SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
FLEET FINANCIAL GROUP, INC.
(Name of Issuer)
Common Stock, $1.00 par value
(Title of Class of Securities)
338915 01 1
(CUSIP Number)
J. Michael Shepherd, Esq.
Executive Vice President, General Counsel and Secretary
Shawmut National Corporation
One Federal Street
Boston, Massachusetts 02211
(617) 292-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
William S. Rubenstein, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
February 20, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a
statement on Schedule 13G to report the acquisition which
is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the
following box: [ ]
Check the following box if a fee is being paid
with this statement: [ X ]
CUSIP No. 338915 01 1
1. NAME OF REPORTING PERSON S.S. OR I.R.S.
IDENTIFICATION NO. OF ABOVE PERSON.
Shawmut National Corporation
I.R.S. Identification No. 06-1212629
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)____
(b)____
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
_____
6. CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH
7. SOLE VOTING POWER
28,176,050
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
28,176,050
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
28,176,050
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
_______
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6 %
14. TYPE OF REPORTING PERSON
CO
Item 1. Security and Issuer.
This statement relates to the common stock, par
value $1.00 per share (the "Common Stock"), of Fleet
Financial Group, Inc. a Rhode Island corporation (the
"Company"). The principal executive offices of the
Company are located at 50 Kennedy Plaza, Providence,
Rhode Island 02903.
Item 2. Identity and Background.
(a)-(c) and (f) This statement is being filed
by Shawmut National Corporation, a Delaware corporation
("Shawmut"). The principal executive offices of Shawmut
are located at 777 Main Street, Hartford, Connecticut
06115 and One Federal Street, Boston, Massachusetts
02211.
The principal business of Shawmut is to
provide, through its bank subsidiaries, comprehensive
corporate, commercial, correspondent and individual
banking services, both domestic and international, and
personal and corporate trust services.
Information as to each of the executive
officers and directors of Shawmut is set forth on
Schedule I hereto. Each of such persons is a citizen of
the United States.
(d) During the last five years, neither
Shawmut nor, to the best of Shawmut's knowledge, any of
the individuals named in Schedule I hereto, has been
convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) During the last five years, neither
Shawmut nor, to the best of Shawmut's knowledge, any of
the individuals named in Schedule I hereto, has been a
party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4 below,
pursuant to the terms of the Stock Option Agreement (as
defined below), Shawmut will have the right, upon the
occurrence of specified events, to purchase up to
28,171,050 shares of Common Stock from the Company at
$33.625 per share. Should Shawmut purchase Common Stock
pursuant to the Stock Option Agreement, Shawmut intends
to finance such purchase from one or more of the
following sources: cash on hand; the liquidation of
securities held by Shawmut; or dividends from Shawmut
subsidiaries
.
With respect to other transactions being reported
pursuant to this Schedule 13D, this item is regarded as not
applicable.
Item 4. Purpose of Transaction.
On February 20, 1995, Shawmut and the Company
entered into an Agreement and Plan of Merger (the "Merger
Agreement") providing, among other things, for the merger
(the "Merger") of Shawmut with and into the Company, with
the Company surviving the Merger.
Pursuant to the Merger Agreement, (I) each
share of the common stock, par value $0.01 per share (the
"Shawmut Common Stock"), of Shawmut outstanding on the
date of the Merger (except for shares of Shawmut Common
Stock held by Shawmut as treasury stock or shares held by
the Company or any of its subsidiaries, but including
shares of Shawmut Common Stock (i) held directly or
indirectly by the Company or Shawmut or any of their
respective subsidiaries in trust accounts, managed
accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties and
(ii) held by the Company or Shawmut or any of their
respective subsidiaries in respect of a debt previously
contracted) will be converted into .8922 shares of Common
Stock and (II) each share of the cumulative and
adjustable, 9.30% cumulative and 9.35% cumulative
preferred stock of Shawmut, respectively, outstanding
immediately prior to the Merger, except for shares of the
series of cumulative and adjustable preferred stock as to
which dissenters' rights have been properly exercised,
will be converted into one share of preferred stock of
the Company having terms substantially similar to the
terms of the Shawmut preferred stock converted in the
Merger.
The shares of Common Stock issued in the Merger
will include the corresponding number of rights attached
to such shares pursuant to the Company's shareholder
rights plan. No fractional shares of Common Stock will
be issued in the Merger, and Shawmut's stockholders who
otherwise would be entitled to receive a fractional share
of Common Stock will receive a cash payment in lieu
thereof.
Consummation of the Merger is subject to
certain standard conditions, including, but not limited
to, approval of the Merger Agreement by the holders of a
majority of the shares of the Shawmut Common Stock and the
Common Stock and the receipt of all required regulatory
approvals.
Following the Merger, the Board of Directors of
Fleet shall consist of 20 persons, including Joel Alvord,
the Chairman and Chief Executive Officer of Shawmut (who
will serve as Chairman of the Company), Terrence Murray,
the Chairman, Chief Executive Officer and President of
the Company (who will serve as Chief Executive Officer
and President of the Company), 11 additional persons to
be selected by Mr. Murray and the current Board of
Directors of the Company and 7 additional persons to be
selected by Mr. Alvord and the current Shawmut Board of
Directors. Following the Merger, the headquarters of the
Company will be moved to Boston, Massachusetts.
The Merger Agreement is attached hereto as
Exhibit 1 and incorporated herein by reference in its
entirety. The foregoing summary of the Merger Agreement
does not purport to be complete and is qualified in its
entirety by reference to such exhibit.
Simultaneously with the execution of the Merger
Agreement, on February 20, 1995, Shawmut and the Company
entered into a Stock Option Agreement (the "Stock Option
Agreement"), a copy of which is attached hereto as
Exhibit 2 and incorporated herein by reference.
Pursuant to the Stock Option Agreement, the
Company granted Shawmut an option (the "Option") to
purchase up to 28,171,050 authorized but unissued shares
(the "Option Shares") of Common Stock for $33.625 per
share. The Option will become exercisable in whole or in
part at any time prior to its expiration if (i) the
Company, without the prior written consent of Shawmut,
enters into an agreement with any person (other than
Shawmut) to effect (any of the following, an "Acquisition
Transaction") (a) a merger, consolidation or similar
transaction involving the Company or any of its
Significant Subsidiaries (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange
Commission) (other than mergers, consolidations or
similar transactions involving (x) the Company or any of
its Significant Subsidiaries in which the voting
securities of the Company immediately prior to such
transaction continue to represent at least 65% of the
combined voting power of the voting securities of the
Company or the surviving entity outstanding immediately
after such transaction or (y) only the Company and its
subsidiaries), (b) the purchase, lease or other
acquisition of all or a substantial portion of the assets
of the Company or any of its Significant Subsidiaries,
(c) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of
securities representing 20% or more of the voting power
of the Company or any of its subsidiaries or (d) any
substantially similar transaction, (ii) the Board of
Directors of the Company recommends that the stockholders
of the Company approve or accept any Acquisition
Transaction, or (iii) any person (other than Shawmut)
acquires beneficial ownership of 20% or more of the then
outstanding shares of Common Stock.
As more fully set forth in the Stock Option
Agreement, Shawmut (or a subsequent holder of the Option
or Option Shares) has the right under specified
circumstances to require the Company to repurchase the
Option or Option Shares.
Except as set forth in this Item 4, the
Merger Agreement or the Stock Option Agreement, neither
Shawmut nor, to the best of Shawmut's knowledge, any of
the individuals named in Schedule I hereto, has any plans
or proposals which relate to or which would result in any
of the actions specified in Clauses (a) through (j) of
Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a)-(b) By reason of its execution of the Stock
Option Agreement, pursuant to Rule 13d-3(d)(1)(i)
promulgated under the Exchange Act, Shawmut may be deemed
to have sole voting and dispositive power with respect to
the Common Stock subject to the Option and, accordingly,
may be deemed to beneficially own 28,171,050 shares of
Common Stock, or approximately 16.6% of the Common Stock
outstanding on January 31, 1995 assuming exercise of the
Option. However, Shawmut expressly disclaims any
beneficial ownership of the 28,171,050 shares of Common
Stock which are obtainable by Shawmut upon exercise of
the Option, because the Option is exercisable only in the
circumstances set forth in Item 4, none of which has
occurred as of the date hereof.
As of the date hereof, Mr. John T. Collins, a
director of Shawmut, owns 5,000 shares of Common Stock,
representing less than 1% of the Common Stock outstanding
on January 31, 1995. Mr. Collins has sole voting and
sole dispositive power with respect to such shares.
Except as set forth above, neither Shawmut nor,
to the best of Shawmut's knowledge, any of the
individuals named in Schedule I hereto, owns any Common
Stock.
(c) Mr. Collins purchased 5,000 shares of
Common Stock on February 22, 1995 in open-market
transactions at a purchase price of $30.625 per share.
Except as set forth above, neither Shawmut nor, to the
best of Shawmut's knowledge, any of the individuals named
in Schedule I hereto, has effected any transaction in the
Common Stock during the past 60 days.
(d) So long as Shawmut has not purchased the
Common Stock subject to the Option, Shawmut does not have
the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, any
of the Common Stock.
Mr. Collins has the right to receive and the
power to direct the receipt of dividends from, or the
proceeds from the sale of, the 5,000 shares of Common
Stock that he owns.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer.
The Merger Agreement contains certain customary
restrictions on the conduct of the business of the
Company pending the Merger, including certain customary
restrictions relating to the Common Stock. Except as
provided in the Merger Agreement or the Stock Option
Agreement or as set forth herein, neither Shawmut nor, to
the best of Shawmut's knowledge, any of the individuals
named in Schedule I hereto, has any contracts,
arrangements, understandings or relationships (legal or
otherwise), with any person with respect to any
securities of the Company, including, but not limited to,
transfer or voting of any securities, finder's fees,
joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or
losses, or the giving or withholding of proxies.
Item 7. Material to be filed as Exhibits.
Exhibit 1-- Agreement and Plan of Merger,
dated as of February 20, 1995 by
and among Shawmut National
Corporation and Fleet Financial
Group, Inc.
Exhibit 2-- Stock Option Agreement, dated as
of February 20, 1995 by and
among Shawmut National
Corporation and Fleet Financial
Group, Inc.
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this statement is true, complete
and correct.
Dated: March 1, 1995
SHAWMUT NATIONAL CORPORATION
By /s/ J. Michael Shepherd
_______________________________
J. Michael Shepherd
Executive Vice President,General
Counsel and Secretary
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF SHAWMUT NATIONAL CORPORATION
The name, business address, present principal
occupation or employment, and the name, principal
business and address of any corporation or other
organization in which such employment is conducted, of
each of the directors and executive officers of Shawmut
National Corporation ("Shawmut") is set forth below. If
no business address is given, the director's or officer's
address is Shawmut National Corporation, 777 Main Street,
Hartford, Connecticut 06115. Unless otherwise indicated,
each occupation set forth opposite an executive officer's
name refers to employment with Shawmut.
Present Principal Occupation
Name or Employment and Address
Joel B. Alvord Chairman and Chief
Executive Officer
One Federal Street
Boston, Massachusetts 02211
Stillman B. Brown President
Harcott Associates
196 Trumbull Street
Hartford, CT 06103
John T. Collins Chairman and Chief
Executive Officer
The Collins Group, Inc.
One International Place
Suite 2360
Boston, MA 02110
Ferdinand
Colloredo-Mansfeld Chairman and Chief
Executive Officer
Cabot Partners
60 State Street
Suite 3500
Boston, MA 02109
Bernard M. Fox President and Chief
Executive Officer
Northeast Utilities
107 Selden Street
Berlin, CT 00141
Robert J. Matura Chairman and Chief Executive
Officer
Robert J. Matura Associates
84 Lynam Road
Stamford, CT 06903
Gunnar S.
Overstrom, Jr. President and Chief
Operating Officer
Lois D. Rice The Brookings Institution
Guest Scholar
Program in Economic Studies
1775 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Maurice Segall Massachusetts Institute of
Technology
Sloan School of Management
Senior Lecturer
50 Memorial Drive
E52-504
Cambridge, MA 02142-1347
Samuel O. Thier President
Massachusetts General Hospital
White 1, Administration
32 Fruit Street
Boston, MA 02114
Paul R. Tregurtha Chairman and Chief Executive
Officer
Mormac Marine Group, Inc.
Three Landmark Square
Stamford, CT 06901
Wilson Wilde Chairman of the Executive Committee
The Hartford Steam Boiler
Inspection and Insurance Co.
One State Street
Hartford, CT 06102
Alan R. Buffington Executive Vice President and
Head of Corporate Services
Group-Shawmut Bank, N.A. and
Shawmut Bank Connecticut, N.A.
David L. Eyles Vice Chairman and Chief Credit
Policy Officer
Robert B. Hedges, Jr. Executive Vice President and
Head of Consumer Banking Group-
Shawmut Bank, N.A. and Shawmut
Bank Connecticut, N.A.
One Federal Street
Boston, Massachusetts 02211
John O. Huston Executive Vice President and
Chief Credit Officer-Shawmut
Bank, N.A. and Shawmut Bank
Connecticut, N.A.
One Federal Street
Boston, Massachusetts 02211
Niels C. Jensen Executive Vice President and
Head of Financial Institutions
Business Line-Shawmut Bank, N.A.
and Shawmut Bank Connecticut,
N.A.
Eileen S. Kraus Vice Chairman
Susan E. Lester Executive Vice President and
Chief Financial Officer
Michael J. Rothmeier Executive Vice President and
Head of Investment Services
Business Line-Shawmut Bank, N.A.
and Shawmut Bank Connecticut,
N.A.
One Federal Street
Boston, Massachusetts 02211
J. Michael Shepherd Executive Vice President, General
Counsel and Secretary
One Federal Street
Boston, Massachusetts 02211
INDEX TO EXHIBITS
Exhibit
Number Exhibit Page
1 -- Agreement and Plan of Merger,
dated as of February 20, 1995
by and among Shawmut National
Corporation and Fleet Financial
Group, Inc.
2 -- Stock Option Agreement, dated
as of February 20, 1995 by and
among Shawmut National
Corporation and Fleet Financial
Group, Inc.
AGREEMENT AND PLAN OF MERGER
between
FLEET FINANCIAL GROUP, INC.
and
SHAWMUT NATIONAL CORPORATION
Dated as of February 20, 1995
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 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 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
(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 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
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 Stack,
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.
(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
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
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.
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 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 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.
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 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 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, 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 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 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 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 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 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, 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 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;
(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.
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 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
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
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.
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.
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;
(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.
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.
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.
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
________________________
SHAWMUT NATIONAL CORPORATION
By: /s/ Joel B. Alvord
_________________________
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). 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.
(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.
(i) Upon the giving by the Holder to
Issuer of the written notice of exercise of the Option
provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in
immediately available funds, the Holder shall be deemed
to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder.
Issuer shall pay all expenses, and any and all United
States federal, state and local taxes and other charges
that may be payable in connection with the preparation,
issue and delivery of stock certificates under this
Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all
times maintain, free from preemptive rights, sufficient
authorized but unissued or treasury shares of Common
Stock so that the Option may be exercised without
additional authorization of Common Stock after giving
effect to all other options, warrants, convertible
securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or
performed hereunder by Issuer; (iii) promptly to take all
action as may from time to time be required (including
(x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in
the event, under the Bank Holding Company Act of 1956, as
amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state banking law, prior
approval of or notice to the Federal Reserve Board or to
any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the
Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board
or such state regulatory authority as they may require)
in order to permit the Holder to exercise the Option and
Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the
Holder against dilution.
4. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option
of the Holder, upon presentation and surrender of this
Agreement at the principal office of Issuer, for other
Agreements providing for Options of different
denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as
are set forth herein, in the aggregate the same number of
shares of Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any Stock
Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss,
theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such
new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number
of shares of Common Stock that are purchasable upon
exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to
time as provided in this Section 5. In the event of any
change in, or distributions in respect of, the Common
Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in
respect of the Common Stock that would be prohibited
under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable
upon exercise hereof and the Option Price shall be
appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing
any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's
obligations hereunder.
6. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise
Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days of such Subsequent
Triggering Event (whether on its own behalf or on behalf
of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf
registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to
this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and
remain current in order to permit the sale or other
disposition of this Option and any shares of Common Stock
issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of
disposition requested by Grantee. Issuer will use its
reasonable best efforts to cause such registration
statement first to become effective and then to remain
effective for such period not in excess of 180 days from
the day such registration statement first becomes
effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such
registrations. The foregoing notwithstanding, if, at the
time of any request by Grantee for registration of the
Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good
faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the
Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock
offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated
hereby may be reduced; 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 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.
(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 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 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 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
___________________________
