requirements
of any securities exchange on which the Preferred Shares are listed.
(3) In the event the Corporation shall redeem Preferred Shares, notice
of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the redemption date,
to each holder of record of the shares to be redeemed, at such holder's
address as the same appears on the stock register of the Corporation. Each
such notice shall state: (i) the redemption date; (ii) the number of
Preferred Shares to be redeemed and, if fewer than all the shares held by
such holder are to be redeemed, the number of such shares to be redeemed
from such holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
Preferred Shares so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation or any duly authorized committee thereof shall
so require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(5) Any of the Preferred Shares which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of Directors of the Corporation or any duly authorized committee
thereof.
(6) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on the Preferred Shares are in arrears, no Preferred Shares
shall be redeemed unless all outstanding Preferred Shares of this class are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any Preferred Shares; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Shares
pursuant to a purchase or exchange offer made on the same terms to holders
of all outstanding Preferred Shares.
(d) CONVERSION OR EXCHANGE. The holders of the Preferred Shares shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
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<PAGE> 61
(e) VOTING. The Preferred Shares shall not have any voting powers, either
general or special, except that
(i) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares at the time outstanding, given
in person or by proxy, either in writing or by a vote at a meeting called
for the purpose at which the holders of Preferred Shares shall vote
together as a separate class, shall be necessary for authorizing, effecting
or validating the amendment, alteration or repeal of any of the provisions
of the Restated Certificate of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document relating to any
series of Preferred Stock) which would adversely affect the preferences,
rights, powers or privileges of the Preferred Shares;
(ii) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares and all other series of
Preferred Stock ranking on a parity with the Preferred Shares, either as to
dividends or upon liquidation, at the time outstanding, given in person or
by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of Preferred Shares and such other series of
Preferred Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting or validating the
creation, authorization or issue of any shares of any class of stock of the
Corporation ranking prior to the Preferred Shares as to dividends or upon
liquidation, or the reclassification of any authorized stock of the
Corporation into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the
right to purchase any such prior shares;
(iii) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends (as defined below)
on the Preferred Stock shall exist, the number of directors constituting
the Board of Directors of the Corporation shall be increased by two, and
the holders of the Preferred Stock of all series shall have the right at
such meeting, voting together as a single class without regard to series,
to the exclusion of the holders of common stock, to elect two directors of
the Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Preferred Stock.
Each director elected by the holders of shares of Preferred Stock (herein
called a "Preferred Director") shall continue to serve as such director for
the full term for which he or she shall have been elected, notwithstanding
that prior to the end of such term a default in preference dividends shall
cease to exist. Any Preferred Director may be removed by, and shall not be
removed except by, the vote of the holders of record of the outstanding
shares of Preferred Stock, voting together as a single class without regard
to series, at a meeting of the stockholders, or of the holders of shares of
Preferred Stock, called for the purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist, (a) any vacancy in
the office of a Preferred Director may be filled (except as provided in the
following clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in the case of
the removal of any Preferred Director, the vacancy may be filled by the
vote of the holders of the outstanding shares of Preferred Stock, voting
together as a single class without regard to series, at the same meeting at
which such removal shall be voted. Each director appointed as aforesaid by
the remaining Preferred Director shall be deemed, for all purposes hereof,
to be a Preferred Director. Whenever the term of office of the Preferred
Directors shall end and a default in preference dividends shall no longer
exist, the number of directors constituting the Board of Directors of the
Corporation shall be reduced by two. For the purposes hereof, a "default in
preference dividends" on the Preferred Stock shall be deemed to exist
whenever the amount of accrued dividends upon any series of Preferred Stock
shall be equivalent to six full quarter-yearly dividends or more, and,
having so occurred, such default shall be deemed to exist thereafter until,
but only until, all accrued dividends on all shares of Preferred Stock of
each and every series then outstanding shall have been paid to the end of
the last preceding quarterly dividend period.
G-3
<PAGE> 62
(f) LIQUIDATION RIGHTS.
(1) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares shall be
entitled to receive, before any payment or distribution shall be made on
the Common Stock or on any other class of stock ranking junior to the
Preferred Shares upon liquidation, the amount of $250 per share, plus a sum
equal to all dividends (whether or not earned or declared) on such shares
accrued and unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all of the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purpose of this Section (f).
(3) After the payment to the holders of the Preferred Shares of the
full preferential amounts provided for in this Section (f), the holders of
the Preferred Shares as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of the Preferred Shares upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to paragraph (1) of this Section (f), no such
distribution shall be made on account of any shares of any other class or
series of Preferred Stock ranking on a parity with the Preferred Shares
upon such dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the Preferred Shares,
ratably, in proportion to the full distributable amounts for which holders
of all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(5) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders all amounts to
which such holders are entitled pursuant to paragraph (1) of this Section
(f) before any payment shall be made to the holders of any class of capital
stock of the Corporation ranking junior upon liquidation to the Preferred
Shares.
(g) RANKING OF CLASSES OF STOCK. For purposes of this resolution, any
stock of any class or classes of the Corporation shall be deemed to rank:
(1) prior to the Preferred Shares, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of the Preferred
Shares;
(2) on a parity with the Preferred Shares, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund provisions,
if any, be different from those of the Preferred Shares, if the holders of
such stock shall be entitled to the receipt of dividends or of amounts
distributable upon voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, as the case may be, in proportion to their
respective dividend rates or liquidation prices, without preference or
priority, one over the other, as between the holders of such stock and the
holders of the Preferred Shares; and
(3) junior to the Preferred Shares, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of the
Preferred Shares shall be entitled to receipt of dividends or of amounts
distributable upon voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes."
G-4
<PAGE> 1
EXHIBIT 4(d)
WARRANT AGREEMENT
Warrant Agreement, dated as of , 1995 between FLEET FINANCIAL
GROUP, INC., A Rhode Island corporation (the "Company"), and Fleet National Bank
(the "Warrant Agent").
WHEREAS, as of the date hereof, Shawmut National Corporation ("Shawmut")
has outstanding warrants (the "Shawmut Warrants") to purchase up to an aggregate
of 1,329,115 shares of its Common Stock, par value $.01 per share ("Shawmut
Common Stock"), each Shawmut Warrant entitling the holder thereof to purchase
one share of Shawmut Common Stock at an exercise price of $22.11; and
WHEREAS, as of the effective time (the "Effective Time") of the merger (the
"Merger") of Shawmut into the Company, each Shawmut Warrant automatically
converted into a Common Stock Subscription Warrants, as hereinafter described
(the "Warrants"), to purchase up to an aggregate of 1,185,836 fully paid and
nonassessable shares of the Common Stock, par value $1.00 per share of the
Company ("Common Stock", and the shares of Common Stock issuable upon exercise
of the Warrants being referred to herein as the "Warrant Shares"), each Warrant
entitling the holder thereof to purchase one share of Common Stock at an
Exercise Price (defined in Section 9 hereof) of $24.78 per Warrant, subject to
adjustment as hereinafter provided; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of the Warrants and the other matters as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company and the registered holders of the Warrants
(the "Holders"), the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the provisions
hereinafter set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment. As used herein, the term "Warrant Agent" shall mean the
Warrant Agent and any successor appointed hereunder.
SECTION 2. Form and Countersignature of Warrants.
2.1 Form of Warrant. The text of the Warrant, the subscription form (the
"Subscription Form"), and form of assignment shall be substantially as set forth
in Exhibit A attached hereto. The Warrants shall be executed on behalf of the
Company by one or more authorized officers. The signature of any such officers
on the Warrants may be made manually or by facsimile.
2.2 Countersignature of Warrants. The Warrants shall be countersigned
manually or by facsimile by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. Warrants may be countersigned by the Warrant
Agent and may be issued or delivered by the Warrant Agent, notwithstanding that
the persons whose manual or facsimile signatures appear thereon as proper
officers of the Company shall have ceased to be such officers at the time of
such countersignature, issuance or delivery. Warrants shall be dated as of the
date of issuance or countersignature thereof by the Warrant Agent either upon
initial issuance or upon exchange, substitution or transfer.
SECTION 3. Issuance and Registration of Warrants.
3.1 Initial Issuance of Warrants. The Warrant Agent shall issue the
Warrants upon receipt of, and in accordance with, a statement from an authorized
representative of the Company as contemplated by Section 15.10 hereof specifying
the identity of, and number of Warrants to be issued to, each person or entity
to be issued Warrants.
<PAGE> 2
3.2 Registration. The Warrants shall be numbered and shall be registered
in a warrant register maintained by the Warrant Agent as they are issued. The
Company and the Warrant Agent may deem and treat the registered holder of a
Warrant Certificate as the absolute owner thereof (notwithstanding any notation
of ownership or other writing thereon made by anyone), for the purpose of any
exercise or conversion thereof and any distribution to the holder thereof and
for all other purposes and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary. The Company shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person.
SECTION 4. Transfer and Exchange of Warrants.
Transfer of Warrants. The Warrants shall be transferable only on the books
of the Warrant Agent maintained at the principal office of the Warrant Agent
upon delivery thereof duly endorsed by the Holder or by his duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer, which endorsement shall be guaranteed by an
eligible guarantor institution which is a member of a signature guarantee
program satisfactory to the Warrant Agent (an "Eligible Institution"). Warrants
may be transferred only in whole, so as to allow the Holder of each Warrant to
purchase one full share of Common Stock. In all cases of transfer by an
attorney-in-fact, the original power of attorney, duly approved, or a copy
thereof, duly certified, in such form and with such other evidence of authority
as the Warrant Agent shall request, shall be deposited and remain with the
Warrant Agent. In case of transfer by executors, administrators, guardians or
other legal representatives, duly authenticated evidence of their authority
shall be produced, in such form and with such other evidence of authority as the
Warrant Agent shall request, and may be required to be deposited and remain with
the Warrant Agent in its discretion. Upon any such registration of transfer, the
Warrant Agent shall countersign and deliver a new Warrant or Warrants to the
person entitled thereto.
4.2 Exchange of Warrant Certificates. Each Warrant certificate may be
exchanged upon surrender at the principal office of the Warrant Agent for
another certificate or certificates entitling the Holder thereof to purchase a
like aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitle such Holder to purchase. Any Holder desiring to
exchange a Warrant certificate or certificates shall make such request in
writing delivered to the Warrant Agent, and shall surrender, properly endorsed,
the certificate or certificates to be so exchanged. Thereupon, the Warrant Agent
shall countersign and deliver to the Holder a new Warrant certificate or
certificates, as the case may be, as so requested, in the name of such Holder.
No fractional Warrant certificates shall be issued and no new Warrant
certificate entitling the Holder thereof to purchase fractional shares will be
issued.
SECTION 5. Term of Warrants; Exercise of Warrants.
5.1 Term of Warrants. Subject to the terms of this Agreement, each Holder
shall have the right, which may be exercised commencing at the opening of
business on January 18, 1995 until 5:00 p.m., New York time, on January 18, 1996
(the "Expiration Date"), to purchase from the Company the number of fully paid
and nonassessable Warrant Shares which the Holder may at the time be entitled to
purchase on exercise of such Warrants.
5.2 Exercise of Warrants. A Warrant may be exercised upon surrender to
the Warrant Agent at its principal office of the certificate or certificates
evidencing the Warrants to be exercised, together with the Subscription Form
duly completed and signed, which signature shall be guaranteed by an Eligible
Institution, and upon payment to the Warrant Agent for the account of the
Company of the Exercise Price (as defined in Section 9 hereof and subject to
adjustment in accordance with the provisions of Section 10 hereof) for the
number of Warrant Shares in respect of which such Warrants are then exercised.
Payment of the aggregate Exercise Price shall be made by certified or official
bank check.
Subject to Section 6 hereof, upon the surrender of Warrants and payment of
the Exercise Price as aforesaid, the Warrant Agent shall cause to be issued and
delivered as soon as practicable to or upon the written order of the Holder and
in such name or names as the Holder may designate, a certificate or certificates
for the number of full Warrant Shares so purchased upon the exercise of such
Warrants. No certificate for fractional Warrant Shares, or cash in lieu thereof,
will be issued. If permitted by applicable law,
<PAGE> 3
such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the receipt by the Warrant
Agent of such Warrants and payment of the Exercise Price, as aforesaid;
provided, however, that if at the date of surrender of such Warrants and payment
of such Exercise Price, the transfer books for the shares of Common Stock
purchasable upon the exercise of such Warrants shall be closed, the certificates
for the shares in respect of which such Warrants are then exercised shall be
issuable as of the date on which such books shall be opened, and until such date
the Company shall be under no duty to deliver any certificate for such shares
and the holder of the Warrant shall not be deemed to be the holder of shares of
Common Stock issuable upon exercise of such Warrant until such time as such
books shall be opened; provided, further, however, that such transfer books,
unless other wise required by law or by applicable rule of any national
securities exchange, shall not be closed at any one time for a period longer
than twenty (20) days. The rights of purchase represented by the Warrants shall
be exercisable, at the election of the Holders thereof, either in full or from
time to time in part, and in the event that a certificate evidencing Warrants is
exercised in respect of less than all of the Warrant Shares purchasable on such
exercise at any time prior to the date of expiration of the Warrants, a new
certificate evidencing the remaining Warrant or Warrants will be issued to the
Holder thereof, and the Warrant Agent is hereby authorized to countersign and
deliver the required new Warrant certificate or certificates pursuant to the
provisions of this Section and Section 2 hereof.
5.3 Compliance with Government Regulations. The Company covenants that if
any shares of Common Stock required to be reserved for purposes of exercise of
Warrants require, under any federal securities law or applicable governing rule
or regulation of any national securities exchange, registration with or approval
of any governmental authority, or listing on any such national securities
exchange before such shares may be issued upon exercise, the Company will in
good faith prior to the issuance of such shares endeavor to cause such shares to
be duly registered, approved or listed on the relevant national securities
exchange, as the case may be; provided, however, that in no event shall such
shares of Common Stock be issued, and the Company is hereby authorized to
suspend the exercise of all Warrants, for the period during which such
registration, approval or listing is required but not in effect. The Company
covenants that it will use reasonable efforts to obtain any required approvals
or registration under state "blue sky" securities laws for the issuance of the
Warrant Shares; provided, however, that Warrants may not be exercised by, or
Warrant Shares issued to, any Holder in any state where such exercise or
issuance would be unlawful.
SECTION 6. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue or delivery of any Warrants or certificates for Warrant Shares in a
name other than that of the Holder of such Warrants, and the Company shall not
be required to issue or deliver such Warrants or certificates for Warrant Shares
or proceeds unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
SECTION 7. Mutilated or Missing Warrants. In case any of the certificates
evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, and the Warrant Agent shall countersign and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant certificate, or in lieu of and in substitution for the Warrant
certificate lost, stolen or destroyed, a new Warrant certificate of like tenor
and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such loss, theft
or destruction of such Warrant and an indemnity or bond, if requested, also
satisfactory to them. An applicant for such a substitute Warrant certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 8. Reservation of Warrant Shares; Purchase and Cancellation of
Warrants.
Reservation of Warrant Shares. There have been reserved, and the Company
shall at all times keep reserved, out of its authorized Common Stock, a number
of shares of Common Stock sufficient to provide for the exercise of the rights
of purchase represented by the outstanding Warrants. The transfer agent for the
<PAGE> 4
Common Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby authorized to requisition from time to
time from the Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply the Transfer Agent and any such subsequent
transfer agent with duly executed stock certificates for such purposes. The
Company will furnish the Transfer Agent and any such subsequent transfer agent a
copy of all notices of adjustments delivered by the Company to the Warrant Agent
hereunder.
8.2 Purchase of Warrants by the Company. The Company shall have the
right, except as limited by law, other agreements or herein, to purchase or
otherwise acquire Warrants at such times, in such manner and for such
consideration as it may deem appropriate.
8.3 Cancellation of Warrants. In the event the Company shall purchase or
otherwise acquire Warrants, the same shall thereupon be delivered to the Warrant
Agent and be cancelled by it and retired. The Warrant Agent shall cancel any
Warrant surrendered for exchange, substitution, transfer or exercise in whole or
in part and such cancelled Warrant Certificate shall be disposed of by the
Warrant Agent in a manner satisfactory to the Company.
SECTION 9. Exercise Price. The price per share at which a Warrant Share
shall be purchasable upon exercise of a Warrant (the "Exercise Price") shall be
$24.78, subject to adjustment as provided in Section 10 hereof.
SECTION 10. Adjustments. The Exercise Price and the number and kind of
securities subject to purchase upon the exercise of each Warrant shall be
subject to adjustment form time to time upon the happening of certain events, as
hereinafter set forth.
10.1 Adjustments. (a) In the event that, on or after the Distribution
Date and prior to the Expiration Date, the Company shall (i) declare a dividend
or make a distribution on its shares of Common Stock payable in shares of Common
Stock, (ii) subdivide or reclassify the outstanding Common Stock into a greater
number of shares of Common Stock, or (iii) combine or reclassify the outstanding
Common Stock into a smaller number of shares of Common Stock, the Exercise Price
in effect and number of Warrant Shares which are to be issued upon exercise of a
Warrant at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, shall be
proportionately adjusted so that the holder of any Warrant exercised after such
time shall be entitled to receive the aggregate number of shares of Common Stock
which, if such Warrant had been exercised immediately prior to such date, he
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In the event, on or after the Distribution Date and prior to the
Expiration Date, of any merger or consolidation of the Company with or into, or
all of the outstanding Common Stock is acquired by, any other person or company,
the Holder of Warrants shall receive upon such exercise of the Warrants and
payment of the Exercise Price the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such merger or
consolidation, by a Holder of the number of shares of Common Stock of the
Company into which such Warrants so exercised might have been exercised
immediately prior to such merger or consolidation, subject to adjustments which,
for events subsequent to the effective date of such merger or consolidation,
shall be on terms as nearly equivalent as practicable to the adjustments
provided above. The above provisions shall similarly apply to successive mergers
and consolidations.
(c) The Company may make such reduction in the Exercise Price, in addition
to those required by clauses (a) or (b) of this Section 10.1, as it considers to
be advisable in order that any event treated for federal income tax purposes as
a dividend of stock or stock rights shall not be taxable to the recipients.
<PAGE> 5
(d) Notwithstanding anything to the contrary contained in this Section
10.1, no adjustment in the Exercise Price shall be required unless such
adjustments would require an increase or decrease of at least one percent in
such price; provided, however, that any adjustments which by reason of this
Section 10.1 (d) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
10.1 shall be made to the nearest cent.
(e) In any case in which this Section 10 shall require that any adjustment
in the Exercise Price be made effective as of immediately after a record date
for a specified event, the Company may elect to defer until the occurrence of
the event the issuing to the Holder of any Warrant exercised after that record
date of the shares of Common Stock and other capital stock of the Company, if
any, issuable upon the exercise over and above the shares of Common Stock and
other capital stock of the Company, if any, issuable upon the exercise on the
basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(f) Notwithstanding anything to the contrary contained in this Section
10.1, no adjustment to the Exercise Price or other terms of the Warrants need be
made if Holders are to participate in any transaction on a basis, and with
notice, that the Board of Directors of the Company determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction.
10.2 Notice of Adjustment. Whenever the Exercise Price is adjusted, as
herein provided, the Company shall cause the Warrant Agent promptly to give
notice to the Holders as provided in Section 18 hereof of such adjustment or
adjustments and shall deliver to the Warrant Agent a certificate setting forth
the Exercise Price after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment. The Warrant Agent shall be entitled to rely on
such certificate and shall be under no duty or responsibility with respect to
any such certificate, except to exhibit the same, from time to time, to any
Holder desiring an inspection thereof during reasonable business hours. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holders to determine whether any facts exist which may require any adjustment of
the Exercise Price or other stock or property purchasable on the exercise
thereof, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making such adjustment.
10.3 Statement on Warrants. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares or other property purchasable
upon the exercise of the Warrants or other amendments to or corrections of this
Agreement, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
SECTION 11. No Fractional Interests. No Warrant entitling the Holder to
purchase fractional interests in Warrant Shares and no fractional Warrant
Shares, or cash or other consideration in lieu thereof, will be issued.
SECTION 12. No Rights as Stockholders; Notice to Holders. Nothing
contained in this Agreement or in any of the Warrants shall be construed as
conferring upon the Holders or their transferees the right to vote or to receive
dividends or to consent or to receive notice as stockholders in respect of any
meeting of stockholders for the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company. If,
however, at any time during which the Warrants are exercisable and prior to
their exercise, any of the following events shall occur:
(a) the Company shall declare any dividend or distribution payable in any
securities upon all its shares of Common Stock (other than any dividend or
distribution of securities pursuant to the Rights Agreement dated as of November
21, 1990, as thereafter amended, between the Company and Fleet National Bank, as
Rights Agent, or pursuant to any similar agreement) to all holders of its shares
of Common Stock; or
(b) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation, merger, sale or transfer of all or
substantially all of its assets) shall be proposed;
<PAGE> 6
(c) then in any one or more of said events, the Company shall give notice
in writing of such event to the Warrant Agent and the Warrant Agent shall give
notice to the Holders as provided in Section 18 hereof, such giving of notice to
the Warrant Agent to be completed at least 10 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend or distribution or for the
determination of stockholders entitled to vote on such proposed action. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to mail or receive such notice or any defect therein
or in the mailing thereof shall not affect the validity of any action taken in
connection with such dividend or distribution or action.
SECTION 13. Disposition of Proceeds on Exercise of Warrants; Inspection of
Warrant Agreement. The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all monies
received by the Warrant Agent for the purchase of the Warrant Shares through the
exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices given
or received hereunder available for inspection by the Holders during normal
business hours at its principal office. The Company shall supply the Warrant
Agent from time to time with such number of copies of this Agreement as the
Warrant Agent may request.
SECTION 14. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to substantially all of the business of the Warrant Agent, shall be
the successor to the Warrant Agent hereunder without the execution or filing of
any paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor Warrant
Agent under the provisions of Section 16 hereof. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement any of the Warrants shall have been countersigned but not delivered,
any such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrants so countersigned; and in case
at that time any of the Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrants either in the name
of the predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in any such cases such Warrants shall have the full force provided in the
Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignatures under its prior name and
deliver such Warrants so countersigned; and in case at that time any of the
Warrants shall not have been countersigned, the Warrant Agent may countersign
such Warrants either in its prior name or in its changed name; and in all such
cases such Warrants shall have the full force provided in the Warrants and in
this Agreement.
SECTION 15. Concerning the Warrant Agent. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the Holders, by their acceptance
of Warrants, shall be bound.
15.1 Correctness of Statements. The statements contained herein and in
the Warrants shall be taken as statements of the Company and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken by it. The Warrant Agent assumes no
responsibility with respect to the distribution of the Warrants except as
otherwise provided herein.
15.2 Breach of Covenants. The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants of the Company
contained in this Agreement or in the Warrant.
15.3 Reliance on Counsel. The Warrant Agent may consult at any time with
legal counsel satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any Holder in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
<PAGE> 7
15.4 Proof of Actions Taken. Whenever in the performance of its duties
under this Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed conclusively to
be proved and established by a certificate signed by an officer of the Company
and delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
15.5 Compensation and Indemnification. The Company agrees to pay the
Warrant Agent reasonable compensation for all services rendered by the Warrant
Agent in the performance of its duties under this Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and other charges
of any kind and nature reasonably incurred by the Warrant Agent in the
performance of its duties under this Agreement, and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done or omitted by the Warrant
Agent in the performance of its duties under this Agreement except as a result
of the Warrant Agent's gross negligence or bad faith. In connection with such
indemnification, the Company shall be entitled to conduct any litigation and
shall only be required to pay the reasonable costs and fees of one counsel
selected by the Company. The Warrant Agent will cooperate in the defense of any
such action and will not settle such action without the consent of the Company.
15.6 Other Transactions in Securities of Company. The Warrant Agent and
any stockholder, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be interested
or contract with or lend money to the Company or otherwise act as fully and
freely as though the Warrant Agent was not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any legal entity including, without limitation,
acting as a lender to the Company or an affiliate thereof.
15.7 Liability of Warrant Agent. The Warrant Agent shall act hereunder
solely as the agent of the Company and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for its
own gross negligence or bad faith. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Warrant Agent be liable for special,
indirect or consequential loss or damage whatsoever (including, but not limited
to, lost profits) even if the Warrant Agent has been advised of the likelihood
of such loss or damage and regardless of the form of action.
15.8 Reliance on Documents. The Warrant Agent will not incur any liability
or responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument reasonably believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
15.9 Validity of Agreement. The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity and execution of any Warrant (except its
countersignature thereof); nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Warrant Shares (or other stock) to be issued pursuant to this
Agreement or any Warrant, or as to whether any Warrant Shares (or other stock)
will, when issued, be validly issued, fully paid and nonassessable, or as to the
Exercise Price or the number or amount of Warrant Shares or other securities or
other property issuable upon exercise of any Warrant.
15.10 Instructions from Company. The Warrant Agent is hereby authorized
and directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the President, any Vice
Chairman of the Board, or any Executive, Senior or other Vice President of the
Company or any other employee of the Company expressly authorized in writing by
any of such persons as having the authority to deliver instructions hereunder,
and to apply to such officers or employees for advice or instructions
<PAGE> 8
in connection with its duties, and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officers or employees.
SECTION 16. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company 30
days' notice in writing. The Warrant Agent may be removed by like notice to the
Warrant Agent from the Company. If the Warrant Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then any Holder may apply to any
court of competent jurisdiction located in Boston, Massachusetts for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to the Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. Any successor
Warrant Agent, whether appointed by the Company or such a court, shall be a bank
or trust company, in good standing, incorporated under the laws of the United
States of America or any state thereof and having at the time of its appointment
as Warrant Agent a combined capital and surplus of at least $5,000,000. After
appointment, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former warrant agent shall
deliver and transfer to the successor warrant agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to file any notice provided for
in this Section 16, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the warrant agent or the
appointment of the successor warrant agent, as the case may be. In the event of
such resignation or removal, the successor warrant agent shall mail, by first
class mail, postage prepaid, to each Holder, written notice of such removal or
resignation and the name and address of such successor warrant agent.
SECTION 17. Identity of Transfer Agent. Forthwith upon the appointment of
any subsequent transfer agent for the Common Stock, or any other shares of the
Company's capital stock issuable upon exercise of the Warrant, the Company will
file with the Warrant Agent a statement setting forth the name and address of
such subsequent transfer agent.
SECTION 18. Notices. Any notice pursuant to this Agreement by the Company
or by any Holder to the Warrant Agent, or by the Warrant Agent or by any Holder
to the Company, shall be in writing and shall be delivered in person, by
overnight courier, or by facsimile transmission (with hard copy to follow
promptly by first class mail or overnight courier), or mailed first class,
postage prepaid (a) to the Company at its offices at 50 Kennedy Plaza,
Providence, Rhode Island 02903, Attention: Secretary; or (b) to the Warrant
Agent at Fleet National Bank, 111 Westminster Street, Providence, Rhode Island
02903, Attn: Shareholder Services. Each party hereto may from time to time
change the address or facsimile numbers to which notices to it are to be
delivered or mailed hereunder by notice to the other party.
Any notice required to be mailed pursuant to this Agreement by the Company
or the Warrant Agent to the Holders shall be in writing and shall be mailed
first class, postage prepaid, or otherwise delivered, to such Holders at their
respective addresses on the books of the Warrant Agent. Any other notices which
the Company or the Warrant Agent may wish to provide to the Holder may be made
in such manner (including by publication in a newspaper of national circulation)
as the Company or the Warrant Agent, as the case may be, shall elect. Any notice
requested by any other person may be dispatched in the discretion of the Warrant
Agent, but at no expense to the Warrant Agent or the Company.
SECTION 19. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement without the approval of
any Holder in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable, which shall not adversely affect in any material manner
the interest of the Holders. The Company and the Warrant Agent may from time to
time supplement or amend this Agreement in any other respect with the written
consent of
<PAGE> 9
the Holders of not less than a majority of the Warrants then outstanding;
provided, however, that no change in the number or nature of the securities
purchasable upon the exercise of any Warrant, or increase in the Exercise Price
of any Warrant, or acceleration of the Expiration Date of any Warrant, shall be
made without the written consent of the Holder of such Warrant, other than such
changes as are specifically prescribed by this Agreement as originally executed
or are made in compliance with applicable law.
SECTION 20. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
SECTION 21. Applicable Law. This Agreement and each Warrant issued
hereunder shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be performed within such
State, without giving effect to principles of conflicts of laws. The parties
consent to the exclusive jurisdiction of the state and federal courts located in
Boston, Massachusetts, Providence, Rhode Island or New York, New York, in all
cases arising out of this Agreement or the subject matter thereof, and to the
service of process of such courts (and will not initiate or maintain an action
in any other venue without the consent of both parties hereto). Any action
brought by any person (other than the Company and the Warrant Agent) arising
under or relating to this Agreement and the Warrants shall be brought only in
the state and federal courts located in Boston, Massachusetts except that any
such action brought solely against the Warrant Agent shall be brought only in
the state and federal courts located in Providence, Rhode Island.
SECTION 22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent, and the Holders any legal or equitable right, remedy or claim
under this Agreement; this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent and the Holders of the Warrants.
SECTION 23. Counterparts. This Agreement may be executed in counterparts
and by facsimile and each of such counterparts and facsimile copies shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
SECTION 24. 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.
SECTION 25. Captions. The captions of the Sections and subsections of
this Agreement have been inserted for convenience only and shall have no
substantive effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
FLEET FINANCIAL GROUP, INC.
By:
------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By:
------------------------------------
Name:
Title:
<PAGE> 10
EXHIBIT A
FORM OF WARRANT CERTIFICATE
(OBVERSE)
EXERCISABLE ONLY ON OR AFTER JANUARY 18, 1995 AND ON OR BEFORE 5:00 P.M.
NEW YORK CITY TIME ON JANUARY 18, 1996
NUMBER
NYW: ________________ WARRANTS: ___________________
SEE REVERSE SIDE
FOR DEFINITIONS
COMMON STOCK
SUBSCRIPTION WARRANTS CUSIP
Incorporated Under the Laws of The State of Rhode Island
FLEET FINANCIAL GROUP, INC.
This certifies that FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Common Stock Subscription Warrants (the "Warrants") specified above. Each
Warrant initially entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this Warrant Certificate and the Warrant
Agreement (as hereinafter defined), one fully paid and nonassessable share of
Common Stock, $1.00 par value (the "Common Stock"), of Fleet Financial Group,
Inc., a Rhode Island corporation (the "Company"), at any time between January
18, 1995 and 5:00 p.m. (New York City time) on January 18, 1996 (the "Expiration
Date"), upon surrender of this Warrant Certificate with the Subscription Form on
the reverse hereof duly executed, at the principal office of Fleet National
Bank, as Warrant Agent, or its successor (the "Warrant Agent"), accompanied by
payment of $24.78 per Warrant (the "Exercise Price") by certified or official
bank check made payable to the Warrant Agent for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated as of
, 1995, by and between the Company and the Warrant Agent. A copy of
the Warrant Agreement may be obtained by the Registered Holder upon written
request to the Company.
Upon the occurrence of certain events provided for in the Warrant
Agreement, the Exercise Price and the number and kind of securities subject to
purchase upon the exercise of each Warrant represented hereby are subject to
adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock, or cash or other
consideration in lieu thereof, will be issued. In the case of the exercise of
less than all of the Warrants represented hereby, the Company shall execute a
new Warrant Certificate, which the Warrant Agent shall countersign and deliver,
for the balance of such Warrants.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the principal office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates entitling such Registered Holder to
purchase a like aggregate number of shares of Common Stock as this Warrant
Certificate entitles such Registered Holder to purchase. A Registered Holder
desiring to exchange this Warrant Certificate shall make such request in writing
delivered to the Warrant Agent, and shall surrender,
<PAGE> 11
properly endorsed, this Warrant Certificate to be so exchanged. Thereupon, the
Warrant Agent shall countersign and deliver to the Registered Holder a new
Warrant Certificate or Warrant Certificates as so requested, in the name of such
Registered Holder, subject to the limitations provided in the Warrant Agreement.
No fractional Warrant Certificate shall be issued and no new Warrant Certificate
entitling the Registered Holder thereof to purchase fractional shares will be
issued.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided in the Warrant Agreement.
The Company and the Warrant Agent may deem and treat the Registered Holder
as the absolute owner hereof (notwithstanding any notation of ownership or other
writing hereon made by anyone) for all purposes and shall not be affected by any
notice to the contrary.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted thereon.
FLEET FINANCIAL GROUP, INC.
By:
------------------------------------
Secretary
By:
------------------------------------
Chief Executive Officer and
President
COUNTERSIGNED:
FLEET NATIONAL BANK, as Warrant Agent
By:
------------------------------------
Authorized Officer
2
<PAGE> 12
(REVERSE)
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT -- ______________________ Custodian ____________________
(Cust) (Minor)
Act ___________
(State)
Additional abbreviations may also be used though not in the above list.
3
<PAGE> 13
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and tenders herewith payment of
the purchase price in full in the form of a certified or official bank check in
the amount of $
Please issue a certificate or certificates for such shares of Common Stock
in the name of:
Name
----------------------------------
(Please Print Name,
Address and Social Security
or Taxpayer Identification
Number)
Name
--------------------------------------
Name
--------------------------------------
Name
--------------------------------------
Name
--------------------------------------
And, if said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder.
--------------------------------------
Signature:
Note: The above signature must correspond exactly with the name on the face of
this Warrant Certificate or with the name of assignee appearing in the
assignment form below.
- ----------------------------------------
Signature Guarantee Signatures should be guaranteed by an
eligible guarantor institution which
is a member of a signature guarantee
program satisfactory to the Warrant
Agent.
4
<PAGE> 14
ASSIGNMENT
(TO BE EXECUTED ONLY UPON ASSIGNMENT OF WARRANT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
[ ]
- --------------------------------------------------------------------------------
(Name and Address of Assignee Must Be Printed or Typewritten) the within Warrant
Certificate, hereby irrevocably constituting and appointing ,
Attorney to transfer said Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated:
- ------------------------------------------------------ Signature of Registered
Holder
Note: The above signature must correspond exactly with the name on the face of
this Warrant Certificate.
<TABLE>
<S> <C>
- -----------------------------------------------
Signature Guarantee Signatures should be guaranteed by an
eligible guarantor institution which is a
member of a signature guarantee program
satisfactory to the Warrant Agent.
</TABLE>
Upon the exercise of the Warrants represented by this Warrant Certificate, the
holder will receive shares of Common Stock which will, to the extent provided by
the provisions of the Rights Agreement between the Company and Fleet National
Bank (the "Rights Agent"), dated as of November 21, 1990 (the "Rights
Agreement"), entitle the holder to certain Rights. The terms of the Rights
Agreement are hereby incorporated herein by reference and a copy of the Rights
Agreement is on file at the principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by the
certificate representing shares of Common Stock. The Company or the Rights Agent
will mail to the holder of this certificate a copy of the Rights Agreement, as
in effect on the date of mailing, without charge promptly after receipt of a
written request therefor. Except as may be otherwise provided in the Rights
Agreement, any shares of Common Stock issued prior to the Distribution Date (as
defined in the Rights Agreement) will be issued with Rights. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person, an Adverse Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
5
<PAGE> 1
EXHIBIT 4(F)
INCORPORATED UNDER THE LAWS OF THE STATE OF RHODE ISLAND
FLEET FINANCIAL GROUP, INC.
PREFERRED STOCK
WITH CUMULATIVE AND ADJUSTABLE DIVIDENDS
This is to certify that is the owner
of fully paid and non-assessable shares of the Preferred Stock with
Cumulative and Adjustable Dividends of Fleet Financial Group, Inc., transferable
on the books of the Corporation in person or by attorney upon surrender of this
Certificate duly endorsed or assigned. This Certificate and the Shares
represented thereby are subject to the laws of the State of Rhode Island and to
the provisions of the Restated Articles of Incorporation and the Bylaws of the
Corporation as from time to time amended.
This Certificate is not valid unless countersigned by the Transfer Agent.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
DATED:
<TABLE>
<S> <C>
- --------------------------------------------- ---------------------------------------------
Chief Executive Officer and President Secretary
</TABLE>
COUNTERSIGNED:
FLEET NATIONAL BANK
By
------------------------------------------------------
Authorized Officer
- --------------------------------------------------------------------------------
<PAGE> 2
[REVERSE]
FLEET FINANCIAL GROUP, INC.
The Corporation is authorized to issue Preferred Stock and Common Stock.
The Preferred Stock may be divided into and issued in one or more series, having
such preferences, voting powers, qualifications and special and relative rights
as may be established by the Board of Directors from time to time. The
Corporation will furnish to the holder hereof upon written request and without
charge a copy of the full text, as set forth in the Corporation's Restated
Articles of Incorporation, of the preferences, voting powers, qualifications and
special and relative rights of the shares of each class (and each series of a
class, if any) of its capital stock authorized to be issued as of the date of
such request. Requests for such copies should be directed to the office of the
Secretary of the Corporation or to the Transfer Agent named on the face of this
Certificate.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT -- _________________________ Custodian _____________________
(Cust) (Minor)
under Uniform Gift to Minors Act ________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list
For value received, __________________________________ hereby sell,
assign and transfer unto _____________________ (please insert social security or
other identifying number of assignee)
________________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
_________ Shares of the capital stock represented by the within Certificate, and
do hereby irrevocably constitute and appoint ___________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ___________________________
_______________________________________________________
Notice: The signature to this Assignment must correspond with the name as
written upon the face of the certificate in every particular, without alteration
or enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 4(g)
CUSIP Number ___________ Shares _______
INCORPORATED UNDER THE LAWS OF THE STATE OF RHODE ISLAND
FLEET FINANCIAL GROUP, INC.
9.30% CUMULATIVE PREFERRED STOCK NO PAR VALUE
This Certifies that Fleet National Bank, as Depository and Registrar is the
registered holder of _______ Shares of the Capital Stock of FLEET FINANCIAL
GROUP, INC. Fully Paid and Non-Assessable, transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of this
Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _______ day of , .
<TABLE>
<S> <C>
_____________________________________ ________________________________
Chief Executive Officer and President Secretary
</TABLE>
[SEAL]
________________________________________________________________________________
[REVERSE]
FLEET FINANCIAL GROUP, INC.
The Corporation is authorized to issue Preferred Stock and Common Stock.
The Preferred Stock may be divided into and issued in one or more series, having
such preferences, voting powers, qualifications and special and relative rights
as may be established by the Board of Directors from time to time. The
Corporation will furnish to the holder hereof upon written request and without
charge a copy of the full text, as set forth in the Corporation's Restated
Articles of Incorporation, of the preferences, voting powers, qualifications and
special and relative rights of the shares of each class (and each series of a
class, if any) of its capital stock authorized to be issued as of the date of
such request. Requests for such copies should be directed to the office of the
Secretary of the Corporation or to the Transfer Agent named on the face of this
Certificate.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in
common
<TABLE>
<S> <C> <C>
UNIF GIFT MIN ACT -- _____________________________ Custodian _____________
(Cust) (Minor)
under Uniform Gift to Minors Act_____________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list
For value received, _____________________ hereby sell, assign and transfer
unto ______________________ (please insert social security or other identifying
number of assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
<PAGE> 2
___________________ Shares of the capital stock represented by the within
Certificate, and do hereby irrevocably constitute and appoint ___________
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.
Dated _______________________________
------------------------------------------------------
Notice: The signature to this Assignment must correspond with the name as
written upon the face of the certificate in every particular, without alteration
or enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 4(h)
CUSIP Number __________ Shares _______
INCORPORATED UNDER THE LAWS OF THE STATE OF RHODE ISLAND
FLEET FINANCIAL GROUP, INC.
9.35% CUMULATIVE PREFERRED STOCK NO PAR VALUE
This Certifies that Fleet National Bank, as Depository and Registrar is the
registered holder of Shares of the Capital Stock of FLEET FINANCIAL
GROUP, INC. Fully Paid and Non-Assessable transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of this
Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this day of , 19 .
- ------------------------------------- --------------------------------------
Chief Executive Officer and President Secretary
[SEAL]
- --------------------------------------------------------------------------------
<PAGE> 2
[REVERSE]
FLEET FINANCIAL GROUP, INC.
The Corporation is authorized to issue Preferred Stock and Common Stock.
The Preferred Stock may be divided into and issued in one or more series, having
such preferences, voting powers, qualifications and special and relative rights
as may be established by the Board of Directors from time to time. The
Corporation will furnish to the holder hereof upon written request and without
charge a copy of the full text, as set forth in the Corporation's Restated
Articles of Incorporation, of the preferences, voting powers, qualifications and
special and relative rights of the shares of each class (and each series of a
class, if any) of its capital stock authorized to be issued as of the date of
such request. Requests for such copies should be directed to the office of the
Secretary of the Corporation or to the Transfer Agent named on the face of this
Certificate.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C>
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT -- _______________________ Custodian ________________________
(Cust) (Minor)
under Uniform Gift to Minors Act _________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list
For value received,__________________ hereby sell, assign and transfer unto
__________ (please insert social security or other identifying number of
assignee)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
____________ Shares of the capital stock represented by the within Certificate,
and do hereby irrevocably constitute and appoint _____________________________
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ________________________
------------------------------------------------------
Notice: The signature to this Assignment must correspond with the name as
written upon the face of the certificate in every particular, without alteration
or enlargement, or any change whatever.
<PAGE> 1
EXHIBIT 4(I)
FLEET FINANCIAL GROUP, INC.
FLEET NATIONAL BANK, AS DEPOSITARY
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
DEPOSIT AGREEMENT
DATED AS OF , 1995
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TABLE OF CONTENTS
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ARTICLE I
Definitions...........................................................................
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1. Form and Transfer of Receipts.........................................
SECTION 2.2. Deposit of Stock; Execution and Delivery of Receipts in Respect
Thereof...............................................................
SECTION 2.3. Registration of Transfer of Receipts..................................
SECTION 2.4. Split-ups and Combinations of Receipts; Surrender of Receipts and
Withdrawal of Stock...................................................
SECTION 2.5. Limitations on Execution and Delivery, Transfer, Surrender and
Exchange of Receipts..................................................
SECTION 2.6. Lost Receipts, etc....................................................
SECTION 2.7. Cancellation and Destruction of Surrendered Receipts..................
SECTION 2.8. Redemption of Stock...................................................
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1. Filing Proofs, Certificates and Other Information.....................
SECTION 3.2. Payment of Taxes or Other Governmental Charges........................
SECTION 3.3. Warranty as to Stock..................................................
SECTION 3.4. Warranty as to Receipts...............................................
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.1. Cash Distributions....................................................
SECTION 4.2. Distributions Other than Cash, Rights, Preferences or Privileges......
SECTION 4.3. Subscription Rights, Preferences or Privileges........................
SECTION 4.4. Notice of Dividends, etc.; Fixing Record Date for Holders of
Receipts..............................................................
SECTION 4.5. Voting Rights.........................................................
SECTION 4.6. Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc................................................
SECTION 4.7. Delivery of Reports...................................................
SECTION 4.8. List of Receipt Holders...............................................
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY
SECTION 5.1. Maintenance of Offices, Agencies and Transfer Books by the Depositary;
Registrar.............................................................
SECTION 5.2. Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company.....................
SECTION 5.3. Obligation of the Depositary, the Depositary's Agents, the Registrar
and
the Company...........................................................
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SECTION 5.4. Resignation and Removal of the & Depositary; Appointment of Successor
Depositary............................................................
SECTION 5.5. Corporate Notices and Reports.........................................
SECTION 5.6. Indemnification by the Company........................................
SECTION 5.7. Charges and Expenses..................................................
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1. Amendment.............................................................
SECTION 6.2. Termination...........................................................
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Counterparts..........................................................
SECTION 7.2. Exclusive Benefit of Parties..........................................
SECTION 7.3. Invalidity of Provisions..............................................
SECTION 7.4. Notices...............................................................
SECTION 7.5. Depositary's Agents...................................................
SECTION 7.6. Holders of Receipts Are Parties.......................................
SECTION 7.7. GOVERNING LAW.........................................................
SECTION 7.8. Inspection of Deposit Agreement.......................................
SECTION 7.9. Headings..............................................................
FORM OF DEPOSITARY SHARES
Form of Face of Receipt...............................................................
Form of Reverse of Receipt............................................................
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DEPOSIT AGREEMENT
DEPOSIT AGREEMENT, dated as of , 1995, among FLEET FINANCIAL
GROUP, INC., a Rhode Island corporation, (the "Company"), FLEET NATIONAL BANK, a
national banking association (the "Depositary"), and the holders from time to
time of the Receipts described herein.
WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of shares of the Company's 9.30% Cumulative Preferred
Stock with the Depositary for the purposes set forth in this Deposit Agreement
and for the issuance hereunder of Receipts evidencing Depositary Shares in
respect of the Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the promises contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall, for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement:
"Company" shall mean Fleet Financial Group, Inc., a Rhode Island
corporation, and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean Fleet National Bank, and any successor as
Depositary hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
one-tenth of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 7.5.
"Depositary's Office" shall mean the principal office of the Depositary, at
which at any particular time its depositary receipt business shall be
administered.
"Preferred Stock" means any stock of any class or series of the Company
which has a preference over Common Stock in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not mandatorily redeemable or repayable
by the Company or redeemable or repayable at the option of the holder of such
stock.
"Receipt" shall mean one of the Depositary Receipts, substantially in the
form set forth as Exhibit A hereto, issued hereunder, whether in definitive or
temporary form and evidencing the number of Depositary Shares held of record by
the record holder of such Depositary Shares.
"record holder" or "holder" as applied to a Receipt shall mean the person
in whose name a Receipt is registered on the books of the Depositary maintained
for such purpose.
"Registrar" shall mean the Depositary or such other bank or trust company
which shall be appointed to register ownership and transfers of Receipts as
herein provided.
"Restated Articles" shall mean the Company's Restated Articles of
Incorporation, as amended.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's 9.30% Cumulative Preferred
Stock, $250 stated value per share.
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ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1. Form and Transfer of Receipts. Definitive Receipts shall be
engraved or printed or lithographed on steel-engraved borders, with appropriate
insertions, modifications and omissions, as hereinafter provided. Pending the
preparation of definitive Receipts, the Depositary, upon the written order of
the Company or any holder of Stock, as the case may be, delivered in compliance
with Section 2.2, shall execute and deliver temporary Receipts which are
printed, lithographed, typewritten, mimeographed or otherwise substantially of
the tenor of the definitive Receipts in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the persons executing such Receipts may determine, as evidenced by their
execution of such Receipts. If temporary Receipts are issued, the Company and
the Depositary will cause definitive Receipts to be prepared without
unreasonable delay. After the preparation of definitive Receipts, the temporary
Receipts shall be exchangeable for definitive Receipts upon surrender of the
temporary Receipts at an office described in the penultimate paragraph of
Section 2.2, without charge to the holder. Upon surrender for cancellation of
any one or more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of Depositary
Shares as represented by the surrendered temporary Receipt or Receipts. Such
exchange shall be made at the Company's expense and without any charge therefor.
Until so exchanged, the temporary Receipts shall in all respects be entitled to
the same benefits under this Agreement, and with respect to the Stock, as
definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature of a
duly authorized officer of the Depositary; provided, that such signature may be
a facsimile if a Registrar for the Receipts (other than the Depositary) shall
have been appointed and such Receipts are countersigned by a duly authorized
officer of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it shall
have been executed manually by a duly authorized officer of the Depositary or,
if a Registrar for the Receipts (other than the Depositary) shall have been
appointed, by manual or facsimile signature of a duly authorized officer of the
Depositary and countersigned by a duly authorized officer of such Registrar. The
Depositary shall record on its books each Receipt so signed and delivered as
hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt, which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.3, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.2. Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or any holder of Stock may from time to time deposit shares of the
Stock under this Deposit Agreement by delivery to the Depositary of a
certificate or certificates for the Stock to be deposited, properly endorsed or
accompanied, if required by the Depositary, by a duly executed instrument of
transfer or endorsement, in form satisfactory to the Depositary, together with
all
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such certifications as may be required by the Depositary in accordance with the
provisions of this Deposit Agreement, and together with a written order of the
Company or such holder, as the case may be, directing the Depositary to execute
and deliver to, or upon the written order of, the person or persons stated in
such order a Receipt or Receipts for the number of Depositary Shares
representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's Office
or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for Stock
deposited in accordance with the provisions of this Section, together with the
other documents required as above specified, and upon recordation of the Stock
on the books of the Company in the name of the Depositary or its nominee, the
Depositary, subject to the terms and conditions of this Deposit Agreement, shall
execute and deliver, to or upon the order of the person or persons named in the
written order delivered to the Depositary referred to in the first paragraph of
this Section, a Receipt or Receipts for the number of Depositary Shares
representing the Stock so deposited and registered in such name or names as may
be requested by such person or persons. The Depositary shall execute and deliver
such Receipt or Receipts at the Depositary's Office or such other offices, if
any, as the Depositary may designate. Delivery at other offices shall be at the
risk and expense of the person requesting such delivery.
SECTION 2.3. Registration of Transfer of Receipts. Subject to the terms
and conditions of this Deposit Agreement, the Depositary shall register on its
books from time to time transfers of Receipts upon any surrender thereof by the
holder in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon, the
Depositary shall execute a new Receipt or Receipts evidencing the same aggregate
number of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the order of the
person entitled thereto.
SECTION 2.4. Split-ups and Combinations of Receipts; Surrender of Receipts
and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at the
Depositary's Office or at such other offices as it may designate for the purpose
of effecting a split-up or combination of such Receipt or Receipts, and subject
to the terms and conditions of this Deposit Agreement, the Depositary shall
execute and deliver a new Receipt or Receipts in the authorized denomination or
denominations requested, evidencing the aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.
Any holder of a Receipt or Receipts representing any number of whole shares
of Stock may withdraw the Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts, at the
Depositary's Office or at such other offices as the Depositary may designate for
such withdrawals. Thereafter, without unreasonable delay, the Depositary shall
deliver to such holder or to the person or persons designated by such holder as
hereinafter provided, the number of whole shares of Stock and all money and
other property, if any, represented by the Receipt or Receipts so surrendered
for withdrawal, but holders of such whole shares of Stock will not thereafter be
entitled to deposit such Stock hereunder or to receive Depositary Shares
therefor. If a Receipt delivered by the holder to the Depositary in connection
with such withdrawal shall evidence a number of Depositary Shares in excess of
the number of Depositary Shares representing the number of whole shares of Stock
to be so withdrawn, the Depositary shall at the same time, in addition to such
number of whole shares of Stock and such money and other property, if any, to be
so withdrawn, deliver to such holder, or upon his order, a new Receipt
evidencing such excess number of Depositary Shares. Delivery of the Stock and
money and other property being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate.
If the Stock and the money and other property being withdrawn are to be
delivered to a person or persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Stock, such holders shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
holder for withdrawal of such shares of Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer in blank.
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Delivery of the Stock and the money and other property, if any, represented
by Receipts surrendered for withdrawal shall be made by the Depositary at the
Depositary's Office, except that, at the request, risk and expense of the holder
surrendering such Receipt or Receipts and for the account of the holder thereof,
such delivery may be made at such other place as may be designated by such
holder.
SECTION 2.5. Limitations on Execution and Delivery, Transfer, Surrender
and Exchange of Receipts. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination, surrender or exchange
of any Receipt, the Depositary, any of the Depositary's Agents or the Company
may require payment to it of a sum sufficient for the payment (or, in the event
that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Section 5.7, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against Stock
may be suspended, the registration of transfer of Receipts may be refused and
the registration of transfer, surrender or exchange of outstanding Receipts may
be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission or under any provision of this Deposit
Agreement.
SECTION 2.6. Lost Receipts, etc. In case any receipt shall be mutilated,
destroyed, lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
mutilated Receipt, or in lieu of and in substitution for such destroyed, lost or
stolen Receipt, upon (i) the filing by the holder thereof with the Depositary of
evidence satisfactory to the Depositary of such destruction or loss or theft of
such Receipt, of the authenticity thereof and of his or her ownership thereof
and (ii) the furnishing to the Depositary of indemnification (which may include
posting an indemnification bond) satisfactory to it.
SECTION 2.7. Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so cancelled.
SECTION 2.8. Redemption of Stock. Whenever the Company shall be permitted
and shall elect to redeem shares of Stock in accordance with the provisions of
the Restated Articles, it shall (unless otherwise agreed to in writing with the
Depositary) give or cause to be given to the Depositary not less than 30 days'
and not more than 60 days' notice of the date of such proposed redemption or
exchange of Stock and of the number of such shares held by the Depositary to be
so redeemed and the applicable redemption price, as set forth in the Restated
Articles, which notice shall be accompanied by a certificate from the Company
stating that such redemption of Stock is in accordance with the provisions of
the Restated Articles. On the date of such redemption, provided that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus an amount equal to any
accrued and unpaid dividends thereon to the date fixed for redemption, in
accordance with the provisions of the Restated Articles, the Depositary shall
redeem the number of Depositary Shares representing such Stock. The Depositary
shall mail notice of the Company's redemption of Stock and the proposed
simultaneous redemption of the number of Depositary Shares representing the
Stock to be redeemed by first-class mail, postage prepaid, not less than 10 and
not more than 60 days prior to the date fixed for redemption of such Stock and
Depositary Shares (the "Redemption Date") to the record holders of the Receipts
evidencing the Depositary Shares to be so redeemed, at the address of such
holders as they appear on the records of the Depositary; but neither failure to
mail any such notice of redemption of Depositary Shares to one or more such
holders nor any defect in any notice of redemption of Depositary Shares to one
or more such holders shall affect the sufficiency of the proceedings for
redemption as to the other holders. Each such notice shall state: (i) the
Redemption Date; (ii) the number of Depositary Shares to be redeemed and, if
less than all the Depositary Shares held by any such holder are to be redeemed,
the number of such Depositary Shares held by such holder to be so redeemed;
(iii) the redemption price; (iv) the place or places where Receipts evidencing
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Depositary Shares are to be surrendered for payment of the redemption price; and
(v) that dividends in respect of the Stock represented by the Depositary Shares
to be redeemed will cease to accrue on such Redemption Date. In case less than
all the outstanding Depositary Shares are to be redeemed, the Depositary Shares
to be so redeemed shall be selected by the Depositary by lot or pro rata (as
nearly as may be) or by any other method, in each case, as determined by the
Depositary in its sole discretion to be equitable.
Notice having been mailed by the Depositary as aforesaid, from and after
the Redemption Date (unless the Company shall have failed to provide the funds
necessary to redeem the Stock evidenced by the Depositary Shares called for
redemption) (i) dividends on the shares of Stock so called for redemption shall
cease to accrue from and after such date, (ii) the Depositary Shares being
redeemed from such proceeds shall be deemed no longer to be outstanding, (iii)
all rights of the holders of Receipts evidencing such Depositary Shares (except
the right to receive the redemption price) shall, to the extent of such
Depositary Shares, cease and terminate, and (iv) upon surrender in accordance
with such redemption notice of the Receipts evidencing any such Depositary
Shares called for redemption (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary Shares shall be
redeemed by the Depositary at a redemption price per Depositary Share equal to
one-tenth of the redemption price per share plus all money and other property,
if any, represented by such Depositary Shares, including all amounts paid by the
Company in respect of dividends which on the Redemption Date have accumulated on
the shares of Stock to be so redeemed and have not theretofore been paid.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption.
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1. Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold the delivery, or delay the registration of transfer, redemption or
exchange, of any Receipt or the withdrawal or conversion of the Stock
represented by the Depositary Shares evidenced by any Receipt or the
distribution of any dividend or other distribution or the sale of any rights or
of the proceeds thereof until such proof or other information is filed or such
certificates are executed or such representations and warranties are made.
SECTION 3.2. Payment of Taxes or Other Governmental Charges. Holders of
Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses, as provided in Section 5.7. Registration of transfer of
any Receipt or any withdrawal of Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or any part of or all the Stock or other
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the proceeds of any
such sale may be applied to any payment of such charges or expenses, the holder
of such Receipt remaining liable for any deficiency.
SECTION 3.3. Warranty as to Stock. The Company hereby represents and
warrants that the Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable, subject to the Rhode Island Business Corporation
Act. Such representation and warranty shall survive the deposit of the Stock and
the issuance of Receipts.
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SECTION 3.4. Warranty as to Receipts. The Company hereby represents and
warrants that the Receipts, when issued, will represent legal and valid
interests in the Stock. Such representation and warranty shall survive the
deposit of the Stock and the issuance of Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.1. Cash Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on Stock, the Depositary shall,
subject to Section 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of such dividend or
distribution as are, as nearly as practicable, in proportion to the respective
numbers of Depositary Shares evidenced by the Receipts held by such holders;
provided, however, that in case the Company or the Depositary shall be required
to withhold and shall withhold from any cash dividend or other cash distribution
in respect of the Stock an amount on account of taxes, the amount made available
for distribution or distributed in respect of Depositary Shares shall be reduced
accordingly. The Depositary shall distribute or make available for distribution,
as the case may be, only such amount, however, as can be distributed without
attributing to any
holder of Depositary Shares a fraction of one cent. Any balance not so
distributable shall be returned by the Depositary to the Company and shall be
added to and be treated as part of the next sum received by the Depositary for
distribution to record holders of Receipts then outstanding.
SECTION 4.2. Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable and practicable
for accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes) the Depositary deems, after consultation
with the Company, such distribution not to be feasible, the Depositary may, with
the approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the sale
(at public or private sale) of the securities or property thus received, or any
part thereof, at such place or places and upon such terms as it may deem proper.
The net proceeds of any such sale shall, subject to Sections 3.1 and 3.2, be
distributed or made available for distribution, as the case may be, by the
Depositary to record holders of Receipts as provided by Section 4.1 in the case
of a distribution received in cash. The Company shall not make any distribution
of such securities or property to the Depositary and the Depositary shall not
make any distribution of such securities or property to the holders of Receipts
unless the Company shall have provided an opinion of counsel stating that such
securities or property have been registered under the Securities Act or do not
need to be registered in connection with such distributions.
SECTION 4.3. Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
however, that (i) if at the time of issue or offer of any such rights,
preferences or privileges the Depositary determines that it is not lawful or
(after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders of Receipts by the issue of
warrants or otherwise, or (ii) if and to the extent so instructed by holders of
Receipts who do not desire to exercise such rights, preferences or privileges,
then the Depositary, in its discretion (with approval of the Company, in any
case where the Depositary has determined that it is not feasible to make such
rights, preferences or privileges
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available), may, if applicable laws or the terms of such rights, preferences or
privileges permit such transfer, sell such rights, preferences or privileges at
public or private sale, at such place or places and upon such terms as it may
deem proper. The net proceeds of any such sale shall, subject to Sections 3.1
and 3.2, be distributed by the Depositary to the record holders of Receipts
entitled thereto as provided by Section 4.1 in the case of a distribution
received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees with the Depositary that it will file
promptly a registration statement pursuant to such Act with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until such registration statement shall have become
effective, or unless the offering and sale of such securities to such holders
are exempt from registration under the provisions of the Securities Act, and the
Company shall have provided to the Depositary an opinion of counsel to such
effect.
If any other action under the laws of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company agrees with the Depositary that the Company will use its reasonable
best efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.4. Notice of Dividends, etc.; Fixing Record Date for Holders of
Receipts. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with respect to Stock,
or whenever the Depositary shall receive notice of any meeting at which holders
of Stock are entitled to vote or of which holders of Stock are entitled to
notice, or whenever the Depositary and the Company shall decide it is
appropriate, the Company shall in each such instance fix a record date for the
determination of the holders of Receipts who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds of
the sale thereof, or to give instructions for the exercise of voting rights at
any such meeting, or who shall be entitled to notice of such meeting or for any
other appropriate reasons.
SECTION 4.5. Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement that the holders may, subject to any applicable restrictions,
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock represented by their respective Depositary Shares (including
an express indication that instructions may be given to the Depositary to give a
discretionary proxy to a person designated by the Company) and a brief statement
as to the manner in which such instructions may be given. Upon the written
request of the holders of Receipts on the relevant record date, the Depositary
shall endeavor insofar as practicable to vote or cause to be voted, in
accordance with the instructions set forth in such requests, the maximum number
of whole shares of Stock represented by the Depositary Shares evidenced by all
Receipts as to which any particular voting instructions are received. The
Company hereby agrees to take all reasonable action which may be deemed
necessary by the Depositary in order to enable the Depositary to vote such Stock
or cause such Stock to be voted. In the absence of specific instructions from
the holder of a Receipt, the Depositary will not vote (but, at its discretion,
may appear at any meeting with respect to such Stock unless directed to the
contrary by the holders of all the Receipts) to the extent of the Stock
represented by the Depositary Shares evidence by such Receipt.
SECTION 4.6. Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc. Upon any change in par or stated value, split-up,
combination or any other reclassification of the Stock, or upon any
recapitalization, reorganization, merger or consolidation affecting the Company
or to which it is party, the Depositary may in its discretion with the approval
of, and shall upon the instructions of, the
7
<PAGE> 11
Company, and (in either case) in such manner as the Depositary may deem
equitable, (i) make such adjustments as are certified by the Company in the
fraction of an interest represented by one Depositary Share in one share of
Stock as may be necessary fully to reflect the effects of such change in par or
stated value, split-up, combination or other reclassification of Stock, or of
such recapitalization, reorganization, merger or consolidation and (ii) treat
any securities which shall be received by the Depositary in exchange for or upon
conversion of or in respect of the Stock as new deposited securities so received
in exchange for or upon conversion or in respect of such Stock. In any such case
the Depositary may in its discretion, with the approval of the Company, execute
and deliver additional Receipts or may call for the surrender of all outstanding
Receipts to be exchanged for new Receipts specifically describing such new
deposited securities. Anything to the contrary herein notwithstanding, holders
of Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of the Stock or any such recapitalization, reorganization, merger or
consolidation to surrender such Receipts to the Depositary with instructions to
convert, exchange or surrender the Stock represented thereby only into or for,
as the case may be, the kind and amount of shares of stock and other securities
and property and cash into which the Stock represented by such Receipts might
have been converted or for which such Stock might have been exchanged or
surrendered immediately prior to the effective date of such transaction.
SECTION 4.7. Delivery of Reports. The Depositary shall furnish to holders
of Receipts any reports and communications received from the Company which are
received by the Depositary as the holder of Stock.
SECTION 4.8. List of Receipt Holders. Promptly upon request from time to
time by the Company, the Depositary shall furnish to it a list, as of the most
recent practicable date, of the names, addresses and holdings of Depositary
Shares of all record holders of Receipts.
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR AND THE COMPANY
SECTION 5.1. Maintenance of Offices, Agencies and Transfer Books by the
Depositary; Registrar. Upon execution of this Deposit Agreement, the Depositary
shall maintain at the Depositary's office, facilities for the execution and
delivery, registration and registration of transfer, surrender and exchange of
Receipts, and at the offices of the Depositary's Agents, if any, facilities for
the delivery, registration of transfer, surrender and exchange of Receipts, all
in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books at all
reasonable times shall be open for inspection by the record holders of Receipts;
provided that any such holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close such books, at any time or from time to time, when
deemed expedient by it in connection with the performance of its duties
hereunder.
The Depositary may, with the approval of the Company, appoint a Registrar
for registration of the Receipts or the Depositary Shares evidenced thereby. If
the Receipts or the Depositary Shares evidenced thereby or the Stock represented
by such Depositary Shares shall be listed on one or more national stock
exchanges, the Depositary will appoint a Registrar (acceptable to the Company)
for registration of such Receipts or Depositary Shares in accordance with any
requirements of such exchange. Such Registrar may be the Depositary if so
permitted by the requirements of any such exchange. Such Registrar may be
removed and a substitute registrar appointed by the Depositary upon the request
or with the approval of the Company. If the Receipts, such Depositary Shares or
such stock are listed on one or more other stock exchanges, the Depositary will,
at the request of the Company, arrange such facilities for the delivery,
registration, registration of transfer, surrender and exchange of such Receipts,
such Depositary Shares or such stock as may be required by law or applicable
stock exchange regulation.
8
<PAGE> 12
SECTION 5.2. Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company. Neither the Depositary nor
any Depositary's Agent nor any Registrar nor the Company shall incur any
liability to any holder of any Receipt if by reason of any provision of any
present or future law, or regulation thereunder, of the United States of America
or of any other governmental authority or, in the case of the Depositary, the
Depositary's Agent or the Registrar, by reason of any provision, present or
future, of the Restated Articles or by reason of any act of God or war or other
circumstance beyond the control of the relevant party, the Depositary, the
Depositary's Agent, the Registrar or the Company shall be prevented, delayed or
forbidden from, or subjected to any penalty on account of, doing or performing
any act or thing which the terms of this Deposit Agreement provide shall be done
or performed; nor shall the Depositary, any Depositary's Agent, any Registrar or
the Company incur liability to any holder of a Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which the terms of this Deposit Agreement shall provide shall or may be
done or performed, or (ii) by reason of any exercise of, or failure to exercise,
any discretion provided for in this Deposit Agreement except, in the case of any
such exercise or failure to exercise discretion not caused as aforesaid, if
caused by the negligence or willful misconduct of the party charged with such
exercise or failure to exercise.
SECTION 5.3. Obligation of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent
nor any Registrar nor the Company assumes any obligation or shall be subject to
any liability under this Deposit Agreement to holders of Receipts other than for
its negligence, willful misconduct or bad faith. The Company shall indemnify the
Depositary for, and hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part arising out of or in
connection with its agency under this Deposit Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
its exercise or performance of any of its duties under this Deposit Agreement.
Anything in this Deposit Agreement to the contrary notwithstanding, in no event
shall the Depositary be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Depositary has been advised of the likelihood of such loss or damage and
regardless of the form of the action.
Neither the Depositary nor any Depositary's Agent nor any Registrar nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other preceding in respect of the Stock, the Depositary Shares
or the Receipts which in its opinion may involve it in expense or liability
unless indemnity satisfactory to it against all expense and liability be
furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor any Registrar nor the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information from any
person presenting Stock for deposit, any holder of a Receipt or any other person
believed by it in good faith to be competent to give such information. The
Depositary, any Depositary's Agent, any Registrar and the Company may each rely
and shall each be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
The Depositary shall not be responsible for any failure to carry out any
instruction to vote and of the shares of stock or for the manner or effect of
any such vote made, as long as any such action or non-action is in good faith.
The Depositary undertakes, and any Registrar shall be required to undertake, to
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Depositary or any Registrar. This Section 5.3 shall
survive any termination of this Agreement and any succession of any Depositary.
The Depositary, the Depositary's Agents, and any Registrar may own and deal in
any class of securities of the Company and its affiliates and in Receipts. The
Depositary may also act as transfer agent or registrar of any of the securities
of the Company and its affiliates.
SECTION 5.4. Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by delivering notice of its election to do so to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
9
<PAGE> 13
The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor, and shall deliver to such successor a list of the record holders
of all outstanding Receipts and such records, books and other information in its
possession relating thereto. Any successor Depositary shall promptly mail notice
of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.5. Corporate Notices and Reports. The Company agrees that it
will transmit to the record holders of Receipts, in each case at the addresses
furnished to it pursuant to Section 4.8, all notices and reports (including
without limitation financial statements) required by law or by the rules of any
national securities exchange upon which the Stock, the Depositary Shares or the
Receipts are listed, to be furnished to the record holders of Receipts or
otherwise determine to furnish. Such transmission will be at the Company's
expense.
SECTION 5.6. Indemnification by the Company. The Company shall indemnify
the Depositary, any Depositary's Agent and any Registrar against, and hold each
of them harmless from, any loss, liability or expense (including the reasonable
costs and expenses of defending itself) which may arise out of acts performed or
omitted in connection with this Agreement and the Receipts by the Depositary,
any Registrar or any of their respective agents (including any Depositary's
Agent), except for any liability arising out of negligence, willful misconduct
or bad faith on the respective parts of any such person or persons. The
obligations of the Company set forth in this Section 5.6 shall survive any
succession of any Depositary, Registrar or Depositary's Agent.
SECTION 5.7. Charges and Expenses. The Company shall pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company shall pay all charges of the Depositary in
connection with the initial deposit of the Stock and the initial issuance of the
Depositary Shares, all withdrawals of shares of the Stock by owners of
Depositary Shares, and any redemption or exchange of the Stock at the option of
the Company. All other transfer and other taxes and governmental charges shall
be at the expense of holders of Depositary Shares. If, at the request of a
holder of Receipts, the Depositary incurs charges or expenses for which it is
not otherwise liable hereunder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder and of any Registrar (including, in each case, reasonable fees
and expenses of counsel) incident to the performance of their respective
obligations hereunder will be paid upon consultation and agreement between the
Depositary and the Company as to the amount and nature of such charges and
expenses. The Depositary shall present its statement for charges and expenses to
the Company at such intervals as the Company and the Depositary may agree.
10
<PAGE> 14
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1. Amendment. The form of the Receipts and any provisions of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary or Registrar, which shall go into
effect not sooner than three months after notice thereof to the holders of the
Receipts) which shall materially and adversely alter the rights of the holders
of Receipts shall be effective unless such amendment shall have been approved by
the holders of at least a majority of the Depositary Shares then outstanding.
Every holder of an outstanding Receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such Receipt, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby.
SECTION 6.2. This Agreement may be terminated by the Company or the
Depositary only after (i) all outstanding Depositary Shares have been redeemed
pursuant to Section 2.8 or (ii) there shall have been made a final distribution
in respect of the Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of Depositary Shares pursuant to Section 4.1 or 4.2, as applicable.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.6 and 5.7.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Counterparts. This Deposit Agreement may be executed in any
number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.2. Exclusive Benefit of Parties. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.3. Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4. Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attention: Secretary
Facsimile No.: (401) 278-5801
or at any other address of which the Company shall have notified the Depositary
in writing.
11
<PAGE> 15
Any and all notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the Depositary's Office, at:
Fleet National Bank
111 Westminster Street
Providence, RI 02903
Attention: Shareholder Services
Facsimile No.: 401-751-9706
or at any other address of which the Depositary shall have notified the Company
in writing.
Any and all notices to be given to any record holder of a Receipt hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail, or by telegram or facsimile
transmission confirmed by letter, addressed to such record holder at the address
of such record holder as it appears on the books of the Depositary, or if such
holder shall have filed with the Depositary a written request that notices
intended for such holder be mailed some other address, at the address designated
in such request.
Delivery of a notice sent by mail or by telegram or facsimile transmission
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a telegram or
facsimile transmission) is deposited, postage prepaid, in a post office letter
box. The Depositary or the Company may, however, act upon any telegram or
facsimile transmission received by it from the other or from any holder of a
Receipt, notwithstanding that such telegram or facsimile transmission shall not
subsequently be confirmed by letter or as aforesaid.
SECTION 7.5. Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company of any such action.
The Company hereby also appoints the Depositary as Registrar in respect of
the Receipts and the Depositary hereby accepts such appointments.
SECTION 7.6. Holders of Receipts Are Parties. The holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by all of the terms and conditions hereof and of the Receipts by acceptance of
delivery thereof.
SECTION 7.7. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND THE RECEIPTS AND
ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 7.8. Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agent and
shall be open to inspection during business hours at the Depositary's office and
respective offices of the Depositary's Agent, if any, by any holder of a
Receipt.
SECTION 7.9. Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any bearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
12
<PAGE> 16
IN WITNESS WHEREOF, the Company and the Depositary have duly executed this
Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
Attested by
- ------------------------------------------------------
[SEAL]
FLEET FINANICAL GROUP, INC.
By:
Attested by
- ------------------------------------------------------
[SEAL]
FLEET NATIONAL BANK
By:
13
<PAGE> 17
EXHIBIT A
TO
DEPOSIT AGREEMENT
SEE REVERSE FOR
CERTAIN DEFINITIONS
<TABLE>
<CAPTION>
CERTIFICATE FOR
<S> <C>
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES, EACH DEPOSITARY SHARE ____________________
REPRESENTING A ONE-TENTH INTEREST IN ONE SHARE OF 9.30% CUMULATIVE ____________________
PREFERRED STOCK
</TABLE>
FLEET FINANCIAL GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF RHODE ISLAND
DEPOSITARY SHARES
FLEET NATIONAL BANK, as Depositary (the "Depositary) hereby certifies that
Transferable Depositary Receipt
This Certificate is transferable in
Providence, Rhode Island and New York,
New York
CUSIP
Is the registered owner of DEPOSITARY SHARES ("Depositary
Shares"), each Depositary Share representing a one-tenth interest in one share
of 9.30% Cumulative Preferred Stock, $1 par value, $250 stated value per
preferred share (the "Stock"), of Fleet Financial Group, Inc., a Rhode Island
corporation (the "Corporation") on deposit with the Depositary, subject to the
terms and entitled to the benefits of the Deposit Agreement dated as of
[ ], 1995 (the "Deposit Agreement"), between the Corporation and the
Depositary. By accepting this Depositary Receipt, the holder hereof becomes a
party to and agrees to be bound by all the terms and conditions of the Deposit
Agreement. This Depositary Receipt shall not be valid or obligatory for any
purpose or be entitled to any benefits under the Deposit Agreement unless it
shall have been executed by the Depositary by the manual signature of a duly
authorized officer or, if executed in facsimile by the Depositary, countersigned
by a Registrar in respect of the Depositary Receipts by a duly authorized
officer thereof.
Dated
Countersigned
FLEET NATIONAL BANK
Depositary and Registrar
By ___________________________________
Authorized Officer
FLEET FINANCIAL GROUP, INC.
FLEET FINANCIAL GROUP INC. WILL FURNISH WITHOUT CHARGE TO EACH
RECEIPTHOLDER WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A STATEMENT OR
SUMMARY OF THE TERMS OF THE 9.30% CUMULATIVE PREFERRED STOCK AND EACH OTHER
CLASS OF PREFERRED STOCK OR SERIES THEREOF WHICH THE CORPORATION IS AUTHORIZED
TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCE AND/OR RIGHTS. ANY SUCH REQUEST SHOULD BE ADDRESSED TO FLEET
FINANCIAL GROUP, INC., 50 KENNEDY PLAZA, PROVIDENCE, RI 02903, ATTN: SECRETARY.
<PAGE> 18
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Depositary Receipt, shall be construed as though they are written out in
full according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenant with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT -- ______________________ Custodian ______________________
(Cust) (Minor)
under Uniform Gifts to Minors Act _____________________
(State)
UNIF TRAN MIN ACT -- ______________________ Custodian (until age _______________
(Cust) (Minor)
under Uniform Transfers Minors Act ___________________
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell(s), assigns(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
Depositary Shares represented by the within Depositary Receipt, and
do(es) hereby irrevocably constitute and appoint Attorney to transfer
the said Depositary Shares on the books of the within named Depositary with full
power of substitution in the premises.
Dated Signature:
--------------------------------------
NOTICE The signature to this
assignment must correspond with the
name as written upon the face of this
Depositary Receipt in every
particular, without alteration or
enlargement or any change whatsoever
SIGNATURE GUARANTEED
<PAGE> 1
EXHIBIT 4(k)
FLEET FINANCIAL GROUP, INC.
FLEET NATIONAL BANK, AS DEPOSITARY
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
DEPOSIT AGREEMENT
DATED AS OF , 1995
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I
Definitions...........................................................................
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1. Form and Transfer of Receipts.........................................
SECTION 2.2. Deposit of Stock; Execution and Delivery of Receipts in Respect
Thereof...............................................................
SECTION 2.3. Registration of Transfer of Receipts..................................
SECTION 2.4. Split-ups and Combinations of Receipts; Surrender of Receipts and
Withdrawal of Stock...................................................
SECTION 2.5. Limitations on Execution and Delivery, Transfer, Surrender and
Exchange of Receipts..................................................
SECTION 2.6. Lost Receipts, etc....................................................
SECTION 2.7. Cancellation and Destruction of Surrendered Receipts..................
SECTION 2.8. Redemption of Stock...................................................
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1. Filing Proofs, Certificates and Other Information.....................
SECTION 3.2. Payment of Taxes or Other Governmental Charges........................
SECTION 3.3. Warranty as to Stock..................................................
SECTION 3.4. Warranty as to Receipts...............................................
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.1. Cash Distributions....................................................
SECTION 4.2. Distributions Other than Cash, Rights, Preferences or Privileges......
SECTION 4.3. Subscription Rights, Preferences or Privileges........................
SECTION 4.4. Notice of Dividends, etc.; Fixing Record Date for Holders of
Receipts..............................................................
SECTION 4.5. Voting Rights.........................................................
SECTION 4.6. Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc................................................
SECTION 4.7. Delivery of Reports...................................................
SECTION 4.8. List of Receipt Holders...............................................
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY
SECTION 5.1. Maintenance of Offices, Agencies and Transfer Books by the Depositary;
Registrar.............................................................
SECTION 5.2. Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company.....................
SECTION 5.3. Obligation of the Depositary, the Depositary's Agents, the Registrar
and the Company.......................................................
</TABLE>
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<TABLE>
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<S> <C> <C>
SECTION 5.4. Resignation and Removal of the & Depositary; Appointment of Successor
Depositary............................................................
SECTION 5.5. Corporate Notices and Reports.........................................
SECTION 5.6. Indemnification by the Company........................................
SECTION 5.7. Charges and Expenses..................................................
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1. Amendment.............................................................
SECTION 6.2. Termination...........................................................
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Counterparts..........................................................
SECTION 7.2. Exclusive Benefit of Parties..........................................
SECTION 7.3. Invalidity of Provisions..............................................
SECTION 7.4. Notices...............................................................
SECTION 7.5. Depositary's Agents...................................................
SECTION 7.6. Holders of Receipts Are Parties.......................................
SECTION 7.7. GOVERNING LAW.........................................................
SECTION 7.8. Inspection of Deposit Agreement.......................................
SECTION 7.9. Headings..............................................................
FORM OF DEPOSITARY SHARES
Form of Face of Receipt...............................................................
Form of Reverse of Receipt............................................................
</TABLE>
<PAGE> 4
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT, dated as of , 1995, among FLEET FINANCIAL
GROUP, INC., a Rhode Island corporation, (the "Company"), FLEET NATIONAL BANK, a
national banking association (the "Depositary"), and the holders from time to
time of the Receipts described herein.
WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of shares of the Company's 9.35% Cumulative Preferred
Stock with the Depositary for the purposes set forth in this Deposit Agreement
and for the issuance hereunder of Receipts evidencing Depositary Shares in
respect of the Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the promises contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall, for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement:
"Company" shall mean Fleet Financial Group, Inc., a Rhode Island
corporation, and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean Fleet National Bank, and any successor as
Depositary hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing
one-tenth of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 7.5.
"Depositary's Office" shall mean the principal office of the Depositary, at
which at any particular time its depositary receipt business shall be
administered.
"Preferred Stock" means any stock of any class or series of the Company
which has a preference over Common Stock in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not mandatorily redeemable or repayable
by the Company or redeemable or repayable at the option of the holder of such
stock.
"Receipt" shall mean one of the Depositary Receipts, substantially in the
form set forth as Exhibit A hereto, issued hereunder, whether in definitive or
temporary form and evidencing the number of Depositary Shares held of record by
the record holder of such Depositary Shares.
"record holder" or "holder" as applied to a Receipt shall mean the person
in whose name a Receipt is registered on the books of the Depositary maintained
for such purpose.
"Registrar" shall mean the Depositary or such other bank or trust company
which shall be appointed to register ownership and transfers of Receipts as
herein provided.
"Restated Articles" shall mean the Company's Restated Articles of
Incorporation, as amended.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's 9.35% Cumulative Preferred
Stock, $250 stated value per share.
<PAGE> 5
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF STOCK,
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.1. Form and Transfer of Receipts. Definitive Receipts shall be
engraved or printed or lithographed on steel-engraved borders, with appropriate
insertions, modifications and omissions, as hereinafter provided. Pending the
preparation of definitive Receipts, the Depositary, upon the written order of
the Company or any holder of Stock, as the case may be, delivered in compliance
with Section 2.2, shall execute and deliver temporary Receipts which are
printed, lithographed, typewritten, mimeographed or otherwise substantially of
the tenor of the definitive Receipts in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the persons executing such Receipts may determine, as evidenced by their
execution of such Receipts. If temporary Receipts are issued, the Company and
the Depositary will cause definitive Receipts to be prepared without
unreasonable delay. After the preparation of definitive Receipts, the temporary
Receipts shall be exchangeable for definitive Receipts upon surrender of the
temporary Receipts at an office described in the penultimate paragraph of
Section 2.2, without charge to the holder. Upon surrender for cancellation of
any one or more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of Depositary
Shares as represented by the surrendered temporary Receipt or Receipts. Such
exchange shall be made at the Company's expense and without any charge therefor.
Until so exchanged, the temporary Receipts shall in all respects be entitled to
the same benefits under this Agreement, and with respect to the Stock, as
definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature of a
duly authorized officer of the Depositary; provided, that such signature may be
a facsimile if a Registrar for the Receipts (other than the Depositary) shall
have been appointed and such Receipts are countersigned by a duly authorized
officer of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it shall
have been executed manually by a duly authorized officer of the Depositary or,
if a Registrar for the Receipts (other than the Depositary) shall have been
appointed, by manual or facsimile signature of a duly authorized officer of the
Depositary and countersigned by a duly authorized officer of such Registrar. The
Depositary shall record on its books each Receipt so signed and delivered as
hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to which any
particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt, which is properly
endorsed or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.3, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.2. Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or any holder of Stock may from time to time deposit shares of the
Stock under this Deposit Agreement by delivery to the Depositary of a
certificate or certificates for the Stock to be deposited, properly endorsed or
accompanied, if required by the Depositary, by a duly executed instrument of
transfer or endorsement, in form satisfactory to the Depositary, together with
all
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<PAGE> 6
such certifications as may be required by the Depositary in accordance with the
provisions of this Deposit Agreement, and together with a written order of the
Company or such holder, as the case may be, directing the Depositary to execute
and deliver to, or upon the written order of, the person or persons stated in
such order a Receipt or Receipts for the number of Depositary Shares
representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's Office
or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for Stock
deposited in accordance with the provisions of this Section, together with the
other documents required as above specified, and upon recordation of the Stock
on the books of the Company in the name of the Depositary or its nominee, the
Depositary, subject to the terms and conditions of this Deposit Agreement, shall
execute and deliver, to or upon the order of the person or persons named in the
written order delivered to the Depositary referred to in the first paragraph of
this Section, a Receipt or Receipts for the number of Depositary Shares
representing the Stock so deposited and registered in such name or names as may
be requested by such person or persons. The Depositary shall execute and deliver
such Receipt or Receipts at the Depositary's Office or such other offices, if
any, as the Depositary may designate. Delivery at other offices shall be at the
risk and expense of the person requesting such delivery.
SECTION 2.3. Registration of Transfer of Receipts. Subject to the terms
and conditions of this Deposit Agreement, the Depositary shall register on its
books from time to time transfers of Receipts upon any surrender thereof by the
holder in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon, the
Depositary shall execute a new Receipt or Receipts evidencing the same aggregate
number of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the order of the
person entitled thereto.
SECTION 2.4. Split-ups and Combinations of Receipts; Surrender of Receipts
and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at the
Depositary's Office or at such other offices as it may designate for the purpose
of effecting a split-up or combination of such Receipt or Receipts, and subject
to the terms and conditions of this Deposit Agreement, the Depositary shall
execute and deliver a new Receipt or Receipts in the authorized denomination or
denominations requested, evidencing the aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.
Any holder of a Receipt or Receipts representing any number of whole shares
of Stock may withdraw the Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts, at the
Depositary's Office or at such other offices as the Depositary may designate for
such withdrawals. Thereafter, without unreasonable delay, the Depositary shall
deliver to such holder or to the person or persons designated by such holder as
hereinafter provided, the number of whole shares of Stock and all money and
other property, if any, represented by the Receipt or Receipts so surrendered
for withdrawal, but holders of such whole shares of Stock will not thereafter be
entitled to deposit such Stock hereunder or to receive Depositary Shares
therefor. If a Receipt delivered by the holder to the Depositary in connection
with such withdrawal shall evidence a number of Depositary Shares in excess of
the number of Depositary Shares representing the number of whole shares of Stock
to be so withdrawn, the Depositary shall at the same time, in addition to such
number of whole shares of Stock and such money and other property, if any, to be
so withdrawn, deliver to such holder, or upon his order, a new Receipt
evidencing such excess number of Depositary Shares. Delivery of the Stock and
money and other property being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate.
If the Stock and the money and other property being withdrawn are to be
delivered to a person or persons other than the record holder of the Receipt or
Receipts being surrendered for withdrawal of Stock, such holders shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
holder for withdrawal of such shares of Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer in blank.
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<PAGE> 7
Delivery of the Stock and the money and other property, if any, represented
by Receipts surrendered for withdrawal shall be made by the Depositary at the
Depositary's Office, except that, at the request, risk and expense of the holder
surrendering such Receipt or Receipts and for the account of the holder thereof,
such delivery may be made at such other place as may be designated by such
holder.
SECTION 2.5. Limitations on Execution and Delivery, Transfer, Surrender
and Exchange of Receipts. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination, surrender or exchange
of any Receipt, the Depositary, any of the Depositary's Agents or the Company
may require payment to it of a sum sufficient for the payment (or, in the event
that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Section 5.7, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against Stock
may be suspended, the registration of transfer of Receipts may be refused and
the registration of transfer, surrender or exchange of outstanding Receipts may
be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission or under any provision of this Deposit
Agreement.
SECTION 2.6. Lost Receipts, etc. In case any receipt shall be mutilated,
destroyed, lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
mutilated Receipt, or in lieu of and in substitution for such destroyed, lost or
stolen Receipt, upon (i) the filing by the holder thereof with the Depositary of
evidence satisfactory to the Depositary of such destruction or loss or theft of
such Receipt, of the authenticity thereof and of his or her ownership thereof
and (ii) the furnishing to the Depositary of indemnification (which may include
posting an indemnification bond) satisfactory to it.
SECTION 2.7. Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so cancelled.
SECTION 2.8. Redemption of Stock. Whenever the Company shall be permitted
and shall elect to redeem shares of Stock in accordance with the provisions of
the Restated Articles, it shall (unless otherwise agreed to in writing with the
Depositary) give or cause to be given to the Depositary not less than 30 days'
and not more than 60 days' notice of the date of such proposed redemption or
exchange of Stock and of the number of such shares held by the Depositary to be
so redeemed and the applicable redemption price, as set forth in the Restated
Articles, which notice shall be accompanied by a certificate from the Company
stating that such redemption of Stock is in accordance with the provisions of
the Restated Articles. On the date of such redemption, provided that the Company
shall then have paid or caused to be paid in full to the Depositary the
redemption price of the Stock to be redeemed, plus an amount equal to any
accrued and unpaid dividends thereon to the date fixed for redemption, in
accordance with the provisions of the Restated Articles, the Depositary shall
redeem the number of Depositary Shares representing such Stock. The Depositary
shall mail notice of the Company's redemption of Stock and the proposed
simultaneous redemption of the number of Depositary Shares representing the
Stock to be redeemed by first-class mail, postage prepaid, not less than 10 and
not more than 60 days prior to the date fixed for redemption of such Stock and
Depositary Shares (the "Redemption Date") to the record holders of the Receipts
evidencing the Depositary Shares to be so redeemed, at the address of such
holders as they appear on the records of the Depositary; but neither failure to
mail any such notice of redemption of Depositary Shares to one or more such
holders nor any defect in any notice of redemption of Depositary Shares to one
or more such holders shall affect the sufficiency of the proceedings for
redemption as to the other holders. Each such notice shall state: (i) the
Redemption Date; (ii) the number of Depositary Shares to be redeemed and, if
less than all the Depositary Shares held by any such holder are to be redeemed,
the number of such Depositary Shares held by such holder to be so redeemed;
(iii) the redemption price; (iv) the place or places where Receipts evidencing
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<PAGE> 8
Depositary Shares are to be surrendered for payment of the redemption price; and
(v) that dividends in respect of the Stock represented by the Depositary Shares
to be redeemed will cease to accrue on such Redemption Date. In case less than
all the outstanding Depositary Shares are to be redeemed, the Depositary Shares
to be so redeemed shall be selected by the Depositary by lot or pro rata (as
nearly as may be) or by any other method, in each case, as determined by the
Depositary in its sole discretion to be equitable.
Notice having been mailed by the Depositary as aforesaid, from and after
the Redemption Date (unless the Company shall have failed to provide the funds
necessary to redeem the Stock evidenced by the Depositary Shares called for
redemption) (i) dividends on the shares of Stock so called for redemption shall
cease to accrue from and after such date, (ii) the Depositary Shares being
redeemed from such proceeds shall be deemed no longer to be outstanding, (iii)
all rights of the holders of Receipts evidencing such Depositary Shares (except
the right to receive the redemption price) shall, to the extent of such
Depositary Shares, cease and terminate, and (iv) upon surrender in accordance
with such redemption notice of the Receipts evidencing any such Depositary
Shares called for redemption (properly endorsed or assigned for transfer, if the
Depositary or applicable law shall so require), such Depositary Shares shall be
redeemed by the Depositary at a redemption price per Depositary Share equal to
one-tenth of the redemption price per share plus all money and other property,
if any, represented by such Depositary Shares, including all amounts paid by the
Company in respect of dividends which on the Redemption Date have accumulated on
the shares of Stock to be so redeemed and have not theretofore been paid.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption.
ARTICLE III
CERTAIN OBLIGATIONS OF
HOLDERS OF RECEIPTS AND THE COMPANY
SECTION 3.1. Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold the delivery, or delay the registration of transfer, redemption or
exchange, of any Receipt or the withdrawal or conversion of the Stock
represented by the Depositary Shares evidenced by any Receipt or the
distribution of any dividend or other distribution or the sale of any rights or
of the proceeds thereof until such proof or other information is filed or such
certificates are executed or such representations and warranties are made.
SECTION 3.2. Payment of Taxes or Other Governmental Charges. Holders of
Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses, as provided in Section 5.7. Registration of transfer of
any Receipt or any withdrawal of Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or any part of or all the Stock or other
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the proceeds of any
such sale may be applied to any payment of such charges or expenses, the holder
of such Receipt remaining liable for any deficiency.
SECTION 3.3. Warranty as to Stock. The Company hereby represents and
warrants that the Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable, subject to the Rhode Island Business Corporation
Act. Such representation and warranty shall survive the deposit of the Stock and
the issuance of Receipts.
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<PAGE> 9
SECTION 3.4. Warranty as to Receipts. The Company hereby represents and
warrants that the Receipts, when issued, will represent legal and valid
interests in the Stock. Such representation and warranty shall survive the
deposit of the Stock and the issuance of Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.1. Cash Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on Stock, the Depositary shall,
subject to Section 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of such dividend or
distribution as are, as nearly as practicable, in proportion to the respective
numbers of Depositary Shares evidenced by the Receipts held by such holders;
provided, however, that in case the Company or the Depositary shall be required
to withhold and shall withhold from any cash dividend or other cash distribution
in respect of the Stock an amount on account of taxes, the amount made available
for distribution or distributed in respect of Depositary Shares shall be reduced
accordingly. The Depositary shall distribute or make available for distribution,
as the case may be, only such amount, however, as can be distributed without
attributing to any holder of Depositary Shares a fraction of one cent. Any
balance not so distributable shall be returned by the Depositary to the Company
and shall be added to and be treated as part of the next sum received by the
Depositary for distribution to record holders of Receipts then outstanding.
SECTION 4.2. Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.1 and 3.2, distribute to record holders of Receipts on the
record date fixed pursuant to Section 4.4 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable and practicable
for accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes) the Depositary deems, after consultation
with the Company, such distribution not to be feasible, the Depositary may, with
the approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the sale
(at public or private sale) of the securities or property thus received, or any
part thereof, at such place or places and upon such terms as it may deem proper.
The net proceeds of any such sale shall, subject to Sections 3.1 and 3.2, be
distributed or made available for distribution, as the case may be, by the
Depositary to record holders of Receipts as provided by Section 4.1 in the case
of a distribution received in cash. The Company shall not make any distribution
of such securities or property to the Depositary and the Depositary shall not
make any distribution of such securities or property to the holders of Receipts
unless the Company shall have provided an opinion of counsel stating that such
securities or property have been registered under the Securities Act or do not
need to be registered in connection with such distributions.
SECTION 4.3. Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
however, that (i) if at the time of issue or offer of any such rights,
preferences or privileges the Depositary determines that it is not lawful or
(after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders of Receipts by the issue of
warrants or otherwise, or (ii) if and to the extent so instructed by holders of
Receipts who do not desire to exercise such rights, preferences or privileges,
then the Depositary, in its discretion (with approval of the Company, in any
case where the Depositary has determined that it is not feasible to make such
rights, preferences or privileges
6
<PAGE> 10
available), may, if applicable laws or the terms of such rights, preferences or
privileges permit such transfer, sell such rights, preferences or privileges at
public or private sale, at such place or places and upon such terms as it may
deem proper. The net proceeds of any such sale shall, subject to Sections 3.1
and 3.2, be distributed by the Depositary to the record holders of Receipts
entitled thereto as provided by Section 4.1 in the case of a distribution
received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees with the Depositary that it will file
promptly a registration statement pursuant to such Act with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until such registration statement shall have become
effective, or unless the offering and sale of such securities to such holders
are exempt from registration under the provisions of the Securities Act, and the
Company shall have provided to the Depositary an opinion of counsel to such
effect.
If any other action under the laws of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company agrees with the Depositary that the Company will use its reasonable
best efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.4. Notice of Dividends, etc.; Fixing Record Date for Holders of
Receipts. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered, with respect to Stock,
or whenever the Depositary shall receive notice of any meeting at which holders
of Stock are entitled to vote or of which holders of Stock are entitled to
notice, or whenever the Depositary and the Company shall decide it is
appropriate, the Company shall in each such instance fix a record date for the
determination of the holders of Receipts who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds of
the sale thereof, or to give instructions for the exercise of voting rights at
any such meeting, or who shall be entitled to notice of such meeting or for any
other appropriate reasons.
SECTION 4.5. Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement that the holders may, subject to any applicable restrictions,
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Stock represented by their respective Depositary Shares (including
an express indication that instructions may be given to the Depositary to give a
discretionary proxy to a person designated by the Company) and a brief statement
as to the manner in which such instructions may be given. Upon the written
request of the holders of Receipts on the relevant record date, the Depositary
shall endeavor insofar as practicable to vote or cause to be voted, in
accordance with the instructions set forth in such requests, the maximum number
of whole shares of Stock represented by the Depositary Shares evidenced by all
Receipts as to which any particular voting instructions are received. The
Company hereby agrees to take all reasonable action which may be deemed
necessary by the Depositary in order to enable the Depositary to vote such Stock
or cause such Stock to be voted. In the absence of specific instructions from
the holder of a Receipt, the Depositary will not vote (but, at its discretion,
may appear at any meeting with respect to such Stock unless directed to the
contrary by the holders of all the Receipts) to the extent of the Stock
represented by the Depositary Shares evidence by such Receipt.
SECTION 4.6. Changes Affecting Deposited Securities and Reclassifications,
Recapitalizations, etc. Upon any change in par or stated value, split-up,
combination or any other reclassification of the Stock, or upon any
recapitalization, reorganization, merger or consolidation affecting the Company
or to which it is party, the Depositary may in its discretion with the approval
of, and shall upon the instructions of, the
7
<PAGE> 11
Company, and (in either case) in such manner as the Depositary may deem
equitable, (i) make such adjustments as are certified by the Company in the
fraction of an interest represented by one Depositary Share in one share of
Stock as may be necessary fully to reflect the effects of such change in par or
stated value, split-up, combination or other reclassification of Stock, or of
such recapitalization, reorganization, merger or consolidation and (ii) treat
any securities which shall be received by the Depositary in exchange for or upon
conversion of or in respect of the Stock as new deposited securities so received
in exchange for or upon conversion or in respect of such Stock. In any such case
the Depositary may in its discretion, with the approval of the Company, execute
and deliver additional Receipts or may call for the surrender of all outstanding
Receipts to be exchanged for new Receipts specifically describing such new
deposited securities. Anything to the contrary herein notwithstanding, holders
of Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of the Stock or any such recapitalization, reorganization, merger or
consolidation to surrender such Receipts to the Depositary with instructions to
convert, exchange or surrender the Stock represented thereby only into or for,
as the case may be, the kind and amount of shares of stock and other securities
and property and cash into which the Stock represented by such Receipts might
have been converted or for which such Stock might have been exchanged or
surrendered immediately prior to the effective date of such transaction.
SECTION 4.7. Delivery of Reports. The Depositary shall furnish to holders
of Receipts any reports and communications received from the Company which are
received by the Depositary as the holder of Stock.
SECTION 4.8. List of Receipt Holders. Promptly upon request from time to
time by the Company, the Depositary shall furnish to it a list, as of the most
recent practicable date, of the names, addresses and holdings of Depositary
Shares of all record holders of Receipts.
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S
AGENTS, THE REGISTRAR AND THE COMPANY
SECTION 5.1. Maintenance of Offices, Agencies and Transfer Books by the
Depositary; Registrar. Upon execution of this Deposit Agreement, the Depositary
shall maintain at the Depositary's office, facilities for the execution and
delivery, registration and registration of transfer, surrender and exchange of
Receipts, and at the offices of the Depositary's Agents, if any, facilities for
the delivery, registration of transfer, surrender and exchange of Receipts, all
in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books at all
reasonable times shall be open for inspection by the record holders of Receipts;
provided that any such holder requesting to exercise such right shall certify to
the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close such books, at any time or from time to time, when
deemed expedient by it in connection with the performance of its duties
hereunder.
The Depositary may, with the approval of the Company, appoint a Registrar
for registration of the Receipts or the Depositary Shares evidenced thereby. If
the Receipts or the Depositary Shares evidenced thereby or the Stock represented
by such Depositary Shares shall be listed on one or more national stock
exchanges, the Depositary will appoint a Registrar (acceptable to the Company)
for registration of such Receipts or Depositary Shares in accordance with any
requirements of such exchange. Such Registrar may be the Depositary if so
permitted by the requirements of any such exchange. Such Registrar may be
removed and a substitute registrar appointed by the Depositary upon the request
or with the approval of the Company. If the Receipts, such Depositary Shares or
such stock are listed on one or more other stock exchanges, the Depositary will,
at the request of the Company, arrange such facilities for the delivery,
registration, registration of transfer, surrender and exchange of such Receipts,
such Depositary Shares or such stock as may be required by law or applicable
stock exchange regulation.
8
<PAGE> 12
SECTION 5.2. Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company. Neither the Depositary nor
any Depositary's Agent nor any Registrar nor the Company shall incur any
liability to any holder of any Receipt if by reason of any provision of any
present or future law, or regulation thereunder, of the United States of America
or of any other governmental authority or, in the case of the Depositary, the
Depositary's Agent or the Registrar, by reason of any provision, present or
future, of the Restated Articles or by reason of any act of God or war or other
circumstance beyond the control of the relevant party, the Depositary, the
Depositary's Agent, the Registrar or the Company shall be prevented, delayed or
forbidden from, or subjected to any penalty on account of, doing or performing
any act or thing which the terms of this Deposit Agreement provide shall be done
or performed; nor shall the Depositary, any Depositary's Agent, any Registrar or
the Company incur liability to any holder of a Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which the terms of this Deposit Agreement shall provide shall or may be
done or performed, or (ii) by reason of any exercise of, or failure to exercise,
any discretion provided for in this Deposit Agreement except, in the case of any
such exercise or failure to exercise discretion not caused as aforesaid, if
caused by the negligence or willful misconduct of the party charged with such
exercise or failure to exercise.
SECTION 5.3. Obligation of the Depositary, the Depositary's Agents, the
Registrar and the Company. Neither the Depositary nor any Depositary's Agent
nor any Registrar nor the Company assumes any obligation or shall be subject to
any liability under this Deposit Agreement to holders of Receipts other than for
its negligence, willful misconduct or bad faith. The Company shall indemnify the
Depositary for, and hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part arising out of or in
connection with its agency under this Deposit Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
its exercise or performance of any of its duties under this Deposit Agreement.
Anything in this Deposit Agreement to the contrary notwithstanding, in no event
shall the Depositary be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Depositary has been advised of the likelihood of such loss or damage and
regardless of the form of the action.
Neither the Depositary nor any Depositary's Agent nor any Registrar nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other preceding in respect of the Stock, the Depositary Shares
or the Receipts which in its opinion may involve it in expense or liability
unless indemnity satisfactory to it against all expense and liability be
furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor any Registrar nor the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information from any
person presenting Stock for deposit, any holder of a Receipt or any other person
believed by it in good faith to be competent to give such information. The
Depositary, any Depositary's Agent, any Registrar and the Company may each rely
and shall each be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
The Depositary shall not be responsible for any failure to carry out any
instruction to vote and of the shares of stock or for the manner or effect of
any such vote made, as long as any such action or non-action is in good faith.
The Depositary undertakes, and any Registrar shall be required to undertake, to
perform such duties and only such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Depositary or any Registrar. This Section 5.3 shall
survive any termination of this Agreement and any succession of any Depositary.
The Depositary, the Depositary's Agents, and any Registrar may own and deal in
any class of securities of the Company and its affiliates and in Receipts. The
Depositary may also act as transfer agent or registrar of any of the securities
of the Company and its affiliates.
SECTION 5.4. Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by delivering notice of its election to do so to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
9
<PAGE> 13
The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor, and shall deliver to such successor a list of the record holders
of all outstanding Receipts and such records, books and other information in its
possession relating thereto. Any successor Depositary shall promptly mail notice
of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.5. Corporate Notices and Reports. The Company agrees that it
will transmit to the record holders of Receipts, in each case at the addresses
furnished to it pursuant to Section 4.8, all notices and reports (including
without limitation financial statements) required by law or by the rules of any
national securities exchange upon which the Stock, the Depositary Shares or the
Receipts are listed, to be furnished to the record holders of Receipts or
otherwise determine to furnish. Such transmission will be at the Company's
expense.
SECTION 5.6. Indemnification by the Company. The Company shall indemnify
the Depositary, any Depositary's Agent and any Registrar against, and hold each
of them harmless from, any loss, liability or expense (including the reasonable
costs and expenses of defending itself) which may arise out of acts performed or
omitted in connection with this Agreement and the Receipts by the Depositary,
any Registrar or any of their respective agents (including any Depositary's
Agent), except for any liability arising out of negligence, willful misconduct
or bad faith on the respective parts of any such person or persons. The
obligations of the Company set forth in this Section 5.6 shall survive any
succession of any Depositary, Registrar or Depositary's Agent.
SECTION 5.7. Charges and Expenses. The Company shall pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements. The Company shall pay all charges of the Depositary in
connection with the initial deposit of the Stock and the initial issuance of the
Depositary Shares, all withdrawals of shares of the Stock by owners of
Depositary Shares, and any redemption or exchange of the Stock at the option of
the Company. All other transfer and other taxes and governmental charges shall
be at the expense of holders of Depositary Shares. If, at the request of a
holder of Receipts, the Depositary incurs charges or expenses for which it is
not otherwise liable hereunder, such holder will be liable for such charges and
expenses. All other charges and expenses of the Depositary and any Depositary's
Agent hereunder and of any Registrar (including, in each case, reasonable fees
and expenses of counsel) incident to the performance of their respective
obligations hereunder will be paid upon consultation and agreement between the
Depositary and the Company as to the amount and nature of such charges and
expenses. The Depositary shall present its statement for charges and expenses to
the Company at such intervals as the Company and the Depositary may agree.
10
<PAGE> 14
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1. Amendment. The form of the Receipts and any provisions of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary or Registrar, which shall go into
effect not sooner than three months after notice thereof to the holders of the
Receipts) which shall materially and adversely alter the rights of the holders
of Receipts shall be effective unless such amendment shall have been approved by
the holders of at least a majority of the Depositary Shares then outstanding.
Every holder of an outstanding Receipt at the time any such amendment becomes
effective shall be deemed, by continuing to hold such Receipt, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby.
SECTION 6.2. This Agreement may be terminated by the Company or the
Depositary only after (i) all outstanding Depositary Shares have been redeemed
pursuant to Section 2.8 or (ii) there shall have been made a final distribution
in respect of the Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of Depositary Shares pursuant to Section 4.1 or 4.2, as applicable.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Sections 5.6 and 5.7.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Counterparts. This Deposit Agreement may be executed in any
number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.2. Exclusive Benefit of Parties. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.3. Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4. Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 02903
Attention: Secretary
Facsimile No.: (401) 278-5801
or at any other address of which the Company shall have notified the Depositary
in writing.
11
<PAGE> 15
Any and all notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the Depositary's Office, at:
Fleet National Bank
111 Westminster Street
Providence, RI 02903
Attention: Shareholder Services
Facsimile No.: 401-751-9706
or at any other address of which the Depositary shall have notified the Company
in writing.
Any and all notices to be given to any record holder of a Receipt hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail, or by telegram or facsimile
transmission confirmed by letter, addressed to such record holder at the address
of such record holder as it appears on the books of the Depositary, or if such
holder shall have filed with the Depositary a written request that notices
intended for such holder be mailed some other address, at the address designated
in such request.
Delivery of a notice sent by mail or by telegram or facsimile transmission
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a telegram or
facsimile transmission) is deposited, postage prepaid, in a post office letter
box. The Depositary or the Company may, however, act upon any telegram or
facsimile transmission received by it from the other or from any holder of a
Receipt, notwithstanding that such telegram or facsimile transmission shall not
subsequently be confirmed by letter or as aforesaid.
SECTION 7.5. Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company of any such action.
The Company hereby also appoints the Depositary as Registrar in respect of
the Receipts and the Depositary hereby accepts such appointments.
SECTION 7.6. Holders of Receipts Are Parties. The holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by all of the terms and conditions hereof and of the Receipts by acceptance of
delivery thereof.
SECTION 7.7. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND THE RECEIPTS AND
ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 7.8. Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agent and
shall be open to inspection during business hours at the Depositary's office and
respective offices of the Depositary's Agent, if any, by any holder of a
Receipt.
SECTION 7.9. Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any bearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
12
<PAGE> 16
IN WITNESS WHEREOF, the Company and the Depositary have duly executed this
Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
Attested by FLEET FINANCIAL GROUP, INC.
By:
- ---------------------------- ----------------------------
[SEAL]
Attested by FLEET NATIONAL BANK
By:
- ---------------------------- ----------------------------
[SEAL]
By:
13
<PAGE> 17
EXHIBIT A
TO
DEPOSIT AGREEMENT
SEE REVERSE FOR
CERTAIN DEFINITIONS
<TABLE>
<CAPTION>
CERTIFICATE FOR
<S> <C>
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES, EACH DEPOSITARY SHARE ____________________
REPRESENTING A ONE-TENTH INTEREST IN ONE SHARE OF 9.35% CUMULATIVE
PREFERRED STOCK ____________________
</TABLE>
FLEET FINANCIAL GROUP, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF RHODE ISLAND
DEPOSITARY SHARES
FLEET NATIONAL BANK, as Depositary (the "Depositary) hereby certifies that
Transferable Depositary Receipt
This Certificate is transferable in
Providence, Rhode Island and New York,
New York
CUSIP
Is the registered owner of DEPOSITARY SHARES ("Depositary
Shares"), each Depositary Share representing a one-tenth interest in one share
of 9.35% Cumulative Preferred Stock, $1 par value, $250 stated value per
preferred share (the "Stock"), of Fleet Financial Group, Inc., a Rhode Island
corporation (the "Corporation") on deposit with the Depositary, subject to the
terms and entitled to the benefits of the Deposit Agreement dated as of
[ ], 1995 (the "Deposit Agreement"), between the Corporation and the
Depositary. By accepting this Depositary Receipt, the holder hereof becomes a
party to and agrees to be bound by all the terms and conditions of the Deposit
Agreement. This Depositary Receipt shall not be valid or obligatory for any
purpose or be entitled to any benefits under the Deposit Agreement unless it
shall have been executed by the Depositary by the manual signature of a duly
authorized officer or, if executed in facsimile by the Depositary, countersigned
by a Registrar in respect of the Depositary Receipts by a duly authorized
officer thereof.
Dated
Countersigned
FLEET NATIONAL BANK
Depositary and Registrar
By ___________________________________
Authorized Officer
FLEET FINANCIAL GROUP, INC.
FLEET FINANCIAL GROUP INC. WILL FURNISH WITHOUT CHARGE TO EACH
RECEIPTHOLDER WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A STATEMENT OR
SUMMARY OF THE TERMS OF THE 9.35% CUMULATIVE PREFERRED STOCK AND EACH OTHER
CLASS OF PREFERRED STOCK OR SERIES THEREOF WHICH THE CORPORATION IS AUTHORIZED
TO ISSUE AND OF THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCE AND/OR RIGHTS. ANY SUCH REQUEST SHOULD BE ADDRESSED TO FLEET
FINANCIAL GROUP, INC., 50 KENNEDY PLAZA, PROVIDENCE, RI 02903, ATTN: SECRETARY.
<PAGE> 18
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Depositary Receipt, shall be construed as though they are written out in
full according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenant with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT -- ______________________ Custodian ______________________
(Cust) (Minor)
under Uniform Gifts to Minors Act _____________________
(State)
UNIF TRAN MIN ACT -- ______________________ Custodian (until age _______________
(Cust) (Minor)
under Uniform Transfers Minors Act ___________________
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell(s), assigns(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
Depositary Shares represented by the within Depositary Receipt, and
do(es) hereby irrevocably constitute and appoint Attorney to transfer
the said Depositary Shares on the books of the within named Depositary with full
power of substitution in the premises.
Dated Signature:
--------------------------------------
NOTICE The signature to this
assignment must correspond with the
name as written upon the face of this
Depositary Receipt in every
particular, without alteration or
enlargement or any change whatsoever
SIGNATURE GUARANTEED
<PAGE> 1
EXHIBIT 5
April 28, 1995
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 April 28, 1995 in connection with the
registration under the Securities Act of 1933, as amended, of up to 116,139,576
shares of common stock, $1 par value (the "Common Stock"), 116,139,576 preferred
share purchase rights (the "Rights"), 688,700 shares of preferred stock with
cumulative and adjustable dividends, no par value (the "Adjustable Preferred"),
5,750,000 depositary shares (the "9.30% Depositary Shares"), each representing
1/10 of a share of 9.30% preferred stock, no par value (the "9.30% Preferred"),
5,000,000 depositary shares (the "9.35 % Depositary Shares", and together with
the 9.30% Depositary Shares, collectively, the "Depositary Shares"), each
representing 1/10 of a share of 9.35% preferred stock, no par value (the "9.35%
Preferred Stock" and together with the Adjustable Preferred and the 9.30%
Preferred, collectively the "Preferred Stock"), and warrants to purchase Common
Stock (the "Warrants").
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 as they currently
exist and as proposed to be amended and restated;
2. The By-Laws of the Company;
3. The Agreement and Plan of Merger dated as of February 20, 1995 (the
"Merger Agreement");
4. Specimen certificates of the Common Stock and proposed forms of the
Preferred Stock certificates and proposed forms of the depositary
receipts for the Depositary Shares;
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 Rights, the Preferred Stock, the
Depositary Shares and the Warrants 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,
Rights, Preferred Stock, the Depositary Shares and Warrants. 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 Rights, the Preferred Stock, the
Depositary Shares and the Warrants, and have assumed that the Warrant Agreement
and the Warrants are duly executed and delivered in substantially the terms
reviewed by us.
<PAGE> 2
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 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, the Rights, the Preferred
Stock, the Depositary Shares and the Warrants, (a) the Common Stock and the
Rights 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; (b) the Preferred Stock and the Depositary Shares
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 (c) the warrants, when issued pursuant to the Merger
Agreement upon consummation of the Merger, will be legally issued and binding
obligations of the Company except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws, or equitable principles
relating to or limiting creditors' rights generally. We express no opinion as to
the availability of equitable remedies.
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, Fleet Bank, National Association and Fleet Bank of Massachusetts,
National Association, subsidiaries 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 Joint Proxy Statement-Prospectus
which is part of the Registration Statement.
Very truly yours,
/S/ EDWARDS & ANGELL
--------------------
EDWARDS & ANGELL
<PAGE> 1
EXHIBIT 8(a)
April 28, 1995
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, RI 07903
Ladies and Gentlemen:
You have requested our opinion regarding the discussions of the material
U.S. federal income tax consequences under the captions "SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- Certain Federal Income Tax Consequences" and "THE
MERGER -- Certain Federal Income Tax Consequences" in the Joint Proxy
Statement-Prospectus which will be included in the Registration Statement on
Form S-4 filed on the date hereof with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). The Registration Statement relates to the proposed merger of Shawmut
National Corporation with and into Fleet Financial Group, Inc. This opinion is
delivered in accordance with the requirements of Item 601(b)(8) of Regulation
S-K under the Securities Act.
In rendering our opinion, we have reviewed the Registration Statement and
such other materials as we have deemed necessary or appropriate as a basis for
our opinion. In addition, we have considered the applicable provisions of the
Internal Revenue Code of 1986, as amended, Treasury Regulations, pertinent
judicial authorities, rulings of the Internal Revenue Service, and such other
authorities as we have considered relevant.
Based upon the foregoing, it is our opinion that the statements made under
the captions "SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS -- Certain Federal
Income Tax Consequences" and "THE MERGER -- Certain Federal Income Tax
Consequences" in the Joint Proxy Statement-Prospectus, to the extent that they
constitute matters of law or legal conclusions, are correct in all material
respects. There can be no assurance that contrary positions may not be asserted
by the Internal Revenue Service.
This opinion is being furnished in connection with the Registration
Statement. You may rely upon and refer to the foregoing opinion in the
Registration Statement. Any variation or difference in the facts from those set
forth or assumed either herein or in the Registration Statement may affect the
conclusions stated herein.
We hereby consent to the use of our name under the captions "SUMMARY OF
JOINT PROXY STATEMENT-PROSPECTUS -- Certain Federal Income Tax Consequences" and
"THE MERGER -- Certain Federal Income Tax Consequences" in the Joint Proxy
Statement-Prospectus and to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/S/ WACHTELL, LIPTON, ROSEN & KATZ
----------------------------------
<PAGE> 1
EXHIBIT 8(b)
April 28, 1995
Shawmut National Corporation
777 Main Street
Hartford, CT 06115
Ladies and Gentlemen:
You have requested our opinion regarding the discussions of the material
U.S. federal income tax consequences under the captions "SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- Certain Federal Income Tax Consequences" and "THE
MERGER -- Certain Federal Income Tax Consequences" in the Joint Proxy
Statement-Prospectus which will be included in the Registration Statement on
Form S-4 filed on the date hereof with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). The Registration Statement relates to the proposed merger of Shawmut
National Corporation with and into Fleet Financial Group, Inc. This opinion is
delivered in accordance with the requirements of Item 601(b)(8) of Regulation
S-K under the Securities Act.
In rendering our opinion, we have reviewed the Registration Statement and
such other materials as we have deemed necessary or appropriate as a basis for
our opinion. In addition, we have considered the applicable provisions of the
Internal Revenue Code of 1986, as amended, Treasury Regulations, pertinent
judicial authorities, rulings of the Internal Revenue Service, and such other
authorities as we have considered relevant.
Based upon the foregoing, it is our opinion that the statements made under
the captions "SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS -- Certain Federal
Income Tax Consequences" and "THE MERGER -- Certain Federal Income Tax
Consequences" in the Joint Proxy Statement-Prospectus, to the extent that they
constitute matters of law or legal conclusions, are correct in all material
respects. There can be no assurance that contrary positions may not be asserted
by the Internal Revenue Service.
This opinion is being furnished in connection with the Registration
Statement. You may rely upon and refer to the foregoing opinion in the
Registration Statement. Any variation or difference in the facts from those set
forth or assumed either herein or in the Registration Statement may affect the
conclusions stated herein.
We hereby consent to the use of our name under the captions "SUMMARY OF
JOINT PROXY STATEMENT-PROSPECTUS -- Certain Federal Income Tax Consequences" and
"THE MERGER -- Certain Federal Income Tax Consequences" in the Joint Proxy
Statement-Prospectus and to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/S/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM
----------------------------------------
<PAGE> 1
<TABLE>
EXHIBIT 12
FLEET FINANCIAL GROUP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
EXCLUDING INTEREST ON DEPOSITS
(THOUSANDS)
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income (loss)............ $ 612,931 $ 488,049 $ 279,843 $ 97,672 $ (73,687)
Adjustments:
(a) Applicable income taxes
(benefits)................... 397,708 327,407 228,526 55,176 (89,636)
(b) Fixed charges:
(1) Interest on borrowed
funds...................... 526,397 417,301 386,275 449,544 782,814
(2) 1/3 of rent............. 33,706 34,217 29,672 23,033 19,121
(c) Preferred dividends......... 24,742 36,927 49,706 21,958 12,990
---------- ---------- ---------- ---------- ----------
(d) Adjusted earnings........... $1,595,484 $1,303,901 $ 974,022 $ 647,383 $ 651,602
========= ========= ========= ========= =========
Fixed charges
[b(1) + b(2) + c]............... $ 584,845 $ 488,445 $ 465,653 $ 494,535 $ 814,925
========= ========= ========= ========= =========
Adjusted earnings/fixed charges... 2.73x 2.67x 2.09x 1.31x 0.80x*
========= ========= ========= ========= =========
</TABLE>
<TABLE>
INCLUDING INTEREST ON DEPOSITS
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income (loss)............... $ 612,931 $ 488,049 $ 279,843 $ 97,672 $ (73,687)
Adjustments:
(a) Applicable income taxes
(benefits)................... 397,708 327,407 228,526 55,176 (89,636)
(b) Fixed charges:
(1) Interest on borrowed
funds...................... 526,397 417,301 386,275 449,544 782,814
(2) 1/3 of rent............. 33,706 34,217 29,672 23,033 19,121
(3) Interest on deposits..... 764,186 744,080 1,076,368 1,480,395 1,343,417
(c) Preferred dividends 24,742 36,927 49,706 21,958 12,990
---------- ---------- ---------- ---------- ----------
(d) Adjusted earnings........... $2,359,670 $2,047,981 $2,050,390 $2,127,778 $1,995,019
========= ========= ========= ========= =========
Fixed charges
[b(1) + b(2) + b(3) + c]........ $1,349,031 $1,232,525 $1,542,021 $1,974,930 $2,158,342
========= ========= ========= ========= =========
Adjusted earnings/fixed charges... 1.75x 1.66x 1.33x 1.08x 0.92x*
========= ========= ========= ========= =========
<FN>
- ---------------
* Note that earnings are inadequate to cover fixed charges, the deficiency being
$163,323 for both the ratio excluding and including interest on deposits
</TABLE>
<PAGE> 2
<TABLE>
EXHIBIT 12 -- (CONTINUED)
FLEET FINANCIAL GROUP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS
(THOUSANDS)
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income (loss)............ $ 612,931 $ 488,049 $ 279,843 $ 97,672 $ (73,687)
Adjustments:
(a) Applicable income taxes
(benefits)................... 397,708 327,407 228,526 55,176 (89,636)
(b) Fixed charges:
(1) Interest on borrowed
funds...................... 526,397 417,301 386,275 449,544 782,814
(2) 1/3 of rent............. 33,706 34,217 29,672 23,033 19,121
---------- ---------- ---------- ---------- ----------
(c) Adjusted earnings........... $1,570,742 $1,266,974 $ 924,316 $ 625,425 $ 638,612
========= ========= ========= ========= =========
Fixed charges [b(1) + b(2)]....... $ 560,103 $ 451,518 $ 415,947 $ 472,577 $ 801,935
========= ========= ========= ========= =========
Adjusted earnings/fixed charges... 2.80x 2.81x 2.22x 1.32x 0.80x*
========= ========= ========= ========= =========
</TABLE>
<TABLE>
INCLUDING INTEREST ON DEPOSITS
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income (loss)............ $ 612,931 $ 488,049 $ 279,843 $ 97,672 $ (73,687)
Adjustments:
(a) Applicable income taxes
(benefits)................... 397,708 327,407 228,526 55,176 (89,636)
(b) Fixed charges:
(1) Interest on borrowed
funds...................... 526,397 417,301 386,275 449,544 782,814
(2) 1/3 of rent............. 33,706 34,217 29,672 23,033 19,121
(3) Interest on deposits..... 764,186 744,080 1,076,368 1,480,395 1,343,417
---------- ---------- ---------- ---------- ----------
(c) Adjusted earnings........... $2,334,928 $2,011,054 $2,000,684 $2,105,820 $1,982,029
========= ========= ========= ========= =========
Fixed charges
[b(1) + b(2) + b(3)]............ $1,324,289 $1,195,598 $1,492,315 $1,952,972 $2,145,352
========= ========= ========= ========= =========
Adjusted earnings/fixed charges... 1.76x 1.68x 1.34x 1.08x 0.92x*
========= ========= ========= ========= =========
<FN>
- ---------------
* Note that earnings are inadequate to cover fixed charges, the deficiency being
$163,323 for both the ratio excluding and including interest on deposits
</TABLE>
<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,
1994 which is incorporated by reference herein and to the reference to our Firm
under the heading "Experts" in the joint proxy statement-prospectus. Our report
refers to a change in the method of accounting for investments.
KPMG PEAT MARWICK LLP
Providence, Rhode Island
April 28, 1995
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Joint Proxy
Statement-Prospectus constituting part of the Registration Statement on Form S-4
of Fleet Financial Group, Inc. of our report dated February 20, 1995 appearing
on page 83 of Shawmut National Corporation's Annual Report on Form 10-K for the
year ended December 31, 1994. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/S/ PRICE WATERHOUSE LLP
Hartford, Connecticut
April 28, 1995
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Joint Proxy
Statement-Prospectus constituting part of the Registration Statement on Form S-4
of Fleet Financial Group, Inc. of our report dated April 7, 1995 relating to the
financial statements of the Business Finance Division of Barclays Business
Credit, Inc., which appears in the Current Report on Form 8-K of Shawmut
National Corporation dated April 13, 1995. We also consent to the reference to
us under the heading "Experts" in such Prospectus.
/S/ PRICE WATERHOUSE LLP
Hartford, Connecticut
April 28, 1995
<PAGE> 1
EXHIBIT 23(D)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Fleet Financial Group, Inc. of our report dated January
20, 1995 appearing in the Current Report on Form 8-K dated April 13, 1995 of
Shawmut National Corporation, and to the reference to us under the heading
"Experts" which appears in this Joint Proxy Statement-Prospectus which is part
of this Registration Statement.
/S/ DELOITTE & TOUCHE LLP
Hartford, Connecticut
April 28, 1995
<PAGE> 1
EXHIBIT 23(e)
We hereby consent to the use of our opinion letter dated May 8, 1995 to the
Board of Directors of Fleet Financial Group, Inc. included as Exhibit D to the
Joint Proxy Statement-Prospectus which forms a part of the Registration
Statement on Form S-4 relating to the proposed merger of Shawmut National
Corporation with and into Fleet Financial Group, Inc., and to the reference to
such opinion in such Joint Proxy Statement-Prospectus. In giving such consent,
we do not admit 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 term "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
/s/ David W. Levy
BY:______________________________
Dated: April 28, 1995
<PAGE> 1
EXHIBIT 23(F)
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
April 28, 1995
Shawmut National Corporation
777 Main Street
Hartford, Connecticut 06115
Dear Sirs:
We hereby consent to the inclusion of the Registration Statement on Form
S-4, relating to the proposed merger of Shawmut National Corporation with Fleet
Financial Group, Inc., of our opinion letter appearing as Exhibit E to the Joint
Proxy Statement-Prospectus which is a part of the Registration Statement, and to
the references of our firm name under the captions "SUMMARY OF JOINT PROXY
STATEMENT-PROSPECTUS -- Fairness Opinions of Financial Advisors", "THE MERGER --
Reasons for the Merger -- Recommendation of the Shawmut Board and Reasons for
the Merger" and "THE MERGER -- Fairness Opinions of Financial Advisors --
Shawmut." In giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations adopted by the Securities
and Exchange Commission thereunder nor do we admit that we are experts with
respect to any part of such Registration Statement within the meaning of the
term "experts" as used in the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/S/ STEPHEN CRAWFORD
By: ....................................
Stephen Crawford
Vice President
<PAGE> 1
EXHIBIT 99(A)(I)
PROXY FLEET FINANCIAL GROUP, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul J. Choquette, Jr., Michael B. Picotte
and John S. Scott, or any one or more of them, attorneys with full power of
substitution to each for and in the name of the undersigned, with all powers the
undersigned would possess if personally present to vote the Common Stock of the
undersigned in Fleet Financial Group, Inc. ("Fleet") at the Annual Meeting of
its stockholders to be held June 21, 1995 or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR EACH
OF THE PROPOSALS LISTED BELOW.
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
FOR all nominees listed below (except marked to AGAINST all nominees listed below / /
the contrary below) / /
</TABLE>
NOMINEES: Bradford R. Boss, James F. Hardymon, Arthur C. Milot, John A.
Reeves and John R. Riedman.
- --------------------------------------------------------------------------------
(INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. To approve and adopt the Agreement and Plan of Merger, dated as of February
20, 1995, between Fleet and Shawmut National Corporation, and the
consummation of the transactions contemplated thereby, including the
Merger. / / FOR / / AGAINST / / ABSTAIN
3. To approve the amendment and restatement of the Restated Articles of
Incorporation of Fleet, as described in the accompanying Joint Proxy
Statement-Prospectus. / / FOR / / AGAINST / / ABSTAIN
4. To ratify the selection of KPMG Peat Marwick LLP as independent auditors of
Fleet for the fiscal year
ending December 31, 1995. / / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL
NOS. 1, 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held in more than one
name, including joint tenants, each party should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
Dated: .............................., 1995
...........................................
Signature
...........................................
Signature if held jointly
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 1
<TABLE>
EXHIBIT 99(a)(ii)
PLEASE MARK
/X/ YOUR VOTES
AS IN THE
EXAMPLE
--------- ----------------
COMMON D.R.S
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
<S> <C>
FOR AGAINST ABSTAIN
1. Proposal to approve and adopt the Agreement and Plan of Merger, by and between / / / / / /
Shawmut National Corporation and Fleet Financial Group, Inc., and the
consummation of the transactions contemplated thereby.
- ----------------------------------------------------------------------------------------------------------------------------------
2. Election of Directors. FOR listed nominees: FOR AGAINST ABSTAIN
Alvord, Brown, Collins, Colloredo-Mansfeld, 3. Appointment of / / / / / /
Fox, Matura, Overstrom, Rice, Segall, Thier, FOR WITHHELD independent
Tregurtha and Wilde. / / / / accountants
For all nominees listed except: WITHHELD for listed nominees
- ----------------------------------- ------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2 AND 3 in the discretion of the named proxies, and upon such
other matters as may properly come before the meeting or any adjournments or postponements thereof. By executing this proxy, the
undersigned hereby revokes all prior proxies.
Signature(s) ___________________________________________________________________________________ Date ___________________
Please sign your name as it appears on this proxy. All joint owners should sign. Persons signing as executors, administrators,
trustees, etc. should so indicate. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED.
</TABLE>
<PAGE> 2
SHAWMUT NATIONAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
600 Atlantic Avenue, Boston, Massachusetts 02106
June 21, 1995 at 10 A.M.
The undersigned hereby appoints Lois D. Rice and Wilson Wilde proxies, with
full power of substitution to each, to represent and vote all stock that the
undersigned is entitled to vote at the 1995 Annual Meeting of Stockholders of
Shawmut National Corporation, or any adjournments or postponements thereof,
upon any and all matters which may properly be brought before such meeting.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
JUST SIGN AND DATE ON THE REVERSE SIDE; NO BOXES NEED BE CHECKED.
PLEASE SIGN, DATE AND RETURN TO CHEMICAL BANK
P.O. BOX 24036, NEW YORK, N.Y. 10242-4036.
<PAGE> 3
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2 and 3 in
the discretion of the named proxies, and upon such other matters as may
properly come before the meeting or any adjournment thereof. By executing this
proxy, the undersigned hereby revokes all prior proxies.
<TABLE>
<S> <C>
1. Proposal to approve and adopt the Agreement and Plan of Merger, by and
between Shawmut National Corporation and Fleet Financial Group, Inc.,
and the consummation of the transactions contemplated thereby.
FOR AGAINST ABSTAIN
/ / / / / /
2. Election of directors. For listed nominees except: WITHHELD for listed nominees
FOR listed nominees: Alvord,
Brown, Collins, Colloredo-Mansfeld,
Fox, Matura, Overstrom, Rice,
Segall, Thier, Tregurtha and Wilde.
/ / _________________ / /
3. Appointment of independent accountants.
FOR AGAINST ABSTAIN
/ / / / / /
_______________________________________
Signature
_______________________________________
Date
Please sign your name as it appears on
this proxy. All joint owners should sign.
Persons signing as executors, administrators,
trustees, etc. should so indicate.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE
IT IS VOTED.
</TABLE>
<PAGE> 4
SHAWMUT NATIONAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
600 Atlantic Avenue, Boston, Massachusetts 02106
June 21, 1995 at 10 A.M.
The undersigned hereby appoints Lois D. Rice and Wilson Wilde proxies, with
full power of substitution to each, to represent and vote all stock that the
undersigned is entitled to vote at the 1995 Annual Meeting of Stockholders of
Shawmut National Corporation, or any adjournments or postponements thereof,
upon any and all matters which may properly be brought before such meeting.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
JUST SIGN AND DATE ON THE REVERSE SIDE; NO BOXES NEED BE CHECKED.
PLEASE SIGN, DATE AND RETURN IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE> 5
<TABLE>
PLEASE MARK
/X/ YOUR VOTES
AS IN THE
EXAMPLE
----------
THRIFT
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
<S> <C>
FOR AGAINST ABSTAIN
1. Proposal to approve and adopt the Agreement and Plan of Merger, by and between / / / / / /
Shawmut National Corporation and Fleet Financial Group, Inc., and the
consummation of the transactions contemplated thereby.
- ----------------------------------------------------------------------------------------------------------------------------------
2. Election of Directors. FOR listed nominees: FOR AGAINST ABSTAIN
Alvord, Brown, Collins, Colloredo-Mansfeld, 3. Appointment of / / / / / /
Fox, Matura, Overstrom, Rice, Segall, Thier, FOR WITHHELD independent
Tregurtha and Wilde. / / / / accountants
For all nominees listed except: WITHHELD for listed nominees
- ----------------------------------- ------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2 AND 3
Signature(s) ___________________________________________________________________________________ Date ___________________
Please sign your name as it appears on your account
</TABLE>
<PAGE> 6
SHAWMUT NATIONAL CORPORATION
EMPLOYEES' THRIFT PLAN
The undersigned hereby instructs Chemical Bank, the proxy tally agent, to vote,
in person or by proxy, all stock in the undersigned's account in the Plan at
the Annual Meeting of Stockholders of Shawmut National Corporation to be held
on June 21, 1995, or any adjournments or postponements thereof.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
JUST SIGN AND DATE ON THE REVERSE SIDE; NO BOXES NEED BE CHECKED.
PLEASE SIGN, DATE AND RETURN TO PROXY TALLY AGENT:
CHEMICAL BANK
P.O. BOX 24036, NEW YORK, N.Y. 10242-4036
