================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|X| Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for quarterly period ended September 30, 1999
|_| Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period _____________ to
_______________
Commission File Number 1-6366
FLEET BOSTON CORPORATION
(Exact name of registrant as specified in its charter)
Rhode Island 05-0341324
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
One Federal Street
Boston, Massachusetts 02110
(Address of principal executive office) (Zip Code)
(617) 346-4000
(Registrant's telephone number, including area code)
Fleet Financial Group, Inc.
(Former name, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES |X| NO |_|
The number of shares of common stock of the Registrant outstanding as of October
31, 1999 was 915,564,364.
================================================================================
<PAGE>
FLEET BOSTON CORPORATION
FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS OF INFORMATION REQUIRED IN REPORT
On October 1, 1999, BankBoston Corporation (BankBoston) merged with and into
Fleet Financial Group, Inc. (Fleet) in a transaction accounted for as a pooling
of interests. Following the merger, Fleet was renamed "Fleet Boston
Corporation." Fleet is currently doing business under the name "FleetBoston
Financial." Generally accepted accounting principles do not permit giving effect
to a consummated business combination accounted for by the pooling of interests
method in financial statements that do not include the date of consummation.
Therefore, the accompanying unaudited condensed consolidated financial
statements for the quarter ended September 30, 1999 include only the accounts
and results of Fleet, without giving effect to the merger. Beginning in the
fourth quarter of 1999, which will include the date of consummation of the
merger (October 1, 1999), financial statements for all periods presented will be
restated to include the accounts and results of BankBoston, in accordance with
the pooling of interests method of accounting. Supplemental Consolidated
Statements of Income and Supplemental Consolidated Balance Sheets that reflect
the results of operations and financial position of Fleet and BankBoston as if
they were combined as of the earliest period presented are included in Note 6 to
the consolidated financial statements.
PAGE
----
PART I. FINANCIAL INFORMATION
Management's Discussion and Analysis of Financial Condition
and Results of Operations 3
Consolidated Statements of Income
Three Months Ended September 30, 1999 and 1998 16
Nine Months Ended September 30, 1999 and 1998 17
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998 18
Consolidated Statements of Changes in Stockholders' Equity
Nine Months Ended September 30, 1999 and 1998 19
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1999 and 1998 20
Condensed Notes to Consolidated Financial Statements 21
Overview of Supplemental Consolidated Statements of Income for
the Quarter and Nine Months Ended September 30, 1999
and 1998 25
PART II. OTHER INFORMATION 26
SIGNATURES 27
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On October 1, 1999, Fleet Financial Group, Inc. (Fleet) completed its merger
with BankBoston Corporation in a transaction accounted for as a pooling of
interests, and was renamed Fleet Boston Corporation. Since this transaction was
consummated after September 30, 1999, this management's discussion and analysis
relates to the unaudited consolidated financial statements of Fleet, and does
not reflect the merger. Additional information on the merger is included in
Notes 1 and 6 to the consolidated financial statements. This discussion and
analysis updates, and should be read in conjunction with, Management's
Discussion and Analysis included in the previously filed Fleet Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999, and the
Fleet 1998 Annual Report to Stockholders, which is incorporated by reference
into Fleet's 1998 Annual Report on Form 10-K.
<TABLE>
<CAPTION>
FINANCIAL SUMMARY
- --------------------------------------------------------------------------------------------
Three months Nine months
Dollars in millions, ended Sept. 30 ended Sept. 30
except per share amounts 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Earnings
Net income $ 438 $ 401 $ 1,327 $ 1,117
Net interest income (FTE) (a) 1,016 979 3,090 2,898
- --------------------------------------------------------------------------------------------
Per Common Share
Basic earnings .75 .68 2.25 1.90
Diluted earnings .72 .66 2.18 1.84
Cash dividends declared .27 .245 .81 .735
Book value 16.32 14.95 16.32 14.95
- --------------------------------------------------------------------------------------------
Operating Ratios
Return on average assets 1.61% 1.60% 1.63% 1.54%
Return on common equity 18.59 18.56 19.08 17.87
Efficiency ratio 56.5 56.7 56.6 56.7
Equity to assets (period-end) 9.22 9.22 9.22 9.22
- --------------------------------------------------------------------------------------------
At September 30
Total assets $108,399 $99,479 $108,399 $99,479
Stockholders' equity 9,990 9,175 9,990 9,175
Nonperforming assets (b) 370 289 370 289
- --------------------------------------------------------------------------------------------
</TABLE>
(a) The FTE adjustment included in net interest income was $7 million and $9
million for the three months ended September 30, 1999 and 1998,
respectively, and $24 million and $27 million for the nine months ended
September 30, 1999 and 1998, respectively.
(b) Nonperforming assets and related ratios at September 30, 1999 and 1998 do
not include $113 million and $126 million, respectively, of nonperforming
assets classified as held for sale by accelerated disposition.
Fleet had net income of $438 million, or $.72 per diluted share, in the
third quarter of 1999, compared to $401 million, or $.66 per diluted share, in
the third quarter of 1998. Return on average assets (ROA) and return on common
equity (ROE) were 1.61% and 18.59%, respectively, for the third quarter of 1999,
compared to 1.60% and 18.56%, respectively, for the third quarter of 1998. Net
income for the first nine months of 1999 was $1,327 million compared to $1,117
million for the first nine months of 1998. Diluted earnings per share rose 18%
to $2.18 for the first nine months of 1999 compared with $1.84 earned in the
first nine months of 1998. ROA and ROE for the first nine months of 1999 were
1.63% and 19.08%, respectively, compared with 1.54% and 17.87%, respectively, in
1998. The nine months ended September 30, 1998 included merger-related charges
of $73 million ($44 million post-tax) pertaining to the acquisitions of Quick &
Reilly and the domestic consumer credit card operations of Advanta.
The increases in net income for both the quarterly and year-to-date
periods were largely due to strong growth in many of the corporation's
businesses, particularly brokerage and investment services, mortgage banking,
investment banking, and credit cards, as well as earnings from the recent
acquisitions of Sanwa Business Credit (Sanwa) and Merrill Lynch Specialists,
Inc. (MLSI).
INCOME STATEMENT ANALYSIS
<TABLE>
<CAPTION>
Net Interest Income
- --------------------------------------------------------------------------------------------
Three months Nine months
FTE Basis ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $1,796 $1,729 $5,357 $5,039
Tax-equivalent adjustment 7 9 24 27
Interest expense 787 759 2,291 2,168
- --------------------------------------------------------------------------------------------
Net interest income $1,016 $ 979 $3,090 $2,898
- --------------------------------------------------------------------------------------------
</TABLE>
Net interest income on a fully taxable equivalent (FTE) basis totaled
$1.016 billion for the quarter ended September 30, 1999, compared to $979
million for the same period in 1998. The increase was primarily attributable to
the inclusion of the results of Sanwa in 1999 and strong growth in the
corporation's commercial loan portfolio.
<TABLE>
<CAPTION>
Net Interest Margin and Interest-Rate Spread
- ---------------------------------------------------------------------------------------------
Three months ended Sept. 30 1999 1998
FTE Basis Average Average
Dollars in millions Balance Rate Balance Rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities $10,638 6.48% $10,010 6.62%
Loans 76,044 8.05 67,908 8.58
Mortgages held for resale 1,785 7.47 3,064 7.08
Due from brokers/dealers 2,903 4.85 3,380 5.25
Other 1,656 5.28 1,076 4.59
- ---------------------------------------------------------------------------------------------
Total interest-earning assets 93,026 7.71 85,438 8.11
- ---------------------------------------------------------------------------------------------
Deposits 48,695 3.16 50,967 3.67
Short-term borrowings 7,042 4.31 9,051 5.04
Due to brokers/dealers 3,947 5.05 4,350 5.00
Long-term debt 18,118 6.02 6,575 7.19
- ---------------------------------------------------------------------------------------------
Interest-bearing liabilities 77,802 4.03 70,943 4.25
- ---------------------------------------------------------------------------------------------
Interest-rate spread 3.68 3.86
Interest-free sources of funds 15,224 14,495
- ---------------------------------------------------------------------------------------------
Total sources of funds $93,026 $85,438
- ---------------------------------------------------------------------------------------------
Net interest margin 4.34% 4.58%
- ---------------------------------------------------------------------------------------------
</TABLE>
The corporation's net interest margin for the third quarter of 1999 was
4.34%. The 24 basis point decrease in net interest margin from the third quarter
of 1998 was primarily attributable to declining yields in
3
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
the commercial loan and credit card portfolios, as well as a change in the mix
of interest-earning assets, as higher yielding consumer loans, particularly
credit card balances, were replaced with higher levels of leases, commercial
loans and investment securities. These items were partially offset by declining
rates paid on long-term debt, short-term borrowings and deposits.
Average loans increased $8.1 billion to $76 billion, while the yield
declined 53 basis points. The growth in average loans resulted primarily from
increases in the commercial and lease financing portfolios, as the third quarter
of 1999 was positively impacted by the Sanwa acquisition, which added
approximately $6 billion of average loans and leases. The decline in the yield
was principally attributable to the decrease in short-term rates over the period
and the change in the mix of loans discussed above.
Average mortgages held for resale decreased $1.3 billion, or 42%, over the
third quarter of 1998, due to lower production volume at Fleet Mortgage caused
by a rise in mortgage rates. The increase in mortgage rates caused yields on
mortgages held for resale to increase 39 basis points.
The $2.3 billion decrease in average interest-bearing deposits compared to
the third quarter of 1998 was primarily attributable to a decrease in average
retail and wholesale time deposits as a result of the corporation utilizing
longer-term funding vehicles as well as the runoff of wholesale funding acquired
as part of the corporation's recent mergers and acquisitions. The 51 basis point
decline in the rates paid on deposits resulted from a lower interest-rate
environment during the third quarter of 1999, in addition to a change in the mix
of deposits, as time deposits were replaced with lower-cost money market
accounts.
The $2 billion decrease in average short-term borrowings was attributable
to the corporation's addition of long-term debt to fund balance sheet growth.
The $11.5 billion increase in average long-term debt was due primarily to
net increases in senior and subordinated debt and capital securities issued
throughout the fourth quarter of 1998 and throughout 1999 in order to fund
acquisitions and overall asset growth. The 117 basis point decrease in the
funding rate was due to the aforementioned debt being issued at lower floating
rates.
<TABLE>
<CAPTION>
Noninterest Income
- ---------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment services revenue $243 $210 $ 754 $ 631
Banking fees and commissions 203 197 590 556
Credit card revenue 172 117 477 271
Processing-related revenue 147 129 459 315
Capital markets revenue 123 124 456 369
Other noninterest income 79 66 227 206
- ---------------------------------------------------------------------------------------------
Total noninterest income $967 $843 $2,963 $2,348
- ---------------------------------------------------------------------------------------------
</TABLE>
Noninterest income for the third quarter of 1999 increased $124 million to
$967 million compared to $843 million for the same period in 1998, an increase
of 15%, reflecting the corporation's continued focus on developing, acquiring
and growing fee-based businesses. Increases were noted in all core revenue
categories and reflect revenues achieved from the acquisitions of Sanwa and
MLSI, as well as strong growth and volume at Fleet Credit Card Services and
Quick & Reilly, coupled with higher servicing volume at Fleet Mortgage.
<TABLE>
<CAPTION>
Investment Services Revenue
- ---------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment management revenue $142 $129 $425 $390
Brokerage fees and commissions 101 81 329 241
- ---------------------------------------------------------------------------------------------
Total investment services revenue $243 $210 $754 $631
- ---------------------------------------------------------------------------------------------
</TABLE>
Investment services revenue, which includes investment management revenues
as well as brokerage fees and commissions, increased $33 million, or 16%, over
the third quarter of 1998. Brokerage fees and commissions increased $20 million,
or 25%, over the third quarter of 1998, driven by a strong equity market and
trading volumes which benefited the brokerage and clearing units of Quick &
Reilly. The major components of investment management revenue are as follows:
<TABLE>
<CAPTION>
Investment Management Revenue
- ---------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Private clients group $ 58 $ 53 $173 $164
Retail investments 28 20 82 57
Columbia Management Company 25 25 74 75
Retirement plan services 18 17 54 50
Not-for-profit institutional services 12 12 37 37
Other 1 2 5 7
- ---------------------------------------------------------------------------------------------
Total $142 $129 $425 $390
- ---------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Investment management revenue increased 10% in the third quarter of 1999
to $142 million compared to $129 million in the third quarter of 1998. This
improvement was largely driven by growth in overall assets under management as
well as a 22% increase in the sales of mutual funds and annuities. Assets under
management grew 15% to $85 billion at September 30, 1999 from $74 billion at
September 30, 1998.
Banking Fees and Commissions
Banking fees and commissions, which includes fees received for cash
management, deposit accounts, electronic banking fees and other fees, increased
$6 million to $203 million.
Credit Card Revenue
Credit card revenue rose $55 million, or 47%, over the third quarter of
1998, primarily attributable to acquisitions of various credit card portfolios
during the latter half of 1998 and a decline in charge-offs within the
securitized credit card portfolio.
<TABLE>
<CAPTION>
Processing-Related Revenue
- ---------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage banking revenue, net $ 88 $ 76 $274 $172
Student loan servicing fees 35 31 105 89
Other 24 22 80 54
- ---------------------------------------------------------------------------------------------
Total processing-related revenue $147 $129 $459 $315
- ---------------------------------------------------------------------------------------------
</TABLE>
Processing-related revenue increased $18 million, or 14%, when compared to
the third quarter of 1998, reflecting increases in all components. Student loan
servicing fees increased $4 million, or 13%, at AFSA, the corporation's student
loan servicing subsidiary. AFSA services 6.8 million accounts nationwide, an
increase of 11% from accounts serviced as of September 30, 1998, and is the
largest student loan servicer in the United States, with over $68 billion in
loans serviced. Other processing-related revenue increased slightly over the
third quarter of 1998, due to higher tax and health care processing revenue.
<TABLE>
<CAPTION>
Mortgage Banking Revenue, Net
- ------------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loan servicing revenue $138 $110 $391 $340
Mortgage production revenue 38 60 145 145
Gains on sales of mortgage servicing -- -- -- 34
Mortgage servicing rights amortization (88) (94) (262) (272)
Impairment charge -- -- -- (75)
- ------------------------------------------------------------------------------------------------
Total mortgage banking revenue, net $ 88 $76 $274 $172
- ------------------------------------------------------------------------------------------------
</TABLE>
Net mortgage banking revenue was $88 million in the third quarter of 1999,
an increase of $12 million, or 16%, compared to the third quarter of 1998.
Loan servicing revenue represents fees received for servicing residential
mortgage loans. The $28 million increase in loan servicing revenue was primarily
the result of an increase in the size of the corporation's servicing portfolio.
The mortgage servicing portfolio increased $24.3 billion, or 20%, to $142.8
billion at September 30, 1999 compared to $118.5 billion at September 30, 1998.
Mortgage production revenue, which includes income derived from the loan
origination process and net gains on sales of mortgage loans, decreased $22
million from the third quarter of 1998 as a result of a lower level of gains on
sales of loans during the quarter. Loan production volume declined to $7.1
billion in the third quarter of 1999 compared to $9.5 billion in the same period
a year ago as a result of a rise in mortgage rates.
Mortgage servicing rights (MSRs) amortization declined $6 million to $88
million for the third quarter of 1999 when compared to $94 million for the third
quarter of 1998. This decline was the result of a lower level of prepayments in
the third quarter of 1999, which had the effect of extending the estimated
duration of the MSRs, thereby decreasing amortization expense.
<TABLE>
<CAPTION>
Capital Markets Revenue
- -------------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brokerage market-making revenue $ 60 $ 29 $207 $ 92
Venture capital revenue 24 21 110 90
Investment banking fees 23 11 68 29
Foreign exchange/interest-rate products 18 19 57 52
Securities trading (losses)/gains (2) 24 14 35
Securities gains -- 20 -- 71
- -------------------------------------------------------------------------------------------------
Total capital markets revenue $123 $124 $456 $369
- -------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital markets revenue was essentially flat compared to the same quarter in
1998. Increases in brokerage market-making, venture capital and investment
banking fees were offset by lower trading results and securities gains in the
third quarter of 1999 due to the unfavorable interest-rate environment.
The $31 million rise in brokerage market-making revenue from Fleet's
equity specialists businesses was a result of increased trading volumes and
market volatility as well as the acquisition of MLSI in December 1998.
Venture capital revenue at Fleet Private Equity, the corporation's venture
capital business, increased by $3 million when compared to the third quarter of
1998, as the corporation continued to experience gains in this business as a
result of strength in the equity markets. The corporation's ability to continue
to experience increases in the value of these venture capital investments
depends on a variety of factors, including the condition of the economy and
equity markets. Thus, the likelihood of such gains in the future cannot be
predicted.
Investment banking fees doubled compared to the third quarter of 1998, due
primarily to higher loan syndication activity from increased market penetration.
<TABLE>
<CAPTION>
Noninterest Expense
- -------------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Employee compensation and benefits $ 548 $ 489 $ 1,669 $1,415
Equipment 82 77 248 231
Occupancy 75 75 226 224
Intangible asset amortization 74 58 216 167
Legal and other professional 43 41 134 107
Marketing 40 35 107 97
Printing and mailing 26 25 80 71
Telephone 25 22 70 68
Other 207 220 673 604
- -------------------------------------------------------------------------------------------------
Total noninterest expense excluding
merger-related charges 1,120 1,042 3,423 2,984
Merger-related charges -- -- -- 73
- -------------------------------------------------------------------------------------------------
Total noninterest expense $1,120 $1,042 $3,423 $3,057
- -------------------------------------------------------------------------------------------------
</TABLE>
Noninterest expense for the third quarter of 1999 totaled $1.1 billion
compared to $1.0 billion for the same period in 1998. The $78 million increase
over the third quarter of 1998 was primarily the result of various acquisitions,
as well as higher expenses at Quick & Reilly due to increased volume. The
corporation's efficiency ratio declined slightly from 56.7% in the third quarter
of 1998 to 56.5% in the third quarter of 1999.
Employee compensation and benefits increased $59 million, or 12%, compared
with the third quarter of 1998, due primarily to incentive and volume-related
increases in compensation at many of the corporation's businesses, particularly
Quick & Reilly.
Intangible asset amortization increased $16 million to $74 million when
compared to the same period a year ago, as a result of goodwill added from
acquisitions in 1998 and 1999 as well as the ongoing earnout payment relating to
the 1996 NatWest Bancorp acquisition.
Income Taxes
The corporation recorded income tax expense of $280 million for the third
quarter of 1999 compared with $250 million for the same period a year ago. The
effective tax rate was 39.0% and 38.4% for the third quarter of 1999 and 1998,
respectively.
Lines of Business
The corporation is managed along five lines of business: Commercial
Financial Services, Retail Banking, Fleet Investment Group, National Financial
Services, and Treasury. Management accounting concepts are periodically refined
and results have been restated to reflect changes in methodology and
organizational structure. Net income by business line is shown in the following
table.
<TABLE>
<CAPTION>
Net Income by Lines of Business
- ---------------------------------------------------------------------------------------------
Three months Nine months
ended Sept. 30 ended Sept. 30
In millions 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Financial Services $147 $115 $ 444 $ 330
Retail Banking 112 109 292 314
Fleet Investment Group 75 57 240 171
National Financial Services 73 67 242 150
Treasury 24 35 71 96
All Other 7 18 38 56
- ---------------------------------------------------------------------------------------------
Total $438 $401 $1,327 $1,117
- ---------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Commercial Financial Services
- ---------------------------------------------------------------------------------------
Three months ended September 30, 1999 1998
In millions
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Income statement data:
Net interest income $ 416 $ 338
Noninterest income 126 99
------ ------
Total revenue 542 437
Provision for credit losses 62 43
Noninterest expense 243 207
Net income $ 147 $ 115
- ---------------------------------------------------------------------------------------
Balance sheet data:
Average total assets 57,361 44,523
Average loans 49,891 40,399
Average deposits 11,864 11,178
- ---------------------------------------------------------------------------------------
Return on equity 17% 21%
- ---------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Commercial financial services includes traditional commercial banking,
national, specialized and asset-based lending, as well as investment banking,
government banking, trade finance and cash management services. The 1999 results
reflect the first quarter 1999 acquisition of Sanwa, which had $7.4 billion in
average assets for the third quarter of 1999. Commercial financial services
earned $147 million in the third quarter of 1999, an increase of $32 million, or
28%, compared to the third quarter of 1998. Loan balances increased $9.5
billion, or 23%, significantly influenced by the acquisition of Sanwa, and
reflecting strong growth within the commercial banking, commercial real estate,
leasing, and specialty units. Excluding the Sanwa acquisition, loans grew by
$3.7 billion, or 9%, while revenues increased by $38 million, or 9%, driven by
strong loan growth and increased leasing, corporate finance, trade services and
tax processing activities.
<TABLE>
<CAPTION>
Retail Banking
- ---------------------------------------------------------------------------------------
Three months ended September 30, 1999 1998
In millions
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Income statement data:
Net interest income $ 445 $ 457
Noninterest income 171 163
----- -----
Total revenue 616 620
Provision for credit losses 25 28
Noninterest expense 386 389
Net income $ 112 $ 109
- ---------------------------------------------------------------------------------------
Balance sheet data:
Average loans 8,992 9,870
Average deposits 42,167 42,481
- ---------------------------------------------------------------------------------------
Return on equity 26% 25%
- ---------------------------------------------------------------------------------------
</TABLE>
Retail banking includes businesses engaged in consumer retail services
through branch banking and direct banking units, as well as small business
lending and deposit services. The retail banking unit earned $112 million in the
third quarter of 1999, up from $109 million in the third quarter of 1998. Higher
earnings were driven by increased fee revenues primarily due to higher service
charges on deposits and increased merchant fees on credit cards, enhanced by a
slightly lower level of operating expenses. The aforementioned increases were
partly offset by lower net interest income associated with declining loan and
deposit balances, excluding money market deposits, which have grown due to
aggressive pricing strategies. Lower levels of deposits reflect a continued
migration of customers to alternative higher rate investment products.
<TABLE>
<CAPTION>
Fleet Investment Group
- ---------------------------------------------------------------------------------------
Three months ended September 30, 1999 1998
In millions
- ---------------------------------------------------------------------------------------
Income statement data:
<S> <C> <C>
Net interest income $ 53 $ 48
Noninterest income 315 252
----- -----
Total revenue 368 300
Provision for credit losses 1 1
Noninterest expense 239 203
Net income $ 75 $ 57
- ---------------------------------------------------------------------------------------
Balance sheet data:
Average loans 5,558 4,020
Average deposits 1,861 2,022
- ---------------------------------------------------------------------------------------
Return on equity 20% 20%
- ---------------------------------------------------------------------------------------
Assets under management $85,009 $73,675
- ---------------------------------------------------------------------------------------
</TABLE>
Fleet Investment Group provides asset management services to
institutional and high net worth clients, retail mutual fund and annuity sales,
and securities brokerage services. Investment group earnings increased $18
million, or 32%, compared to the third quarter of 1998. Higher earnings were
driven by strong growth in brokerage market-making revenues, which increased $51
million at Quick & Reilly, while investment management revenues, which include
fees on assets under management and sales of retail investment products and
services, grew by $13 million, or 10%, compared to the third quarter of 1998.
Increased brokerage market-making revenues were partly attributable to the
December 1998 acquisition of MLSI, a unit of Quick & Reilly, as well as
increased trading volumes and market volatility. Higher investment management
revenues were driven by strong sales of mutual funds and annuity products, which
increased by 22%, as well as growth in assets under management, which climbed to
$85 billion at September 30, 1999, growth of 15% over the same period a year
ago.
<TABLE>
<CAPTION>
National Financial Services
- ---------------------------------------------------------------------------------------
Three months ended September 30, 1999 1998
In millions
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Income statement data:
Net interest income $ 84 $ 129
Noninterest income 341 271
----- -----
Total revenue 425 400
Provision for credit losses 72 72
Noninterest expense 235 219
Net income $ 73 $ 67
- ---------------------------------------------------------------------------------------
Balance sheet data:
Average loans 3,896 5,474
Average deposits 2,360 2,653
- ---------------------------------------------------------------------------------------
Return on equity 12% 11%
- ---------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
National financial services includes credit card services, mortgage
banking, private equity financing, and student loan processing. The following
table presents net income for the four principal businesses that comprise this
group.
National Financial Services
- -----------------------------------------------------------------------
Three months ended September 30, 1999 1998
In millions
- -----------------------------------------------------------------------
Credit card $39 $33
Mortgage banking 16 19
Private equity 11 9
Student loan processing 7 6
- -----------------------------------------------------------------------
Net income $73 $67
- -----------------------------------------------------------------------
Third quarter 1999 earnings increased $6 million compared to the same
quarter of 1998. Higher earnings were predominantly driven by fee revenues
generated in the credit card business, attributed to an ongoing management focus
on the underlying loan portfolio's credit quality. Mortgage banking earnings
declined $3 million from the third quarter of 1998 to $16 million, as the higher
mortgage rate environment has lowered production, which has reduced the level of
mortgage portfolio assets held for sale and associated escrow deposit balances,
reducing net interest income levels. Private equity's earnings were up 22% from
the prior year driven by the condition of the general economy and financial
markets.
<TABLE>
<CAPTION>
Treasury
- ---------------------------------------------------------------------------------------
Three months ended September 30, 1999 1998
In millions
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Income statement data:
Net interest income $ 33 $ 29
Noninterest income 16 36
------ ------
Total revenue 49 65
Provision for credit losses 3 4
Noninterest expense 18 17
Net income $ 24 $ 35
- ---------------------------------------------------------------------------------------
Balance sheet data:
Average loans 7,092 7,576
Average securities 9,523 9,136
Average deposits 6,780 7,476
- ---------------------------------------------------------------------------------------
Return on equity 34% 47%
- ---------------------------------------------------------------------------------------
</TABLE>
Treasury is responsible for managing the corporation's securities and
residential mortgage portfolios, trading operations, asset-liability management
function and wholesale funding needs. The treasury unit earned $24 million in
the third quarter of 1999, down $11 million from the same quarter a year ago,
primarily due to securities gains recorded in the third quarter of 1998; this
decrease was partly offset by an increase in net interest income driven by
higher securities balances and overnight investments. Excluding these securities
gains, net income increased by $1 million.
All Other
All Other includes allocated support units, the management accounting
control units, and certain transactions or events not driven by specific
business lines. Accordingly, earnings in All Other can fluctuate with changes
affecting consolidated provision for credit losses, one-time charges, gains and
other actions not driven by specific business units.
ANALYSIS OF FINANCIAL CONDITION
Securities
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
September 30, 1999 June 30, 1999 December 31, 1998
------------------ ------------- -----------------
Amortized Market Amortized Market Amortized Market
In millions Cost Value Cost Value Cost Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities available for sale:
U.S. Treasury and government agencies $ 232 $ 229 $ 232 $ 231 $ 434 $ 437
Mortgage-backed securities 8,084 7,871 8,342 8,172 7,784 7,982
Other debt securities 577 559 552 541 792 802
- ----------------------------------------------------------------------------------------------------------------------------------
Total debt securities 8,893 8,659 9,126 8,944 9,010 9,221
- ----------------------------------------------------------------------------------------------------------------------------------
Marketable equity securities 148 147 129 129 100 100
Other securities 463 463 463 463 403 403
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities available for sale 9,504 9,269 9,718 9,536 9,513 9,724
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities held to maturity 1,117 1,119 925 928 1,068 1,073
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities $10,621 $10,388 $10,643 $10,464 $10,581 $10,797
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Compared to December 31, 1998, the amortized cost of securities available
for sale was relatively unchanged at September 30, 1999. The valuation
adjustment of securities available for sale decreased $446 million to an
unrealized loss of $235 million at September 30, 1999. This decline generally
resulted from an increase in interest rates during the first nine months of
1999.
<TABLE>
<CAPTION>
Loans
- ----------------------------------------------------------------------------------------------
Sept. 30, June 30, Dec. 31,
In millions 1999 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial and industrial $39,573 $39,089 $37,167
Lease financing 8,977 8,566 4,225
Commercial real estate 5,867 6,079 5,374
Consumer 22,149 21,553 22,630
- ----------------------------------------------------------------------------------------------
Total loans $76,566 $75,287 $69,396
- ----------------------------------------------------------------------------------------------
</TABLE>
Total loans increased $7.2 billion from December 31, 1998 to $76.6 billion
at September 30, 1999. The increase was the result of commercial and industrial
(C&I) loans increasing $2.4 billion and lease financings increasing $4.8 billion
from December 31, 1998 to September 30, 1999, due primarily to the addition of
Sanwa loans and leases in the first quarter of 1999, as well as growth in the
C&I and lease financing portfolios.
<TABLE>
<CAPTION>
Consumer Loans
- ----------------------------------------------------------------------------------------------
Sept. 30, June 30, Dec. 31,
In millions 1999 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Residential real estate $9,356 $9,141 $9,314
Home equity 4,521 4,292 4,257
Credit card 4,198 3,782 5,673
Student loans 675 679 812
Installment/other 3,399 3,659 2,574
- ----------------------------------------------------------------------------------------------
Total $22,149 $21,553 $22,630
- ----------------------------------------------------------------------------------------------
</TABLE>
Consumer loans decreased $481 million from December 31, 1998. The decrease
was primarily the result of a $1.5 billion decrease in credit card loans, as
$4.0 billion of credit card receivables were transferred to the securitized
portfolio during the first nine months of 1999 in order to replenish the
off-balance sheet securitized credit card pools. In addition, during the first
nine months of 1999, the corporation's credit card subsidiary, Fleet Credit Card
Services, continued its strategy of transitioning from a primarily one product
portfolio to a multi-product portfolio by replacing promotional rate products
with a stable fixed-rate offering, with improved credit quality and lower
expected charge-offs and attrition rates. The $825 million increase in
installment/other when compared to December 31, 1998 was due to an increase in
margin loans at Quick & Reilly as a result of the strong equity markets.
<TABLE>
<CAPTION>
Nonperforming Assets(a)(b)
- ---------------------------------------------------------------------------------------------------
In millions C&I CRE Consumer Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonperforming loans:
Current or less than 90 days
past due $194 $ 5 $ 7 $206
Noncurrent 84 24 43 151
Other real estate owned (OREO) 2 3 8 13
- ---------------------------------------------------------------------------------------------------
Total NPAs September 30, 1999 $280 $32 $58 $370
- ---------------------------------------------------------------------------------------------------
Total NPAs June 30, 1999 $225 $30 $63 $318
- ---------------------------------------------------------------------------------------------------
Total NPAs December 31, 1998 $173 $57 $52 $282
- ---------------------------------------------------------------------------------------------------
</TABLE>
(a) Throughout this document, NPAs and related ratios do not include loans
greater than 90 days past due and still accruing interest ($232 million,
$216 million and $234 million at September 30, 1999, June 30, 1999 and
December 31, 1998, respectively). Included in the 90 days past due and
still accruing interest category were $169 million, $174 million and $209
million of consumer and residential loans at September 30, 1999, June 30,
1999 and December 31, 1998, respectively.
(b) Nonperforming assets and related ratios at September 30, 1999, June 30,
1999 and December 31, 1998 do not include $113 million, $170 million and
$46 million, respectively, of nonperforming assets classified as held for
sale by accelerated disposition.
Nonperforming assets (NPAs) increased $88 million to $370 million when
compared with December 31, 1998, as a $107 million increase in C&I nonperforming
loans (NPLs), principally due to the addition of several large credits during
the year, and a $9 million increase in consumer NPLs were partially offset by a
$24 million decline in commercial real estate (CRE) NPLs. OREO declined $4
million to $13 million at September 30, 1999 when compared to December 31, 1998.
NPAs at September 30, 1999 as a percentage of total loans and OREO and as a
percentage of total assets, were .48% and .34%, respectively, compared to .41%
and .27%, respectively, at December 31, 1998.
During the first nine months of 1999, the corporation transferred $84
million of loans, primarily C&I loans, to an assets held for sale by accelerated
disposition pool (ADP), which is included in other assets. Additionally, $62
million of nonperforming leases and asset-backed loans pertaining to the Sanwa
acquisition were transferred to the ADP in the first quarter of 1999. The
transfer of these nonperforming loans and leases was the result of management's
decision to accelerate the disposition of these assets.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reserve for Credit Loss Activity
- --------------------------------------------------------------------------------
Nine months ended September 30 1999 1998
Dollars in millions
- --------------------------------------------------------------------------------
Balance at beginning of year $ 1,552 $ 1,432
Loans charged off (566) (440)
Recoveries of loans charged off 113 110
- --------------------------------------------------------------------------------
Net charge-offs (453) (330)
Provision charged against income 433 330
Acquisitions/Other 172 120
- --------------------------------------------------------------------------------
Balance at end of period $ 1,704 $ 1,552
- --------------------------------------------------------------------------------
Ratio of net charge-offs to average loans .81% .67%
- --------------------------------------------------------------------------------
Ratio of reserve for credit losses to period-end
loans 2.22 2.28
- --------------------------------------------------------------------------------
Ratio of reserve for credit losses to period-end
nonperforming loans 477 566
- --------------------------------------------------------------------------------
Fleet's reserve for credit losses increased from $1.5 billion at December
31, 1998 to $1.7 billion at September 30, 1999. The increase was a result of
reserves acquired as part of the Sanwa acquisition. The provision for credit
losses for the first nine months of 1999 was $433 million, $103 million higher
than the first nine months of 1998. The increase in provision was primarily the
result of increased charge-offs in the credit card and lease financing
portfolios as well as an increase in C&I charge-offs from unusually low levels
in 1998.
Funding Sources
- --------------------------------------------------------------------------------
Sept. 30, June 30, Dec. 31,
In millions 1999 1999 1998
- --------------------------------------------------------------------------------
Deposits:
Demand $11,579 $11,807 $13,400
Regular savings and NOW 4,868 5,259 5,399
Money market 28,967 29,350 29,297
Time:
Domestic 15,284 16,659 17,764
Foreign 3,276 3,269 3,818
- --------------------------------------------------------------------------------
Total deposits 63,974 66,344 69,678
- --------------------------------------------------------------------------------
Short-term borrowed funds:
Federal funds purchased 408 960 1,857
Securities sold under agreements
to repurchase 2,746 2,547 2,599
Commercial paper 1,191 819 943
Other 2,543 2,560 3,913
- --------------------------------------------------------------------------------
Total short-term borrowed funds 6,888 6,886 9,312
- --------------------------------------------------------------------------------
Due to brokers/dealers 3,884 3,775 3,975
Long-term debt 19,789 16,436 8,820
- --------------------------------------------------------------------------------
Total $94,535 $93,441 $91,785
- --------------------------------------------------------------------------------
Total deposits decreased $5.7 billion to $64.0 billion at September 30,
1999 when compared to December 31, 1998, due principally to a $1.8 billion
decrease in demand deposits as a result of higher seasonal business deposits in
December. Additionally, domestic time deposits decreased $2.5 billion. This
decrease was principally the result of a $702 million decrease in retail CD's
resulting from the maturity of promotional CD's with higher rates, as well as a
$951 million decline in brokered CD's, resulting from maturities during the
first nine months of 1999. These brokered CD's had been acquired as a part of
the corporation's recent mergers and acquisitions. Foreign time deposits
declined $542 million since December 31, 1998 due to seasonal patterns. The $2.4
billion decrease in short-term borrowings since December 31, 1998 was primarily
attributable to a $1.5 billion decrease in federal funds purchased, a $500
million decrease in short-term bank notes, and a $736 million decrease in
treasury, tax and loan borrowings, as the funding mix of the corporation changed
to a longer term tenor.
Long-term debt increased $11.0 billion to $19.8 billion at September 30,
1999 when compared to December 31, 1998, due to the issuance of debt to fund
acquisitions and balance sheet growth, as well as a concerted effort to decrease
short-term borrowings.
ASSET-LIABILITY MANAGEMENT
The goal of asset-liability management is the prudent control of market
risk, liquidity, and capital. The Asset-Liability Management Committee (ALCO) is
responsible for implementing the Board's policies and guidelines governing
liquidity.
Market Risk
Market risk is the sensitivity of income to variations in interest rates,
foreign exchange rates, equity prices, commodity prices, and other market-driven
rates or prices. As discussed below, the corporation is exposed to market risk
in both its non-trading and trading operations.
Non-trading Market Risk
Interest-rate risk, including mortgage prepayment risk, is by far the most
significant non-trading market risk to which the corporation is exposed.
Interest-rate risk is the sensitivity of income and financial position to
variations in interest rates.
The major source of the corporation's non-trading interest-rate risk is
the difference in the repricing characteristics of the corporation's core
banking assets and liabilities - loans and deposits. This difference, or
mismatch, is a risk to net interest income.
The corporation's Board of Directors (Board)- approved limits on
interest-rate risk specify that if interest rates were to shift immediately up
or down 200 basis points, estimated net interest income for the subsequent 12
months should decline by less than 7.5%. The corporation was in compliance with
this limit at September 30, 1999. The following ta-
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ble reflects the estimated exposure of the corporation's net interest income for
the next 12 months, assuming an immediate shift in interest rates.
September 30, 1999 Estimated Exposure to
Rate Change Net Interest Income
(Basis Points) (In millions)
- --------------------------------------------------------------------------------
+200 $ (57)
-200 1
- --------------------------------------------------------------------------------
Net interest income exposure to an immediate +/- 200 bps change in
interest rates remains low. The impact of planned merger-related branch
divestitures is incorporated in these estimates. Exposure due to the option risk
embedded in various core businesses, e.g. refinancing of mortgage loans and
withdrawal of noncontractual deposits, is reduced as a result of the
divestiture.
<TABLE>
<CAPTION>
Risk-Management Instrument Analysis
- ------------------------------------------------------------------------------------------------------------------------
Weighted
Assets- Average
September 30, 1999 Notional Liabilities Maturity
Dollars in millions Value Hedged (Years)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest-rate risk-management instruments Interest-rate swaps:
Receive-fixed/pay-variable $11,975 Variable-rate loans
280 Fixed-rate deposits
2,499 Long-term debt
--------
14,754 2.1
- ------------------------------------------------------------------------------------------------------------------------
Basis swaps 3,050 Long-term debt .4
- ------------------------------------------------------------------------------------------------------------------------
Total hedges of net interest income 17,804 1.8
- ------------------------------------------------------------------------------------------------------------------------
Mortgage banking risk-management instruments Interest-rate swaps:
Receive-fixed/pay-variable, PO swaps 6,836 Mortgage servicing rights 2.6
Futures contracts:
Futures 40 Mortgage servicing rights .2
Options:
Interest-rate floors and options on swaps 34,060 Mortgage servicing rights 4.1
Interest-rate caps and cap corridors 9,825 Mortgage servicing rights 4.3
Other 300 Mortgage servicing rights .1
- ------------------------------------------------------------------------------------------------------------------------
Total options 44,185 4.1
- ------------------------------------------------------------------------------------------------------------------------
Total hedges of mortgage servicing rights 51,061 3.9
- ------------------------------------------------------------------------------------------------------------------------
Total risk-management instruments $68,865 3.4
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Weighted Average
Rate
September 30, 1999 Fair -------------------
Dollars in millions Value Receive Pay
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest-rate risk-management instruments Interest-rate swaps:
$(162) 6.63% 6.24%
- -------------------------------------------------------------------------------------------------------------
Basis swaps 3 5.45 5.54
- -------------------------------------------------------------------------------------------------------------
Total hedges of net interest income (159) 6.43 6.12
- -------------------------------------------------------------------------------------------------------------
Mortgage banking risk-management instruments Interest-rate swaps:
Receive-fixed/pay-variable, PO swaps (119) 6.58 5.76
Futures contracts:
Futures -- -- --
Options:
Interest-rate floors and options on swaps 133 -- (a) -- (a)
Interest-rate caps and cap corridors 206 -- (a) -- (a)
Other -- -- --
- -------------------------------------------------------------------------------------------------------------
Total options 339 -- --
- -------------------------------------------------------------------------------------------------------------
Total hedges of mortgage servicing rights 220 6.58 5.76
- -------------------------------------------------------------------------------------------------------------
Total risk-management instruments $61 6.47% 6.02%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The mortgage banking risk-management interest-rate floors and options on
swaps, and interest-rate caps and cap corridors have weighted average
strike rates of 5.07% and 6.52%, respectively.
Off-balance sheet interest-rate instruments used to manage net interest
income are designated as hedges of specific assets and liabilities. Accrual
accounting is applied to these hedges, and the income or expense is recorded in
the same category as that of the related balance sheet item. As of September 30,
1999, the corporation had net deferred income of $8.6 million related to
interest-rate contracts, which will be amortized over the remaining life of the
underlying contracts of approximately 5 years.
A second major source of the corporation's non-trading interest-rate risk
is the sensitivity of its mortgage servicing rights (MSRs) to prepayments. Since
MSRs represent the right to service mortgage loans, a decline in interest rates
and an actual, or probable, increase in mortgage prepayments shorten the
expected life of the MSR asset and reduce its economic value. Correspondingly,
an increase in interest rates and an actual, or probable, decline in mortgage
prepayments lengthen the expected life of the MSR asset and enhance its economic
value. The expected income from and, therefore, economic value of MSRs is
sensitive to movements in interest rates due to this sensitivity to mortgage
prepayments.
The interest-rate instruments used to manage potential impairment of MSRs
are designated as hedges of the MSRs. Changes in fair value of the hedges are
recorded as adjustments to the carrying value of the MSRs and related hedges.
During the third quarter of 1999, net hedge losses of $89 million were recorded
as adjustments to the carrying value of the MSRs and related hedges. At
September 30, 1999, the carrying value and fair value of the corporation's MSRs
were $3.0 billion and $3.3 billion, respectively.
In connection with the corporation's management of its MSR hedge program,
the corporation terminated (in notional amounts) $4.9 billion of interest-rate
floor and options on swaps agreements and added $5.4 billion of interest-rate
floor and options on swaps agreements during the third quarter of
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1999. Additionally, during the quarter the corporation terminated $7.7 billion
of interest-rate cap corridors and $4.6 billion of interest-rate swap contracts
while it added $3.5 billion of interest-rate cap corridors and $2.3 billion of
interest-rate swap contracts, in its management of the MSR hedge program.
The corporation also performs valuation analysis which involves projecting
future cash flows from the corporation's assets, liabilities and off-balance
sheet positions over a very long-term horizon, discounting those cash flows at
appropriate interest rates, and then summing the discounted cash flows. The
corporation's "economic value of equity" (EVE) is the estimated net present
value of the discounted cash flows.
The corporation's Board-approved limits on interest-rate risk specify that
if interest rates shift immediately up or down 200 basis points, the estimated
economic value of equity should decline by less than 10%. The following table
reflects the corporation's estimated exposure to economic value assuming an
immediate shift in interest rates. Exposures are reported for shifts of +/- 100
basis points, as well as +/- 200 basis points because the sensitivity of EVE, in
particular, the sensitivity of the hedged MSRs, to changes in interest rates can
be nonlinear. Given the assumption of an immediate interest-rate movement with
no management intervention, the corporation would be adversely impacted by the
following rate changes in either direction.
September 30, 1999 Estimated Exposure to
Rate Change Economic Value
(Basis Points) (In millions)
- -------------------------------------------------------------------------
+200 $ (534)
+100 (293)
-100 (297)
-200 (1,020)
- -------------------------------------------------------------------------
The corporation's economic value exposure as of September 30, 1999 is
within management guidelines and complies with Board-approved limits. The impact
of planned merger-related branch divestitures is incorporated in these
estimates. The larger exposure to falling rates results from the sensitivity of
MSRs which while, well hedged against modest changes in interest rates, are not
currently fully hedged against an immediate and extreme decline in interest
rates. Excluding this position, economic value exposure is modest and
symmetrical.
Trading Market Risk
The corporation's trading portfolios are exposed to market risk due to
variations in interest rates, currency exchange rates, equity prices, precious
metals prices, and related market volatilities. This exposure arises in the
normal course of the corporation's business as a financial intermediary.
The corporation uses an "earnings at risk" (EAR) system, based on an
industry-standard risk measurement methodology, to measure the overall market
risk inherent in its trading activities. The average daily exposure to this
market risk was $17.5 million, and the maximum daily exposure was $21.5 million,
during the third quarter of 1999.
Liquidity Risk
The objective of liquidity risk management is to assure the ability of the
corporation and its subsidiaries to meet their financial obligations. These
obligations are the withdrawal of deposits on demand or at their contractual
maturity, the repayment of borrowings as they mature, the ability to fund new
and existing loan commitments and the ability to take advantage of new business
opportunities. Liquidity is achieved by the maintenance of a strong base of core
customer funds, maturing short-term assets, the ability to sell marketable
securities and securitize consumer asset receivables, committed lines of credit
and access to capital markets. Liquidity at Fleet is measured and monitored
daily, allowing management to better understand and react to balance sheet
trends.
Liquidity at the bank level is managed through the monitoring of
anticipated changes in loans, core deposits, and wholesale funds.
Diversification of liquidity sources by maturity, market, product, and
counterparty is mandated through ALCO guidelines. The corporation's banking
subsidiaries routinely model liquidity under three economic scenarios, two of
which involve increasing levels of economic difficulty and financial market
strain. Management also maintains a detailed liquidity contingency plan designed
to respond either to an overall decline in the condition of the banking industry
or a problem specific to Fleet. The strength of Fleet's liquidity position is a
result of its base of core customer deposits. These core deposits are
supplemented by wholesale funding sources in the capital markets, as well as
from direct customer contacts. Wholesale funding sources include large
certificates of deposit, foreign branch deposits, federal funds, collateralized
borrowings, and a bank-note program.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The primary sources of liquidity for the parent company are interest and
dividends from subsidiaries, committed lines of credit and access to the money
and capital markets. Dividends from banking subsidiaries are limited by various
regulatory requirements related to capital adequacy and earnings trends. The
corporation's subsidiaries rely on cash flows from operations, core deposits,
borrowings, short-term high-quality liquid assets, and, in the case of
nonbanking subsidiaries, funds from the parent company.
At September 30, 1999 and December 31, 1998, the corporation had
commercial paper outstanding of $1.2 billion and $943 million, respectively. The
corporation has a backup line of credit to ensure that funding is not
interrupted if commercial paper is not available. The total amount of funds
available under this agreement was $1 billion at September 30, 1999, with no
outstanding balance under this line of credit.
Fleet has a shelf registration statement that provides for the issuance
of common and preferred stock, senior or subordinated debt securities, and other
securities, with availability of approximately $852 million at September 30,
1999.
CAPITAL
- -------------------------------------------------------------------------------
Sept. 30, June 30, Dec. 31,
1999 1999 1998
- -------------------------------------------------------------------------------
Risk-adjusted assets
(in millions) $110,991 $108,940 $104,372
Tier 1 risk-based capital
(4% minimum) 7.06% 7.03% 7.08%
Total risk-based capital
(8% minimum) 11.12 11.19 11.22
Leverage ratio (4% minimum) 7.39 7.25 7.48
Common equity-to-assets 8.58 8.46 8.35
Total equity-to-assets 9.22 9.11 9.01
Tangible common equity-to-
assets 5.54 5.47 5.53
Tangible total equity-to-assets 6.20 6.13 6.21
- -------------------------------------------------------------------------------
At September 30, 1999, the corporation exceeded all regulatory required
minimum capital ratios, as Fleet's Tier 1 and Total risk-based capital ratios
were 7.06% and 11.12%, respectively, compared with 7.03% and 11.19%,
respectively, at June 30, 1999. The leverage ratio, a measure of Tier 1 capital
to average quarterly assets, was 7.39% at September 30, 1999 compared with 7.25%
at June 30, 1999.
Impact of the Year 2000 Issue
The corporation's Year 2000 project has been directed by a Year 2000
Executive Management Steering Committee consisting of its President and Vice
Chairmen. The committee provides direct oversight of the Year 2000 initiative
and continues to be updated monthly on the project's progress. The corporation's
Board of Directors continues to receive formal project updates on a quarterly
basis.
The corporation has completed its assessment of Year 2000 issues,
developed a plan, and arranged for the required resources to complete the
necessary remediation efforts for both information technology and
non-information technology systems and processes. The corporation continues to
utilize both internal and external resources to ensure the corporation is
prepared for the Year 2000. The corporation will continue to focus on the
following key areas during the fourth quarter of 1999: testing, vendor
management, event planning and communication with customers. Additionally, the
corporation continues to work on high priority new business technological
initiatives that it deems critical to its ongoing business success.
The corporation has completed the remediation and testing of its internal
systems, and considers itself "Y2K Ready" - meaning 100% of the corporation's
internal systems have been successfully remediated, tested and placed back into
production and are ready for the Year 2000. The corporation expects to conduct
business as usual in the Year 2000 and beyond. This activity continues to track
in accordance with the original plan and in accordance with Federal Financial
Institutions Examination Council (FFIEC) guidelines.
The corporation relies on several vendors and service providers for key
business processes. The corporation continues to work closely with these vendors
and service providers. Validation of Year 2000 readiness of all the
corporation's vendors and service providers continues with a particular focus on
alternatives, where possible, for vendors and service providers that have been
identified as critical. The corporation's senior management has conducted
on-site visits and in many cases follow-up discussions with its most critical
service providers to further assess their Year 2000 readiness. All critical
vendors and service providers have represented themselves to the corporation as
Year 2000 compliant. In addition, the corporation has completed necessary
testing with the corporation's significant vendors, service providers, and
regulatory agencies. Testing was conducted with selected customers who
electronically exchange data with the corporation.
Until and after the Year 2000 rollover takes place, there can be no
assurance that Year 2000 related problems will not occur, particularly problems
relative to the Year 2000 readiness of third parties on which the corporation
relies. The Year 2000 is an un-
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
precedented event. Despite the corporation's efforts to identify and address
Year 2000 issues, such issues present risks to the corporation. Such risks
include business disruptions, operational problems, financial losses, legal
liability, and other similar risks. The corporation's businesses, results of
operations, and financial position could be materially adversely affected.
The corporation had previously established business resumption plans for
its lines of business and subsidiaries. These plans have been reviewed and where
appropriate have been enhanced to address potential Year 2000 failure scenarios.
In addition, a corporate-wide Year 2000 Event Plan has been developed to govern
the corporation's activities prior to, during and after the calendar rollover to
2000. The Event Plan has been validated by conducting unit specific structured
walkthroughs, employee notification tests and structured plan walk-throughs
between interdependent units. Event Plans will continue to be updated, as
appropriate, through the fourth quarter of 1999. In addition to the components
listed above, the corporation has validated its approach to Year 2000 Event
Planning by conducting an independent assessment of the strategy and process.
The corporation has also implemented a plan consisting of several
components to monitor fiduciary risk. For example, from an investment risk
perspective, the corporation continues to assess the level of preparedness of
underlying equity and fixed income positions executed on behalf of its
customers. This activity will continue through year-end 1999.
The corporation's credit risk associated with borrowers may increase to
the extent borrowers are not adequately prepared for the Year 2000. As a result,
there may be increases in the corporation's problem loans and credit losses
during and subsequent to the Year 2000. However, to mitigate the risk, the
corporation has continued to assess quarterly the Year 2000 readiness of
material business relationships to which it extends credit. The assessment
determines the customers' level of Year 2000 preparedness and their level of
dependency on technology. Factored together with the overall credit rating of
the customer, the corporation identifies those customers that present an
unacceptable risk to the corporation due to the Year 2000. Of the material
relationships the corporation has assessed, approximately one percent has
presently been identified as unacceptable in their level of Year 2000
preparedness and have been required to take action to mitigate their Year 2000
risk. Therefore, the corporation does not expect to experience any major loan
loss due to the Year 2000 issue and, at this time, does not expect to adjust its
reserve for credit losses. The corporation will continue to reassess the
readiness of customers receiving the unacceptable rating through year-end 1999
to ensure that the proper steps have been taken.
As an integral part of the corporation's risk assessment process, the
corporation has also assessed its material funds providers. The assessment
sought to determine the funds providers' level of Year 2000 preparedness and
their level of dependency on technology. Ninety-seven percent of material funds
providers have been identified as acceptable in their level of Year 2000
preparedness. Utilizing the same process, the corporation also assessed its
material funds takers, which include financial institutions to which the
corporation provides short-term funds and its material counterparties that have
a capital markets relationship with the corporation. One hundred percent of
material funds takers and ninety-eight percent of material counterparties have
been identified as acceptable in their level of Year 2000 preparedness. The
corporation will continue to closely monitor these funds providers, funds takers
and counterparties through year-end 1999.
The corporation will continue communicating with employees and customers
through year-end 1999 to discuss its readiness through a variety of
communication vehicles: branch posters; displays; take-one brochures; statement
messages and inserts; ATM on-screen and receipt messages; direct mail
initiatives; direct discussions with customers; seminars; and through the
corporation's internet web site (www.fleet.com).
The corporation continues to anticipate that the cost of the Year 2000
project will be approximately $150 million. The corporation incurred $8 million
during the third quarter of 1999 and has incurred $117 million of expenses since
the inception of this project.
CAUTIONARY STATEMENT
This Quarterly Report on Form 10-Q contains statements relating to future
results of the corporation (including certain projections and business trends)
that are considered "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Actual results may differ materially
from those projected as a result of certain risks and uncertainties, including
but not limited to changes in political and economic conditions, either
internationally or in the states in which the corpora-
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
tion conducts its business; interest-rate and foreign currency fluctuations;
competitive product and pricing pressures within the corporation's market;
equity and bond market fluctuations; personal and corporate customers'
bankruptcies; inflation; lower than expected savings associated with mergers and
acquisitions and integrations of acquired businesses (particularly with respect
to the BankBoston merger); lower than expected revenues following mergers and
acquisitions (particularly with respect to the BankBoston merger); greater than
expected negative impact of the regulatory required divestitures in connection
with mergers and acquisitions; risks relating to Year 2000 issues (particularly
with respect to compliance by third parties on which the corporation relies);
adverse legislation or regulatory changes affecting the businesses in which
Fleet is engaged; as well as other risks and uncertainties detailed from time to
time in the filings of the corporation with the Securities and Exchange
Commission.
RECENT ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
comprehensive accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and
hedging activities. The standard requires that all derivative instruments be
recorded in the balance sheet at fair value. However, the accounting for
changes in fair value of the derivative instrument depends on whether the
derivative instrument qualifies as a hedge. If the derivative instrument does
not qualify as a hedge, changes in fair value are reported in earnings when they
occur. If the derivative instrument qualifies as a hedge, the accounting
treatment varies based on the type of risk being hedged.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective date of FASB
Statement No. 133." SFAS No. 137 deferred the effective date of SFAS No. 133 to
fiscal years beginning after June 15, 2000. The corporation intends to adopt
SFAS No. 133 as of January 1, 2001. The adoption of this standard may cause
volatility in both the income statement and the equity section of the balance
sheet. The impact of this Statement cannot be currently estimated and will be
dependent upon the fair value, nature and purpose of the derivative instruments
held by the corporation as of January 1, 2001.
15
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
- -----------------------------------------------------------------------
For the three months ended September 30 1999 1998
In millions, except per share amounts
- -----------------------------------------------------------------------
Interest and fees on loans $1,577 $1,514
Interest on securities 172 164
Other 47 51
- -----------------------------------------------------------------------
Total interest income 1,796 1,729
- -----------------------------------------------------------------------
Interest expense:
Deposits 388 471
Short-term borrowings 76 115
Long-term debt 273 118
Other 50 55
- -----------------------------------------------------------------------
Total interest expense 787 759
- -----------------------------------------------------------------------
Net interest income 1,009 970
- -----------------------------------------------------------------------
Provision for credit losses 138 120
- -----------------------------------------------------------------------
Net interest income after provision for credit losses 871 850
- -----------------------------------------------------------------------
Noninterest income:
Investment services revenue 243 210
Banking fees and commissions 203 197
Credit card revenue 172 117
Processing-related revenue 147 129
Capital markets revenue 123 124
Other 79 66
- -----------------------------------------------------------------------
Total noninterest income 967 843
- -----------------------------------------------------------------------
Noninterest expense:
Employee compensation and benefits 548 489
Equipment 82 77
Occupancy 75 75
Intangible asset amortization 74 58
Legal and other professional 43 41
Other 298 302
- -----------------------------------------------------------------------
Total noninterest expense 1,120 1,042
- -----------------------------------------------------------------------
Income before income taxes 718 651
Applicable income taxes 280 250
- -----------------------------------------------------------------------
Net Income $ 438 $ 401
- -----------------------------------------------------------------------
Net income applicable to common shares $ 426 $ 388
Basic earnings per share .75 .68
Diluted earnings per share .72 .66
Dividends declared .27 .245
Diluted weighted average common shares outstanding 589.1 587.1
- -----------------------------------------------------------------------
See accompanying Condensed Notes to Consolidated Financial Statements.
16
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
- --------------------------------------------------------------------------------
For the nine months ended September 30 1999 1998
In millions, except per share amounts
- --------------------------------------------------------------------------------
Interest and fees on loans $4,693 $4,372
Interest on securities 523 506
Other 141 161
- --------------------------------------------------------------------------------
Total interest income 5,357 5,039
- --------------------------------------------------------------------------------
Interest expense:
Deposits 1,215 1,383
Short-term borrowings 229 305
Long-term debt 710 311
Other 137 169
- --------------------------------------------------------------------------------
Total interest expense 2,291 2,168
- --------------------------------------------------------------------------------
Net interest income 3,066 2,871
- --------------------------------------------------------------------------------
Provision for credit losses 433 330
- --------------------------------------------------------------------------------
Net interest income after provision for credit losses 2,633 2,541
- --------------------------------------------------------------------------------
Noninterest income:
Investment services revenue 754 631
Banking fees and commissions 590 556
Credit card revenue 477 271
Processing-related revenue 459 315
Capital markets revenue 456 369
Other 227 206
- --------------------------------------------------------------------------------
Total noninterest income 2,963 2,348
- --------------------------------------------------------------------------------
Noninterest expense:
Employee compensation and benefits 1,669 1,415
Equipment 248 231
Occupancy 226 224
Intangible asset amortization 216 167
Legal and other professional 134 107
Other 930 913
- --------------------------------------------------------------------------------
Total noninterest expense 3,423 3,057
- --------------------------------------------------------------------------------
Income before income taxes 2,173 1,832
Applicable income taxes 846 715
- --------------------------------------------------------------------------------
Net Income $1,327 $1,117
- --------------------------------------------------------------------------------
Net income applicable to common shares $1,283 $1,079
Basic earnings per share 2.25 1.90
Diluted earnings per share 2.18 1.84
Dividends declared .81 .735
Diluted weighted average common shares outstanding 588.9 587.6
- --------------------------------------------------------------------------------
See accompanying Condensed Notes to Consolidated Financial Statements.
17
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
September 30, December 31,
In millions, except share amounts 1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 4,771 $ 5,738
Securities (market value: $10,388 and $10,797) 10,386 10,792
Loans 76,566 69,396
Reserve for credit losses (1,704) (1,552)
- -------------------------------------------------------------------------------------------------------------------------
Net loans 74,862 67,844
- -------------------------------------------------------------------------------------------------------------------------
Due from brokers/dealers 2,856 3,600
Mortgages held for resale 1,030 3,960
Premises and equipment 1,232 1,229
Mortgage servicing rights 2,965 1,405
Intangible assets 3,487 3,117
Other assets 6,810 6,697
- -------------------------------------------------------------------------------------------------------------------------
Total assets $108,399 $104,382
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Demand $11,579 $13,400
Regular savings, NOW, money market 33,835 34,696
Time 18,560 21,582
- -------------------------------------------------------------------------------------------------------------------------
Total deposits 63,974 69,678
- -------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase 3,154 4,456
Other short-term borrowings 3,734 4,856
Due to brokers/dealers 3,884 3,975
Long-term debt 19,789 8,820
Accrued expenses and other liabilities 3,874 3,188
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 98,409 94,973
- -------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock 691 691
Common stock (571,168,358 shares issued in 1999 and 1998) 6 6
Common surplus 3,343 3,284
Retained earnings 6,162 5,337
Accumulated other comprehensive (loss) income (151) 128
Treasury stock, at cost (1,544,972 shares in 1999 and 1,593,005 shares in 1998) (61) (37)
- -------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 9,990 9,409
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $108,399 $104,382
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
18
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Nine months ended September 30 Preferred Common Common Retained
In millions, except per share amounts Stock Stock Surplus Earnings
- -------------------------------------------------------------------------------------------------------------------------
1998
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $691 $3 $3,329 $4,437
Net income 1,117
Other comprehensive income, net of tax:
Change in net unrealized gain on securities available
for sale
Comprehensive income
Cash dividends declared on common stock
($.735 per share) (414)
Cash dividends declared on preferred stock (38)
Common stock issued in connection with employee
benefit and stock option plans (32)
Treasury stock purchased
Two-for-one common stock split 3 (3)
Other, net (2)
- -------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1998 $691 $6 $3,292 $5,102
- -------------------------------------------------------------------------------------------------------------------------
1999
Balance at December 31, 1998 $691 $6 $3,284 $5,337
Net income 1,327
Other comprehensive income, net of tax:
Change in net unrealized gain on securities available
for sale
Comprehensive income
Cash dividends declared on common stock
($.81 per share) (461)
Cash dividends declared on preferred stock (38)
Common stock issued in connection with employee
benefit and stock option plans 56 2
Treasury stock purchased
Other, net 3 (5)
- -------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 $691 $6 $3,343 $6,162
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Accumulated
Other
Nine months ended September 30 Comprehensive Treasury
In millions, except per share amounts Income (Loss) Stock Total
- -------------------------------------------------------------------------------------------------------------------------
1998
Balance at December 31, 1997 $ 97 $(105) $8,452
Net income 1,117
Other comprehensive income, net of tax:
Change in net unrealized gain on securities available
for sale 83 83
------------------
Comprehensive income 1,200
Cash dividends declared on common stock
($.735 per share) (414)
Cash dividends declared on preferred stock (38)
Common stock issued in connection with employee
benefit and stock option plans 60 28
Treasury stock purchased (51) (51)
Two-for-one common stock split --
Other, net (2)
- -------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1998 $ 180 $(96) $9,175
- -------------------------------------------------------------------------------------------------------------------------
1999
Balance at December 31, 1998 $ 128 $(37) $9,409
Net income 1,327
Other comprehensive income, net of tax:
Change in net unrealized gain on securities available
for sale (279) (279)
------------------
Comprehensive income 1,048
Cash dividends declared on common stock
($.81 per share) (461)
Cash dividends declared on preferred stock (38)
Common stock issued in connection with employee
benefit and stock option plans 3 61
Treasury stock purchased (24) (24)
Other, net (3) (5)
- -------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 $(151) $(61) $9,990
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
19
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Nine months ended September 30
In millions 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net income $1,327 $1,117
Adjustments for noncash items:
Depreciation and amortization of premises and equipment 196 184
Amortization and impairment of mortgage servicing rights 262 347
Amortization of other intangible assets 216 167
Provision for credit losses 433 330
Deferred income tax expense 556 185
Originations and purchases of mortgages held for resale (23,805) (20,964)
Proceeds from sales of mortgages held for resale 26,735 19,852
Decrease in due from brokers/dealers 744 262
Increase in accrued receivables, net (137) (218)
Decrease in due to brokers/dealers (91) (9)
(Decrease) increase in accrued expenses and other liabilities, net (209) 297
Other, net (1,069) (1,105)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,158 445
- ------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of securities available for sale (1,994) (3,963)
Proceeds from sales of securities available for sale 777 2,436
Proceeds from maturities of securities available for sale 1,252 763
Purchases of securities held to maturity (1,063) (1,024)
Proceeds from maturities of securities held to maturity 1,013 1,171
Net cash and cash equivalents (paid for) received from businesses acquired (613) 380
Net increase in loans (2,009) (3,954)
Purchases of premises and equipment (136) (137)
Purchases of mortgage servicing rights (749) (319)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (3,522) (4,647)
- ------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net decrease in deposits (5,704) (366)
Net (decrease) increase in short-term borrowings (2,782) 1,339
Proceeds from issuance of long-term debt 7,374 3,486
Repayments of long-term debt (1,034) (618)
Proceeds from the issuance of common stock 61 28
Repurchase of common stock (24) (51)
Cash dividends paid (494) (431)
- ------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (2,603) 3,387
- ------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (967) (815)
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 5,738 5,574
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $4,771 $4,759
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
20
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1. BASIS OF PRESENTATION
On October 1, 1999, BankBoston Corporation (BankBoston) merged with and
into Fleet Financial Group, Inc. (Fleet or the Corporation) in a transaction
accounted for as a pooling of interests, and Fleet was renamed Fleet Boston
Corporation. Generally accepted accounting principles do not permit giving
effect to a consummated business combination accounted for by the pooling of
interests method in financial statements that do not include the date of
consummation. The accompanying unaudited condensed consolidated financial
statements for the quarter ended September 30, 1999 include only the accounts
and results of Fleet. Beginning in the fourth quarter of 1999, which will
include the date of consummation of the merger (October 1, 1999), financial
statements for all periods presented will be restated to include the accounts
and results of BankBoston in accordance with the pooling of interests method of
accounting.
The unaudited consolidated financial statements included herein have been
prepared on a basis consistent with the audited consolidated financial
statements of Fleet included in its 1998 Annual Report on Form 10-K, and should
be read in conjunction with that report. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the information presented herein have been made. Certain
prior period amounts have been reclassified to conform to current period
classification.
NOTE 2. EARNINGS PER SHARE
A summary of the corporation's calculation of earnings per share follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
For the three months ended September 30, 1999 1998
- ----------------------------------------------------------------------------------------------------------------
Dollars in millions, except per share amounts BASIC DILUTED BASIC DILUTED
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equivalent shares:
Average shares outstanding 569,523,007 569,523,007 567,650,764 567,650,764
Additional shares due to:
Stock options -- 7,228,649 -- 7,138,826
Warrants -- 12,371,186 -- 12,298,448
- ----------------------------------------------------------------------------------------------------------------
Total equivalent shares 569,523,007 589,122,842 567,650,764 587,088,038
================================================================================================================
Earnings per share
Net income $438 $438 $ 401 $401
Less preferred stock dividends (12) (12) (13) (13)
================================================================================================================
Adjusted net income $426 $426 $388 $388
================================================================================================================
Total equivalent shares 569,523,007 589,122,842 567,650,764 587,088,038
================================================================================================================
Earnings per share $ .75 $.72 $.68 $.66
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
For the nine months ended September 30, 1999 1998
- ----------------------------------------------------------------------------------------------------------------
Dollars in millions, except per share amounts BASIC DILUTED BASIC DILUTED
- ----------------------------------------------------------------------------------------------------------------
Equivalent shares:
Average shares outstanding 569,204,017 569,204,017 567,873,966 567,873,966
Additional shares due to:
Stock options -- 7,180,886 -- 7,363,594
Warrants -- 12,553,392 -- 12,363,078
- ----------------------------------------------------------------------------------------------------------------
Total equivalent shares 569,204,017 588,938,295 567,873,966 587,600,638
- ----------------------------------------------------------------------------------------------------------------
Earnings per share
Net income $1,327 $1,327 $1,117 $1,117
Less preferred stock dividends (44) (44) (38) (38)
- ----------------------------------------------------------------------------------------------------------------
Adjusted net income $1,283 $1,283 $1,079 $1,079
- ----------------------------------------------------------------------------------------------------------------
Total equivalent shares 569,204,017 588,938,295 567,873,966 587,600,638
================================================================================================================
Earnings per share $2.25 $2.18 $1.90 $1.84
================================================================================================================
</TABLE>
21
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 3. SUPPLEMENTAL DISCLOSURE FOR STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cash Flow Disclosure
- ------------------------------------------------------------------------------------------------------
Nine months ended September 30 1999 1998
In millions
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Supplemental disclosure for cash paid during the period for:
Interest $2,241 $2,143
Income taxes, net of refunds 603 386
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Supplemental disclosure of noncash investing and financing activities:
Transfer of loans to foreclosed property
and repossessed equipment 6 9
Change in net unrealized gain on
securities available for sale (279) 83
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Assets acquired and liabilities assumed in business combinations:
Assets acquired, net of cash and cash
equivalents received 6,073 2,845
Net cash and cash equivalents (paid) received (613) 380
Liabilities assumed 5,460 3,225
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 4. BUSINESS SEGMENT INFORMATION
The corporation reports information about its operating segments in
accordance with Statement of Financial Accounting Standards (SFAS) No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
Information about the corporation's operating segments for the current quarter
is included in the "Lines of Business" section of Management's Discussion and
Analysis of Financial Condition and Results of Operations (pages 6-8) of this
Form 10-Q.
NOTE 5. ACQUISITIONS
On February 1, 1999, the corporation acquired Sanwa Business Credit
(Sanwa), a leasing and asset-based lending company, from Sanwa Bank, Ltd. Sanwa
offers a wide variety of asset-based lending, equipment leasing and vendor
finance programs throughout the United States and had approximately $6 billion
in assets at the date of acquisition. Goodwill of approximately $385 million was
recorded and is being amortized on a straight-line basis over 25 years. Sanwa's
results of operations are included in the accompanying consolidated financial
statements from the date of acquisition.
NOTE 6. SUBSEQUENT EVENT
On October 1, 1999, the corporation completed its merger with BankBoston.
Under the terms of the merger agreement, BankBoston shareholders received 1.1844
shares of Fleet common stock for each share of BankBoston common stock. Fleet
issued approximately 353 million shares of its common stock in exchange for
substantially all of the outstanding common shares of BankBoston. The
transaction was accounted for under the pooling-of-interests method of
accounting.
In connection with the merger, a merger and restructuring-related charge
originally estimated to be approximately $650 million after-tax is expected to
be recorded in the fourth quarter of 1999. This charge includes transaction
costs, exit costs including severance and facilities-related charges, and
accelerated depreciation in excess of normal scheduled depreciation on duplicate
systems and excess facilities that will be taken out of service. The corporation
also expects to recognize approximately $60 million of after-tax costs in
subsequent periods, related to the ongoing cost of integrating the two
companies. The merger and restructuring-related charge and subsequent period
costs continue to be evaluated, and could change as the integration of the two
companies is completed. In connection with regulatory approval of the
transaction, the companies have agreed to divest approximately $13 billion of
deposits and $9 billion of loans, primarily in the Massachusetts, Connecticut
and Rhode Island markets. It is anticipated that these divestitures will occur
during the first half of 2000.
The following tables present supplemental consolidated statements of
income and supplemental consolidated balance sheets that reflect the results of
operations and financial position of Fleet and BankBoston as if they were
combined as of the beginning of the earliest period presented.
Certain historical information has been reclassified to conform to current
period classification. The supplemental consolidated financial statements do not
reflect the anticipated merger and restructuring-related costs expected to be
recorded in connection with the merger, or the expected divestiture of deposits
and loans discussed above. The supplemental consolidated financial statements
are not necessarily indicative of actual financial position or results of
operations that may be achieved in the future.
22
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
FLEET BOSTON CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
In millions, except per share amounts 1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and fees on loans and leases $2,644 $2,605 $7,821 $7,506
Interest on securities and trading assets 428 384 1,271 1,172
Other 226 150 586 498
- -----------------------------------------------------------------------------------------------------
Total interest income 3,298 3,139 9,678 9,176
- -----------------------------------------------------------------------------------------------------
Interest expense:
Deposits of domestic offices 582 658 1,788 1,947
Deposits of international offices 276 273 829 822
Short-term borrowings 332 352 886 960
Long-term debt 358 206 968 540
Other 50 55 137 168
- -----------------------------------------------------------------------------------------------------
Total interest expense 1,598 1,544 4,608 4,437
- -----------------------------------------------------------------------------------------------------
Net interest income 1,700 1,595 5,070 4,739
- -----------------------------------------------------------------------------------------------------
Provision for credit losses 228 180 688 590
- -----------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses 1,472 1,415 4,382 4,149
- -----------------------------------------------------------------------------------------------------
Noninterest income:
Capital markets revenue 471 231 1,371 806
Banking fees and commissions 391 347 1,115 984
Investment services revenue 363 298 1,108 881
Credit card revenue 193 135 542 311
Processing-related revenue 146 128 457 311
Net gains on sales of business units -- -- 50 165
Other 128 93 358 330
- -----------------------------------------------------------------------------------------------------
Total noninterest income 1,692 1,232 5,001 3,788
- -----------------------------------------------------------------------------------------------------
Noninterest expense:
Employee compensation and benefits 1,053 937 3,196 2,585
Occupancy 143 133 425 392
Equipment 128 118 384 352
Intangible asset amortization 88 70 259 200
Legal and other professional 68 69 206 177
Marketing and public relations 70 68 199 190
Other 466 437 1,363 1,263
- -----------------------------------------------------------------------------------------------------
Total noninterest expense 2,016 1,832 6,032 5,159
- -----------------------------------------------------------------------------------------------------
Income before income taxes 1,148 815 3,351 2,778
Applicable income taxes 437 309 1,279 1,076
- -----------------------------------------------------------------------------------------------------
Net income $ 711 $ 506 $2,072 $1,702
- -----------------------------------------------------------------------------------------------------
Net income applicable to common shares $ 698 $ 492 $2,028 $1,655
Basic earnings per share .76 .54 2.20 1.81
Diluted earnings per share .74 .52 2.15 1.76
Diluted weighted average common shares outstanding 946.5 938.1 945.0 938.2
- -----------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
FLEET FINANCIAL GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
FLEET BOSTON CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
In millions, except share amounts 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash, due from banks and interest-bearing deposits $ 8,829 $ 10,941
Federal funds sold and securities purchased under agreements to resell 2,504 2,566
Trading assets 6,050 4,364
Securities (market value: $24,708 and $23,379) 24,708 23,369
Loans and leases 119,772 112,094
Reserve for credit losses (2,515) (2,306)
- --------------------------------------------------------------------------------------------------------------------------
Net loans and leases 117,257 109,788
- --------------------------------------------------------------------------------------------------------------------------
Due from brokers/dealers 2,856 3,600
Mortgages held for resale 1,052 4,068
Premises and equipment 2,501 2,549
Mortgage servicing rights 2,965 1,405
Intangible assets 4,252 3,906
Other assets 12,321 11,338
- --------------------------------------------------------------------------------------------------------------------------
Total assets $ 185,295 $ 177,894
- --------------------------------------------------------------------------------------------------------------------------
Liabilities
Deposits:
Domestic:
Noninterest bearing $ 22,775 $ 25,200
Interest bearing 72,487 75,585
International:
Noninterest bearing 1,262 1,144
Interest bearing 16,660 16,249
- --------------------------------------------------------------------------------------------------------------------------
Total deposits 113,184 118,178
- --------------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under agreements to repurchase 7,232 9,697
Other short-term borrowings 10,057 9,479
Trading liabilities 3,358 2,326
Due to brokers/dealers 3,884 3,975
Long-term debt 25,240 14,411
Accrued expenses and other liabilities 6,883 5,624
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 169,838 163,690
- --------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
Preferred stock 691 691
Common stock (934,598,514 shares issued in 1999 and 935,155,537 shares issued in 1998) 9 9
Common surplus 4,749 4,706
Retained earnings 10,466 9,210
Accumulated other comprehensive income:
Net unrealized (loss) gain on securities available for sale (43) 109
Cumulative translation adjustments (6) (14)
Treasury stock, at cost (12,389,762 shares in 1999 and 16,215,465 shares in 1998) (409) (507)
- --------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 15,457 14,204
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 185,295 $ 177,894
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
FLEET BOSTON CORPORATION
OVERVIEW OF SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME FOR
THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Fleet Boston Corporation (Fleet Boston) net income was $711 million, or $.74 per
diluted share, for the third quarter of 1999, compared to net income of $506
million, or $.52 per diluted share, earned in the third quarter of 1998. For the
nine months ended September 30, 1999, Fleet Boston earned $2.1 billion, or $2.15
per diluted share, compared to $1.7 billion, or $1.76 per diluted share, for the
same period in 1998.
Net interest income totaled $1.7 billion during the third quarter of 1999,
up $105 million from the third quarter of 1998. The increase was principally
attributable to strong growth of interest earning assets, the purchase of Sanwa
Credit earlier this year, and growth in Latin America, primarily from wider
spreads. Fleet Boston's net interest margin was 4.21%, down 12 basis points from
the third quarter of 1998, related principally to the growth of the commercial
loan portfolio at lower spreads. Net interest income and net interest margin
were $5.1 billion and 4.27%, respectively, for the nine month period ending
September 30, 1999 and $4.8 billion and 4.40%, respectively, for the same period
in 1998.
Noninterest income in the third quarter of 1999 totaled $1.7 billion, up
37%, or $460 million from the same period in 1998, due primarily to strong gains
in the capital markets, investment services and credit card revenue categories.
Capital markets revenue doubled to $471 million as a result of gains in
market-making revenue from the equity specialists business, strong private
equity gains, as well as higher investment banking fees at Robertson Stephens.
Investment services revenue increased 22% to $363 million driven by strong
transactional volume, which benefited Fleet Boston's brokerage and clearing
units at Quick & Reilly. Credit card revenue increased $58 million over the
prior year's third quarter, which was attributable to the acquisition of various
credit card portfolios during 1998 and a decline in charge-offs within the
securitized portfolio. For the nine month period ending September 30, 1999,
noninterest income increased 32% to $5.0 billion when compared to $3.8 billion
for the same period in 1998, as Fleet Boston continues to experience growth in
all major business lines as well as the benefit of a number of acquisitions,
principally Robertson Stephens.
Noninterest expense in the third quarter of 1999 totaled $2.0 billion, up
$184 million from the third quarter of 1998. The increase was due primarily to
the impact of various acquisitions, including Robertson Stephens and Sanwa, in
addition to incentive- and volume-related increases in compensation at many of
Fleet Boston's businesses that delivered strong revenue growth. In the third
quarter of 1998, Fleet Boston incurred $80 million of costs associated with the
acquisition of Robertson Stephens and $45 million of charges related to the
realignment of other businesses. Noninterest expense increased to $6.0 billion
for the first nine months of 1999 when compared to $5.2 billion for the same
period of 1998 as a result of various acquisitions made throughout 1998 and 1999
as well as an increase in incentive compensation driven by higher revenue.
25
<PAGE>
PART II. OTHER INFORMATION
ITEM 6.
(a) Exhibit Index
Exhibit
Number
------
3 Restated Articles of Incorporation of the Registrant
4* Instruments defining the rights of security holders,
including debentures
10 Employment agreement between the Registrant and
Robert J. Higgins
12 Statement re: computation of ratios
27 Financial data schedule
* Registrant has no instruments defining the rights of holders of equity or
debt securities where the amount of securities authorized thereunder
exceeds 10% of the total assets of the registrant and its subsidiaries on
a consolidated basis. Registrant hereby agrees to furnish a copy of any
such instrument to the Commission upon request.
(b) Seven Current Reports on Form 8-K were filed during the period from July
1, 1999 to the date of the filing of this report.
- Current Report on Form 8-K dated July 14, 1999 announcing second
quarter earnings of Fleet Financial Group, Inc.
- Current Report on Form 8-K dated August 12, 1999 filing the
unaudited pro forma condensed combined financial statements and
notes thereto of Fleet Boston Corporation for the period ended June
30, 1999 in connection with the merger with BankBoston Corporation.
- Current Report on Form 8-K dated September 7, 1999 announcing the
divestiture agreement between Fleet, BankBoston and Sovereign
Bancorp.
- Current Report on Form 8-K dated September 30, 1999 announcing that
the Board of Directors rescinded its prior authority, granted in
October 1998, to repurchase up to $1.5 billion of common stock.
- Two Current Reports on Form 8-K dated October 1, 1999 both
announcing the closing of the merger between Fleet and BankBoston.
- Current Report on Form 8-K dated October 20, 1999 announcing third
quarter earnings of Fleet Boston Corporation and an 11% increase in
the quarterly common stock - dividend to $.30 per common share.
26
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Fleet Boston Corporation
------------------------
(Registrant)
/s/ Eugene M. McQuade
---------------------
Eugene M. McQuade
Vice Chairman and
Chief Financial Officer
/s/ Robert C. Lamb, Jr.
-----------------------
Robert C. Lamb, Jr.
Controller
November 12, 1999
27
Exhibit 3
Filing Fee: $70.00 ID Number:__________
[SEAL]
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
Office of the Secretary of State
Corporations Division
100 North Main Street
Providence, Rhode Island 02903-1335
BUSINESS CORPORATION
----------
RESTATED ARTICLES OF INCORPORATION
Pursuant to the provisions of Section 7-1.1-59 of the General Laws, 1956, as
amended, the undersigned corporation adopts the following Restated Articles of
Incorporation:
1. The name of the corporation is Fleet Boston Corporation
-------------------------------------------
2. The period of its duration is (if perpetual, so state) perpetual
-------------------
3. The specific purpose or purposes which the corporation is authorized to
pursue are:
See Annex I attached hereto.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
4. The aggregate number of shares which the corporation has authority to
issue is:
(a) If only one class: Total number of shares __________ (If the
authorized shares consist of one class only state the par value of such
shares or a statement that all of such shares are to be without par
value.):
or
(b) If more than one class: Total number of shares of all classes of stock
2,016,000,000 (State (A) the number of shares of each class thereof that
are to have a par value and the par value of each share of each such
class, and/or (B) the number of such shares that are to be without par
value, and (C) a statement of all or any of the designations and the
powers, preferences and rights, including voting rights, and the
qualifications, limitations or restrictions thereof, which are permitted
by the provisions of Chapter 7-1.1 of the General Laws, 1956, as amended,
in respect of any class or classes of stock of the corporation insofar as
the same are fixed in the articles of incorporation, and a statement of
any authority vested in the board of directors to establish series and
and determine the variations in the relative rights and preferences
as between series.):
See Annex I attached hereto and Exhibits A-K attached to Annex I
--------------------------------------------------------------------------
2,000,000,000 shares are Common Stock, $0.01 par value
--------------------------------------------------------------------------
16,000,000 shares are Preferred Stock, $1.00 par value
--------------------------------------------------------------------------
<PAGE>
5. Existing provisions, if any, dealing with the preemptive right of
shareholders pursuant to ss. 7-1.1-24 of the General Laws, 1956, as
amended:
None.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
6. Existing provisions, if any, for the regulation of the internal affairs of
the corporation are:
See Annex I attached hereto.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
7. The restated articles of incorporation correctly set forth without change
the corresponding provisions of the articles of incorporation, as
heretofore amended, and supersede the original articles of incorporation
and all amendments thereto.
8. As required by Section 7-1.1-59 of the General Laws the corporation has
paid all fees and franchise taxes.
9. Date when restated articles of incorporation are to become
--------------------------------------------------------------------------
(not prior to, nor more than 30 days after, the filing of restated articles)
Date: November 5, 1999
FLEET BOSTON CORPORATION
---------------------------------
Print Corporate Name
By /s/ William C. Mutterperl
-------------------------------------------------
|_| President or |X| Vice President (check one)
William C. Mutterperl
AND
By /s/ Drew J. Pfirrman
-------------------------------------------------
|_| Secretary or |X| Assistant Secretary
(check one)
Drew J. Pfirrman
STATE OF Massachusetts
----------------------
COUNTY OF Suffolk
----------------------
In Boston, MA, on this 5th day of November, 1999, personally appeared
before me Drew J. Pfirrman who, being by me first duly sworn, declared that he
is the Assistant Secretary of the corporation and that he signed the foregoing
document as such officer of the corporation, and that the statements herein
contained are true.
/s/ Barbara Ann Manfra
--------------------------------------------
Notary Public
My Commission Expires: July 9, 2004
----------------------
<PAGE>
ANNEX I
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
BUSINESS CORPORATION
RESTATED ARTICLES OF INCORPORATION
OF
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
Pursuant to the provisions of Section 7-1.1-59 of the General Laws, 1956,
as amended, the undersigned corporation adopts the following Restated Articles
of Incorporation:
FIRST: The name of the corporation (hereinafter called the Corporation) is
FLEET BOSTON CORPORATION.
SECOND: The period of its duration is perpetual.
THIRD: The nature of the business of the Corporation and the objects or
purposes to be transacted, promoted or carried on by it are as follows:
1. To purchase or otherwise acquire and to hold, pledge, sell, exchange or
otherwise dispose of securities (which term includes any shares of stock, bonds,
debentures, notes, mortgages or other instruments representing rights to
receive, purchase or subscribe for the same or representing any other rights or
interest therein or in any property or assets) created or issued by any person,
firm, association, corporation (including, to the extent permitted by the laws
of the State of Rhode Island, the Corporation) or government or subdivision,
agency or instrumentality thereof, to make payment therefor in any lawful
manner; and to exercise, as owner or holder thereof, any and all rights, powers
and privileges in respect thereof (to the extent aforesaid).
2. To make, manufacture, produce, prepare, process, purchase or otherwise
acquire, and to hold, use, sell, import, export, or otherwise trade or deal in
and with, goods, wares, products, merchandise, machines, machinery, appliances
and apparatus, of every kind, nature and any manufacturing or other business of
any kind or character whatsoever, including, but not by way of limitation,
importing, exporting, mining, quarrying, producing, farming, agriculture,
forestry, construction, management, advisory, mercantile, financial or
investment business, any business engaged in rendering any manner of services
and any business of buying, selling, leasing or dealing in properties of any and
all kinds, whether any such business is located in the United States of America
or any foreign country, and whether or not related to, conducive to, incidental
to, or in any way connected with, the foregoing business.
3. To engage in research, exploration, laboratory and development work
relating to any material, substance, compound or mixture now known or which may
hereafter be known,
<PAGE>
discovered or developed and to perfect, develop, manufacture, use, apply and
generally to deal in and with any such material, substance, compound or mixture.
4. To purchase, lease or otherwise acquire, to hold, own, use, develop,
maintain, manage and operate, to sell, transfer, lease, assign, convey,
exchange, or otherwise turn to account or dispose of, and, generally, to deal in
and with, personal and real property, tangible or intangible, of every kind and
description, wheresoever situated, and any and all rights, concessions,
interests and privileges therein.
5. To adopt, apply for, obtain, register, purchase, lease or otherwise
acquire, to maintain, protect, hold, use, own, exercise, develop, manufacture
under, operate and introduce and to sell and grant licenses or other rights in
respect of, assign or otherwise dispose of, turn to account, or in any manner
deal with, and contract with reference to, any trademarks, trade names, patents,
patent rights, concessions, franchises, designs, copyrights and distinctive
marks and rights analogous thereto and inventions, devices, improvements,
processes, recipes, formulae and the like, including, but not by way of
limitation, such thereof as may be covered by, used in connection with, or
secured or received under, Letters Patent of the United States of America or
elsewhere, and any licenses and rights in respect thereof, in connection
therewith or appertaining thereto.
6. To make, enter into, perform and carry out contracts of every kind and
description with any person, firm, association, corporation or government or
subdivision, agency or instrumentality thereof, to endorse or guarantee the
payment of principal, interest or dividends upon, and to guarantee the
performance of sinking fund or other obligations of, any securities or the
payment of a certain amount per share in liquidation of the capital stock of any
other corporation; and to guarantee in any way permitted by law the performance
of any of the contracts or other undertakings of any person, firm, association,
corporation or government or subdivision, agency or instrumentality thereof.
7. To acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets, business and good will of any one or
more persons, firms, associations or corporations heretofore or hereafter
engaged in any business whatsoever; to pay for the same in cash, property or its
own or other securities; to hold, operate, lease, reorganize, liquidate, sell or
in any manner dispose of the whole or any part thereof, to assume or guarantee,
in connection therewith, the performance of any liabilities, obligations or
contracts of such persons, firms, associations or corporations; and to conduct
the whole or any part of any business thus acquired.
8. To lend its uninvested funds from time to time to such extent, to such
persons, firms, associations, corporations or governments or subdivisions,
agencies or instrumentalities thereof, and on such terms and on such security,
if any, as the Board of Directors of the Corporation (hereinafter called the
Board of Directors) may determine.
9. To borrow money for any of the purposes of the Corporation, from time
to time, and without limits as to amount; to issue and sell from time to time
its own securities in such amounts, on such terms and conditions, for such
purposes and for such consideration, as may
-2-
<PAGE>
now be or hereafter shall be permitted by the laws of the State of Rhode Island;
and to secure such securities by mortgage upon, or the pledge of, or the
conveyance or assignment in trust of, the whole or any part of the properties,
assets, business and good will of the Corporation then owned or thereafter
acquired.
10. To promote, organize, manage, aid or assist, financially or otherwise,
persons, firms, associations or corporations engaged in any business whatsoever;
and to assume or underwrite the performance of all or any of their obligations.
11. To organize or cause to be organized under the laws of the State of
Rhode Island, any other state or states of the United States of America, the
District of Columbia, any territory, dependency, colony or possession of the
United States of America, or of any foreign country, a corporation or
corporations for the purpose of transacting, promoting or carrying on any or all
objects or purposes for which the Corporation is organized; to dissolve, wind
up, liquidate, merge or consolidate any such corporation or corporations or to
cause the same to be dissolved, wound up, liquidated, merged or consolidated;
and, subject to the laws of the State of Rhode Island, to consolidate or merge
with or into one or more other corporations organized under the laws of the
State of Rhode Island or under the laws of any other state or states in the
United States of America, the District of Columbia, any territory, dependency,
colony or possession of the United States of America or of any foreign country
if the laws under which said other corporation or corporations are formed shall
permit such consolidation or merger.
12. To conduct its business in any and all of its branches and maintain
offices both within and without the State of Rhode Island in any and all states
of the United States of America, in the District of Columbia, in any or all
territories, dependencies, colonies or possessions of the United States of
America and in foreign countries.
13. To such extent as a business corporation organized under the laws of
the State of Rhode Island may now or hereafter lawfully do, to do, either as
principal or agent and either alone or through subsidiaries or in connection
with other persons, firms, associations or corporations, all and everything
necessary, suitable, convenient or proper for, or in connection with, or
incident to, the accomplishment of any of the purposes or the attainment of any
one or more of the objects herein enumerated or designed directly or indirectly
to promote the interests of the Corporation or to enhance the value of its
properties and in general to engage in any lawful act or activity for which
corporations may be organized under the General Laws of Rhode Island; and to do
any and all things and exercise all powers, rights and privileges which a
business corporation may now or hereafter be organized or authorized to do or to
exercise under the laws of the State of Rhode Island.
14. Whenever the context permits, the following provisions shall govern
the construction of the paragraphs of these purposes: no specified enumeration
shall be construed as restricting in any way any general language; any word,
whether in the singular or plural shall be construed to mean both the singular
and the plural; any phrase in the conjunctive or in the disjunctive shall
include both the conjunctive and disjunctive; the mention of the whole shall
include any part or parts; any one or more or all of the purposes set forth may
be pursued from
-3-
<PAGE>
time to time and whenever deemed desirable; verbs in the present or future tense
shall be construed to include both the present and future tenses or either of
them.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 2,016,000,000, of which 16,000,000
shares of the par value of $1 each are to be of a class designated "Preferred
Stock" and 2,000,000,000 of the par value of $0.01 each are to be of a class
designated "Common Stock".
The voting powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of the classes of stock of the Corporation which are fixed
by these Articles of Incorporation, and the authority vested in the Board of
Directors to fix by vote or votes providing for the issue of Preferred Stock,
the voting powers, designations, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof, of the shares of Preferred Stock which are not fixed by
these Articles of Incorporation, are as follows:
(a) The Preferred Stock may be issued from time to time in one or more
series of any number of shares; provided that the aggregate number of shares
issued and not canceled of any and all such series shall not exceed the total
number of shares of Preferred Stock hereinabove authorized. Each series of
Preferred Stock shall be distinctively designated by letter or descriptive
words. All series of Preferred Stock shall rank equally and be identical in all
respects except as permitted by the provisions of paragraph (b) of this Article
FOURTH.
(b) Authority is hereby vested in the Board of Directors from time to time
to issue the Preferred Stock of any series and in connection with the creation
of each such series to fix by vote or votes providing for the issue of shares
thereof the voting powers, if any, the designation, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such series to the full extent now or
hereafter permitted by these Articles of Incorporation and the laws of the State
of Rhode Island, in respect of the matters set forth in the following
subparagraphs (1) to (8), inclusive:
(1) The distinctive designation of such series and the number of
shares which shall constitute such series, which number may be increased
or decreased (but not below the number of shares thereof then outstanding)
from time to time by action of the Board of Directors;
(2) The dividend rate of such series, any preferences to or
provisions in relation to the dividends payable on any other class or
classes or of any other series of stock, and any limitations, restrictions
or conditions on the payment of dividends;
(3) The price or prices at which, and the terms and conditions on
which, the shares of such series may be redeemed by the Corporation;
(4) The amount or amounts payable upon the shares of such series in
the event of any liquidation, dissolution or winding up of the
Corporation;
-4-
<PAGE>
(5) Whether or not the shares of such series shall be entitled to
the benefit of a sinking fund to be applied to the purchase or redemption
of shares of such series and, if so entitled, the amount of such fund and
the manner of its application;
(6) Whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or
classes of stock of the Corporation or shares of any other series of
Preferred Stock, and, if made so convertible or exchangeable, the
conversion price or prices, or the rate or rates of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may be
made, and any other terms and conditions of such conversion or exchange;
(7) Whether or not the shares of such series shall have any voting
powers and, if voting powers are so granted, the extent of such voting
powers; and
(8) Whether or not the issue of any additional shares of such series
or of any future series in addition to such series shall be subject to
restrictions in addition to the restrictions, if any, on the issue of
additional shares imposed in the vote or votes fixing the terms of any
outstanding series of Preferred Stock theretofore issued pursuant to this
Article FOURTH and, if subject to additional restrictions, the extent of
such additional restrictions.
(c) The holders of Preferred Stock of each series shall be entitled to
receive, when and as declared by the Board of Directors, dividends in cash at
the rate for such series fixed by the Board of Directors as provided in
paragraph (b) of this Article FOURTH, and no more, payable quarterly on the
first days of January, April, July and October or of such other months as may be
designated by the Board of Directors (each of the quarterly periods ending on
the first day of January, April, July and October in each year, or on the first
days of such other months, respectively, being hereinafter called a dividend
period), in each case from the date of cumulation (as defined in paragraph (h)
of this Article FOURTH) of such series. Except as may otherwise be provided in
the vote or votes providing for the issue of any given series of Preferred
Stock, dividends on Preferred Stock shall be cumulative (whether or not there
shall be net profits or net assets of the Corporation legally available for the
payment of such dividends), so that, if at any time full cumulative dividends
(as defined in paragraph (h) of this Article FOURTH) upon the Preferred Stock of
all series to the end of the last completed dividend period shall not have been
paid or declared and a sum sufficient for payment thereof set apart, the amount
of the deficiency shall be fully paid, but without interest, or dividends in
such amount shall have been declared on each such series and a sum sufficient
for the payment thereof shall have been set apart for such payment, before any
sum or sums shall be set aside for or applied to the purchase or redemption of
Preferred Stock of any series (either pursuant to any applicable sinking fund
provisions or any redemptions authorized pursuant to paragraph (g) of this
Article FOURTH or otherwise) or set aside for or applied to the purchase of
Common Stock and before any dividend shall be declared or paid or any other
distribution ordered or made upon the Common Stock (other than a dividend
payable in Common Stock); provided, however, that any moneys deposited in the
sinking fund provided for any series of Preferred Stock in the vote or votes
-5-
<PAGE>
providing for the issue of shares of said series, in compliance with the
provisions of such sinking fund and of this paragraph (c), may thereafter be
applied to the purchase or, redemption of Preferred Stock in accordance with the
terms of such sinking fund, whether or not at the time of such application full
cumulative dividends upon the outstanding Preferred Stock of all series to the
end of the last completed dividend period shall have been paid or declared and
set apart for payment. All dividends declared upon the Preferred Stock of the
respective series outstanding shall be declared pro rata, so that the amounts of
dividends declared per share on the Preferred Stock of different series shall in
all cases bear to each other the same ratio that accrued dividends per share on
the shares of such respective series bear to each other.
(d) Before any sum or sums shall be set aside for or applied to the
purchase of Common Stock and before any dividends shall be declared or paid or
any distribution ordered or made upon the Common Stock (other than a dividend
payable in Common Stock), the Corporation shall comply with the sinking fund
provisions, if any, of any vote or votes providing for the issue of any series
of Preferred Stock any shares of which shall at the time be outstanding.
(e) Subject to the provisions of paragraphs (c) and (d) of this Article
FOURTH, the holders of Common Stock shall be entitled, to the exclusion of the
holders of Preferred Stock of any and all series, to receive such dividends as
from time to time may be declared by the Board of Directors.
(f) In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of Preferred Stock of each series then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any payment shall be made to the holders of Common Stock, an amount
determined as provided in paragraph (b) of this Article FOURTH for every share
of their holdings of Preferred Stock of such series. If upon any liquidation,
dissolution or winding up of the Corporation the assets of the Corporation
available for distribution to its stockholders shall be insufficient to pay the
holders of Preferred Stock of all series the full amounts to which they
respectively shall be entitled, the holders of Preferred Stock of all series
shall share ratably in any distribution of assets according to the respective
amounts which would be payable in respect of the shares of Preferred Stock held
by them upon such distribution if all amounts payable on or with respect to
Preferred Stock of all series were paid in full. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amount to which they shall be entitled as aforesaid, the
holders of Common Stock shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to share, ratably according to the number
of shares of Common Stock held by them, in all remaining assets of the
Corporation available for distribution to its stockholders. Neither the merger
or consolidation of the Corporation into or with another corporation nor the
merger or consolidation of any other corporation into or with the Corporation,
nor the sale, transfer or lease of all or substantially all the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up of
the Corporation.
(g) Subject to any requirements which may be applicable to the redemption
of any given series of Preferred Stock as provided in any vote or votes
providing for the issue of such
-6-
<PAGE>
series of Preferred Stock, the Preferred Stock of all series, or of any series
thereof, or any part of any series thereof, at any time outstanding, may be
redeemed by the Corporation, at its election expressed by vote of the Board of
Directors, any time or from time to time, upon not less than 30 days previous
notice to the holders of record of Preferred Stock to be redeemed, given by mail
in such manner as may be prescribed by vote or votes of the Board of Directors,
(1) If such redemption shall be otherwise than by the application of
moneys in any sinking fund referred to in paragraph (d) of this Article
FOURTH, at the redemption price, fixed as provided in paragraph (b) of
this Article FOURTH, at which shares of Preferred Stock of the particular
series may then be redeemed at the option of the Corporation and
(2) If such redemption shall be by the application of moneys in any
sinking fund referred to in paragraph (d) of this Article FOURTH, at the
redemption price, fixed as provided in paragraph (b) of this Article
FOURTH, at which shares of Preferred Stock of the particular series may
then be redeemed for such sinking fund;
provided, however, that, before any Preferred Stock of any series shall be
redeemed at said redemption price thereof specified in clause (1) of this
paragraph (g), all moneys at the time in the sinking fund, if any, for Preferred
Stock of that series shall first be applied, as nearly as may be, to the
purchase or redemption of Preferred Stock of that series as provided in the vote
or votes of the Board of Directors providing for such sinking fund. If less than
all the outstanding shares of Preferred Stock of any series are to be redeemed,
the redemption may be made either by lot or pro rata in such manner as may be
prescribed by vote of the Board of Directors. The Corporation may, if it shall
so elect, provide moneys for the payment of the redemption price by depositing
the amount thereof for the account of the holders of Preferred Stock entitled
thereto with a bank or trust company doing business in the City of New York, in
the State of New York, or in the City of Providence, in the State of Rhode
Island, and having capital and surplus of at least $5,000,000. The date upon
which such deposit may be made by the Corporation (hereinafter called the "date
of deposit") shall be prior to the date fixed as the date of redemption. In any
such case there shall be included in the notice of redemption a statement of the
date of deposit and of the name and address of the bank or trust company with
which the deposit has been or will be made. On and after the date fixed in any
such notice of redemption as the date of redemption (unless default shall be
made by the Corporation in providing moneys for the payment of the redemption
price pursuant to such notice) or, if the Corporation shall have made such
deposit on or before the date specified therefor in the notice, then on and
after the date of deposit all rights of the holders of the Preferred Stock to be
redeemed as stockholders of the Corporation, except the right to receive the
redemption price as hereinafter provided, and, in the case of such deposit, any
conversion rights not theretofore expired, shall cease and terminate. Such
conversion rights, however, in any event shall cease and terminate upon the date
fixed for redemption or upon any earlier date fixed by the Board of Directors
pursuant to paragraph (b) of this Article FOURTH for termination of such
conversion rights. Anything herein contained to the contrary notwithstanding,
said redemption price shall include an amount equal to accrued dividends on the
Preferred Stock to be redeemed to the date fixed for the redemption thereof and
the Corporation shall not be required to declare or pay on such Preferred Stock
to be redeemed,
-7-
<PAGE>
and the holders thereof shall not be entitled to receive, any dividends in
addition to those thus included in the redemption price, provided, however, that
the Corporation may pay in regular course any dividends thus included in the
redemption price either to the holders of record on the record date fixed for
the determination of stockholders entitled to receive such dividends (in which
event, anything herein to the contrary notwithstanding, the amount so deposited
need not include any dividends so paid or to be paid) or as part of the
redemption price upon surrender of the certificates for the shares redeemed. At
any time on or after the date fixed as aforesaid for such redemption or, if the
Corporation shall elect to deposit the money for such redemption as herein
provided, then at any time on or after the date of deposit and without awaiting
the date fixed as aforesaid for such redemption, the respective holders of
record of the Preferred Stock to be redeemed shall be entitled to receive the
redemption price upon actual delivery to the Corporation, or, in the event of
such deposit, to the bank or trust company with which such deposit shall be
made, of certificates for the shares to be redeemed, such certificates, if
required, to be properly stamped for transfer and duly endorsed in blank or
accompanied by proper instruments of assignment and transfer thereof duly
executed in blank. Any moneys so deposited which shall remain unclaimed by the
holders of such Preferred Stock at the end of five years after the redemption
date shall be paid by such bank or trust company to the Corporation and any
interest accrued on moneys so deposited shall belong to the Corporation and
shall be paid to it from time to time. Preferred Stock redeemed pursuant to the
provisions of this paragraph (g) shall be canceled and shall thereafter have the
status of authorized and unissued shares of Preferred Stock.
(h) The term "date of cumulation" as used with reference to any series of
Preferred Stock shall be deemed to mean the date fixed by the Board of Directors
as the date of cumulation of such series at the time of creation thereof or, if
no date shall have been fixed, the date on which shares of such series are first
issued. Whenever used with reference to any share of any series of Preferred
Stock, the term "full cumulative dividends" shall be deemed to mean (whether or
not in any dividend period, or any part thereof, in respect of which such term
is used there shall have been net profits or net assets of the Corporation
legally available for the payment of such dividends) that amount which shall be
equal to dividends at the full rate fixed for such series as provided in
paragraph (b) of this Article FOURTH for the period of time elapsed from the
date of cumulation of such series to the date as of which full cumulative
dividends are to be computed (including an amount equal to the dividend at such
rate for any fraction of a dividend period included in such period of time); and
the term "accrued dividends" shall be deemed to mean full cumulative dividends
to the date as of which accrued dividends are to be computed, less the amount of
all dividends paid, or deemed paid as hereinafter in this paragraph (h)
provided, upon said share. In the event of the issue of additional shares of
Preferred Stock of any series after the original issue of shares of Preferred
Stock of such series, all dividends paid or accrued on Preferred Stock of such
series prior to the date of issue of such additional Preferred Stock shall be
deemed to have been paid on the additional Preferred Stock so issued.
(i) No holder of stock of any class of the Corporation, whether now or
hereafter authorized, shall have any preemptive, preferential or other rights to
subscribe for or purchase or acquire any shares of any class or any other
securities of the Corporation, whether now or hereafter authorized, and whether
or not convertible into, or evidencing or carrying the right to
-8-
<PAGE>
purchase, shares of any class or any other securities now or hereafter
authorized, and whether the same shall be issued for cash, services or property,
or by way of dividend or otherwise.
(j) Subject to the provisions of these Articles of Incorporation and
except as otherwise provided by law, the shares of stock of the Corporation,
regardless of class, may be issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time determine.
(k) Except as otherwise provided by law, or these Articles of
Incorporation, or by the vote or votes providing for the issue of any series of
Preferred Stock, the holders of shares of Preferred Stock as such holders, shall
not have any right to vote, and are hereby specifically excluded from the right
to vote, in the election of directors or for any other purpose. Except as
aforesaid, the holders of Preferred Stock, as such holders, shall not be
entitled to notice of any meeting of stockholders.
(1) Subject to the provisions of any applicable law, or of the Bylaws of
the Corporation as from time to time amended, with respect to the closing of the
transfer books or the fixing of a record date for the determination of
stockholders entitled to vote and except as otherwise provided by law or by
these Articles of Incorporation, or by the vote or votes providing for the issue
of any series of Preferred Stock, the holders of outstanding shares of Common
Stock shall exclusively possess voting power for the election of directors and
for all other purposes, each holder of record of shares of Common Stock being
entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation.
(As of the date of these Restated Articles of Incorporation, the following
series of Preferred Stock have been authorized by the Board of Directors of the
Corporation: (i) Series III 10.12% Perpetual Preferred Stock, the terms and
provisions of which are set forth in Exhibit A hereto, (ii) Series IV 9.375%
Perpetual Preferred Stock, the terms and provisions of which are set forth in
Exhibit B hereto, (iii) Dual Convertible Preferred Stock, the terms and
provisions of which are set forth in Exhibit C hereto, (iv) Cumulative
Participating Junior Preferred Stock, the terms and provisions of which are set
forth in Exhibit D hereto, (v) Preferred Stock with Cumulative and Adjustable
Dividends, the terms and provisions of which are set forth in Exhibit E hereto,
(vi) 9.30% Cumulative Preferred Stock, the terms and provisions of which are set
forth in Exhibit F hereto, (vii) 9.35% Cumulative Preferred Stock, the terms and
provisions of which are set forth in Exhibit G hereto, (viii) Series V 7.25%
Perpetual Preferred Stock, the terms and provisions of which are set forth in
Exhibit H hereto, (ix) Series VI 6.75% Perpetual Preferred Stock, the terms and
provisions of which are set forth in Exhibit I hereto, (x) Series VII
Fixed/Adjustable Rate Cumulative Preferred Stock, the terms and provisions of
which are set forth in Exhibit J hereto and (xi) Series VIII Fixed/Adjustable
Rate Noncumulative Preferred Stock, the terms and provisions of which are set
forth in Exhibit K hereto, said Exhibits A through K being hereby incorporated
by reference in this Article FOURTH as if set forth herein. As of the date of
these Restated Articles of Incorporation, there were issued and outstanding (i)
no shares of Series III 10.12% Perpetual Preferred Stock, (ii) no shares of
Series IV 9.375% Perpetual Preferred Stock, (iii) no shares of Dual Convertible
Preferred Stock, (iv) no shares of Cumulative Participating Junior Preferred
Stock, (v) no shares of Preferred Stock with
-9-
<PAGE>
Cumulative and Adjustable Dividends, (vi) no shares of 9.30% Cumulative
Preferred Stock, (vii) 500,000 shares of 9.35% Cumulative Preferred Stock,
(viii) 765,010 shares of Series V 7.25% Perpetual Preferred Stock, (ix) 600,000
shares of Series VI 6.75% Perpetual Preferred Stock, (x) 700,000 shares of
Series VII Fixed/Adjustable Rate Cumulative Preferred Stock, and (xi) 200,000
shares of Series VIII Fixed/Adjustable Rate Noncumulative Preferred Stock.)
FIFTH: The private property of the stockholders of the Corporation shall
not be subject to the payment of corporate debts to any extent whatsoever.
SIXTH: Whenever the vote of stockholders at a meeting thereof is required
or permitted to be taken for or in connection with any corporate action, the
meeting and vote of stockholders may be dispensed with and such action may be
taken with the written consent of stockholders having not less than the minimum
percentage of the total vote required by statute for the proposed corporate
action, and provided that prompt notice of such action be given to all
stockholders who would have been entitled to vote upon the action if such
meeting were held.
SEVENTH: (a) Directors of the Corporation need not be stockholders, but no
person shall be elected a Director who has attained the age of 72 and no person
shall continue to serve as Director after the date of the first meeting of the
stockholders of the Corporation held on or after the date on which such person
attained the age of 72.
The powers and authorities herein conferred upon the Board of Directors
are in furtherance and not in limitation of those conferred by the laws of the
State of Rhode Island. In addition to the powers and authorities herein or by
statute expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the State
of Rhode Island, of these Articles of Incorporation and of the Bylaws of the
Corporation.
(b) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of directors of the
Corporation (exclusive of directors to be elected by the holders of any one or
more series of the Preferred Stock vote separately as a class or classes) that
shall constitute the Board of Directors shall be 13, unless otherwise determined
from time to time by resolution adopted by the affirmative vote of:
(1) At least 80% of the Board of Directors, and
(2) A majority of the Continuing Directors.
(c) Subject to applicable law, the Directors shall be divided into three
(3) classes, each class to be as nearly equal in number as possible. The term of
office of Directors of the first class shall expire at the annual meeting of
stockholders to be held in 1984 and until their respective successors are duly
elected and qualified. The term of office of Directors of the second class shall
expire at the annual meeting of stockholders to be held in 1985 and until their
respective successors are duly elected and qualified. The term of office of
Directors of the third class shall expire at the annual meeting of stockholders
to be held in 1986 and until their
-10-
<PAGE>
respective successors are duly elected and qualified. Subject to the foregoing,
at each annual meeting of stockholders, commencing at the annual meeting to be
held in 1984, the successors to the class of directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting and until their successors shall be duly elected and
qualified. Any vacancies in the Board of Directors for any reason, and any newly
created directorships resulting from any increase in the number of directors,
may be filled only by the Board of Directors, acting by vote of 80% of the
directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until their respective successors shall be
duly elected and qualified. No decrease in the number of directors shall shorten
the term of any incumbent director. Notwithstanding the foregoing, and except as
otherwise required by law, whenever the holders of any one or more series of
Preferred Stock shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, (i) the terms of the director or directors
elected by such holders shall expire at the next succeeding annual meeting of
stockholders and vacancies created with respect to, any directorship of the
directors so elected may be filled in the manner specified by such Preferred
Stock, and (ii) this Article SEVENTH shall be deemed to be construed and/or
modified so as to permit the full implementation of the terms and conditions
relating to election of directors of any series of Preferred Stock that has been
or will be designated by the Board of Directors.
(d) Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), any one or more directors of
the Corporation may be removed at any time, but only for cause and only by
either (1) the affirmative vote of a majority or the Continuing Directors and a
majority of the Board of Directors or (2) the affirmative vote, at a meeting of
the stockholders called for that purpose, as to all stock held by the holders of
80% or more of the outstanding Voting Shares, voting separately as a class.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a class, to elect one or more directors of the
Corporation, the provisions of this Section (d) shall not apply with respect to
the director or directors elected by such holders of Preferred Stock.
(e) For purposes of this Article SEVENTH, the following definitions shall
apply:
(1) Affiliate. An "Affiliate" of, or a Person "affiliated with", a
specified Person, means a Person that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(2) Associate. The term "Associate", used to indicate a relationship
with any Person means:
(A) Any corporation or organization (other than the
Corporation or a Subsidiary of the Corporation) of which such Person
is an officer or partner or is,
-11-
<PAGE>
directly or indirectly, the beneficial owner of ten percent or more
of any class of equity securities;
(B) Any trust or other estate in which such Person has a ten
percent or greater beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity;
(C) Any relative or spouse of such Person, or any relative of
such spouse, who has the same home as such Person; or
(D) Any investment company registered under the Investment
Company Act of 1940 for which such Person or any Affiliate or
Associate of such Person serves as investment adviser.
(3) Beneficial Owner. A Person shall be considered the "Beneficial Owner"
of any shares of stock (whether or not owned of record):
(A) With respect to which such Person or any Affiliate or
Associate of such Person directly or indirectly has or shares (i)
voting power, including the power to vote or to direct the voting of
such shares of stock, and/or (ii) investment power, including the
power to dispose of or to direct the disposition of such shares of
stock;
(B) Which such Person or any Affiliate or Associate of such
Person has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding or upon the exercise
of conversion rights, exchange rights, warrants or options, or
otherwise, and/or (ii) the right to vote pursuant to any agreement,
arrangement or understanding (whether such right is exercisable
immediately or only after the passage of time); or
(C) Which are Beneficially Owned within the meaning of (A) or
(B) of this Section (3) by any other Person with which such first
mentioned Person or any of its Affiliates or Associates has any
agreement, arrangement or understanding, written or oral, with
respect to acquiring, holding, voting or disposing of any shares of
stock of the Corporation or any Subsidiary of the Corporation or
acquiring, holding or disposing of all or substantially all, or any
Substantial Part, of the assets or business of the Corporation or a
Subsidiary of the Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article SEVENTH of the outstanding
Voting Shares, such shares shall be deemed to include any Voting Shares which
may be issuable pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights,
-12-
<PAGE>
warrants, options or otherwise and which are deemed to be beneficially owned by
only such Person pursuant to the foregoing provisions of this Section (3).
(4) Business Combination. A "Business Combination" means:
(A) The sale, exchange, lease, transfer or other
disposition to or with a Related Person or any Affiliate or
Associate of such Related Person by the Corporation or any of
its Subsidiaries (in a single transaction or a series of
related transactions) of all or substantially all, or any
Substantial Part, of its or their assets or businesses
(including, without limitation, any securities issued by a
Subsidiary);
(B) The purchase, exchange, lease or other acquisition
by the Corporation or any of its Subsidiaries (in a single
transaction or a series of related transactions) of all or
substantially all, or any Substantial Part, of the assets or
business of a Related Person or any Affiliate or Associate of
such Related Person;
(C) Any merger or consolidation of the Corporation or
any Subsidiary thereof into or with a Related Person or any
Affiliate or Associate of such Related Person, irrespective of
which Person is the surviving entity in such merger or
consolidation;
(D) Any reclassification of securities, recapitalization
or other transaction (other than a redemption in accordance
with the terms of the security redeemed) which has the effect,
directly or indirectly, of increasing the proportionate amount
of Voting Shares of the Corporation or any Subsidiary thereof
which are Beneficially Owned by a Related Person, or any
partial or complete liquidation, spin off, split off or split
up of the Corporation or any Subsidiary thereof; provided
however, that this Section (4)(D) shall not relate to any
transaction of the types specified herein that has been
approved by (i) a majority of the Board of Directors, and (ii)
80% of the Continuing Directors; or
(E) The acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of Voting Shares or
securities convertible into Voting Shares or any voting
securities or securities convertible into voting securities of
any Subsidiary of the Corporation, or the acquisition upon the
issuance thereof of Beneficial Ownership by a Related Person
of any rights, warrants or options to acquire any of the
foregoing or any combination of the foregoing Voting Shares or
voting securities of a Subsidiary of the Corporation.
As used in this definition, a "series of related transactions" shall be
deemed to include not only a series of transactions with the same Related Person
but also a series of separate transactions with a Related Person or any
Affiliate or Associate of such Related Person.
-13-
<PAGE>
Anything in this definition to the contrary notwithstanding, this
definition shall not be deemed to include any transaction of the type set forth
in Sections (4)(A) through (4)(C) above between or among any two or more
Subsidiaries of the Corporation or the Corporation and one or more Subsidiaries
of the Corporation if such transaction has been approved by the affirmative vote
of at least 80% of the Board of Directors and a majority of the Continuing
Directors on or prior to the Date of Determination.
(5) Continuing Director. A "Continuing Director" shall mean:
(A) An individual who was a member of the Board of
Directors of the Corporation first elected by the stockholders
or by the Board of Directors prior to April 13, 1983 or prior
to the time that a Related Person became the Beneficial Owner
of in excess of 10% of the Voting Shares of the Corporation
entitled to vote in the election of directors; or
(B) An individual designated (before such individual's
initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
(6) Date of Determination. The term "Date of Determination"
means:
(A) The date on which a binding agreement (except for
the fulfillment of conditions precedent, including, without
limitation, votes of stockholders to approve such transaction)
is entered into by the Corporation, as authorized by its Board
of Directors, and another Person providing for any Business
Combination; or
(B) If such an agreement as referred to in Section
(6)(A) above is amended so as to make it less favorable to the
Corporation and its stockholders, the date on which such
amendment is approved by the Board of Directors of the
Corporation; or
(C) In cases where neither Section (6)(A) or (6)(B)
above shall be applicable, the record date for the
determination of stockholders of the Corporation entitled to
notice of and to vote upon the transaction in question. A
majority of the Continuing Directors shall have the power and
duty to determine the Date of Determination as to any
transaction under this Article SEVENTH. Any such determination
shall be conclusive and binding for all purposes of this
Article.
(7) Person. The term "Person" shall mean any individual,
partnership, corporation, group or other entity (other than the
Corporation, any Subsidiary of the Corporation for itself or as a
fiduciary for customers in the ordinary course, or a trustee holding
stock for the benefit of employees of the Corporation or its
Subsidiaries, or any one of them, pursuant to one or more employee
benefit plans or arrangements). When
-14-
<PAGE>
two or more Persons act as a partnership, limited partnership,
syndicate, association or other group for the purpose of acquiring,
holding or disposing of shares of stock, such partnership,
syndicate, association or group shall be deemed a "Person".
(8) Related Person. "Related Person" means any Person which is
the Beneficial Owner, as of the Date of Determination or immediately
prior to the consummation of a Business Combination, or both, of 10%
or more of the Voting Shares, or any Person who is an Affiliate of
the Corporation and at any time within five years preceding the Date
of Determination was the Beneficial Owner of 10% or more of the then
outstanding Voting Shares, but does not include any one group of
more than one Continuing Director.
(9) Substantial Part. The term "Substantial Part" as used with
reference to the assets of the Corporation, of any Subsidiary or of
any Related Person means assets having a value of more than five
percent of the total consolidated assets of the Corporation and its
Subsidiaries as of the end of the Corporation's most recent fiscal
year ending prior to the time the determination is being made.
(10) Subsidiary. "Subsidiary" shall mean any corporation or
entity of which the Person in question owns not less than 50% of any
class of equity securities, directly or indirectly.
(11) Voting Shares. "Voting Shares" shall mean shares of the
Corporation's capital stock entitled to vote generally in the
election of directors.
(12) Certain Determinations With Respect to Article SEVENTH.
(A) A majority of the Continuing Directors shall have the conclusive
power and authority to determine, for the purposes of this Article
SEVENTH, on the basis of information known to them: (i) the number
of Voting Shares of which any Person is the Beneficial Owner, (ii)
whether a Person is an Affiliate or Associate of another, (iii)
whether a Person has an agreement, arrangement or understanding with
another as to the matters referred to in the definition of
"Beneficial Owner" as hereinabove defined, (iv) whether the assets
subject to any Business Combination constitute a "Substantial Part"
as hereinabove defined, (v) whether two or more transactions
constitute a "series of related transactions" as hereinabove
defined, (vi) any matters referred to in subsection (12)(B) below,
and (vii) such other matters with respect to which a determination
is required under this Article SEVENTH. Any such determination shall
be final and binding for all purposes hereunder.
(B) A Related Person shall be deemed to have acquired a Voting Share of
the Corporation at the time where such Related Person became the Beneficial
Owner thereof. With respect to Voting Shares owned by Affiliates, Associates or
other Persons whose ownership is attributed to a Related Person under the
foregoing definition of Beneficial Owner, if the price paid by such Related
Person for such shares is not determinable, the price so paid shall be deemed to
be the higher of (i) the price paid upon acquisition thereof by the Affiliate,
Associate
-15-
<PAGE>
or other Person or (ii) the market price of the shares in question (as
determined by a majority of the Continuing Directors) at the time when the
Related Person became the Beneficial Owner thereof.
(f) Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), and in addition to such
additional vote of the Preferred Stock as may be required by the provisions of
any series thereof or by applicable law, this Article SEVENTH shall not be
amended, altered, changed or repealed without:
(1) The affirmative vote of 80% of the Board of Directors and of a
majority of Continuing Directors, and
(2) The affirmative vote as to all stock held by the holders of 80%
or more of the outstanding Voting Shares, voting separately as a class.
EIGHTH: (a) The Corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provision contained in these
Articles of Incorporation, and other provisions authorized by the laws of the
State of Rhode Island at the time in force may be added or inserted in these
Articles of Incorporation, in the manner (i) now or hereafter prescribed by law,
and (ii) as has otherwise been provided in Articles SEVENTH and NINTH of these
Articles of Incorporation; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to these Articles of Incorporation in their present
form or as hereafter amended are granted subject to the right reserved in this
Article EIGHTH.
(b) Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the Corporation), and in addition to such
additional vote of the Preferred Stock as may be required by the provisions of
any series thereof or by applicable law, this Article EIGHTH shall not be
amended, altered, changed or repealed without the affirmative vote as to all
stock held by the holders of 80% or more of the outstanding shares of the
Corporation's capital stock entitled to vote generally in the election of
directors, voting separately as a class.
NINTH: (a) Definitions and Related Matters as to Certain Business
Combinations.
1.1 Affiliate. An "Affiliate" of, or a Person "affiliated with", a
specified Person, means a Person that directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
1.2 Associate. The term "Associate" used to indicate a relationship with
any Person means:
-16-
<PAGE>
(1) Any corporation or organization (other than the Corporation or a
Subsidiary of the Corporation) of which such Person is an officer or
partner or is, directly or indirectly, the beneficial owner of ten percent
or more of any class of equity securities;
(2) Any trust or other estate in which such Person has a ten percent
or greater beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity;
(3) Any relative or spouse of such Person, or any relative of such
spouse, who has the same home as such Person; or
(4) Any investment company registered under the Investment Company
Act of 1940 for which such Person or any Affiliate or Associate of such
Person serves as investment adviser.
1.3 Beneficial Owner. A Person shall be considered the "Beneficial Owner"
of any shares of stock (whether or not owned of record):
(1) With respect to which such Person or any Affiliate or Associate
of such Person directly or indirectly has or shares (i) voting power,
including the power to vote or to direct the voting of such shares of
stock, and/or (ii) investment power, including the power to dispose of or
to direct the disposition of such shares of stock;
(2) Which such Person or any Affiliate or Associate of such Person
has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, and/or (ii) the right
to vote pursuant to any agreement, arrangement or understanding (whether
such right is exercisable immediately or only after the passage of time);
or
(3) Which are Beneficially Owned within the meaning of (1) or (2) of
this Section 1.3 by any other Person with which such first mentioned
Person or any of its Affiliates or Associates has any agreement,
arrangement or understanding, written or oral, with respect to acquiring,
holding, voting or disposing of any shares of stock of the Corporation or
any Subsidiary of the Corporation or acquiring, holding or disposing of
all or substantially all, or any Substantial Part, of the assets or
business of the Corporation or a Subsidiary of the Corporation.
For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article NINTH of the outstanding Voting
Shares, such shares shall be deemed to include any Voting Shares which may be
issuable pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants, options or otherwise
and which are deemed to be beneficially owned by only such Person pursuant to
the foregoing provisions of this Section 1.3.
-17-
<PAGE>
1.4 Business Combination. A "Business Combination" means:
(1) The sale, exchange, lease, transfer or other disposition to or
with a Related Person or any Affiliate or Associate of such Related Person
by the Corporation or any of its Subsidiaries (in a single transaction or
a series of related transactions) of all or substantially all, or any
Substantial Part, of its or their assets or business (including, without
limitation, any securities issued by a Subsidiary);
(2) The purchase, exchange, lease or other acquisition by the
Corporation or any of its Subsidiaries (in a single transaction or a
series of related transactions) of all, or any Substantial Part, of the
assets or business of a Related Person or any Affiliate or Associate of
such Related Person;
(3) Any merger or consolidation of the Corporation or any Subsidiary
thereof into or with a Related Person or any Affiliate or Associate of
such Related Person, irrespective of which Person is the surviving entity
in such merger or consolidation;
(4) Any reclassification of securities, recapitalization or other
transaction (other than a redemption in accordance with the terms of the
security redeemed) which has the effect, directly or indirectly, of
increasing the proportionate amount of Voting Shares of the Corporation or
any Subsidiary thereof which are Beneficially Owned by a Related Person,
or any partial or complete liquidation, spin-off, split-off or split-up of
the Corporation or any Subsidiary thereof; provided, however, that this
Section 1.4(4) shall not relate to any transaction of the types specified
herein that has been approved by (i) a majority of the Board of Directors
and (ii) 80% of the Continuing Directors; or
(5) The acquisition upon the issuance thereof of Beneficial
Ownership by a Related Person of Voting Shares or securities convertible
into Voting Shares or any voting securities or securities convertible into
voting securities of any Subsidiary of the Corporation, or the acquisition
upon the issuance thereof of Beneficial Ownership by a Related Person of
any rights, warrants or options to acquire any of the foregoing or any
combination of the foregoing Voting Shares or voting securities of a
Subsidiary of the Corporation.
As used in this definition, a "series of related transactions" shall be deemed
to include not only a series of transactions with the same Related Person but
also a series of separate transactions with a Related Person or any Affiliate or
Associate of such Related Person.
Anything in this definition to the contrary notwithstanding, this
definition shall not be deemed to include any transaction of the type set forth
in Section 1.4(l) through 1.4(3) above between or among any two or more
Subsidiaries of the Corporation or the Corporation and one or more Subsidiaries
of the Corporation if such transaction has been approved by the affirmative vote
of at least 80% of the Board of Directors and a majority of the Continuing
Directors on or prior to the Date of Determination.
-18-
<PAGE>
1.5 Continuing Director. A "Continuing Director" shall mean:
(1) An individual who was a member of the Board of Directors of the
Corporation first elected by the stockholders or by the Board of Directors
prior to April 13, 1983 or prior to the time that a Related Person became
the Beneficial Owner of in excess of 10% of the Voting Shares of the
Corporation entitled to vote in the election of directors; or
(2) An individual designated (before such individual's initial
election as a director) as a Continuing Director by a majority of the then
Continuing Directors.
1.6 Date of Determination. The term "Date of Determination" means:
(1) The date on which a binding agreement (except for the
fulfillment of conditions precedent, including, without limitation, votes
of stockholders to approve such transaction) is entered into by the
Corporation, as authorized by its Board of Directors, and another Person
providing for any Business Combination; or
(2) If such an agreement as referred to in Section 1.6(1) above is
amended so as to make it less favorable to the Corporation and its
stockholders, the date on which such amendment is approved by the Board of
Directors of the Corporation; or
(3) In cases where neither Section 1.6(1) or (2) above shall be
applicable, the record date for the determination of stockholders of the
Corporation entitled to notice of and to vote upon the transaction in
question.
A majority of the Continuing Directors shall have the power and duty to
determine the Date of Determination as to any transaction under this Article
NINTH. Any such determination shall be conclusive and binding for all purposes
of this Article.
1.7 Person. The term "Person" shall mean any individual, partnership,
corporation, group or other entity (other than the Corporation, any Subsidiary
of the Corporation for itself or as a fiduciary for customers in the ordinary
course, or a trustee holding stock for the benefit of employees of the
Corporation or its Subsidiaries, or any one of them, pursuant to one or more
employee benefit plans or arrangements). When two or more Persons act as a
partnership, limited partnership, syndicate, association or other group for the
purpose of acquiring, holding or disposing of shares of stock, such partnership,
syndicate, association or group shall be deemed a "Person".
1.8 Related Person. "Related Person" means any Person which is the
Beneficial Owner, as of the Date of Determination or immediately prior to the
consummation of a Business Combination or both, of 10% or more of the Voting
Shares, or any Person who is an Affiliate of the Corporation and at any time
within five years preceding the Date of Determination was the Beneficial Owner
of 10% or more of the then outstanding Voting Shares, but does not include any
one or group of more than one Continuing Director.
-19-
<PAGE>
1.9 Substantial Part. The term "Substantial Part" as used with reference
to the assets of the Corporation, of any Subsidiary or of any Related Person
means assets having a value of more than five percent of the total consolidated
assets of the Corporation and its Subsidiaries as of the end of the
Corporation's most recent fiscal year ending prior to the time the determination
is being made.
1.10 Subsidiary. "Subsidiary" shall mean any corporation or entity of
which the Person in question owns not less than 50% of any class of equity
securities, directly or indirectly.
1. 11 Voting Shares. "Voting Shares" shall mean shares of the
Corporation's capital stock entitled to vote generally in the election of
directors.
1. 12 Certain Determinations With Respect to Article NINTH.
(1) A majority of the Continuing Directors shall have the conclusive
power and authority to determine, for the purposes of this Article NINTH,
on the basis of information known to them: (i) the number of Voting Shares
of which any Person is the Beneficial Owner, (ii) whether a Person is an
Affiliate or Associate of another, (iii) whether a Person has an
agreement, arrangement or understanding with another as to the matters
referred to in the definition of "Beneficial Owner" as hereinabove
defined, (iv) whether the assets subject to any Business Combination
Constitute a "Substantial Part" as hereinabove defined, (v) whether two or
more transactions constitute a "series of related transactions" as
hereinabove defined, (vi) any matters referred to in subsection 1.12(2)
below, and (vii) such other matters with respect to which a determination
is required under this Article NINTH. Any such determination shall be
final and binding for all purposes hereunder.
(2) A Related Person shall be deemed to have acquired a Voting Share
of the Corporation at the time when such Related Person became the
Beneficial Owner thereof. With respect to Voting Shares owned by
Affiliates, Associates or other Persons whose ownership is attributed to a
Related Person under the foregoing definition of Beneficial Owner, if the
price paid by such Related Person for such shares is not determinable, the
price so paid shall be deemed to be the higher of (i) the price paid upon
acquisition thereof by the Affiliate, Associate or other Person or (ii)
the market price of the shares in question (as determined by a majority of
the Continuing Directors) at the time when the Related Person became the
Beneficial Owner thereof.
(b) Approval of Certain Business Combinations.
Whether or not a vote of the stockholders is otherwise required in
connection with the transaction, neither the Corporation nor any of its
Subsidiaries shall become a party to any Business Combination without prior
compliance with the provisions of Section 1.1 or 1.2 or 1.3 hereinbelow, in
addition to such additional vote of the Preferred Stock as may be required by
the provisions of any series thereof or by applicable law.
-20-
<PAGE>
1.1 Prior Approval by the Board of Directors. Such Business Combination
was approved by the Board of Directors of the Corporation by the affirmative
vote of at least 80% of the Board of Directors of the Corporation either (a) at
a time prior to the acquisition of 10% or more of the outstanding Voting Shares
of the Corporation by the Related Person, or (b) after such acquisition, but
only so long as such Related Person sought and obtained the approval, by the
affirmative vote of at least 80% of the Board of Directors of the Corporation,
of the acquisition of 10% or more of the outstanding Voting Shares prior to such
acquisition being consummated.
1.2 Approval by Continuing Directors and Additional Requirements.
Such Business Combination (a) shall be approved at a meeting of the Board
of Directors by the affirmative vote of 80% of the Continuing Directors and a
majority of the Board of Directors, and (b) all of the conditions hereinafter
set forth in subsections (1) through (5) shall be satisfied:
(1) The ratio of (i) the aggregate amount of the cash and the fair
market value of other consideration to be received per share of Common
Stock in such Business Combination by holders of Common Stock other than
the Related Person involved in such Business Combination, to (ii) the
market price per share of the Common Stock immediately prior to the
announcement of the proposed Business Combination, is at least as great as
the ratio of (x) the highest per share price (including brokerage
commissions, transfer taxes and soliciting dealers' fees) which such
Related Person has theretofore paid in acquiring any Common Stock prior to
such Business Combination, to (y) the market price per share of Common
Stock immediately prior to the initial acquisition by such Related Person
of any shares of Common Stock; and
(2) The aggregate amount of the cash and the fair market value of
other consideration to be received per share of Common Stock in such
Business Combination by holders of Common Stock, other than the Related
Person involved in such Business Combination, (i) is not less than the
highest per share price (including brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by such Related Person in acquiring any
of its holdings of Common Stock, (ii) is not less than the earnings per
share of Common Stock for the four consecutive fiscal quarters of the
Corporation immediately preceding the Date of Determination of such
Business Combination multiplied by the then price/earnings multiple (if
any) of such Related Person as customarily computed and reported in the
financial community; provided, that for the purposes of this clause (ii),
if more than one Person constitutes the Related Person involved in the
Business Combination, the price/earnings multiple (if any) of the Person
having the highest price/earnings multiple shall be used for the
computation in this clause (ii), and (iii) is not less than the book value
of a share of the Common Stock, as reflected in the balance sheet of the
Corporation as of the last day of the last fiscal quarter of the
Corporation preceding the Date of Determination; and
-21-
<PAGE>
(3) The consideration (if any) to be received in such Business
Combination by holders of Common Stock other than the Related Person
involved shall, except to the extent that a stockholder agrees otherwise
as to all or part of the shares which he or she owns, be in the same form
and of the same kind as the consideration paid by the Related Person in
acquiring Common Stock already owned by it; and
(4) After such Related Person became a Related Person and prior to
the consummation of such Business Combination: (i) such Related Person
shall have taken steps to ensure that the Board of Directors of the
Corporation included at all times representation by Continuing Directors
proportionate to the ratio that the number of Voting Shares of the
Corporation from time to time owned by stockholders who are not Related
Persons bears to all Voting Shares of the Corporation outstanding at the
time in question (with a Continuing Director to occupy any resulting
fractional position among the directors); (ii) such Related Person shall
not have acquired from the Corporation, directly or indirectly, any shares
of the Corporation (except (x) upon conversion of convertible securities
acquired by it prior to becoming a Related Person or (y) as a result of a
pro rata stock dividend, stock split or division of shares or (z) in a
transaction consummated after this Article NINTH was added to these
Articles of Incorporation and which satisfied all applicable requirements
of this Article NINTH); (iii) such Related Person shall not have acquired
any additional Voting Shares of the Corporation or securities convertible
into or exchangeable for Voting Shares except as a part of the transaction
which resulted in such Related Person's becoming a Related Person; and
(iv) such Related Person shall not have (x) received the benefit, directly
or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or tax credits
provided by the Corporation or any Subsidiary, or (y) made any major
change in the Corporation's business or equity capital structure or
entered into any contract, arrangement or understanding with the
Corporation except any such change, contract, arrangement or understanding
as may have been approved by the favorable vote of not less than 80% of
the Continuing Directors and a majority of the Board of Directors of the
Corporation; and
(5) A proxy statement complying with the requirements of the
Securities Exchange Act of 1934 shall have been mailed to all holders of
Voting Shares for the purpose of soliciting stockholder approval of such
Business Combination. Such proxy statement shall contain at the front
thereof, in a prominent place, any recommendations as to the advisability
(or inadvisability) of the Business Combination which the Continuing
Directors, or any of them, may have furnished in writing and, if deemed
advisable by two thirds of the Continuing Directors, an opinion of a
reputable investment banking firm as to the fairness (or lack of fairness)
of the terms of such Business Combination from the point of view of the
holders of Voting Shares other than any Related Person (such investment
banking firm to be selected by two thirds of the Continuing Directors, to
be furnished with all information it reasonably requests, and to be paid
by the Corporation a reasonable fee for its services upon receipt by the
Corporation of such opinion).
-22-
<PAGE>
For purposes of Sections 1.1 (1) and (2) hereof, in the event of a
Business Combination upon consummation of which the Corporation would be
the surviving corporation or company or would continue to exist (unless it
is provided, contemplated or intended that as part of such Business
Combination or within one year after consummation thereof a plan of
liquidation or dissolution of the Corporation will be effected), the term
"other consideration to be received" shall include (without limitation)
Common Stock retained by stockholders of the Corporation other than
Related Persons who are parties to such Business Combination.
1.3 Approval by Stockholders. If there is not full compliance with the
provisions of Section 1.1 or 1.2 of paragraph (b) of this Article, such Business
Combination shall be approved by the affirmative vote of 80% of the Voting
Shares, voting as a single class; provided that a proxy statement complying with
the requirements of the Securities Exchange Act of 1934 shall have been mailed
to all holders of Voting Shares for the purpose of soliciting stockholder
approval of such Business Combination. Such proxy statement shall contain at the
front thereof, in a prominent place, any recommendations as to the advisability
(or inadvisability) of the Business Combination which the Continuing Directors,
or any of them, may have furnished in writing and, if deemed advisable by two
thirds of the Continuing Directors, an opinion of a reputable investment banking
firm as to the fairness (or lack of fairness) of the terms of such Business
Combination from the point of view of the holders of Voting Shares other than
any Related Person (such investment banking firm to be selected by two thirds of
the Continuing Directors, to be furnished with all information it reasonably
requests, and to be paid a reasonable fee by the Corporation for its services
upon receipt by the Corporation of such opinion).
(c) Amendments to this Article NINTH.
Notwithstanding any other provisions of these Articles of Incorporation or
the Bylaws of the Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Articles of Incorporation or the
Bylaws of the Corporation), and in addition to such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof or by
applicable law, this Article NINTH shall not be amended, altered, changed or
repealed without:
(1) The affirmative vote of 80% of the Board of Directors and a
majority of the Continuing Directors, and
(2) The affirmative vote as to all stock held by the holders of 80%
or more of the outstanding Voting Shares, voting separately as a class.
(d) Amendments Recommended by Directors.
The provisions of paragraph (c) of this Article NINTH shall not apply to,
and the vote, referred to therein shall not be required for, any amendment,
addition, alteration or repeal of any provision of this Article NINTH
recommended to the stockholders by the favorable vote of (1) a majority of the
Board of Directors, and (2) not less than 80% of the Continuing Directors, and
-23-
<PAGE>
any such amendment, addition, alteration or repeal so recommended shall require
only the vote, if any, required under the applicable provisions of the Rhode
Island Business Corporation Law.
TENTH: (a) No director of the Corporation shall be liable to the
Corporation or to its stockholders for monetary damages for breach of the
director's duty as a director; provided, however, that this Article TENTH shall
not eliminate or limit the liability of a director: (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) the liability imposed pursuant to the provisions
of R.I.G.L. Section 7-1.1-43 (as in effect or as hereafter amended); or (iv) for
any transaction from which the director derived an improper personal benefit
unless said transaction is permitted by R.I.G.L. Section 7-1.1-37.1 (as in
effect or as hereafter amended). If the Rhode Island General Laws are amended
after the adoption of this Article TENTH to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of each director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Rhode Island General Laws, as so amended.
Neither the amendment nor repeal of this Article TENTH nor the adoption of any
provision of these Articles of Incorporation inconsistent with this Article
TENTH shall eliminate or reduce the effect of this Article TENTH in respect of
any matter occurring, or any cause of action, suit or claim that, but for this
Article TENTH, would occur or arise, prior to such amendment, repeal or adoption
of an inconsistent provision.
(b) Notwithstanding any other provision of these Articles of
Incorporation, including Section EIGHTH (a), or the Bylaws of the Corporation
(and notwithstanding the fact that some lesser percentage may be specified by
law, these Articles of Incorporation or the Bylaws of the Corporation), and in
addition to such additional vote of the Preferred Stock as may be required by
the provisions of any series thereof or by applicable law, this Article TENTH
shall not be amended, altered, changed or repealed without:
(1) the affirmative vote of 80% of the Board of Directors and a
majority of Continuing Directors (as defined in Article SEVENTH of these
Articles of Incorporation), and
(2) the affirmative vote as to all stock held by the holders of 80%
or more of the outstanding Voting Shares (as defined in Article SEVENTH of
these Articles of Incorporation), voting separately as a class.
ELEVENTH: The Restated Articles of Incorporation correctly set forth
without change the corresponding provisions of the Articles of Incorporation as
heretofore amended, and supersede the original Articles of Incorporation and all
amendments thereto.
-24-
<PAGE>
EXHIBIT A
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
SERIES III 10.12% PERPETUAL PREFERRED STOCK
(a) Designation. The designation of the series of Preferred Stock shall be
"Series III 10.12% Perpetual Preferred Stock" (hereinafter called this "Series")
and the number of shares constituting this Series is One Million One Hundred
Thousand (1,100,000).
(b) Dividend Rate.
(1) The holders of shares of this Series shall be entitled to
receive dividends thereon at a rate of 10.12% per annum computed on the
basis of an issue price thereof of $100 per share, and no more, payable
quarterly out of the funds of the Corporation legally available for the
payment of dividends. Such dividends shall be cumulative from the date of
original issue of such shares and shall be payable, when, as and if
declared by the Board, on March 1, June 1, September 1 and December 1 of
each year, commencing September 1, 1991. Each such dividend shall be paid
to the holders of record of shares of this Series as they appear on the
stock register of the Corporation on such record date, not exceeding 30
days preceding the payment date thereof, as shall be fixed by the Board.
Dividends on account of arrears for any past quarters may be declared and
paid at any time, without reference to any regular dividend payment date,
to holders of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed by the Board.
(2) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on
a parity with or junior to this Series for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other preferred stock ranking on a parity as to dividends
with this Series, all dividends declared upon shares of this Series and
any other class or series of preferred stock of the Corporation ranking on
a parity as to dividends with this Series shall be declared pro rata so
that the amount of dividends declared per share on this Series and such
other preferred stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the shares of this Series and such
other preferred stock bear to each other. Holders of shares of this Series
shall not be entitled to any dividend, whether payable in cash, property
or stocks, in excess of full cumulative dividends, as herein provided, on
A-1
<PAGE>
this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series
which may be in arrears.
(3) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in paragraph (2) of this Section (b)) shall be
declared or paid or set aside for payment or other distribution declared
or made upon the Common Stock or upon any other stock ranking junior to or
on a parity with this Series as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of this Series shall have been paid for all past
dividend payment periods.
(4) Dividends payable on this Series for any period, including the
period from the original issue of such shares until September 1, 1991,
shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
(c) Redemption.
(1) The shares of this Series shall not be redeemable prior to June
1, 1996. On and after June 1, 1996, the Corporation, at its option, may
redeem shares of this Series, as a whole or in part, at any time or from
time to time, at a redemption price per share as follows:
If redeemed during the twelve-month period beginning June 1, 1996 -
$105.060 per share
If redeemed during the twelve-month period beginning June 1, 1997 -
$104.048 per share
If redeemed during the twelve-month period beginning June 1, 1998 -
$103.036 per share
If redeemed during the twelve-month period beginning June 1, 1999 -
$102.024 per share
If redeemed during the twelve-month period beginning June 1, 2000 -
$101.012 per share
If redeemed at any time from and after June 1, 2001 - $100.000 per share
plus, in each case, accrued and unpaid dividends thereof to the date fixed for
redemption.
A-2
<PAGE>
(2) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board or by any other
method as may be determined by the Board in its sole discretion to be
equitable.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the
Board shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the aforesaid redemption price. In case
fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(5) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series
shall be redeemed unless all outstanding shares of this Series are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of this
Series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of this Series.
(d) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders,
A-3
<PAGE>
before any payment or distribution shall be made on the Common Stock or on
any other class of stock ranking junior to the shares of this Series upon
liquidation, the amount of $100 per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares accrued and
unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (d),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the shares of
this Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) Conversion or Exchange. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(f) Voting. The shares of this Series shall not have any voting powers,
either general or special except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or
A-4
<PAGE>
Other Special Rights and the Qualifications, Limitations or Restrictions
thereof, or any similar document relating to any series of Preferred
Stock) which would adversely affect the preferences, rights, powers or
privileges of this Series;
(2) Unless "the vote or consent of the holders of a greater number
of shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing effecting, increasing
or validating the creation, authorization or issue of any shares of any
class of stock of the Corporation ranking prior to the shares of this
Series as to dividends or upon liquidation, or the reclassification of any
authorized stock of the Corporation into any such prior shares, or the
creation, authorization or issue of any obligation or security
convertible, into or evidencing the right to purchase any such prior
shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than the Corporation's Series II 6 1/2% Cumulative
Convertible Preferred Stock (the "Series II Preferred") and any other
class or series of the Corporation's preferred stock expressly entitled to
elect additional directors to the Board by a vote separate and distinct
from the vote provided for in this paragraph (3) ("Voting Preferred"))
shall exist, the number of directors constituting the Board shall be
increased by two (without duplication of any increase made pursuant to the
terms of any other class or series of the Corporation's preferred stock
other than the Series II Preferred and any Voting Preferred) and the
holders of the Corporation's preferred stock of all classes and series
(other than the Series II Preferred and any such Voting Preferred) shall
have the right at such meeting, voting together as a single class without
regard to class or series, to the exclusion of the holders of Common
Stock, the Series II Preferred and the Voting Preferred, to elect two
directors of the Corporation to fill such newly created directorships.
Such right shall continue until there are no dividends in arrears upon
shares of any class or series of the Corporation's preferred stock ranking
prior to or on a parity with shares of this Series as to dividends (other
than the Series II Preferred and any Voting Preferred). Each director
elected by the holders of shares of any series of the Preferred Stock or
any other class or series of the Corporation's preferred stock in an
election provided for by this paragraph (3) (herein called a "Preferred
Director") shall continue to serve as such director for the full term for
which he shall have been elected, notwithstanding that prior to the end of
such term a default in preference dividends shall cease to exist. Any
Preferred Director may be removed by, and shall not be removed except by,
the vote of the holders of
A-5
<PAGE>
record of the outstanding shares of the Corporation's preferred stock
entitled to have originally voted for such director's election, voting
together as a single class without regard to class or series, at a meeting
of the stockholders, or of the holders of shares of the Corporation's
preferred stock, called for that purpose. So long as a default in any
preference dividends on any series of the Preferred Stock or any other
class or series of preferred stock of the Corporation shall exist (other
then the Series II Preferred and any Voting Preferred) (A) any vacancy in
the office of a Preferred Director may be filled (except as provided in
the following clause (B)) by an instrument in writing signed by the
remaining Preferred Director and filed with the Corporation and (B) in the
case of the removal of any Preferred Director, the vacancy may be filled
by the vote of the holders of the outstanding shares of the Corporation's
preferred stock entitled to have originally voted for the removed
director's election, voting together as a single class without regard to
class or series, at the same meeting at which such removal shall be voted.
Each director appointed as aforesaid shall be deemed for all purposes
hereto to be a Preferred Director. Whenever the term of office of the
Preferred Directors shall end and a default in preference dividends shall
no longer exist, the number of directors constituting the Board shall be
reduced by two. For purposes hereof, a "default in preference dividends"
on any series of the Preferred Stock or any other class or series of
preferred stock of the Corporation shall be deemed to have occurred
whenever the amount of accrued dividends upon such class or series of the
Corporation's preferred stock shall be equivalent to six full quarterly
dividends or more, and, having so occurred, such default shall be "deemed
to exist thereafter until, but only until, all accrued dividends on all
such shares of the Corporation's preferred stock of each and every series
then outstanding (other than the Series II Preferred, any Voting Preferred
or shares of any class or series ranking junior to shares of this Series
as to dividends) shall have been paid to the end of the last preceding
quarterly dividend period.
(g) Reacquired Shares. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued,
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
(h) Relation to Existing Preferred Classes of Stock. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of original issue of the shares of this Series and the
Preferred Stock with Cumulative and Adjustable Dividends, $20.00 par value, and
are senior in rank and preference to the Common Stock and the Cumulative
Participating Junior Preferred Stock of the Corporation.
(i) Relation to Other Preferred Classes of Stock. For purposes of this
resolution, any stock of any class or classes of the Corporation shall be deemed
to rank:
A-6
<PAGE>
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one
over the other, as between the holders of such stock and the holders of
shares of this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
A-7
<PAGE>
EXHIBIT B
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
SERIES IV 9.375% PERPETUAL PREFERRED STOCK
(a) Designation. The designation of the series of Preferred Stock shall be
"Series IV 9.375% Perpetual Preferred Stock" (hereinafter called this "Series")
and the number of shares constituting this Series is One Million (1,000,000).
(b) Dividend Rate.
(1) The holders of shares of this Series shall be entitled to
receive dividends thereon at a rate of 9.375% per annum computed on the
basis of an issue price thereof of $100 per share, and no more, payable
quarterly out of the funds of the Corporation legally available for the
payment of dividends. Such dividends shall be cumulative from the date of
original issue of such shares and shall be payable, when, as and if
declared by the Board, on March 1, June 1, September 1 and December 1 of
each year, commencing March 1, 1992. Each such dividend shall be paid to
the holders of record of shares of this Series as they appear on the stock
register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board.
Dividends on account of arrears for any past quarters may be declared and
paid at any time, without reference to any regular dividend payment date,
to holders of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed by the Board.
(2) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on
a parity with or junior to this Series for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other preferred stock ranking on a parity as to dividends
with this Series, all dividends declared upon shares of this Series and
any other class or series of preferred stock of the Corporation ranking on
a parity as to dividends with this Series shall be declared pro rata so
that the amount of dividends declared per share on this Series and such
other preferred stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the shares of this Series and such
other preferred stock bear to each other. Holders of shares of this Series
shall not be entitled to any dividend, whether payable in cash, property
or stocks, in excess of full cumulative dividends, as herein provided, on
B-1
<PAGE>
this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series
which may be in arrears.
(3) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in paragraph (2) of this Section (b)) shall be
declared or paid or set aside for payment or other distribution declared
or made upon the Common Stock or upon any other stock ranking junior to or
on a parity with this Series as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of this Series shall have been paid for all past
dividend payment periods.
(4) Dividends payable on this Series for any period, including the
period from the original issue of such shares until March 1, 1992, shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
(c) Redemption.
(1) The shares of this Series shall not be redeemable prior to
December 1, 1996. On and after December 1, 1996, the Corporation, at its
option, may redeem shares of this Series, in whole or in part, at any time
or from time to time, at a redemption price of $100 per share, plus
accrued and unpaid dividends thereon to the date fixed for redemption.
(2) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board or by any other
method as may be determined by the Board in its sole discretion to be
equitable.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holders address as the same appears on the stock register of the
corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed,
B-2
<PAGE>
the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the
Board shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the aforesaid redemption price. In case
fewer than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(5) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series
shall be redeemed unless all outstanding shares of this Series are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of this
Series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of this Series.
(d) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or on any other class of stock ranking junior
to the shares of this Series upon liquidation, the amount of $100 per
share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the date of final
distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
B-3
<PAGE>
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (d),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the shares of
this Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) Conversion or Exchange. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(f) Voting. The shares of this Series shall not have any voting powers,
either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and the Qualifications, Limitations or
Restrictions thereof, or any similar document relating to any series of
Preferred Stock) which would adversely affect the preferences, rights,
powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting,
increasing or
B-4
<PAGE>
validating the creation, authorization or issue of any shares of any class
of stock of the Corporation ranking prior to the shares of this Series as
to dividends or upon liquidation, or the reclassification of any
authorized stock of the Corporation into any such prior shares, or the
creation, authorization or issue of any obligation or security convertible
into or evidencing the right to purchase any such prior shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than the Corporation's Series II 6 1/2% Cumulative
Convertible Preferred Stock (the "Series II Preferred") and any other
class or series of the Corporation's preferred stock expressly entitled to
elect additional directors to the Board by a vote separate and distinct
from the vote provided for in this paragraph (3) ("Voting Preferred"))
shall exist, the number of directors constituting the Board shall be
increased by two (without duplication of any increase made pursuant to the
terms of any other class or series of the Corporation's preferred stock
other than the Series II Preferred and any Voting Preferred) and the
holders of the Corporation's preferred stock of all classes and series
(other than the Series II Preferred and any such Voting Preferred) shall
have the right at such meeting, voting together as a single class without
regard to class or series, to the exclusion of the holders of Common
Stock, the Series II Preferred and the Voting Preferred, to elect two
directors of the Corporation to fill such newly created directorships.
Such right shall continue until there are no dividends in arrears upon
shares of any class or series of the Corporation's preferred stock ranking
prior to or on a parity with shares of this Series as to dividends (other
than the Series II Preferred and any Voting Preferred). Each director
elected by the holders of shares of any series of the Preferred Stock or
any other class or series of the Corporation's preferred stock in an
election provided for by this paragraph (3) (herein called a "Preferred
Director") shall continue to serve as such director for the full term for
which he shall have been elected, notwithstanding that prior to the end of
such term a default in preference dividends shall cease to exist. Any
Preferred Director may be removed by, and shall not be removed except by,
the vote of the holders of record of the outstanding shares of the
Corporation's preferred stock entitled to have originally voted for such
director's election, voting together as a single class without regard to
class or series, at a meeting of the stockholders, or of the holders of
shares of the Corporation's preferred stock, called for that purpose so
long as a default in any preference dividends on any series of the
Preferred Stock or any other class or series of preferred stock of the
Corporation shall exist (other than the Series II Preferred and any Voting
Preferred) (A) any vacancy in the office of a Preferred Director may be
filled (except as provided in the following clause (B)) by an instrument
in writing signed by the remaining Preferred Director and filed with the
Corporation and (B) in the case of the removal of any Preferred Director,
the vacancy may be filled by the vote of the holders of the outstanding
shares of the Corporation's preferred stock entitled to have originally
voted for the removed
B-5
<PAGE>
director's election, voting together as a single class without regard to
class or series, at the same meeting at which such removal shall be voted.
Each director appointed as aforesaid shall be deemed for all purposes
hereto to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and
a default in preference dividends shall no longer exist, the number of
directors constituting the Board shall be reduced by two. For purposes
hereof, a "default in preference dividends" on any series of the Preferred
Stock or any other class or series of preferred stock of the Corporation
shall be deemed to have occurred whenever the amount of accrued dividends
upon such class or series of the Corporation's preferred stock shall be
equivalent to six full quarterly dividends or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all such shares of the Corporation's
preferred stock of each and every series then outstanding (other than the
Series II Preferred, any Voting Preferred or shares of any class or series
ranking junior to shares of this Series as to dividends) shall have been
paid to the end of the last preceding quarterly dividend period.
(g) Reacquired Shares. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
(h) Relation to Existing Preferred Classes of Stock. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of original issue of the shares of this Series and the
Preferred Stock with Cumulative and Adjustable Dividends, $20.00 par value, and
are senior in rank and preference to the Common Stock and the Cumulative
Participating Junior Preferred Stock of the Corporation.
(i) Relation to Other Preferred Classes of Stock. For purposes of this
resolution, any stock, of any class or classes of the Corporation shall be
deemed to rank:
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation
B-6
<PAGE>
or winding up of the Corporation, as the case may be, in proportion to
their respective dividend rates or liquidation prices, without preference
or priority, one over the other, as between the holders of such stock and
the holders of shares of this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
B-7
<PAGE>
EXHIBIT C
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
DUAL CONVERTIBLE PREFERRED STOCK
(a) Designation. The designation of this series of Preferred Stock created
by this resolution shall be "Dual Convertible Preferred Stock" (the "Dual
Convertible Preferred Stock") consisting of 1,415,000 shares. The stated value
of the Dual Convertible Preferred Stock shall be $200 per share.
(b) Rank. The Dual Convertible Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
prior to the Common Stock, par value $1.00 per share (the "Common Stock"), of
the Corporation. (All equity securities of the Corporation to which the Dual
Convertible Preferred Stock ranks prior with respect to dividend rights and
rights on liquidation, winding up and dissolution, including the Common Stock,
are collectively referred to herein as the "Junior Securities", all equity
securities of the Corporation with which the Dual Convertible Preferred Stock
ranks on a parity with respect to dividend rights and rights on liquidation,
winding up and dissolution are collectively referred to herein as the "Parity
Securities" and all equity securities of the Corporation to which the Dual
Convertible Preferred Stock ranks junior, whether with respect to dividends or
upon liquidation, dissolution, winding-up or otherwise, are collectively
referred to herein as the "Senior Securities.") The Dual Convertible Preferred
Stock shall be subject to the creation of Junior Securities, Parity Securities
and Senior Securities, subject, in the case of Senior Securities, to obtaining
the approval of the holders of the shares of the Dual Convertible Preferred
Stock in accordance with paragraph (h).
(c) Dividends.
(i) The holders of the shares of Dual Convertible Preferred Stock
shall be entitled to receive, out of funds legally available for the
payment of dividends, cumulative dividends in an amount equal to 50% of
the dividends declared on the common stock, par value $.01 per share
("Holding Common Stock"), of Fleet/Norstar Holding Company, Inc., a Rhode
Island corporation ("Holding"), and its successor or assign; provided,
however, that dividends shall not become payable on the shares of the Dual
Convertible Preferred Stock until an aggregate of $15 million of dividends
have been declared by Holding and shall only become payable to the extent
of dividends declared by Holding in excess of such amount; and, provided
further, that the amount of such dividends shall be subject to reduction
in accordance with paragraph (f) (iv); and, provided further, that
dividends shall not become payable on the shares of the Dual Convertible
Preferred Stock as a result of the declaration of the Dividend Note (as
hereinafter defined) or other amounts payable as dividends by Holding to
the Corporation pursuant to the Tax Allocation Agreement (as hereinafter
defined). Such dividends shall be payable from time to time as declared by
the Board (each of such dates being a "dividend payment date"), in
preference to dividends on the
C-1
<PAGE>
Junior Securities. Such dividends shall be paid to the holders of record
at the close of business on the tenth business day immediately preceding
each dividend payment date (each of such dates being a "dividend payment
record date"). Each of such dividends shall be fully cumulative and shall
accrue without interest, until paid.
(ii) All dividends paid with respect to shares of the Dual
Convertible Preferred Stock pursuant to paragraph (c)(i) shall be paid pro
rata to the holders entitled thereto.
(iii) No full dividends shall be declared by the Board of Directors
or paid or set apart for payment by the Corporation on any Parity
Securities for any period unless full cumulative accrued dividends have
been or contemporaneously are declared and paid or declared and a sum set
apart sufficient for such payment on the Dual Convertible Preferred Stock.
If any dividends are not paid in full upon the shares of the Dual
Convertible Preferred Stock and any other Parity Securities, all dividends
declared upon shares of the Dual Convertible Preferred Stock and any other
Parity Securities shall be declared pro rata so that the amount of
dividends declared per share of the Dual Convertible Preferred Stock and
such Parity Securities shall in all cases bear to each other the same
ratio that accrued dividends per share on the Dual Convertible Preferred
Stock and such Parity Securities bear to each other. No interest, or sum
of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Dual Convertible Preferred Stock or any other
Parity Securities which may be in arrears. Any dividend not paid pursuant
to paragraph (c)(i) hereof or this paragraph (c)(iii) shall be fully
cumulative and shall accrue (whether or not declared), without interest,
as set forth in paragraph (c)(i) hereof.
(iv) (A) Holders of shares of the Dual Convertible Preferred Stock
shall be entitled to receive the dividends provided for in paragraph
(c)(i) hereof in preference to and in priority over any dividends upon any
of the Junior Securities.
(B) So long as any shares of the Dual Convertible Preferred Stock
are outstanding, the Board of Directors shall not declare, and the
Corporation shall not pay or set apart for payment, any dividend on any of
the Junior Securities or make any payment on account of, or set apart for
payment money for a sinking or other similar fund for, the repurchase,
redemption or other retirement of, any of the Junior Securities or Parity
Securities or any warrants, rights or options exercisable for or
convertible into any of the Junior Securities or Parity Securities, or
make any distribution in respect of the Junior Securities, either directly
or indirectly, and whether in cash, obligations or shares of the
Corporation or other property (other than distributions or dividends in
Junior Securities to the holders of Junior Securities), and shall not
permit any corporation or other entity directly or indirectly controlled
by the Corporation to purchase or redeem any of the Junior Securities or
Parity Securities or any warrants, rights, calls or options
C-2
<PAGE>
exercisable for or convertible into any of the Junior Securities or Parity
Securities unless prior to or concurrently with such declaration, payment,
setting apart for payment, repurchase, redemption or other retirement or
distribution, as the case may be, all accrued and unpaid dividends on
shares of the Dual Convertible Preferred Stock not paid on the dates
provided for in paragraph (c)(i) hereof shall have been or be paid;
provided, however, that the foregoing restriction shall not prohibit the
Corporation from redeeming the rights outstanding under that certain
Rights Agreement dated as of November 21, 1990, as amended, between the
Corporation and Fleet National Bank, for a redemption price not in excess
of $.01 per right.
(d) Payment in Liquidation.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders
of shares of Dual Convertible Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders an amount in cash equal to $200 for each
share outstanding, plus an amount in cash equal to all accrued but unpaid
dividends thereon to the date of liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders
of any of the Junior Securities. If the assets of the Corporation are not
sufficient to pay in full the liquidation payments payable to the holders
of outstanding shares of the Dual Convertible Preferred Stock and any
Parity Securities, then the holders of all such shares shall share ratably
in such distribution of assets in accordance with the amount which would
be payable on such distribution if the amounts to which the holders of
outstanding shares of Dual Convertible Preferred Stock and the holders of
outstanding shares of such Parity Securities are entitled were paid in
full.
(ii) For the purposes of this paragraph (d), neither the voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with or into one or more other corporations nor the
consolidation or merger of one or more corporations with or into the
Corporation shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up.
(e) Common Stock Conversion.
(i) Upon the terms and in the manner set forth in this paragraph (e)
and subject to the provisions for adjustment contained in paragraph (e)
(vii), (A) the shares of the Dual Convertible Preferred Stock shall be
convertible, in whole, but not in part, at the option of the holders
thereof, at any time after the date that is one year after the Issue Date
(as hereinafter defined) and (B) each share of the Dual Convertible
Preferred Stock shall be convertible, from time to time in part,
C-3
<PAGE>
after the date that is ten years after the Issue Date, or such earlier
date as provided in paragraph (e)(ii), in either case, upon surrender to
the Corporation of the certificates for the shares to be converted, into a
number of fully paid and nonassessable shares of Common Stock equal to the
aggregate stated value of the Dual Convertible Preferred Stock to be
converted divided by a conversion price (the "Conversion Price") of
$17.65. As used herein, the term "Issue Date" shall mean the date of
initial issuance of the Dual Convertible Preferred Stock.
(ii) If, prior to the date that is one year after the Issue Date,
there occurs a sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of
the property or assets of the Corporation or a consolidation or merger of
the Corporation with or into another corporation in which the shares of
Common Stock are converted into cash, assets or securities (other than
shares of Common Stock where the Corporation is the surviving
corporation), the time when the conversion rights of holders of shares of
Dual Convertible Preferred Stock into Common Stock become effective shall
be accelerated and such conversion rights shall be effective at and after
a time at least 20 business days prior to the consummation of such
transaction.
(iii) In order to convert shares of the Dual Convertible Preferred
Stock into Common Stock, (x) if such shares are converted in whole, but
not in part, pursuant to paragraph (e)(i)(A) above, there shall be
delivered to the Corporation written evidence reasonably satisfactory to
it that the holders of a majority of the shares of Dual Convertible
Preferred Stock have elected to convert the Dual Convertible Preferred
Stock into Common Stock (the "Common Stock Conversion Election"), and (y)
if such shares are converted in part, the holder thereof shall deliver a
properly completed and duly executed written notice of election to convert
specifying the number (in whole shares) of the shares of the Dual
Convertible Preferred Stock to be converted. In either case, each holder
of shares of the Dual Convertible Preferred Stock shall (A) deliver a
written notice to the Corporation at its principal office or at the office
of the agency which may be maintained for such purpose (the "Common Stock
Conversion Agent") specifying the name or names in which such holder
wishes the certificate or certificates for shares of Common Stock to be
issued, (B) surrender the certificate for such shares of Dual Convertible
Preferred Stock to the Corporation or the Common Stock Conversion Agent,
accompanied, if so required by the Corporation or the Common Stock
Conversion Agent, by a written instrument or instruments of transfer in
form reasonably satisfactory to the Corporation or the Common Stock
Conversion Agent duly executed by the holder or his attorney duly
authorized in writing, and (C) pay any transfer or similar tax required by
paragraph (e)(ix).
(iv) (A) A "Common Stock Conversion" shall be deemed to have been
effected at the close of business on the date (the "Common Stock
Conversion Date") on which the Corporation or the Common Stock Conversion
Agent shall
C-4
<PAGE>
have received (x) the written notice of Common Stock Conversion Election,
or (y) a notice of election to convert, a surrendered certificate, any
required payments contemplated by paragraph (e) (ix) below, and all other
required documents. Immediately upon conversion, the rights of the holders
of converted shares of Dual Convertible Preferred Stock shall cease and
the persons entitled to receive the shares of Common Stock upon the
conversion of such shares of Dual Convertible Preferred Stock shall be
treated for all purposes as having become the beneficial owners of such
shares of Common Stock; provided, however, that such persons shall be
entitled to receive when paid dividends accrued on such shares of Dual
Convertible Preferred Stock to the last preceding dividend payment date
and unpaid as of the date of such conversion. A Common Stock Conversion
shall be at the Conversion Price in effect on such date, unless the stock
transfer books of the Corporation shall be closed on that date, in which
event such person or persons shall be deemed to have become such holder or
holders of record of the Common Stock at the close of business on the next
succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the Common Stock
Conversion Date.
(B) As promptly as practicable after the Common Stock Conversion
Date, the Corporation shall deliver or cause to be delivered at the office
or agency of the Common Stock Conversion Agent, to or upon the written
order of the holders of the surrendered shares of Dual Convertible
Preferred Stock, a certificate or certificates representing the number of
fully paid and nonassessable shares of Common Stock, with no personal
liability attaching to the ownership thereof, free of all taxes with
respect to the issuance thereof, liens, charges and security interests and
not subject to any preemptive rights, into which such shares of Dual
Convertible Preferred Stock have been converted in accordance with the
provisions of this paragraph (e), and any cash payable in respect of
fractional shares as provided in paragraph (e)(v).
(C) Upon the surrender of a certificate representing shares of Dual
Convertible Preferred Stock that is converted in part, the Corporation
shall issue or cause to be issued for the holder a new certificate
representing shares of Dual Convertible Preferred Stock equal in number to
the unconverted portion of the shares of Dual Convertible Preferred Stock
represented by the certificate so surrendered.
(v) No fractional shares or scrip representing fractional shares of
Common Stock shall be issued upon the conversion or redemption of any
shares of Dual Convertible Preferred Stock. Instead of any fractional
interest in a share of Common Stock which would otherwise be deliverable
upon the conversion or redemption of a share of Dual Convertible Preferred
Stock, the Corporation shall pay to the holder of such share (a
"Fractional Shareholder") an amount in cash (computed to the nearest cent)
equal to the current market price (as defined in paragraph (e)(vii)(E)
below) thereof on the business day next preceding the day of
C-5
<PAGE>
conversion or redemption. If more than one share shall be surrendered for
conversion or redemption at one time by the same holder, the number of
full shares of Common Stock issuable upon conversion or redemption thereof
shall be computed on the basis of the aggregate stated value of the shares
of Dual Convertible Preferred Stock so surrendered.
(vi) The holders of shares of Dual Convertible Preferred Stock at
the close of business on a dividend payment record date shall be entitled
to receive the dividend payable on such shares on the corresponding
dividend payment date notwithstanding the conversion thereof or the
Corporation's default in payment of the dividend due on such dividend
payment date.
(vii) The Conversion Price shall be subject to adjustment as
follows:
(A) If the Corporation shall (1) declare or pay a dividend on
its outstanding Common Stock in shares of Common Stock or make a
distribution to holders of its Common Stock in shares of Common
Stock, (2) subdivide its outstanding shares of Common Stock into a
greater number of shares of Common Stock, (3) combine its
outstanding shares of Common Stock into a smaller number of shares
of Common Stock or (4) issue by reclassification of its shares of
Common Stock other securities of the Corporation, then the
Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of any shares of Dual Convertible
Preferred Stock thereafter converted shall be entitled to receive
the number and kind of shares of Common Stock or other securities
that the holder would have owned or have been entitled to receive
after the happening of any of the events described above had such
shares of Dual Convertible Preferred Stock been converted
immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this paragraph
(e)(vii)(A) shall become effective on the date of the dividend
payment, subdivision, combination or issuance retroactive to the
record date with respect thereto, if any, for such event. Such
adjustment shall be made successively.
(B) If the Corporation shall issue to all holders of its
Common Stock, rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock at a price per share that is lower
than the then current market price per share of Common Stock (as
defined in paragraph (e)(vii)(E) below), then the Conversion Price
shall be adjusted in accordance with the following formula:
0 + (N x P)
-----
AC = C x (M)
-----
0 + N
C-6
<PAGE>
where:
AC = the adjusted Conversion Price.
C = the current Conversion Price.
0 = the number of shares of Common Stock outstanding on
the record date.
N = the number of additional shares of Common Stock
offered.
P = the offering price per share of the additional
shares.
M = the current market price per share of Common Stock
on the record date.
The adjustment shall be made successively whenever any such
rights, options, warrants or convertible or exchangeable securities
are issued, and shall become effective immediately after the record
date for the determination of shareholders entitled to receive the
rights, options, warrants or convertible or exchangeable securities.
(C) Upon the expiration of any rights, options, warrants or
convertible or exchangeable securities issued by the Corporation to
all holders of its Common Stock which caused an adjustment to the
Conversion Price pursuant to paragraph (e)(vii)(B), if any thereof
shall not have been exercised, then the Conversion Price shall be
increased by the amount of the initial adjustment of the Conversion
Price pursuant to paragraph (e)(vii)(B) in respect of such expired
rights, options, warrants or convertible or exchangeable securities.
(D) If the Corporation shall distribute to all holders of its
outstanding Common Stock any shares of capital stock of the
Corporation (other than Common Stock) or evidences of indebtedness
or assets (excluding ordinary cash dividends and dividends or
distributions referred to in paragraphs (e)(vii)(A) and (B) above)
or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in paragraph (e)(vii)(B)
above), (any of the foregoing being hereinafter in this paragraph
(e)(vii)(D) called the "Securities or Assets"), then in each such
case, unless the Corporation elects to reserve shares or other units
of such Securities or Assets for distribution to the holders of the
Dual Convertible Preferred Stock upon the conversion of the shares
of Dual Convertible Preferred Stock so that any such holder
converting shares of Dual Convertible Preferred Stock will receive
upon such conversion, in addition to the shares of the Common Stock
to which such holder is entitled, the amount and kind of such
Securities or Assets which such holder would have received if such
holder had, immediately prior to the record date for the
distribution of the Securities or Assets, converted its shares of
Dual Convertible Preferred Stock into Common Stock, the
C-7
<PAGE>
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction of
which the numerator shall be the current market price per share (as
defined in paragraph (e)(vii)(E) below) of the Common Stock on the
record date mentioned below less the then fair market value (as
determined by the Board in good faith) of the portion of the capital
stock or assets or evidences of indebtedness so distributed or of
such rights or warrants applicable to one share of Common Stock, and
of which the denominator shall be the current market price per share
of the Common Stock on such record date; provided, however, that if
the then fair market value (as so determined) of the portion of the
Securities or Assets so distributed applicable to one share of
Common Stock is equal to or greater than the current market price
per share of the Common Stock on the record date mentioned above, in
lieu of the foregoing adjustment, adequate provision shall be made
so that each holder of shares of the Dual Convertible Preferred
Stock shall have the right to receive the amount and kind of
Securities and Assets such holder would have received had such
holder converted each such share of the Dual Convertible Preferred
Stock immediately prior to the record date for the distribution of
the Securities or Assets. Such adjustment shall become effective
immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(E) For the purposes of any computation under paragraph (e)
(vii), and for the purposes of paragraphs (e)(v) and (g)(ii), the
current market price per share of Common Stock at any date shall be
deemed to be the average of the daily closing prices for the 20
consecutive trading days commencing on the 30th trading day prior to
the date in question. The closing price for each day shall be (i) if
the Common Stock is listed or admitted to trading on a national
securities exchange, the closing price on the New York Stock
Exchange Consolidated Tape (or any successor composite tape
reporting transactions on national securities exchanges) or, if such
a composite tape shall not be in use or shall not report
transactions in the Common Stock, the last reported sales price
regular way on the principal national securities exchange on which
the Common Stock is listed or admitted to trading (which shall be
the national securities exchange on which the greatest number of
shares of Common Stock has been traded during such 20 consecutive
trading days), or, if there is no transaction on any such day in any
such situation, the mean of the bid and asked prices on such day or,
(ii) if the Common Stock is not listed or admitted to trading on any
such exchange, the closing price, if reported, or, if the closing
price is not reported, the average of the closing bid and asked
prices as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, (iii) if bid and asked
prices for the Common Stock on each such day shall not have been
C-8
<PAGE>
reported through NASDAQ, the average of the bid and asked prices for
such date as furnished by any three New York Stock Exchange member
firms regularly making a market in the Common Stock and not
affiliated with the Corporation selected for such purpose by the
Board or, (iv) if no such quotations are available, the fair market
value of the Common Stock as determined by a New York Stock Exchange
member firm regularly making a market in the Common Stock selected
for such purpose by the Board.
(F) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% of such price; provided, however, that any adjustments
which by reason of this paragraph (e)(vii)(F) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this paragraph
(e)(vii) shall be made to the nearest one hundredth of a cent or to
the nearest one-hundredth of a share, as the case may be.
(G) If the Corporation shall be a party to any transaction,
including without limitation a merger, consolidation, sale of all or
substantially all of the Corporation's assets, liquidation or
recapitalization of the Common Stock (each of the foregoing being
referred to as a "Transaction"), in each case (except in the case of
a Common Stock Fundamental Change (as hereinafter defined)) as a
result of which shares of Common Stock shall be converted into the
right to receive stock, securities or other property (including cash
or any combination thereof), in addition to the right to exchange
the Dual Convertible Preferred Stock for Holding Common Stock, which
shall survive the consummation of any such Transaction, each share
of Dual Convertible Preferred Stock shall thereafter be convertible
into the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such
Transaction by a holder of that number of shares of Common Stock
into which one share of Dual Convertible Preferred Stock was
convertible immediately prior to such Transaction. The Corporation
shall not be a party to any Transaction unless the terms of such
Transaction are consistent with the provisions of this paragraph
(c)(vii)(G) and it shall not consent or agree to the occurrence of
any Transaction until the corporation has entered into an agreement
with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Dual Convertible Preferred Stock,
which shall contain provisions (i) enabling the holders of the Dual
Convertible Preferred Stock to convert into the consideration
received by holders of Common Stock at the Conversion Price
immediately after such Transaction and (ii) acknowledging the right
of the Dual Convertible Preferred Stock to be exchanged for Holding
Common Stock and assuming any obligations with
C-9
<PAGE>
respect thereto. The provisions of this paragraph (e)(vii)(G) shall
similarly apply to successive Transactions.
(H) In the event of a Common Stock Fundamental Change, in
addition to the right to exchange the Dual Convertible Preferred
Stock for Holding Common Stock, which shall survive the consummation
of any such Common Stock Fundamental Change, each share of Dual
Convertible Preferred Stock shall be convertible into common stock
of the kind received by holders of Common Stock as the result of
such Common Stock Fundamental Change. The Conversion Price
immediately following such Common Stock Fundamental Change shall be
the Conversion Price in effect immediately prior to such Common
Stock Fundamental Change multiplied by a fraction, the numerator of
which is the Purchaser Stock Price (as hereinafter defined) and the
denominator of which is the Applicable Price (as hereinafter
defined). The Corporation shall not consent or agree to the
occurrence of any Common Stock Fundamental Change until the
Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the
holders of the Dual Convertible Preferred Stock, which shall contain
provisions (i) enabling the holders of the Dual Convertible
Preferred Stock to convert into the consideration received by
holders of Common Stock at the Conversion Price immediately after
such Fundamental Change and (ii) acknowledging the right of the Dual
Convertible Preferred Stock to be exchanged for Holding Common Stock
and assuming any obligations with respect thereto. The provisions of
this paragraph (e)(vii)(H) shall similarly apply to successive
Common Stock Fundamental Changes.
(I) As used herein:
(1) The term "Applicable Price" means the current market
price for one share of the Common Stock (determined in
accordance with paragraph (e)(vii)(E)) on the record date for
the determination of the holders of Common Stock entitled to
receive common stock in connection with such Common Stock
Fundamental Change, or, if there is no such record date, on
the date upon which the holders of Common Stock shall have the
right to receive such common stock.
(2) The term "Common Stock Fundamental Change" shall
mean the occurrence of any transaction or event in connection
with which all or substantially all the Common Stock shall be
exchanged for, converted into, acquired for or shall
constitute solely the right to receive common stock that, for
the ten consecutive trading days immediately prior to such
Common Stock Fundamental Change, has been admitted for listing
on a national
C-10
<PAGE>
securities exchange or quoted on the National Market System of
NASDAQ (whether by means of an exchange order, liquidation,
tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise).
(3) The term "Purchaser Stock Price" shall mean, with
respect to any Common Stock Fundamental Change, the current
market price for one share of the common stock received by
holders of Common Stock in such Common Stock Fundamental
Change (determined in accordance with paragraph (e)(vii)(E) as
if such paragraph were applicable to such common stock) on the
record date for the determination of the holders of Common
Stock entitled to receive such common stock or, if there is no
such record date, on the date upon which the holders of Common
Stock shall have the right to receive such common stock.
(J) For the purposes of this paragraph (e)(vii) and paragraph
(e)(x), the term "Shares of Common Stock" shall mean (i) the class of
stock designated as the Common Stock of the Corporation at the date hereof
or (ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par
value, or from no par value to par value. If at any time, as a result of
an adjustment made pursuant to paragraphs (e)(vii) (A), (D), (G) or (H)
above, the holders of Dual Convertible Preferred Stock shall become
entitled to receive any securities other than shares of Common Stock,
thereafter the number of such other securities so issuable upon conversion
of the shares of Dual Convertible Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the shares of Dual
Convertible Preferred Stock contained in this paragraph (e)(vii).
(K) Notwithstanding the foregoing, in any case which this paragraph
(e)(vii) provides that an adjustment shall become effective immediately
after a record date for an event, the Corporation may defer until the
occurrence of such event (i) issuing to the holder of any share of Dual
Convertible Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Common Stock
issuable upon such conversion before giving effect to such adjustment and
(ii) paying to such holder any amount in cash in lieu of any fraction
pursuant to paragraph (e)(v).
(L) If the Corporation shall take any action affecting the Common
Stock, other than action described in this paragraph (e)(vii), which in
the opinion of the Board would materially adversely affect the conversion
rights of the holders of the shares of Dual Convertible
C-11
<PAGE>
Preferred Stock, the Conversion Price for the Dual Convertible Preferred
Stock may be adjusted, to the extent permitted by law, in such manner, if
any, and at such time, as the Board may determine in good faith to be
equitable in the circumstances. Failure of the Board to provide for any
such adjustment prior to the effective date of any such action by the
Corporation affecting the Common Stock shall be evidence that such Board
has determined that it is equitable to make no adjustments in the
circumstances.
(viii) Whenever the Conversion Price is adjusted as herein provided, the
Chief Financial Officer of the Corporation shall compute the adjusted Conversion
Price in accordance with the foregoing provisions and shall prepare a
certificate setting forth such adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based. A copy of such
certificate shall be filed promptly with the Common Stock Conversion Agent.
Promptly after delivery of such certificate, the Corporation shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which such adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Price to the holder
of each share of Dual Convertible Preferred Stock at his last address as shown
on the stock books of the Corporation.
(ix) The Corporation will pay any and all documentary, stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on the conversion of shares of Dual Convertible Preferred Stock
pursuant to this paragraph (e); provided, however, that the Corporation shall
not be required to pay any tax which may be payable in respect of any
registration or transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the registered holder of Dual Convertible
Preferred Stock converted or to be converted, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(x) (A) The Corporation shall at all times reserve and keep available,
free from all liens, charges and security interests and not subject to any
preemptive rights, out of the aggregate of its authorized but unissued Common
Stock or its issued Common Stock held in its treasury, or both, for the purpose
of effecting the conversion of the Dual Convertible Preferred Stock, the full
number of shares of Common Stock then deliverable upon the conversion of all
outstanding shares of the Dual Convertible Preferred Stock.
(B) Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the Common Stock issuable
upon conversion of the Dual Convertible Preferred Stock, the
C-12
<PAGE>
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Conversion Price.
(xi) If (A) the Corporation shall declare a dividend on its outstanding
Common Stock (excluding ordinary cash dividends) or make a distribution to
holders of its Common Stock; (B) the Corporation shall authorize the granting to
the holders of the Common Stock of rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase any
shares of Common Stock or any of its securities; (C) there shall be any
reclassification of the Common Stock or any consolidation or merger to which the
Corporation is a party and for which approval of any shareholders of the
Corporation is required, or the sale or transfer of all or substantially all of
the assets of the Corporation; or (D) there shall be any Common Stock
Fundamental Change; then the Corporation shall cause to be mailed to the holders
of shares of the Dual Convertible Preferred Stock at their addresses as shown on
the stock books of the Corporation, as promptly as possible, but at least 15
days, prior to the applicable date hereinafter specified, a notice stating (1)
the date on which a record is to be taken for the purpose of such dividend or
distribution, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend or
distribution are to be determined or (2) the date on which such
reclassification, consolidation, merger, sale, transfer or Common Stock
Fundamental Change is expected to become effective, and the date as of which it
is expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or Common Stock
Fundamental Change.
(f) Holding Exchange.
(i) Upon the terms and in the manner set forth in this paragraph (f), the
shares of Dual Convertible Preferred Stock shall be exchangeable, in whole, but
not in part, at the option of the holders thereof, upon surrender to the
Corporation of the certificates representing such shares of Dual Convertible
Preferred Stock, for a number of fully paid and nonassessable shares of Holding
Common Stock equal to 50% of the shares of Holding Common Stock on a fully
diluted basis on the Holding Exchange Date (as hereinafter defined).
(ii) On the Issue Date, all of the shares of Dual Convertible Preferred
Stock will be issued to one or more limited partnerships (the "Partnerships"),
for which Kohlberg Kravis Roberts & Co. or one of its affiliates acts as sole
general partner. The Partnerships shall distribute all shares of Dual
Convertible Preferred Stock then owned by the Partnerships to the partners
thereof (the "Distribution") upon the earlier to occur of (A) the date of the
Automatic Early Distribution (as
C-13
<PAGE>
hereinafter defined) or (B) the date that is six years after the Issue Date,
unless the Partnerships shall have received the consent of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") to an
alternative date on which to effect the Distribution (which shall not be earlier
than the date that is four years after the Issue Date). The Partnerships shall
promptly notify the Corporation of the Distribution.
(iii) The shares of Dual Convertible Preferred Stock shall be exchangeable
for Holding Common Stock, in whole, but not in part, in accordance with this
paragraph (f), (A) at any time after the Automatic Early Distribution shall have
been effected and before the date that is ten years after the Issue Date, or (B)
from time to time after the date that is (x) four years after the Issue Date or
at any time after such date, if the Partnerships do not own any shares of Dual
Convertible Preferred Stock on any such date and before the date that is ten
years after the Issue Date, or (y) the date that the Distribution shall have
been effected, which shall be six years after the Issue Date unless the
Partnerships shall have received the consent of the Federal Reserve Board to an
alternative date on which to effect the Distribution (which shall not be earlier
than the date that is four years after the Issue Date) and before the date that
is ten years after the Issue Date (the period of time set forth in either clause
(x) or (y) of this paragraph (f)(iii)(B) is referred to herein as the "Exchange
Period").
(iv) At any time and from time to time during the Exchange Period, the
holders of a majority of the shares of the Dual Convertible Preferred Stock
shall have the right to have an independent nationally recognized investment
banking firm render an opinion (an "Appraisal") of the fair price for all the
outstanding shares of Holding Common Stock as if all such shares were to be sold
to a third party in their entirety reflecting a full control premium (the
"Appraised Price"). The fees and expenses of such investment banking firm shall
be paid by the Corporation. The Corporation shall be entitled to reduce the
amount of dividends that would otherwise be payable on the Dual Convertible
Preferred Stock pursuant to paragraph (c) (i) by the amount of such fees and
expenses paid by the Corporation. The investment banking firm that performs each
Appraisal shall be selected by the Corporation but shall be reasonably
acceptable to the holders of a majority of the shares of the Dual Convertible
Preferred Stock. The holders of a majority of the shares of the Dual Convertible
Preferred Stock shall have 30 days to accept or reject the Appraised Price set
by any Appraisal. The Dual Convertible Preferred Stock will become exchangeable
for Holding Common Stock for a period of 90 days commencing on the date that is
six months after the written acceptance by the holders of a majority of the
shares of the Dual Convertible Preferred Stock of the Appraised Price set by an
Appraisal. If the holders of the Dual Convertible Preferred Stock do not elect
to exchange their shares of the Dual Convertible Preferred Stock for Holding
Common Stock during any such 90-day period, in addition to their other rights
hereunder, the holders shall be entitled to have additional Appraisals rendered
and to otherwise comply
C-14
<PAGE>
with the requirements hereof to have the Dual Convertible Preferred Stock again
become exchangeable for Holding Common Stock.
(v) The right to exchange the Dual Convertible Preferred Stock for Holding
Common Stock may also be exercised at any time on or after the 60th day after
the Corporation shall have given notice to the holders of the shares of the Dual
Convertible Preferred Stock that the Corporation's consolidated Tier 1 capital
leverage ratio, based on the rules and regulations of the Federal Reserve Board
as currently in effect (using year-end 1992 standards) as disclosed in any
report of condition filed by the Corporation with any bank regulatory authority,
adjusted to include the Corporation's goodwill existing at the Issue Date, shall
be less than 3%. The Corporation shall give the holders of the shares of the
Dual Convertible Preferred Stock immediate notice if its consolidated Tier 1
capital leverage ratio as reported in any such regulatory filing, adjusted to
include its goodwill existing at the Issue Date, falls below 3%. Prior to the
fifth day after the Partnerships shall have received such notice, unless the
Partnerships shall have received the consent of the Federal Reserve Board to an
extension of such date, the Partnerships shall effect the Distribution with
respect to all shares of Dual Convertible Preferred Stock then owned by the
Partnerships (the "Automatic Early Distribution"). The Corporation shall cause
an Appraisal to be prepared at the Corporation's expense and delivered to the
holders of the shares of the Dual Convertible Preferred Stock within 20 days
after the Corporation's notice of capital deficiency. The holders of a majority
of the shares of the Dual Convertible Preferred Stock shall have 20 days to
accept or reject such Appraisal. If such Appraisal is accepted, the Corporation
may redeem at its option, with the prior approval of the Federal Reserve Board,
the Dual Convertible Preferred Stock in whole, but not in part, for the Gross
Redemption Price, determined and payable in accordance with paragraph (g) below.
(vi) In order to exchange shares of the Dual Convertible Preferred Stock
into Holding Common Stock, there shall be delivered to the Corporation written
evidence reasonably satisfactory to it that the holders of a majority of the
shares of Dual Convertible Preferred Stock have elected to exchange the Dual
Convertible Preferred Stock into Holding Common Stock (the "Holding Exchange
Election"), which election shall be binding on all the holders of the shares of
the Dual Convertible Preferred Stock. Each holder of shares of the Dual
Convertible Preferred Stock shall (A) deliver a written notice of the name or
names in which such holder wishes the certificate or certificates for shares of
Holding Common Stock to be issued to the Corporation at its principal office or
at the office of the agency which may be maintained for such purpose (the
"Holding Exchange Agent"), (B) surrender the certificate for such shares of Dual
Convertible Preferred Stock to the Corporation or the Holding Exchange Agent,
accompanied, if so required by the Corporation or the Holding Exchange Agent, by
a written instrument or instruments of transfer in form reasonably satisfactory
to the Corporation or the Holding Exchange Agent duly executed by the holder or
his
C-15
<PAGE>
attorney duly authorized in writing, and (C) pay any transfer or similar tax
required by paragraph (f)(x)(A).
(vii) (A) The "Holding Exchange" shall be deemed to have been effected at
the close of business on the fifth business day after the date (the "Holding
Exchange Date") on which the Corporation shall have received the written notice
of the Holding Exchange Election. Immediately upon exchange, the rights of all
the holders of Dual Convertible Preferred Stock shall cease and the persons
entitled to receive the shares of Holding Common Stock upon the exchange of Dual
Convertible Preferred Stock shall be treated for all purposes as having become
the beneficial owners of such shares of Holding Common Stock; provided, however,
that such persons shall be entitled to receive when paid dividends accrued on
such shares of Dual Convertible Preferred Stock to the last preceding dividend
payment date and unpaid as of the date of such exchange.
(B) As promptly as practicable after the Holding Exchange Date subject to
the provisions of paragraph (f)(x), the Corporation shall deliver or cause to be
delivered at the office or agency of the Holding Exchange Agent, to or upon the
written order of the holders of the surrendered shares of Dual Convertible
Preferred Stock, a certificate or certificates representing the number of fully
paid and nonassessable shares of Holding Common Stock into which such shares of
Dual Convertible Preferred Stock have been exchanged in accordance with the
provisions of this paragraph (f).
(viii) No fractional shares or scrip representing fractional shares of
Holding Common Stock shall be issued upon the exchange of the Dual Convertible
Preferred Stock for Holding Common stock. The Corporation shall cause Holding to
effect a stock split or reverse stock split so that no fractional shares become
deliverable pursuant to the Holding Exchange.
(ix) The holders of shares of Dual Convertible Preferred Stock at the
close of business on a dividend payment record date shall be entitled to receive
the dividend payable on such shares on the corresponding dividend payment date
notwithstanding the exchange thereof or the Corporation's default in payment of
the dividend due on such dividend payment date.
(x) (A) The Corporation will pay any and all documentary, stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Holding Common Stock on the exchange of shares of Dual Convertible Preferred
Stock pursuant to this paragraph (f); provided, however, that the Corporation
shall not be required to pay any tax which may be payable in respect of any
registration or transfer involved in the issue or delivery of shares of Holding
Common Stock in a name other than that of the registered holder or Dual
Convertible Preferred Stock exchanged or to be exchanged, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid
C-16
<PAGE>
to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(B) If the Board of Directors of Holding determines in good faith that (i)
the declaration and payment of the dividend note (the "Dividend Note") described
in Section 3 of the Supplemental Tax Allocation Agreement between the
Corporation and Holding, dated the Issue Date (the "Tax Allocation Agreement"),
would cause Holding to be unable to comply with regulatory capital maintenance
requirements and policies then in effect or with safe and sound banking
practices or (ii) Holding will have insufficient cash to pay the Dividend Note,
then the Corporation may condition the issuance of Holding Common Stock to any
holder of the Dual Convertible Preferred Stock upon the receipt of a cash
capital contribution (a "Capital Contribution") from such holder to Holding
concurrently with such issuance equal to the product of a fraction, the
numerator of which equals the number of shares of Holding Common Stock for which
such holder's Dual Convertible Preferred Stock may be exchanged and the
denominator of which equals the total number of shares of Holding Common Stock
that will be outstanding (on a fully diluted basis) after all of the shares of
Dual Convertible Preferred Stock have been exchanged, multiplied by the amount
of the Dividend Note and, in such event, the declaration and payment of the
Dividend Note to the Corporation will be conditioned upon Holding's receipt of a
Capital Contribution from the Corporation equal to 50% of the amount of the
Dividend Note. Except as provided in this paragraph (f)(x), the holders of the
Dual Convertible Preferred Stock shall have no obligation to make any capital
contribution, including, without limitation, with respect to the obligations of
Holding to the Corporation under the Tax Allocation Agreement.
(C) The Board of Directors of Holding shall give written notice of its
determination to require a Capital Contribution to each holder of record of the
shares of the Dual Convertible Preferred Stock, which notice shall state the
amount of such holder's required Capital Contribution and the consequences of
failing to make such Capital Contribution. If any holder of the Dual Convertible
Preferred Stock fails to make such holder's Capital Contribution within 90 days
of such notice, the shares of Holding Common Stock for which such holder's
shares of the Dual Convertible Preferred Stock may be exchanged (the "Escrowed
Shares") shall be deposited by the Corporation in escrow with an independent
trustee (the "Trustee") that is not affiliated with the Corporation. The Trustee
shall be empowered and directed to sell such of the Escrowed Shares as will be
sufficient to realize net proceeds (after the payment of the fees and expenses
of the Trustee) equal to such holder's required Capital Contribution, together
with interest on such amount at the prime rate then in effect at the
Corporation's banking subsidiaries commencing on the 90th day after the notice
of such Capital Contribution ("Interest"). The holder of the shares of the Dual
Convertible Preferred Stock to which such Escrowed Shares relate may obtain the
release of such Escrowed Shares from the Trustee at any time prior to the
Trustee's
C-17
<PAGE>
disposition thereof by paying the amount of the Capital Corporation, together
with Interest thereon, to the Trustee. The Trustee shall have the right to sell
such of the Escrowed Shares in a public offering or in one or more private sales
as will result in the receipt of sufficient proceeds, after the payment of the
fees and expenses of the Trustee therefrom, to pay the required Capital
Contribution, together with Interest thereon, with respect to such Escrowed
Shares. The Trustee shall use its best efforts to obtain the highest price for
the Escrowed Shares to be sold. The Trustee shall not be prohibited from
selling, and shall be specifically authorized to sell, any of the Escrowed
Shares to the Corporation provided that the Corporation purchases such shares
for a consideration at least equal to the book value thereof. Upon the receipt
of sufficient proceeds to pay the required Capital Contribution, together with
Interest thereon, the balance of such Escrowed Shares will be released to the
holder of the Dual Convertible Preferred Stock to which such Escrowed Shares
relate in exchange for the Dual Convertible Preferred Stock held by such holder.
(g) Optional Redemption.
(i) The Corporation may redeem at its option, with the prior approval of
the Federal Reserve Board, the Dual Convertible Preferred Stock, in whole, but
not in part, at any time during the period after the acceptance of any Appraisal
by the holders of a majority of the shares of Dual Convertible Preferred Stock
but before the 90-day period following the acceptance of any Appraisal during
which the Dual Convertible Preferred Stock becomes exchangeable for Holding
Common Stock in accordance with paragraph (f)(iv) or before the Dual Convertible
Preferred Stock becomes exchangeable for Holding Common Stock in accordance with
paragraph (f)(v) above (the "Optional Redemption Period"), at a redemption price
equal to 50% of the Appraised Price (the "Gross Redemption Price"), together
with accrued and unpaid dividends thereon to the date of redemption. The
Appraised Price that is applicable to any Optional Redemption Period shall be
the Appraised Price set forth in the Appraisal, the acceptance of which gave
rise to such Optional Redemption Period.
(ii) The Gross Redemption Price shall be reduced by the aggregate of (A)
the aggregate current market price of the shares of Common Stock into which the
Dual Convertible Preferred Stock would then be convertible, regardless of
whether such shares are actually convertible at such time (which current market
price shall be determined in accordance with paragraph (e)(vii)(E) and the date
in question for purposes thereof shall be the date that the Optional Redemption
Notice (as hereinafter defined) is mailed in accordance with paragraph (g)(iii)
below) or, if any Transaction has been effected in which shares of Common Stock
were converted into the right to receive stock, securities or other property
(including cash or any combination thereof) (the "Transaction Consideration")
and the Common Stock is no longer outstanding, the value of the Transaction
Consideration into which the Dual Convertible Preferred Stock would then be
C-18
<PAGE>
convertible, and (B) the value of the rights to purchase Common Stock (the
"Rights") issued to the Partnerships on the Issue Date. The value of the Rights
shall be determined as follows:
(1) with respect to any portion of the Rights that has been
exercised and the holder of such Rights received Common Stock upon the
exercise thereof, the value of such Rights shall be equal to the aggregate
current market price of the Common Stock received upon the exercise of the
Rights on the date of exercise less the aggregate exercise price paid for
such Common Stock (which current market price shall be determined in
accordance with paragraph (e)(vii)(E) and the date in question for
purposes thereof shall be the date of exercise);
(2) with respect to any portion of the Rights that has not been
exercised, the value of such Rights shall be equal to the aggregate
current market price of the Common Stock that the holders of such Rights
would then be entitled to receive upon the exercise thereof in their
entirety less the aggregate exercise price that would then be payable upon
such exercise (which current market price shall be determined in
accordance with paragraph (e)(vii)(E) and the date in question for
purposes thereof shall be the date that the Optional Redemption Notice is
mailed); and
(3) with respect to any portion of the Rights that has been
exercised and the Corporation exercised its option to purchase such Rights
rather than issue Common Stock upon the exercise thereof, the value of
such Rights shall be equal to the aggregate purchase price received by the
holders thereof upon the Corporation's purchase of such Rights.
The value of the Transaction Consideration shall be determined as follows:
(1) with respect to any portion of the Transaction Consideration
that consists of stock or securities, the value of such stock or
securities shall be equal to the aggregate current market price of such
stock or securities (determined in accordance with paragraph (e)(vii)(E)
as if such paragraph were applicable to such stock or securities and the
date in question for purposes thereof shall be the date that the Optional
Redemption Notice is mailed); and
(2) with respect to any portion of the Transaction Consideration
that consists of other property, the value of such other property shall be
equal to its then aggregate fair market value as determined by the Board
in good faith.
If the Corporation certifies in the Optional Redemption Notice that it
must report gain, and that it will do so on its tax return for the taxable year
of the redemption, that will result in an actual income tax liability or an
actual reduction in income tax refund (or combination thereof)
C-19
<PAGE>
on the income tax return of the Corporation for the taxable year of the
redemption as a direct result of the actual redemption of the Dual Convertible
Preferred Stock for cash and/or the issuance of Common Stock or debt securities
of the Corporation pursuant to paragraph (g)(i), the Gross Redemption Price
shall be reduced by one-half of the amount of the total income tax liability
actually to be incurred as a result of, and/or the actual reduction in income
tax refund to occur caused by, such redemption, as will be reported on the
income tax return of the Corporation to be filed for the taxable year of the
redemption, including any income tax for which the Corporation is liable as a
result of such reduction. If the Corporation does not expect to incur an actual
tax liability or reduction in refund (or combination thereof) in the year of the
redemption, the Gross Redemption Price shall be reduced by one-half of the
amount determined by the Board of Directors of the Corporation in good faith,
equal to the projected tax liability to be incurred by the Corporation in future
years as a result of the redemption appropriately discounted to take into
account the period of time before such tax liability will actually be paid by
the Corporation. The Corporation will not provide the certification in the
Optional Redemption Notice unless there is substantial authority that requires
gain to be recognized by the Corporation on the redemption and no substantial
authority supporting the position that gain is not recognized by the Corporation
on the redemption.
If the Corporation subsequently receives a refund of all or any portion of
the taxes paid or has a reduction in the tax liability that resulted in a
reduction of the Gross Redemption Price, the Corporation shall promptly pay the
former holders of the Dual Convertible Preferred Stock their respective
proportionate share of 50% of such refund or reduction in tax liability,
together with any interest at the underpayment rate set forth in Section 6621
(a)(2) of the Internal Revenue Code of 1986, as amended. The Gross Redemption
Price reduced by the value of the Rights in accordance with clause (B) above and
any reduction pursuant to the three preceding sentences shall be referred to
herein as the "Net Redemption Price", and further reduced by the aggregate
current market price of the Common Stock or the aggregate value of the
Transaction Consideration in accordance with clause (A) above shall be referred
to herein as the "Balance".
(iii) The Net Redemption Price shall be payable to the holders of
the shares of Dual Convertible Preferred Stock as follows:
(A) certificates representing the number of shares of Common
Stock or, if any Transaction has been effected, certificates
representing the number of shares of stock or securities together
with any other property, into which the Dual Convertible Preferred
Stock would then be convertible, regardless of whether such shares
are actually convertible at such time, and any cash payable in
respect of fractional shares as provided in paragraph (e)(v), shall
be delivered to the holders of the Dual Convertible Preferred Stock
in accordance with the procedures for effecting a Common Stock
Conversion; and
(B) the Balance shall be payable, at the Corporation's option,
in any combination of cash or the Corporation's capital and other
securities having a realizable market value (as determined by an
independent
C-20
<PAGE>
nationally recognized investment banking firm selected and paid for
by the Corporation and reasonably acceptable to the holders of at
least a majority of the shares of the Dual Convertible Preferred
Stock) equal to the Balance.
(iv) The Corporation shall have the obligation to redeem, with the
prior approval of the Federal Reserve Board, the Dual Convertible
Preferred Stock, in whole, but not in part, if (A) the Corporation offers
to redeem (the "Redemption Offer") the Dual Convertible Preferred Stock at
a redemption price other than the Gross Redemption Price, which offer, if
made after the Distribution shall have been effected, may only be made
during an Optional Redemption Period or during the period after an
Appraisal has been received and prior to the acceptance or rejection
thereof by the holders of the shares of the Dual Convertible Preferred
Stock, and (B) the holders of a majority of the outstanding shares of the
Dual Convertible Preferred Stock shall have elected to accept the
Redemption Offer, which election shall be binding on all the holders of
the shares of the Dual Convertible Preferred Stock. Written notice of
every Redemption Offer shall be given by first class mail, postage
prepaid, to each holder of record of the shares of the Dual Convertible
Preferred Stock at such holder's address as the same appears on the stock
register of the Corporation. Each Redemption Offer shall state: (A) the
consideration offered by the Corporation for all the shares of the Dual
Convertible Preferred Stock (the "Alternative Redemption Price"); (B) the
proposed date on and the manner in which the Alternative Redemption Price
would be payable; and (C) the Gross Redemption Price, the Net Redemption
Price and the Balance, together with a certificate of the Chief Financial
Officer of the Corporation setting forth in reasonable detail the facts
upon and the manner in which each was determined.
(v) If the Corporation shall redeem shares of Dual Convertible
Preferred Stock pursuant to this paragraph (g), written notice of such
redemption (the "Optional Redemption Notice") shall be given by first
class mail, postage prepaid, mailed not less than 10 days nor more than 30
days prior to the redemption date, to each holder of record of the shares
of the Dual Convertible Preferred Stock at such holder's address as the
same appears on the stock register of the Corporation. The Optional
Redemption Notice shall state: (A) the redemption date; (B) the Gross
Redemption Price, the Net Redemption Price and the Balance, together with
a certificate of the Chief Financial Officer of the Corporation setting
forth in reasonable detail the facts upon and the manner in which each was
determined or the Alternative Redemption Price, as the case may be; (C)
that shares of Dual Convertible Preferred Stock called for redemption may
be converted in accordance with, and subject to the terms of, paragraph
(e) hereof at any time prior to the date fixed for redemption (unless the
Corporation shall default in payment of the Net Redemption Price or the
Alternative Redemption Price, in which case such right shall not terminate
at such date); (D) the place or places where certificates for such shares
are to be surrendered for payment of the
C-21
<PAGE>
Net Redemption Price or the Alternative Redemption Price; (E) the amount
of any accrued and unpaid dividends; and (F) that dividends on the shares
to be redeemed will cease to accrue on such redemption date.
(vi) The Optional Redemption Notice having been mailed as aforesaid,
from and after the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the Net Redemption Price
or the Alternative Redemption Price) dividends on the shares of Dual
Convertible Preferred Stock shall cease to accrue and said shares shall no
longer be deemed to be outstanding and shall have the status of authorized
but unissued shares of Preferred Stock, undesignated as to series, and all
rights of the holders thereof as shareholders of the Corporation (except
the right to receive from the Corporation the Net Redemption Price or the
Alternative Redemption Price and any accrued and unpaid dividends) shall
cease. Upon surrender in accordance with the Optional Redemption Notice of
any certificates for the shares so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors of the Corporation shall so
require and the Optional Redemption Notice shall so state), such shares
shall be redeemed by the Corporation at the Net Redemption Price or the
Alternative Redemption Price, as the case may be, plus any accrued and
unpaid dividends thereon.
(h) Voting Rights.
(i) The holders of record of shares of Dual Convertible Preferred
Stock shall not be entitled to any voting rights except as hereinafter
provided in this paragraph (h) or as otherwise provided by law.
(ii) (A) Whenever any matter is required to be acted upon herein by
the holders of a majority of the Dual Convertible Preferred Stock, the
affirmative vote of the holders of a majority of the outstanding Dual
Convertible Preferred Stock, whether at a special meeting of such holders
called as hereinafter provided, or by the written consent of such holders
pursuant to Section 7-1.1-30.3 of the Rhode Island Business Corporation
Act, shall be required to adopt such matter, which adoption shall be
binding on all the holders of the shares of Dual Convertible Preferred
Stock.
(B) Upon the written request of the holders of at least 10% of the
shares of the Dual Convertible Preferred Stock, addressed to the Secretary
of the Corporation, a proper officer of the Corporation shall call a
special meeting of holders of Dual Convertible Preferred Stock. Such
meeting shall be held at the earliest practicable date upon the notice
required for special meetings of shareholders at a place designated by the
holders of at least 10% of the shares of the Dual Convertible Preferred
Stock. If such meeting shall not be called by the proper officers of the
Corporation within 5 days after the personal service of such written
request upon the Secretary of the Corporation, or within 10 days after
C-22
<PAGE>
mailing the same within the United States, by registered mail, addressed
to the Secretary of the Corporation at its principal office (such mailing
to be evidenced by the registry receipt issued by the postal authorities),
then the holders of at least 10% of the shares of Dual Convertible
Preferred Stock may designate in writing a holder of Dual Convertible
Preferred Stock to call such meeting at the expense of the Corporation,
and such meeting may be called by such person designated upon the notice
required for special meetings of shareholders and shall be held at the
same place as is elsewhere provided in this paragraph (h)(ii)(B). Any
holder of Dual Convertible Preferred Stock that would be entitled to vote
at such meeting shall have access to the stock books of the Corporation
relating to the Dual Convertible Preferred Stock and the right to examine
and to make extracts therefrom, in person or by agent or attorney, at any
reasonable time or times, for the purpose of causing a meeting of
shareholders to be called pursuant to the provisions of this paragraph or
otherwise communicating with the holders of the Dual Convertible Preferred
Stock or for any other proper purpose.
(C) At any meeting of the holders of the Dual Convertible Preferred
Stock, the presence in person or by proxy of the holders of a majority of
the then outstanding shares of Dual Convertible Preferred Stock shall be
required and be sufficient to constitute a quorum of such holders for the
action to be taken by such class. At any such meeting or adjournment
thereof in the absence of a quorum of the holders of shares of Dual
Convertible Preferred Stock, the holders of a majority of such shares
present in person or by proxy shall have the power to adjourn the meeting
from time to time, without notice (except as required by law) other than
announcement at the meeting, until a quorum shall be present.
(D) At any meeting of the holders of the Dual Convertible Preferred
Stock, the holders of a majority of the outstanding shares of the Dual
Convertible Preferred Stock shall be entitled to designate a committee
(the "Committee") consisting of as many holders of the Dual Convertible
Preferred Stock as the holders of a majority of such shares may determine
to be appropriate. The Committee may be empowered to act on behalf of all
holders of the Dual Convertible Preferred Stock with respect to certain
matters affecting the exchangeability of the Dual Convertible Preferred
Stock specified in paragraphs (f)(iv) and (f)(v) and the acceptability of
the Corporation's selection of an investment banking firm hereunder if so
designated by the holders of the Dual Convertible Preferred Stock pursuant
to this paragraph (h)(ii)(D); provided, however, that in no event may the
Committee be empowered to elect to convert the Dual Convertible Preferred
Stock into Common Stock, to accept any Redemption Offer or to exchange the
Dual Convertible Preferred Stock for Holding Common Stock on behalf of the
holders thereof.
(iii) So long as any, shares of the Dual Convertible Preferred Stock
are outstanding, the Corporation shall not, without the affirmative vote
or consent of the holders of at least 66 2/3% of the outstanding shares of
Dual Convertible
C-23
<PAGE>
Preferred Stock, voting as a class, given in person or by proxy, either in
writing or by resolution adopted at a special meeting called for the
purpose, authorize any new class of Senior Securities.
(iv) So long as any shares of the Dual Convertible Preferred Stock
are outstanding, the Corporation shall not, without the affirmative vote
or consent of the holders of at least 66 2/3% of the outstanding shares of
Dual Convertible Preferred Stock, voting as a class, given in person or by
proxy, either in writing or by resolution adopted at a special meeting
called for the purpose, amend the Certificate of Incorporation or this
Certificate of Designation so as to affect materially and adversely the
specified rights, preferences, privileges or voting rights of shares of
Dual Convertible Preferred Stock.
(i) Other Redemption Rights.
(i) If less than 10% of the shares of the Dual Convertible Preferred
Stock originally issued is then outstanding, the Corporation may redeem at
its option, with the prior approval of the Federal Reserve Board, the Dual
Convertible Preferred Stock, in whole, but not in part, at any time on or
after the date that is ten years after the Issue Date, at a redemption
price of $200 per share (the "Stated Value Redemption Price"), together
with accrued and unpaid dividends thereon to the date of redemption,
without interest.
(ii) The Corporation may redeem at its option, with the prior
approval of the Federal Reserve Board, the Dual Convertible Preferred
Stock, in whole, but not in part, at any time on or after the date that is
12 years after the Issue Date, at a redemption price in cash equal to the
Fair Market Value (as hereinafter defined) of such shares. The Corporation
shall have the right to have an independent nationally recognized
investment banking firm render an opinion of the fair market value for all
the outstanding shares of the Dual Convertible Preferred Stock as if all
such shares were to be sold to a third party (the "Fair Market Value").
The investment banking firm that renders such opinion shall be selected by
the Corporation but shall be reasonably acceptable to the holders of a
majority of the outstanding shares of the Dual Convertible Preferred
Stock. Such determination of Fair Market Value shall be binding and
conclusive on the Corporation and the holders of the Dual Convertible
Preferred Stock. The fees and expenses of such investment banking firm
shall be paid by the Corporation.
(iii) If the Corporation shall redeem shares of Dual Convertible
Preferred Stock pursuant to this paragraph (i), written notice of such
redemption shall be given by first class mail, postage prepaid, mailed not
less than 90 days nor more than 120 days prior to the redemption date, to
each holder of record of the shares of the Dual Convertible Preferred
Stock at such holder's address as the same appears on the stock register
of the Corporation. Each such notice shall state: (A) the redemption date;
(B) the number of shares of Dual Convertible
C-24
<PAGE>
Preferred Stock to be redeemed; (C) the Stated Value Redemption Price or
the Fair Market Value of such holder's shares, as the case may be; (D)
that shares of Dual Convertible Preferred Stock called for redemption may
be converted in accordance with, and subject to the terms of, paragraph
(e) hereof at any time prior to the date fixed for redemption (unless the
Corporation shall default in payment of the Stated Value Redemption Price
or the Fair Market Value of such shares, in which case such right shall
not terminate at such date); (E) the place or places where certificates
for such shares are to be surrendered for payment of the Stated Value
Redemption Price or the Fair Market Value of such shares; and (F) that
dividends on the shares to be redeemed will cease to accrue on such
redemption date.
(iv) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the Stated Value Redemption Price or
the Fair Market Value of such shares) dividends on the shares of Dual
Convertible Preferred Stock shall cease to accrue and said shares shall no
longer be deemed to be outstanding and shall have the status of authorized
but unissued shares of Preferred Stock, undesignated as to series, and all
rights of the holders thereof as shareholders of the Corporation (except
the right to receive from the Corporation the Stated Value Redemption
Price and any accrued and unpaid dividends or the Fair Market Value of
such shares) shall cease. Upon surrender in accordance with said notice of
any certificates for the shares so redeemed (properly endorsed or assigned
for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed by
the Corporation at the Stated Value Redemption Price plus any accrued and
unpaid dividends thereon or the Fair Market Value of such shares, as the
case may be.
C-25
<PAGE>
EXHIBIT D
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
CUMULATIVE PARTICIPATING JUNIOR PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as "Cumulative Participating Junior Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 3,000,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
Section 2. Dividends and Distributions.
(A) The holders of shares of Junior Preferred Stock, in preference to the
holders of Common Stock, par value $1.00 per share (the "Common Stock"), of the
Corporation, and of any other junior stock, but subject to the rights of holders
of any senior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first days of January, April, July and October
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Junior Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Corporation shall at any time after
November 21, 1990 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock), then in each such case the
amount to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Junior
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or
D-1
<PAGE>
distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Junior Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the Record Date for the determination of holders
of shares of Junior Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Junior Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than 50 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(A) Each share of Junior Preferred Stock shall entitle the holder thereof
to one hundred votes (subject to adjustment as set forth below) on all matters
submitted to a vote of the stockholders of the Corporation (including, without
limitation, the election of directors). In the event the Corporation shall at
any time after November 21, 1990, declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock), then in
each such case the number of votes to which holders of shares of Junior
Preferred Stock were entitled to immediately prior to such event shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Restated Articles of
Incorporation, or by law, the holders of shares of Junior Preferred Stock, the
holders of shares of Common Stock and the holders of any other capital stock of
the Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Junior Preferred Stock shall be in
arrears in an amount equal to the full accrued dividends for six (6) or more
quarterly dividend periods,
D-2
<PAGE>
whether or not consecutive, shall not have been paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for the
holders of all of such shares, the Board of Directors of the Corporation shall
promptly take all necessary actions to increase the authorized number of
directors of the Corporation by one (1) and the holders of the shares of the
Junior Preferred Stock then outstanding shall be entitled (by series, voting as
a single class) to elect one (1) person director to the Board of Directors of
the Corporation (such right to elect one (1) director being hereinafter
sometimes referred to as the "special voting rights"), each outstanding share
having such right being entitled for such purpose to one vote; provided,
however, that at such time as the arrearage in payment of dividends which gave
rise to the exercise of the special voting rights has been cured with regard to
the Junior Preferred Stock by waiver or payment of all accrued dividends, the
right of the holders of such shares so to vote as provided in this paragraph
(C)(i) of this Section 3 shall cease (subject to renewal from time to time upon
the same terms and conditions) and the term of office of the person who is at
that time a director elected by such holders shall terminate and the number of
directors of the Corporation shall be automatically reduced by one (1).
(ii) At any time after the special voting rights shall have become vested
in the holders of the shares of the Junior Preferred Stock as provided in
paragraph (C)(i) of this Section 3, the Secretary of the Corporation, as
promptly as possible but in any event within twenty (20) days after receipt of
the written request of the holders of 10% of the shares of the Junior Preferred
Stock then outstanding, addressed to the Corporation at its principal office,
shall call a special meeting of the holders of the shares of the Junior
Preferred Stock for the purpose of electing such additional director, such
meeting to be held at any place as provided by the Bylaws of the Corporation for
meetings of the Corporation's stockholders, and upon not less than ten (10) nor
more than twenty (20) days notice. If such meeting shall not be so called within
twenty (20) days after receipt of the request by the Secretary of the
Corporation, then the holders of 10% of the shares of the Junior Preferred Stock
then outstanding may, by written notice to the Secretary of the Corporation,
designate any person to call such meeting, and the person so designated may call
such meeting, at any such place as provided above and upon not less than ten
(10) nor more than twenty (20) days notice and for that purpose shall have
access to the stockholder record books of the Corporation. No such special
meeting of the holders of the shares of the Junior Preferred Stock and no
adjournment thereof shall be held on a date later than thirty (30) days before
the annual meeting of stockholders of the Corporation. At any meeting so called
or at any annual meeting held at any time when the special voting rights are in
effect, the holders of a majority of the shares of the Junior Preferred Stock
then outstanding, present in person or by proxy, shall be sufficient to
constitute a quorum for the election of such additional director, and such
additional director, together with any and all other directors who are then
members of the Board of Directors, shall constitute the duly elected directors
of the Corporation.
(iii) With respect to a vacancy arising in the directorship referred to in
paragraph (C)(i) of this Section 3 at any time when the special voting rights
are in effect pursuant to paragraph (C)(i) of this Section 3, upon the written
request of the holders of 10% of the shares of the Junior Preferred Stock then
outstanding, addressed to the Corporation at its principal office, the Secretary
of the Corporation shall give notice of a special meeting of holders of the
shares of the Junior Preferred Stock of the election of a director to fill such
vacancy caused by
D-3
<PAGE>
the death, resignation or other inability to serve as a director elected by such
holders, to be held not less than ten (10) nor more than twenty (20) days
following receipt by the Secretary of the Corporation of such written request.
So long as special voting rights are in effect pursuant to paragraph (i) of this
Section 3(c), any director who shall have been so elected by the holders of the
Junior Preferred Stock may be removed at any time, either with or without cause,
only by the affirmative vote of the holders of the shares at the time entitled
to cast a majority of the votes entitled to be cast for the election of such
director at a special meeting of such holders called for that purpose, and any
vacancy thereby created may be filled by the vote of such holders.
(D) Except as set forth herein, or as otherwise provided by the Restated
Articles of Incorporation or by law, holders of Junior Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
(E) Holders of Junior Preferred Stock shall be entitled to such notice of
each meeting of stockholders as is furnished to the holders of Common Stock with
respect to such meeting.
Section 4. Certain Restrictions.
(A) Subject to the provisions of the Restated Articles of Incorporation,
whenever quarterly dividends or other dividends or distributions payable on the
Junior Preferred Stock as provided in Section 2 are in arrears as of any
Quarterly Dividend Payment Date, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Junior
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends and
upon dissolution, liquidation or winding up) to the Junior Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of stock ranking on a
parity with
D-4
<PAGE>
the Junior Preferred Stock, except in accordance with the terms of the
Restated Articles of Incorporation and with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Articles of Incorporation, or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Preferred Stock unless, prior thereto, the holders of
shares of Junior Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Junior Preferred Liquidation
Preference"). Following the payment of the full amount of the Junior Preferred
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Junior Preferred Stock unless, prior thereto, the holders of shares
of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Junior Preferred
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock) (such number in clause
(ii) immediately above being referred to as the "Adjustment Number"). Following
the payment of the full amount of the Junior Preferred Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Junior
Preferred Stock and Common Stock, respectively, holders of Junior Preferred
Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to one (1) with respect to such Junior Preferred Stock and
Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Junior Preferred Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Junior Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in
D-5
<PAGE>
proportion to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Corporation shall at any time after November 21,
1990, (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, Etc. In case the Corporation should
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Junior Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after November 21, 1990 declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange of change of shares of Junior Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. Ranking. The Junior Preferred Stock shall rank junior, as to
dividends and upon liquidation, dissolution or winding up, to (a) the Common
Stock, (b) the Preferred Stock with Cumulative and Adjustable Dividends, $20 par
value, (c) any other class of capital stock of the Corporation unless the terms
of such class shall expressly provide otherwise, and (d), to the extent
permitted by the Restated Articles of Incorporation, all other series of
Preferred Stock issued by the Corporation.
Section 9. No Redemption. The shares of Junior Preferred Stock shall not
be redeemable.
Section 10. Fractional Shares. The Junior Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of shares of Junior Preferred Stock.
D-6
<PAGE>
EXHIBIT E
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
PREFERRED STOCK WITH CUMULATIVE AND ADJUSTABLE DIVIDENDS
(a) Designation. The designation of this series of Preferred Stock shall
be "Preferred Stock with Cumulative and Adjustable Dividends" (hereinafter
called this "Series") and the number of shares constituting this Series is
688,700. Shares of this Series shall have a stated value of $50 per share. The
number of authorized shares of this Series may be reduced by further resolution
duly adopted by the Board and by the filing of a certificate pursuant to the
provisions of the Rhode Island Business Corporation Act stating that such
reduction has been so authorized, but the number of authorized shares of this
Series shall not be increased.
(b) Dividend Rate.
(1) The dividend rate on the shares of this Series shall be $.8875
per share for the period (the "Initial Dividend Period") from the date of
their original issue to and including March 31, 1988. Dividend rates on
the shares of this Series shall be for each quarterly dividend period
(hereinafter referred to as a "Quarterly Dividend Period"; and the Initial
Dividend Period or any Quarterly Dividend Period being hereinafter
individually referred to as a "Dividend Period" and collectively referred
to as "Dividend Periods") thereafter, which Quarterly Dividend Periods
shall commence on January 1, April 1, July 1, and October 1, in each year
and shall end on and include the day next preceding the first day of the
next Quarterly Dividend Period, at a rate per annum of the stated value
thereof of 2.25% below the Applicable Rate (as defined in paragraph (2) of
this Section (b)) in respect of such Quarterly Dividend Period. Anything
to the contrary herein notwithstanding, the dividend rate for any
Quarterly Dividend Period shall in no event be less than 6% or greater
than 12% per annum. Such dividends shall be cumulative from the date of
original issue of such shares and shall be payable, when and as declared
by the Board, on January 1, April 1, July 1, and October 1, of each year,
commencing on April 1, 1988. Each such dividend shall be paid to the
holders of record of shares of this Series as they appear on the stock
register of the Corporation on such record date, not exceeding 30 days
preceding the payment date thereof, as shall be fixed by the Board.
Dividends on account of arrears for any past Dividend Periods may be
declared and paid at any time, without reference to any regular dividend
payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board.
(2) Except as provided below in this paragraph, the "Applicable
Rate" for any Quarterly Dividend Period shall be the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Twenty Year
Constant Maturity Rate (each as hereinafter defined) for such Dividend
Period. In the event that the Corporation determines in good faith that
for any reason one or more of such rates cannot be determined for any
Quarterly Dividend Period, then the Applicable Rate for such
E-1
<PAGE>
Quarterly Dividend Period shall be the higher of whichever of such rates
can be so determined. In the event that the Corporation determines in good
faith that none of such rates can be determined for any Quarterly Dividend
Period, then the Applicable Rate in effect for the preceding Dividend
Period shall be continued for such Dividend Period.
(3) Except as provided below in this paragraph, the "Treasury Bill
Rate" for each Quarterly Dividend Period shall be the arithmetic average
of the two most recent weekly per annum market discount rates (or the one
weekly per annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period as provided below) for
three-month U.S. Treasury bills, as published weekly by the Federal
Reserve Board during the Calendar Period immediately prior to the last ten
calendar days of the March, June, September or December, as the case may
be, prior to the Quarterly Dividend Period for which the dividend rate on
this Series is being determined. In the event that the Federal Reserve
Board does not publish such a weekly per annum market discount rate during
such Calendar Period, then the Treasury Bill Rate for such Dividend Period
shall be the arithmetic average of the two most recent weekly per annum
market discount rates (or the one weekly per annum market discount rate,
if only one such rate shall be published during the relevant Calendar
Period as provided below) for three-month U.S. Treasury bills, as
published weekly during such Calendar Period by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum market discount rate for
three-month U.S. Treasury bills shall not be published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury Bill
Rate for such Dividend Period shall be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate shall be published
during the relevant Calendar Period as provided below) for all of the U.S.
Treasury bills then having maturities of not less than 80 nor more than
100 days, as published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board shall not publish such rates, by
any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation determines
in good faith that for any reason no such U.S. Treasury Bill Rates are
published as provided above during such Calendar Period, then the Treasury
Bill Rate for such Dividend Period shall be the arithmetic average of the
per annum market discount rates based upon the closing bids during such
Calendar Period for each of the issues of marketable noninterest-bearing
U.S. Treasury securities with a maturity of not less than 80 nor more than
100 days from the date of each such quotation, as quoted daily for each
business day in New York City (or less frequently if daily quotations
shall not be generally available) to the Corporation by at least three
recognized U.S. Government securities dealers selected by the Corporation.
In the event that the Corporation determines in good faith that for any
reason the Corporation cannot determine the Treasury Bill Rate for any
Quarterly Dividend Period as provided above in this paragraph, the
Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the closing bids
during such Calendar Period for each of the issues of marketable
interest-bearing U.S. Treasury
E-2
<PAGE>
securities with a maturity of not less than 80 nor more than 100 days from
the date of each such quotation, as quoted daily for each business day in
New York City (or less frequently if daily quotations shall not be
generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
(4) Except as provided in this paragraph, the "Ten Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields
(or the one weekly per annum Ten Year Average Yield, if only one such
Yield shall be published during the relevant Calendar Period as provided
below), as published weekly by the Federal Reserve Board during the
Calendar Period immediately prior to the last ten calendar days of the
March, June, September or December, as the case may be, prior to the
Quarterly Dividend Period for which the dividend rate on this Series is
being determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Ten Year Average Yield during such
Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period shall be the arithmetic average of the two most recent
weekly per annum Ten Year Average Yields (or the one weekly per annum Ten
Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), as published weekly during
such Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a per
annum Ten Year Average Yield shall not be published by the Federal Reserve
Board or by any Federal Reserve Bank or by any U.S. Government department
or agency during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the two
most recent weekly per annum average yields to maturity (or the one weekly
average yield to maturity, if only one such yield shall be published
during the relevant Calendar Period as provided below) for all of the
actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) then having maturities of not less than
eight nor more than twelve years, as published during such Calendar Period
by the Federal Reserve Board or, if the Federal Reserve Board shall not
publish such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Ten Year Constant Maturity Rate for any Quarterly
Dividend Period as provided above in this paragraph, then the Ten Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon the closing
bids during such Calendar Period for each of the issues of the actively
traded marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor
more than twelve years from the date of each such quotation, as quoted
daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at
least three recognized U.S. Government securities dealers selected by the
Corporation.
(5) Except as provided below in the paragraph, the "Twenty Year
Constant Maturity Rate" for each Quarterly Dividend Period shall be the
arithmetic average of the two most recent weekly per annum, Twenty Year
Average Yields (or the one weekly per
E-3
<PAGE>
annum Twenty Year Average Yield, if only one such Yield shall be published
during the Relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period immediately
prior to the last ten calendar days of the March, June, September or
December, as the case may be, prior to the Quarterly Dividend Period for
which the dividend rate on this Series is being determined. In the event
that the Federal Reserve Board does not publish such a weekly per annum,
Twenty Year Average Yield during such Calendar Period, then the Twenty
Year Constant Maturity Rate for such Dividend Period shall be the
arithmetic average of the two most recent weekly per annum Twenty Year
Average Yields (or the one weekly per annum, Twenty Year Average Yield, if
only one such Yield shall be published during the relevant Calendar Period
as provided below), as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum Twenty Year
Average Yield shall not be published by the Federal Reserve Board or by
any Federal Reserve Bank or by any U.S. Government department or agency
during such Calendar Period, then the Twenty Year Constant Maturity Rate
for such Dividend Period shall be the arithmetic average of the two most
recent weekly per annum average yields to maturity (or the one weekly
average yield to maturity, if only one such yield shall be published
during the relevant Calendar Period as provided below) for all of the
actively trade marketable U.S. Treasury fixed interest securities (other
than Special Securities) then having maturities of not less than eighteen
nor more than twenty-two years, as published during such Calendar Period
by the Federal Reserve Board or, if the Federal Reserve Board shall not
publish such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Twenty Year Constant Maturity Rate for any Quarterly
Dividend Period as provided above in this paragraph, then the Twenty Year
Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon the closing
bids during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eighteen nor
more than twenty-two years from the date of each such quotation, as quoted
daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at
least three recognized U.S. Government securities dealers selected by the
Corporation.
(6) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Twenty Year Constant Maturity Rate shall each be rounded to the
nearest five hundredths of a percentage point.
(7) The dividend rate with respect to each Quarterly Dividend Period
will be calculated as promptly as practicable by the Corporation according
to the appropriate method described herein. The mathematical accuracy of
each such calculation will be confirmed in writing by independent
accountants of recognized standing. The Corporation will cause each
dividend rate to be published in a newspaper of general circulation in New
York City prior to the commencement of the new Quarterly Dividend
E-4
<PAGE>
Period to which it applies and will cause notice of such dividend rate to
be enclosed with the dividend payment checks next mailed to the holders of
shares of this Series.
(8) For purposes of this Section (b), the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at
the option of the holder, be surrendered at face value in payment of
any Federal estate tax or which provide tax benefits to the holder
and are priced to reflect such tax benefits or which were originally
issued at a deep or substantial discount.
(iii) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest
rate securities (adjusted to constant maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average yield
to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of 20
years).
(9) No full dividends shall be declared or paid or set apart for
payment on Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
this Series for all dividend payment periods terminating on or prior to
the date of payment of such full cumulative dividends. When dividends are
not paid in full, as aforesaid, upon the shares of this Series and any
other Preferred Stock ranking on a parity as to dividends with this
Series, all dividends declared upon shares of this Series and any other
Preferred Stock ranking on a parity as to dividends with this Series shall
be declared pro rata so that the amount of dividends declared per share on
this Series and such other Preferred Stock shall in all cases bear to each
other the same ratio that accrued dividends per share on the shares of
this Series and such other Preferred Stock bear to each other. Holders of
shares of this Series shall not be entitled to any dividend, whether
payable in cash, property or stocks, in excess of full cumulative
dividends, as herein provided, on this Series. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend
payment or payments on this Series which may be in arrears.
(10) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in paragraph (9) of this Section (b) shall be
declared or paid or set aside for payment or other distribution declared
or made upon the Common Stock or upon any other stock ranking junior to or
on a parity with this Series as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the Corporation
ranking junior to this Series as
E-5
<PAGE>
to dividends and upon liquidation) unless, in each case, the full
cumulative dividends on all outstanding shares of this Series shall have
been paid for all past dividend payment periods.
(11) Dividends payable on each share of this Series for each full
Quarterly Dividend Period shall be computed by dividing the dividend rate
for such Quarterly Dividend Period by four and applying such rate against
the stated value, per share of this Series. Dividends payable on this
Series for any period less than a full Quarterly Dividend Period shall be
computed on the basis of a 360-day year consisting of 30-day months.
(c) Redemption
(1) The shares of this Series shall not be redeemable prior to April
1, 1988. On and after April 1, 1988, the Corporation, at its option, may
redeem shares of this Series, as a whole or in part, at any time or from
time to time, at a redemption price (i) in the case of any redemption on a
redemption date occurring on or after April 1, 1988, and prior to April 1,
1993, of $51.50 per share, and (ii) in the case of any redemption on a
redemption date occurring on or after April 1, 1993, of $50.00 per share,
plus, in each case, accrued and unpaid dividends thereon to the date fixed
for redemption.
(2) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board or by any other
method as may be determined by the Board in its sole discretion to be
equitable.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the
Board shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the redemption price aforesaid. In case
fewer than all the shares represented by any such
E-6
<PAGE>
certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
(5) Any shares of this Series which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board.
(6) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series
shall be redeemed unless all outstanding shares of this Series are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent, the purchase or acquisition of shares of this
Series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of this Series.
(d) Conversion or Exchange. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(e) Voting. The shares of this Series shall not have any voting powers
either general or special, except that
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation of the Corporation or of any
certificate amendatory thereof or supplemental thereto (including any
Certificate of Designation, Preferences and Rights or any similar document
relating to any series of Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting or
validating the creation, authorization or issue of any shares of any class
of stock of the Corporation ranking prior to the shares of this Series as
to dividends or upon liquidation, or the reclassification or any
authorized stock of the Corporation into any such prior shares, or the
creation, authorization or issue of any obligation or security convertible
into or evidencing the right to purchase any such prior shares;
E-7
<PAGE>
(3) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends on the Preferred
Stock shall exist, the number of directors constituting the Board of the
Corporation shall be increased by two, and the holders of the Preferred
Stock of all series shall have the right at such meeting, voting together
as a single class without regard to series, to the exclusion of the
holders of Common Stock, to elect two directors of the Corporation to fill
such newly created directorships. Such right shall continue until there
are no dividends in arrears upon the Preferred Stock. Each director
elected by the holders of shares of Preferred Stock (herein called a
"Preferred Director") shall continue to serve as such director for the
full term for which he shall have been elected, notwithstanding that prior
to the end of such term a default in preference dividends shall cease to
exist. Any Preferred Director may be removed by, and shall not be removed
except by, the vote of the holders of record of the outstanding shares of
Preferred Stock, voting together as a single class without regard to
series, at a meeting of the stockholders, or of the holders of shares of
Preferred Stock, called for that purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist, (A) any vacancy
in the office of a Preferred Director may be filled (except as provided in
the following clause (B)) by an instrument in writing signed by the
remaining Preferred Director and filed with the Corporation and (B) in the
case of the removal of any Preferred Director, the vacancy may be filled
by the vote of the holders of the outstanding shares of Preferred Stock,
voting together as a single class without regard to series, at the same
meeting at which such removal shall be voted. Each director appointed as
aforesaid by the remaining Preferred Director shall be deemed, for all
purposes hereof, to be a Preferred Director. Whenever the term of office
of the Preferred Directors shall end and a default in preference dividends
shall no longer exist, the number of directors constituting the Board of
the Corporation shall be reduced by two. For the purposes hereof, a
"default in preference dividends" on the Preferred Stock shall be deemed
to exist whenever the amount of accrued dividends upon any series of the
Preferred Stock shall be equivalent to six full quarter-yearly dividends
or more, and, having so occurred, such default shall be deemed to exist
thereafter until, but only until, all accrued dividends on all shares of
Preferred Stock of each and every series then outstanding shall have been
paid to the end of the last preceding quarterly dividend period.
(f) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive out of the assets of the Corporation, before any payment or
distribution shall be made on the Common Stock or on any other class of
stock ranking junior to the Preferred Stock upon liquidation, the amount
of $50.00 per share, plus a sum equal to all dividends (whether or not
earned or declared) on such shares accrued and unpaid thereon to the date
of final distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the
E-8
<PAGE>
Corporation, shall be deemed to be a dissolution, liquidation or winding
up, voluntary or involuntary, for the purpose of this Section (f).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (f), the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph 1 of this Section (f), no
such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the shares of
this Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(5) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series then outstanding
shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders all amounts to which such
holders are entitled pursuant to paragraph (1) of this Section (f) before
any payment shall be made to the holders of any class of capital stock of
the Corporation ranking junior upon liquidation of this Series.
(g) Ranking of Classes of Stock. Any stock of any class or classes of the
Corporation shall be deemed to rank:
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one
over the other, as between the holders of such stock and the holders of
shares of this Series; and
(3) junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
E-9
<PAGE>
EXHIBIT F
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
9.30% CUMULATIVE PREFERRED STOCK
(a) Designation. The designation of this series of Preferred Stock shall
be "9.30% Cumulative Preferred Stock" (hereinafter called the "Preferred
Shares") and the number of shares constituting this series shall be 575,000.
Such Preferred Shares shall have a stated value of $250 per share. The number of
authorized Preferred Shares may be reduced by further resolution duly adopted by
the Board and by the filing of a certificate pursuant to the provisions of the
Rhode Island Business Corporation Act stating that such reduction has been so
authorized, but the number of authorized Preferred Shares shall not be
increased.
(b) Dividends.
(1) Dividend periods ("Dividend Periods") shall commence on January
1, April 1, July 1 and October 1 in each year and shall end on and include
the day next preceding the first day of the next Dividend Period. The
dividend rate on the Preferred Shares from November 3, 1992 to and
including December 31, 1992 (the "Initial Dividend Period") and for each
Dividend Period thereafter will be 9.30% per annum of the stated value
thereof. Such dividends shall be cumulative from November 3, 1992 and
shall be payable when and as declared by the Board, on January 15th, April
15th, July 15th and October 15th of each year, commencing January 15,
1993. Each such dividend shall be paid to the holders of record of
Preferred Shares as they appear on the stock register of the Corporation
on such record date, not exceeding 30 days preceding the payment date
thereof, as shall be fixed by the Board. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time,
without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 days preceding the payment date
thereof, as may be fixed by the Board.
(2) No full dividends shall be declared or paid or set apart for
payment on Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to the Preferred Shares for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
such payment on the Preferred Shares for all dividend payment periods
terminating on or prior to the date of payment of such full cumulative
dividends. When dividends are not paid in full, as aforesaid, upon the
Preferred Shares and any other Preferred Stock ranking on a parity as to
dividends with the Preferred Shares, all dividends declared upon shares of
the Preferred Shares and any other Preferred Stock ranking on a parity as
to dividends with the Preferred Shares shall be declared pro rata so that
the amount of dividends declared per share on the Preferred Shares and
such other Preferred Stock shall in all cases bear to each other the same
ratio that accrued dividends per share on the Preferred Shares and such
other Preferred Stock bear to each other. Holders of the Preferred Shares
shall not be entitled to any dividend, whether payable in cash, property
or stock, in excess of full cumulative dividends, as herein provided, on
the Preferred Shares. No interest, or sum of money in lieu of interest,
shall
F-1
<PAGE>
be payable in respect of any dividend payment or payments on the Preferred
Shares which may be in arrears.
(3) So long as any of the Preferred Shares are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to the Preferred Shares as to dividends and upon
liquidation and other than as provided in paragraph (2) of this Section
(b)) shall be declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock or upon any other
stock ranking junior to or on a parity with the Preferred Shares as to
dividends or upon liquidation, nor shall any Common Stock nor any other
stock of the Corporation ranking junior to or on a parity with the
Preferred Shares as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by conversion into or
exchange for stock of the Corporation ranking junior to the Preferred
Shares as to dividends and upon liquidation) unless, in each case, the
full cumulative dividends on all outstanding Preferred Shares shall have
been paid for all past dividend payment periods.
(4) Dividends payable on each Preferred Share for each Dividend
Period shall be computed by annualizing the applicable dividend rate and
dividing by four. Dividends payable on the Preferred Shares for any period
less than a full Dividend Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
(c) Redemption.
(1) The Preferred Shares shall not be redeemable prior to October
15, 1997. On and after October 15, 1997, the Corporation, at its option,
may redeem the Preferred Shares, as a whole or in part, at any time or
from time to time at a redemption price equal to $250 per share plus
accrued and unpaid dividends thereon to the date fixed for redemption.
(2) In the event that fewer than all the outstanding Preferred
Shares are to be redeemed, the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board of the Corporation or
by any duly authorized committee thereof or by any other method as may be
determined by the Board of the Corporation or by any duly authorized
committee thereof in its sole discretion to be equitable, provided that
such method satisfies any applicable requirements of any securities
exchange on which the Preferred Shares are listed.
(3) In the event the Corporation shall redeem Preferred Shares,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of Preferred Shares to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (iii) the redemption price; (iv) the
place or places where certificates for such shares are to be
F-2
<PAGE>
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
Preferred Shares so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the
Board of the Corporation or any duly authorized committee thereof shall so
require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(5) Any of the Preferred Shares which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of the Corporation or any duly authorized committee thereof.
(6) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on the Preferred Shares are in arrears, no Preferred Shares
shall be redeemed unless all outstanding Preferred Shares of this series
are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any Preferred Shares; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred
Shares pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Preferred Shares.
(d) Conversion or Exchange. The holders of the Preferred Shares shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(e) Voting. The Preferred Shares shall not have any voting powers, either
general or special, except that
(i) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of Preferred Shares shall vote
together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document relating to
any series of Preferred Stock) which would adversely affect the
preferences, rights, powers or privileges of the Preferred Shares;
F-3
<PAGE>
(ii) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares and all other series of
Preferred Stock ranking on a parity with the Preferred Shares, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of Preferred Shares and such other series of
Preferred Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting or validating the
creation, authorization or issue of any shares of any class of stock of
the Corporation ranking prior to the Preferred Shares as to dividends or
upon liquidation, or the reclassification of any authorized stock of the
Corporation in to any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the
right to purchase any such prior shares;
(iii) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends (as defined below)
on the Preferred Stock shall exist, the number of directors constituting
the Board of the Corporation shall be increased by two, and the holders of
the Preferred Stock of all series shall have the right at such meeting,
voting together as a single class without regard to series, to the
exclusion of the holders of common stock, to elect two directors of the
Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Preferred Stock.
Each director elected by the holders of shares of Preferred Stock (herein
called a "Preferred Director") shall continue to serve as such director
for the full term for which he or she shall have been elected,
notwithstanding that prior to the end of such term a default in preference
dividends shall cease to exist. Any Preferred Director may be removed by,
and shall not be removed except by, the vote of the holders of record of
the outstanding shares of Preferred Stock, voting together as a single
class without regard to series, at a meeting of the stockholders, or of
the holders of shares of Preferred Stock, called for the purpose. So long
as a default in any preference dividends on the Preferred Stock shall
exist, (a) any vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (b)) by an instrument in
writing signed by the remaining Preferred Director and filed with the
Corporation and (b) in case of the removal of any Preferred Director, the
vacancy may be filled by the vote of the holders of the outstanding shares
of Preferred Stock, voting together as a single class without regard to
series, at the same meeting at which such removal shall be voted. Each
director appointed as aforesaid by the remaining Preferred Director shall
be deemed, for all purposes hereof, to be a Preferred Director. Whenever
the term of office of the Preferred Directors shall end and a default in
preference dividends shall no longer exist, the number of directors
constituting the Board of the Corporation shall be reduced by two. For the
purposes hereof, a "default in preference dividends" on the Preferred
Stock shall be deemed to exist whenever the amount of accrued dividends
upon any series of Preferred Stock shall be equivalent to six full
quarter-yearly dividends or more, and, having so occurred, such default
shall be deemed to exist thereafter until, but only until, all accrued
dividends on all shares of Preferred Stock of each and every series then
outstanding shall have been paid to the end of the last preceding
quarterly dividend period.
F-4
<PAGE>
(f) Liquidation Rights.
(1) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares shall
be entitled to receive, before any payment or distribution shall be made
on the Common Stock or on any other class of stock ranking junior to the
Preferred Shares upon liquidation, the amount of $250 per share, plus a
sum equal to all dividends (whether or not earned or declared) on such
shares accrued and unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all of the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purpose of this Section (f).
(3) After the payment to the holders of the Preferred Shares of the
full preferential amounts provided for in this Section (f), the holders of
the Preferred Shares as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of the Preferred Shares upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (f),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the Preferred
Shares upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the
Preferred Shares, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(5) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders all amounts to
which such holders are entitled pursuant to paragraph (1) of this Section
(f) before any payment shall be made to the holders of any class of
capital stock of the Corporation ranking junior upon liquidation to the
Preferred Shares.
(g) Ranking of Classes of Stock. For purposes of this resolution, any
stock of any class or classes of the Corporation shall be deemed to rank:
(1) prior to the Preferred Shares, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of the Preferred
Shares;
(2) on a parity with the Preferred Shares, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of
F-5
<PAGE>
the Preferred Shares, if the holders of such stock shall be entitled to
the receipt of dividends or of amounts distributable upon voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of the Preferred Shares;
and
(3) junior to the Preferred Shares, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of the
Preferred Shares shall be entitled to receipt of dividends or of amounts
distributable upon voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
F-6
<PAGE>
EXHIBIT G
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
9.35% CUMULATIVE PREFERRED STOCK
(a) Designation. The designation of this series of Preferred Stock shall
be "9.35% Cumulative Preferred Stock" (hereinafter called the "Preferred
Shares") and the number of shares constituting this series shall be 500,000.
Such Preferred Shares shall have a stated value of $250 per share. The number of
authorized Preferred Shares may be reduced by further resolution duly adopted by
the Board and by the filing of a certificate pursuant to the provisions of the
Rhode Island Business Corporation Act stating that such reduction has been so
authorized, but the number of authorized Preferred Shares shall not be
increased.
(b) Dividends.
(1) Dividend periods ("Dividend Periods") shall commence on January
15, April 15, July 15 and October 15 in each year and shall end on and
include the day next preceding the first day of the next Dividend Period.
The dividend rate on the Preferred Shares from January 26, 1995 to and
including April 14, 1995 (the "Initial Dividend Period") and for each
Dividend Period thereafter will be 9.35% per annum of the stated value
thereof. Such dividends shall be cumulative from January 26, 1995 and
shall be payable when and as declared by the Board, on January 15, April
15, July 15 and October 15 of each year, commencing April 15, 1995. Each
such dividend shall be paid to the holders of record of Preferred Shares
as they appear on the stock register of the Corporation on such record
date, not exceeding 30 days preceding the payment date thereof, as shall
be fixed by the Board. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without reference
to any regular dividend payment date, to holders of record on such date,
not exceeding 45 days preceding the payment date thereof, as may be fixed
by the Board.
(2) No full dividends shall be declared or paid or set apart for
payment on Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to the Preferred Shares for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
such payment on the Preferred Shares for all dividend payment periods
terminating on or prior to the date of payment of such full cumulative
dividends. When dividends are not paid in full, as aforesaid, upon the
Preferred Shares and any other Preferred Stock ranking on a parity as to
dividends with the Preferred Shares, all dividends declared upon shares of
the Preferred Shares and any other Preferred Stock ranking on a parity as
to dividends
G-1
<PAGE>
with the Preferred Shares shall be declared pro rata so that the amount of
dividends declared per share on the Preferred Shares and such other
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Shares and such other
Preferred Stock bear to each other. Holders of the Preferred Shares shall
not be entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends, as herein provided, on the
Preferred Shares. No interest, or sum of money in lieu of interest, shall
be payable in respect of any dividend payment or payments on the Preferred
Shares which may be in arrears.
(3) So long as any of the Preferred Shares are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to the Preferred Shares as to dividends and upon
liquidation and other than as provided in paragraph (2) of this Section
(b)) shall be declared or paid or set aside for payment or other
distribution declared or made upon the Common Stock or upon any other
stock ranking junior to or on a parity with the Preferred Shares as to
dividends or upon liquidation, nor shall any Common Stock nor any other
stock of the Corporation ranking junior to or on a parity with the
Preferred Shares as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by conversion into or
exchange for stock of the Corporation ranking junior to the Preferred
Shares as to dividends and upon liquidation) unless, in each case, the
full cumulative dividends on all outstanding Preferred Shares shall have
been paid for all past dividend payment periods.
(4) Dividends payable on each Preferred Share for each Dividend
Period shall be computed by annualizing the applicable dividend rate and
dividing by four. Dividends payable on the Preferred Shares for any period
less than a full Dividend Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
(c) Redemption.
(1) The Preferred Shares shall not be redeemable prior to January
15, 2000. On and after January 15, 2000, the Corporation, at its option,
may redeem the Preferred Shares, as a whole or in part, at any time or
from time to time at a redemption price equal to $250 per share plus
accrued and unpaid dividends thereon to the date fixed for redemption.
Notwithstanding the foregoing, to the extent applicable law requires, the
Preferred Shares may not be redeemed by the Corporation without the prior
approval of the Board of Governors of the Federal Reserve System.
(2) In the event that fewer than all the outstanding Preferred
Shares are to be redeemed the number of shares to be redeemed shall be
determined by the
G-2
<PAGE>
Board and the shares to be redeemed shall be determined by lot or pro rata
as may be determined by the Board of the Corporation or by any duly
authorized committee thereof or by any other method as may be determined
by the Board of the Corporation or by any duly authorized committee
thereof in its sole discretion to be equitable, provided that such method
satisfies any applicable requirements of any securities exchange on which
the Preferred Shares are listed.
(3) In the event the Corporation shall redeem Preferred Shares,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of Preferred Shares to be redeemed and, if fewer than all the
shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (iii) the redemption price; (iv) the
place or places where certificates for such shares are to be surrendered
for payment of the redemption price; and (v) that dividends on the shares
to be redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
Preferred Shares so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any
shares so redeemed (properly endorsed assigned for transfer, if the Board
of the Corporation or any duly authorized committee thereof shall so
require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
(5) Any of the Preferred Shares which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of the Corporation or any duly authorized committee thereof.
(6) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on the Preferred Shares are in arrears, no Preferred Shares
shall be redeemed unless all outstanding Preferred Shares of this series
are simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any Preferred Shares; provided, however, that the
foregoing shall not prevent the
G-3
<PAGE>
purchase or acquisition of Preferred Shares pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding
Preferred Shares.
(d) Conversion or Exchange. The holders of the Preferred Shares shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(e) Voting. The Preferred Shares shall not have any voting powers, either
general or special, except that
(i) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of Preferred Shares shall vote
together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
Designation, Preferences and Rights or any similar document relating to
any series of Preferred Stock) which would adversely affect the
preferences, rights, powers or privileges of the Preferred Shares;
(ii) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the Preferred Shares and all other series of
Preferred Stock ranking on a parity with the Preferred Shares, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of Preferred Shares and such other series of
Preferred Stock shall vote together as a single class without regard to
series, shall be necessary for authorizing, effecting or validating the
creation, authorization or issue of any shares of any class of stock of
the Corporation ranking prior to the Preferred Shares as to dividends or
upon liquidation, or the reclassification of any authorized stock of the
Corporation into any such prior shares, or the creation, authorization or
issue of any obligation or security convertible into or evidencing the
right to purchase any such prior shares;
(iii) If at the time of any annual meeting of stockholders for the
election of directors a default in preference dividends (as defined below)
on the Preferred Stock shall exist, the number of directors constituting
the Board of the Corporation shall be increased by two, and the holders of
the Preferred Stock of all series shall have the right at such meeting,
voting together as a single class without regard to series, to the
exclusion of the holders of common stock, to elect two directors of the
Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Preferred Stock.
Each director elected by the holders of shares of Preferred Stock (herein
G-4
<PAGE>
called a "Preferred Director") shall continue to serve as such director
for the full term for which he or she shall have been elected,
notwithstanding that prior to the end of such term a default in preference
dividends shall cease to exist. Any Preferred Director may be removed by,
and shall not be removed except by, the vote of the holders of record of
the outstanding shares of Preferred Stock, voting together as a single
class without regard to series, at a meeting of the stockholders, or of
the holders of shares of Preferred Stock, called for the purpose. So long
as a default in any preference dividends on the Preferred Stock shall
exist, (a) any vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (b)) by an instrument in
writing signed by the remaining Preferred Director and filed with the
Corporation and (b) in the case of the removal of any Preferred Director,
the vacancy may be filled by the vote of the holders of the outstanding
shares of Preferred Stock, voting together as a single class without
regard to series, at the same meeting at which such removal shall be
voted. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a Preferred
Director. Whenever the term of office of the Preferred Directors shall end
and a default in preference dividends shall no longer exist, the number of
directors constituting the Board of the Corporation shall be reduced by
two. For the purposes hereof, a "default in preference dividends" on the
Preferred Stock shall be deemed to exist whenever the amount of accrued
dividends upon any series of Preferred Stock shall be equivalent to six
full quarter-yearly dividends or more, and, having so occurred, such
default shall be deemed to exist thereafter until, but only until, all
accrued dividends on all shares of Preferred Stock of each and every
series then outstanding shall have been paid to the end of the last
preceding quarterly dividend period.
(f) Liquidation Rights.
(1) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares shall
be entitled to receive, before any payment or distribution shall be made
on the Common Stock or on any other class of stock ranking junior to the
Preferred Shares upon liquidation, the amount of $250 per share, plus a
sum equal to all dividends (whether or not earned or declared) on such
shares accrued and unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all of the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purpose of this Section (f).
G-5
<PAGE>
(3) After the payment to the holders of the Preferred Shares of the
full preferential amounts provided for in this Section (f), the holders of
the Preferred Shares as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of the Preferred Shares upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (f),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the Preferred
Shares upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the
Preferred Shares, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(5) Upon the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the holders of the Preferred Shares then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders all amounts to
which such holders are entitled pursuant to paragraph (1) of this Section
(f) before any payment shall be made to the holders of any class of
capital stock of the Corporation ranking junior upon liquidation to the
Preferred Shares.
(g) Ranking of Classes of Stock. For purposes of this resolution, any
stock of any class or classes of the Corporation shall be deemed to rank:
(1) prior to the Preferred Shares, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of the Preferred
Shares;
(2) on a parity with the Preferred Shares, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of the Preferred Shares, if
the holders of such stock shall be entitled to the receipt of dividends or
of amounts distributable upon voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preference or priority, one over the other, as between the holders
of such stock and the holders of the Preferred Shares; and
G-6
<PAGE>
(3) junior to the Preferred Shares, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of the
Preferred Shares shall be entitled to receipt of dividends or of amounts
distributable upon voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, as the case may be, in preference or
priority to the holders of shares of such class or classes.
G-7
<PAGE>
EXHIBIT H
FLEET BOSTON CORPORATION
(formerly knownas FLEET FINANCIAL GROUP, INC.)
SERIES V 7.25% PERPETUAL PREFERRED STOCK
(a) Designation. The designation of the series of Preferred
Stock shall be "Series V 7.25% Perpetual Preferred Stock"
(hereinafter called this "Series") and the number of shares
constituting this Series is one million two hundred sixty-five
thousand (1,265,000).
(b) Dividend Rate.
(1) The holders of shares of this Series shall be
entitled to receive dividends thereon at a rate of 7.25% per
annum computed on the basis of an issue price thereof of $250
per share, and no more, payable quarterly out of the funds of
the Corporation legally available for the payment of
dividends. Such dividends shall be cumulative from the date of
original issue of such shares and shall be payable, when, as
and if declared by the Board on January 15, April 15, July 15
and October 15 of each year, commencing April 15, 1996 (a
"Dividend Payment Date"). Each such dividend shall be paid to
the holders of record of shares of this Series as they appear
on the stock register of the Corporation on such record date,
not exceeding 30 days preceding the payment date thereof, as
shall be fixed by the Board. Dividends on account of arrears
for any past quarters may be declared and paid at any time,
without reference to any regular dividend payment date, to
holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the
Board.
(2) No full dividends shall be declared or paid or set
apart for payment on the Preferred Stock of any series
ranking, as to dividends, on a parity with or junior to this
Series for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods
terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full, as
aforesaid, upon the shares of this Series and any other
preferred stock ranking on a parity as to dividends with this
Series, all dividends declared upon shares of this Series and
any other class or series of preferred stock of the
Corporation ranking on a parity as to dividends with this
Series shall be declared pro rata so that the amount of
dividends declared per share on this Series and such other
preferred stock shall in all cases bear to each other the same
ratio that accrued
H-1
<PAGE>
dividends per share on the shares of this Series and such
other preferred stock bear to each other. Holders of shares of
this Series shall not be entitled to any dividend, whether
payable in cash, property or stocks, in excess of full
cumulative dividends, as herein provided, on this Series. No
interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this
Series which may be in arrears.
(3) So long as any shares of this Series are outstanding
no dividend (other than a dividend in Common Stock or in any
other stock ranking junior to this Series as to dividends and
upon liquidation and other than as provided in paragraph (2)
of this Section (b)) shall be declared or paid or set aside
for payment or other distribution declared or made upon the
Common Stock or upon any other stock ranking junior to or on a
parity with this Series as to dividends or upon liquidation,
nor shall any Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Series
as to dividends or upon liquidation be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation
(except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and
upon liquidation) unless, in each case, the full cumulative
dividends on all outstanding shares of this Series shall have
been paid for all past dividend payment periods.
(4) Dividends payable on this Series for any period,
including the period from the original issue of such shares
until April 15, 1996, shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
(c) Redemption.
(1) The shares of this Series shall not be redeemable
prior to April 15, 2001. On and after April 15, 2001, the
Corporation, at its option, may redeem shares of this Series,
in whole or in part, at any time or from time to time, at a
redemption price of $250 per share, plus accrued and unpaid
dividends thereon to the date fixed for redemption.
(2) In the event that fewer than all the outstanding
shares of this Series are to be redeemed pursuant to
subsection (1), the number of shares to be redeemed shall be
determined by the Board and the shares to be redeemed shall be
determined by lot or pro rata as may be determined by the
Board or by any other method as may be determined by the Board
in its sole discretion to be equitable.
H-2
<PAGE>
(3) In the event the Corporation shall redeem shares of
this Series pursuant to subsections (1) or (2), notice of such
redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior
to the redemption date, to each holder of record of the shares
to be redeemed, at such holder's address as the same appears
on the stock register of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of
shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and
after the redemption date (unless default shall be made by the
Corporation in providing money for the payment of the
redemption price) dividends on the shares of this Series so
called for redemption under either subsection (1) or (2) above
shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation (except the right
to receive from the Corporation the redemption price) shall
cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board shall so require and the
notice shall so state), such shares shall be redeemed by the
Corporation at the applicable redemption price. In case fewer
than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(5) Notwithstanding the foregoing provisions of this
Section (c), if any dividends on this Series are in arrears,
no shares of this Series shall be redeemed unless all
outstanding shares of this Series are simultaneously redeemed,
and the Corporation shall not purchase or otherwise acquire
any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of
shares of this Series pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of
this Series.
(d) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of
the Corporation, the holders of the shares of this Series
shall be entitled to receive and be paid out of the assets of
the Corporation available for distribution to its
stockholders, before any payment or distribution shall be
H-3
<PAGE>
made on the Common Stock or on any other class of stock
ranking junior to the shares of this Series upon liquidation,
the amount of $250 per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares
accrued and unpaid thereon to the date of final distribution.
(2) Neither the sale of all or substantially all the
property or business of the Corporation nor the merger or
consolidation of the Corporation into or with any other
corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to
be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of
this Series of the full preferential amounts provided for in
this Section (d), the holders of this Series as such shall
have no right or claim to any of the remaining assets of the
Corporation.
(4) In the event the assets of the Corporation available
for distribution to the holders of shares of this Series upon
any dissolution, liquidation or winding up of the Corporation,
whether voluntary or involuntary, shall be insufficient to pay
in full all amounts to which such holders are entitled
pursuant to paragraph (1) of this Section (d), no such
distribution shall be made on account of any shares of any
other class or series of Preferred Stock ranking on a parity
with the shares of this Series upon such dissolution,
liquidation or winding up unless proportionate distributive
amounts shall be paid on account of the shares of this Series,
ratably, in proportion to the full distributable amounts for
which holders of all such parity shares arc respectively
entitled upon such dissolution, liquidation or winding up.
(e) Conversion or Exchange. The holders of shares of this Series
shall not have any rights herein to convert such shares into or exchange
such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
(f) Voting. The shares of this Series shall not have any voting
powers, either general or special, except that:
(1) Unless the vote or consent of the holders of a greater
number of shares shall then be required by law, the consent of the
holders of at least 66 2/3% of all of the shares of this Series at
the time outstanding, given in person or by proxy, either in writing
or by a vote at a meeting called for the purpose at which the
holders of shares of this Series shall vote together as a separate
class, shall be necessary for authorizing, effecting or validating
the amendment, alteration or repeal of any of the
H-4
<PAGE>
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and the Qualifications, Limitations or
Restrictions thereof, or any similar document relating to any series of
Preferred Stock) which would adversely affect the preferences, rights,
powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting,
increasing or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the
shares of this Series as to dividends or upon liquidation, or the
reclassification of any authorized stock of the Corporation into any such
prior shares, or the creation, authorization or issue of any obligation or
security convertible into or evidencing the right to purchase any such
prior shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than any other class or series of the Corporation's
preferred stock expressly entitled to elect additional directors to the
Board by a vote separate and distinct from the vote provided for in this
paragraph (3) ("Voting Preferred")) shall exist, the number of directors
constituting the Board shall be increased by two (without duplication of
any increase made pursuant to the terms of any other class or series of
the Corporation's preferred stock other than any Voting Preferred) and the
holders of the Corporation's preferred stock of all classes and series
(other than any such Voting Preferred) shall have the right at such
meeting, voting together as a single class without regard to class or
series, to the exclusion of the holders of Common Stock and the Voting
Preferred, to elect two directors of the Corporation to fill such newly
created directorships. Such right shall continue until there are no
dividends in arrears upon shares of any class or series of the
Corporation's preferred stock ranking prior to or on a parity with shares
of this Series as to dividends (other than any Voting Preferred). Each
director elected by the holders of shares of any series of the Preferred
Stock or any other class or series of the Corporation's preferred stock in
an election provided for by this paragraph (3) (herein
H-5
<PAGE>
called a "Preferred Director") shall continue to serve as such director
for the full term for which he shall have been elected, notwithstanding
that prior to the end of such term a default in preference dividends shall
cease to exist. Any Preferred Director may be removed by, and shall not be
removed except by, the vote of the holders of record of the outstanding
shares of the Corporation's preferred stock entitled to have originally
voted for such director's election, voting together as a single class
without regard to class or series, at a meeting of the stockholders, or of
the holders of shares of the Corporation's preferred stock, called for
that purpose. So long as a default in any preference dividends on any
series of the Preferred Stock or any other class or series of preferred
stock of the Corporation shall exist (other than any Voting Preferred) (A)
any vacancy in the office of a Preferred Director may be filled (except as
provided in the following clause (B)) by an instrument in writing signed
by the remaining Preferred Director and filed with the Corporation and (B)
in the case of the removal of any Preferred Director, the vacancy may be
filled by the vote of the holders of the outstanding shares of the
Corporation's preferred stock entitled to have originally voted for the
removed director's election, voting together as a single class without
regard to class or series, at the same meeting at which such removal shall
be voted. Each director appointed as aforesaid shall be deemed for all
purposes hereto to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and
a default in preference dividends shall no longer exist, the number of
directors constituting the Board shall be reduced by two. For purposes
hereof, a "default in preference dividends" on any series of the Preferred
Stock or any other class or series of preferred stock of the Corporation
shall be deemed to have occurred whenever the amount of accrued dividends
upon such class or series of the Corporation's preferred stock shall be
equivalent to six full quarterly dividends or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all such shares of the Corporation's
preferred stock of each and every series then outstanding (other than any
Voting Preferred or shares of any class or series ranking junior to shares
of this Series as to dividends) shall have been paid to the end of the
last preceding quarterly dividend period.
(g) Reacquired Shares. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
H-6
<PAGE>
(h) Relation to Existing Preferred Classes of Stock. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of original issue of the shares of this Series and are
senior in rank and preference to the Common Stock and the Cumulative
Participating Junior Preferred Stock of the Corporation.
(i) Relation to Other Preferred Classes of Stock. For purposes of this
resolution, any stock of any class or classes of the Corporation shall be deemed
to rank:
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one
over the other, as between the holders of such stock and the holders of
shares of this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
H-7
<PAGE>
EXHIBIT I
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
SERIES VI 6.75% PERPETUAL PREFERRED STOCK
(a) Designation. The designation of the series of Preferred Stock shall be
"Series VI 6.75% Perpetual Preferred Stock" (hereinafter called this "Series")
and the number of shares constituting this Series is Six Hundred Ninety Thousand
(690,000).
(b) Dividend Rate.
(1) The holders of shares of this Series shall be entitled to
receive dividends thereon at a rate of 6.75% per annum computed on the
basis of an issue price thereof of $250 per share, and no more, payable
quarterly out of the funds of the Corporation legally available for the
payment of dividends. Such dividends shall be cumulative from the date of
original issue of such shares and shall be payable, when, as and if
declared by the Board, on January 15, April 15, July 15 and October 15 of
each year, commencing April 15, 1996 (a "Dividend Payment Date"). Each
such dividend shall be paid to the holders of record of shares of this
Series as they appear on the stock register of the Corporation on such
record date, not exceeding 30 days preceding the payment date thereof, as
shall be fixed by the Board. Dividends on account of arrears for any past
quarters may be declared and paid at any time, without reference to any
regular dividend payment date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be fixed by
the Board.
(2) If one or more amendments to the Internal Revenue Code of 1986,
as amended (the "Code"), are enacted that change the percentage of the
dividends received deduction (currently 70%) as specified in Section
243(a)(1) of the Code or any successor provision (the "Dividends Received
Percentage"), the amount of each dividend payable per share of this Series
for dividend payments made on or after the date of enactment of such
change shall be adjusted by multiplying the amount of the dividend payable
determined as described above (before adjustment) by a factor which shall
be the number determined in accordance with the following formula (the
"DRD Formula"), and rounding the result to the nearest cent:
1 - .35 (1 - .70)
-----------------
1 - .35 (1 - DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No amendment
to the Code, other than a change in the percentage of the dividends
received deduction set forth in Section 243(a)(1) of the Code or any
successor provision, will give rise to an adjustment. Notwithstanding the
foregoing provisions, in the event that, with respect to any such
I-1
<PAGE>
amendment, the Corporation shall receive either an unqualified opinion of
independent recognized tax counsel or a private letter ruling or similar
form of authorization from the Internal Revenue Service to the effect that
such an amendment would not apply to dividends payable on shares of this
Series, then any such amendment shall not result in the adjustment
provided for pursuant to the DRD Formula. The Corporation's calculation of
the dividends payable as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified
public accountants then regularly engaged by the Corporation shall be
final and not subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a dividend payable on a Dividend Payment Date
has been declared, the amount of dividend payable on such Dividend Payment
Date will not be increased; but instead, an amount, equal to the excess of
(x) the product of the dividends paid by the Corporation on such Dividend
Payment Date and the DRD Formula (where the DRP used in the DRD Formula
would be equal to the reduced Dividends Received Percentage) and (y) the
dividends paid by the Corporation on such Dividend Payment Date, will be
payable to holders of record on the next succeeding Dividend Payment Date
in addition to any other amounts payable on such date.
In addition, if prior to May 16, 1996, an amendment to the Code is
enacted that reduces the Dividends Received Percentage and such reduction
retroactively applies to a Dividend Payment Date as to which the
Corporation previously paid dividends on shares of this Series (each an
"Affected Dividend Payment Date"), the Corporation will pay (if declared)
additional dividends (the "Additional Dividends") on the next succeeding
Dividend Payment Date (or if such amendment is enacted after the dividend
payable on such Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of enactment) to
holders of record on such succeeding Dividend Payment Date in an amount
equal to the excess of (x) the product of the dividends paid by the
Corporation on each Affected Dividend Payment Date and the DRD Formula
(where the DRP used in the DRD Formula would be equal to the Dividends
Received Percentage applied to each Affected Dividend Payment Date) and
(y) the dividends paid by the Corporation on each Affected Dividend
Payment Date.
Additional Dividends will not be paid in respect of the enactment of
any amendment to the Code on or after May 16, 1996 which retroactively
reduces the Dividends Received Percentage, or if prior to May 16, 1996,
such amendment would not result in an adjustment due to the Corporation
having received either an opinion of counsel or tax ruling referred to in
the third preceding paragraph. The Corporation will only make one payment
of Additional Dividends.
In the event that the amount of dividend payable per share of this
Series shall be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Corporation will cause notice of each such
adjustment and, if applicable, any Additional Dividends, to be sent to
each holder of record of the shares of this Series at such holder's
address as the same appears on the stock register of the Corporation.
I-2
<PAGE>
(3) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on
a parity with or junior to this Series for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other preferred stock ranking on a parity as to dividends
with this Series, all dividends declared upon shares of this Series and
any other class or series of preferred stock of the Corporation ranking on
a parity as to dividends with this Series shall be declared pro rata so
that the amount of dividends declared per share on this Series and such
other preferred stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the shares of this Series and such
other preferred stock bear to each other. Holders of shares of this Series
shall not be entitled to any dividend, whether payable in cash, property
or stocks, in excess of full cumulative dividends, as herein provided, on
this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series
which may be in arrears.
(4) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in subsection (3) of this Section (b)) shall be
declared or paid or set aside for payment or other distribution declared
or made upon the Common Stock or upon any other stock ranking junior to or
on a parity with this Series as to dividends or upon liquidation, nor
shall any Common Stock nor any other stock of the Corporation ranking
junior to or on a parity with this Series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of this Series shall have been paid for all past
dividend payment periods.
(5) Dividends payable on this Series for any period, including the
period from the original issue of such shares until April 15, 1996, shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
(c) Redemption.
(1) (A) The shares of this Series shall not be redeemable prior to
April 15, 2006. On and after April 15, 2006, the Corporation, at its
option, may redeem shares of this Series, in whole or in part, at any time
or from time to time, at a redemption price of $250 per share, plus
accrued and unpaid dividends thereon to the date fixed for redemption.
I-3
<PAGE>
(B) In the event that fewer than all the outstanding shares of this
Series are to be redeemed pursuant to subsection (1)(A), the number of
shares to be redeemed shall be determined by the Board and the shares to
be redeemed shall be determined by lot or pro rata as may be determined by
the Board or by any other method as may be determined by the Board in its
sole discretion to be equitable.
(2) (A) Notwithstanding subsection (1) above, if the Dividends
Received Percentage is equal to or less than 40% and, as a result, the
amount of dividends on the shares of this Series payable on any Dividend
Payment Date will be or is adjusted upwards as described in Section (b)(2)
above, the Corporation, at its option, may redeem all, but not less than
all, of the outstanding shares of this Series; provided, that within sixty
days of the date on which an amendment to the Code is enacted which
reduces the Dividends Received Percentage to 40% or less, the Corporation
sends notice to holders of shares of this Series of such redemption in
accordance with subsection (3) below.
(B) Any redemption of the Perpetual Preferred Stock in accordance
with this subsection (2) shall be at the applicable redemption price set
forth in the following table, in each case plus accrued and unpaid
dividends (whether or not declared) thereon to the date fixed for
redemption, including any changes in dividends payable due to changes in
the Dividends Received Percentage and Additional Dividends, if any.
Redemption Price
Redemption Period Per Share Per Depositary Share
- ----------------- --------- --------------------
February 21, 1996 to April 14, 1997 ............ $ 262.50 $ 52.50
April 15, 1997 to April 14. 1998 ............... 261.25 52.25
April 15, 1998 to April 14, 1999 ............... 260.00 52.00
April 15, 1999 to April 14, 2000 ............... 258.75 51.75
April 15, 2000 to April 14, 2001 ............... 257.50 51.50
April 15, 2001 to April 14, 2002 ............... 256.25 51.25
April 15, 2002 to April 14, 2003 ............... 255.00 51.00
April 15, 2003 to April 14, 2004 ............... 253.75 50.75
April 15, 2004 to April 14, 2005 ............... 252.50 50.50
April 15, 2005 to April 14, 2006 ............... 251.25 50.25
On or after April 15, 2006 ..................... 250.00 50.00
(3) In the event the Corporation shall redeem shares of this Series
pursuant to subsections (1) or (2) above, notice of such redemption shall
be given by first class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the redemption date, to each holder of record
of the shares to be redeemed, at such holder's address as the same appears
on the stock register of the Corporation. Each such notice shall state:
(i) the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii)
the redemption price; (iv) the place or places where
I-4
<PAGE>
certificates for such shares are to be surrendered for payment of the
redemption price; and (v) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption under either subsection (1)
or (2) above shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the applicable redemption price. In case fewer than all the
shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the
holder thereof.
(5) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series
shall be redeemed unless all outstanding shares of this Series are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition of shares of this
Series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding shares of this Series.
(d) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or on any other class of stock ranking junior
to the shares of this Series upon liquidation, the amount of $250 per
share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the date of final
distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
I-5
<PAGE>
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (d),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the shares of
this Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) Conversion or Exchange. The holders of shares of this Series
shall not have any rights herein to convert such shares into or exchange
such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation.
(f) Voting. The shares of this Series shall not have any voting
powers, either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and the Qualifications, Limitations or
Restrictions thereof, or any similar document relating to any series of
Preferred Stock) which would adversely affect the preferences, rights,
powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting,
increasing or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the
shares of this Series as to dividends or upon liquidation, or the
reclassification of any authorized stock of the Corporation into any such
prior shares, or the creation, authorization or issue of any obligation or
security convertible, into or evidencing the right to purchase any such
prior shares.
I-6
<PAGE>
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than any other class or series of the Corporation's
preferred stock expressly entitled to elect additional directors to the
Board by a vote separate and distinct from the vote provided for in this
paragraph (3) ("Voting Preferred")) shall exist, the number of directors
constituting the Board shall be increased by two (without duplication of
any increase made pursuant to the terms of any other class or series of
the Corporation's preferred stock other than any Voting Preferred) and the
holders of the Corporation's preferred stock of all classes and series
(other than any such Voting Preferred) shall have the right at such
meeting, voting together as a single class without regard to class or
series, to the exclusion of the holders of Common Stock and the Voting
Preferred, to elect two directors of the Corporation to fill such newly
created directorships. Such right shall continue until there are no
dividends in arrears upon shares of any class or series of the
Corporation's preferred stock ranking prior to or on a parity with shares
of this Series as to dividends (other than any Voting Preferred). Each
director elected by the holders of shares of any series of the Preferred
Stock or any other class or series of the Corporation's preferred stock in
an election provided for by this paragraph (3) (herein called a "Preferred
Director") shall continue to serve as such director for the full term for
which he shall have been elected, notwithstanding that prior to the end of
such term a default in preference dividends shall cease to exist. Any
Preferred Director may be removed by, and shall not be removed except by,
the vote of the holders of record of the outstanding shares of the
Corporation's preferred stock entitled to have originally voted for such
director's election, voting together as a single class without regard to
class or series, at a meeting of the stockholders, or of the holders of
shares of the Corporation's preferred stock, called for that purpose. So
long as a default in any preference dividends on any series of the
Preferred Stock or any other class or series of preferred stock of the
Corporation shall exist (other than any Voting Preferred) (A) any vacancy
in the office of a Preferred Director may be filled (except as provided in
the following clause (B)) by an instrument in writing signed by the
remaining Preferred Director and filed with the Corporation and (B) in the
case of the removal of any Preferred Director, the vacancy may be filled
by the vote of the holders of the outstanding shares of the Corporation's
preferred stock entitled to have originally voted for the removed
director's election, voting together as a single class without regard to
class or series, at the same meeting at which such removal shall be voted.
Each director appointed as aforesaid shall be deemed for all purposes
hereto to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and
a default in preference dividends shall no longer exist, the number of
directors constituting the Board shall be reduced by two. For purposes
hereof, a "default in preference dividends" on any series of the Preferred
Stock or any other class or series of preferred stock of the Corporation
shall be deemed to have occurred whenever the amount of accrued dividends
upon such class or series of the Corporation's preferred stock shall be
equivalent to six full quarterly dividends or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all such shares of the
I-7
<PAGE>
Corporation's preferred stock of each and every series then outstanding
(other than any Voting Preferred or shares of any class or series ranking
junior to shares of this Series as to dividends) shall have been paid to
the end of the last preceding quarterly dividend period.
(g) Reacquired Shares. Shares of this Series which have been issued
and reacquired through redemption or purchase shall, upon compliance with
an applicable provision of the Rhode Island Business Corporation Act, have
the status of authorized and unissued shares of Preferred Stock and may be
reissued but only as part of a new series of Preferred Stock to be created
by resolution or resolutions of the Board.
(h) Relation to Existing Preferred Classes of Stock. Shares of this
Series are equal in rank and preference with all other series of the
Preferred Stock outstanding on the date of original issue of the shares of
this Series and are senior in rank and preference to the Common Stock and
the Cumulative Participating Junior Preferred Stock of the Corporation.
(i) Relation to Other Preferred Classes of Stock. For purposes of
this resolution, any stock of any class or classes of the Corporation
shall be deemed to rank:
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one
over the other, as between the holders of such stock and the holders of
shares of this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
I-8
<PAGE>
EXHIBIT J
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
SERIES VII FIXED/ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK
(a) Designation. The designation of the series of Preferred Stock shall be
"Series VII Fixed/Adjustable Rate Cumulative Preferred Stock" (hereinafter
called this "Series") and the number of shares constituting this Series is Eight
Hundred Five Thousand (805,000).
(b) Dividend Rate.
(1) The holders of shares of this Series shall be entitled to
receive dividends thereon at a rate of 6.60% per annum computed on the
basis of an issue price thereof of $250 per share, and no more, payable
quarterly out of the funds of the Corporation legally available for the
payment of dividends. Such dividends shall be cumulative from the date of
original issue of such shares and shall be payable, when, as and if
declared by the Board, on January 1, April 1, July 1 and October 1 of each
year, commencing July 1, 1996 (a "Dividend Payment Date") through April 1,
2006. Each such dividend shall be paid to the holders of record of shares
of this Series as they appear on the stock register of the Corporation on
such record date, not exceeding 30 days preceding the payment date
thereof, as shall be fixed by the Board. Dividends on account of arrears
for any past quarters may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of record on
such date, not exceeding 45 days preceding the payment date thereof, as
may be fixed by the Board.
After April 1, 2006, dividends on this Series will be payable
quarterly, as, if and when declared by the Board of Directors or a duly
authorized committee thereof on each Dividend Payment Date at the
Applicable Rate from time to time in effect. The Applicable Rate per annum
for any dividend period beginning on or after April 1, 2006 will be equal
to .50% plus the highest of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate and the Thirty Year Constant Maturity Rate (each as defined
below under "Adjustable Rate Dividends"), as determined in advance of such
dividend period. The Applicable Rate per annum for any dividend period
beginning on or after April 1, 2006 will not be less than 7.0% nor greater
than 13.0% (without taking into account any adjustments as described below
in subsection (3) of this Section (b)).
(2) Except as provided below in this paragraph, the "Applicable
Rate" per annum for any dividend period beginning on or after April 1,
2006 will be equal to .50% plus the Effective Rate (as defined below), but
not less than 7.0%
J-1
<PAGE>
nor greater than 13.0% (without taking into account any adjustments as
described below in subsection (3) of this Section (b)). The "Effective
Rate" for any dividend period beginning on or after April 1, 2006 will be
equal to the highest of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate and the Thirty Year Constant Maturity Rate (each as defined
below) for such dividend period. In the event that the Corporation
determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate cannot be
determined for any dividend period, then the Effective Rate for such
dividend period will be equal to the higher of whichever two of such
rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be
determined for any dividend period, then the Effective Rate for such
dividend period will be equal to whichever such rate can be so
determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be
determined for any dividend period, then the Effective Rate for the
preceding dividend period will be continued for such dividend
period.
Except as described below in this paragraph, the "Treasury Bill
Rate" for each dividend period will be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate is published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board (as defined below)
during the Calendar Period immediately preceding the last ten calendar
days preceding the dividend period for which the dividend rate on this
Series is being determined. In the event that the Federal Reserve Board
does not publish such a weekly per annum market discount rate during any
such Calendar Period, then the Treasury Bill Rate for such dividend period
will be the arithmetic average of the two most recent weekly per annum
market discount rates (or the one weekly per annum market discount rate,
if only one such rate is published during the relevant Calendar Period)
for three-month U.S. Treasury bills, as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a per
annum market discount rate for three-month U.S. Treasury bills is not
published by the Federal Reserve Board or by any Federal Reserve Bank or
by any U.S. Government department or agency during such Calendar Period,
then the Treasury Bill Rate for such dividend period will be the
arithmetic average of the two most recent weekly per annum market discount
rates (or the one weekly per annum market discount rate,
J-2
<PAGE>
if only one such rate is published during the relevant Calendar Period)
for all of the U.S. Treasury bills then having remaining maturities of not
less than 80 nor more than 100 days, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board does
not publish such rates, by any Federal Reserve Bank or by any U.S.
Government Department or agency selected by the Corporation. In the event
that the Corporation determines in good faith that for any reason no such
U.S. Treasury Bill Rates are published as provided above during such
Calendar Period, then the Treasury Bill Rate for such dividend period will
be the arithmetic average of the per annum market discount rates based
upon the closing bids during such Calendar Period for each of the issues
of marketable non-interest-bearing U.S. Treasury securities with a
remaining maturity of not less than 80 nor more than 100 days from the
date of each such quotation, as chosen and quoted daily for each business
day in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation. In the
event that the Corporation determines in good faith that for any reason
the Corporation cannot determine the Treasury Bill Rate for any dividend
period as provided above in this paragraph, the Treasury Bill Rate for
such dividend period will be the arithmetic average of the per annum
market discount rates based upon the closing bids during such Calendar
Period for each of the issues of marketable interest-bearing U.S. Treasury
securities with a remaining maturity of not less than 80 nor more than 100
days, as chosen and quoted daily for each business day in New York City
(or less frequently if daily quotations are not generally available) to
the Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
Except as described below in this paragraph, the "Ten Year Constant
Maturity Rate" for each dividend period will be the arithmetic average of
the two most recent weekly per annum Ten Year Average Yields (as defined
below) (or the one weekly per annum Ten Year Average Yield, if only one
such yield is published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately
preceding the last ten calendar days preceding the dividend period for
which the dividend rate on this Series is being determined. In the event
that the Federal Reserve Board does not publish such a weekly per annum
Ten Year Average Yield during such Calendar Period, then the Ten Year
Constant Maturity Rate for such dividend period will be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields
(or the one weekly per annum Ten Year Average Yield, if only such yield is
published during the relevant Calendar Period), as published weekly during
such Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a per
annum Ten Year Average Yield is not published by the Federal Reserve Board
or by any Federal Reserve Bank or by any U.S. Government department or
agency during such Calendar Period, then the Ten Year Constant Maturity
Rate for such dividend period will be the arithmetic average of the two
most recent
J-3
<PAGE>
weekly per annum average yields to maturity (or the one weekly per annum
average yield to maturity, if only one such yield is published during the
relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities (as
defined below)) then having remaining maturities of not less than eight
nor more than twelve years, as published during such Calendar Period by
the Federal Reserve Board or, if the Federal Reserve Board does not
publish such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Ten Year Constant Maturity Rate for any dividend
period as provided above in this paragraph, then the Ten Year Constant
Maturity Rate for such dividend period will be the arithmetic average of
the per annum average yields to maturity based upon the closing bids
during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor
more than twelve years from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently if
daily quotations are not generally available) to the Corporation by at
least three recognized dealers in U.S. Government securities selected by
the Corporation.
Except as described below in this paragraph, the "Thirty Year
Constant Maturity Rate" for each dividend period will be the arithmetic
average of the two most recent weekly per annum Thirty Year Average Yields
(as defined below) (or the one weekly per annum Thirty Year Yield, if only
one such yield is published during the relevant Calendar Period), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately preceding the last ten calendar days preceding the dividend
period for which the dividend rate on this Series is being determined. In
the event that the Federal Reserve Board does not publish such a weekly
per annum Thirty Year Average Yield during such Calendar Period, then the
Thirty Year Constant Maturity Rate for such dividend period will be the
arithmetic average of the two most recent weekly per annum Thirty Year
Average Yields (or the one weekly per annum Thirty Year Average Yield, if
only one such yield is published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Thirty Year Average Yield is
not published by the Federal Reserve Board or by any Federal Reserve Bank
or by any U.S. Government department or agency during such Calendar
Period, then the Thirty Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the two most recent weekly per
annum average yields to maturity (or the one weekly per annum average
yield to maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S. Treasury
fixed interest rate securities (other than Special Securities) then having
remaining maturities of not less than twenty-eight nor more than thirty
years, as published
J-4
<PAGE>
during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board does not publish such yields, by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good faith
that for any reason the Corporation cannot determine the Thirty Year
Constant Maturity Rate for any dividend period as provided above in this
paragraph, then the Thirty Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each
of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity date
not less than twenty-eight nor more than thirty years from the date of
such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations are not generally
available) to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate will each be rounded to the nearest
five hundredths of a percent.
The Applicable Rate with respect to each dividend period beginning
on or after April 1, 2006 will be calculated as promptly as practicable by
the Corporation according to the appropriate method described above. The
Corporation will cause notice of each Applicable Rate to be enclosed with
the dividend payment checks next mailed to the holders of this Series.
As used above, the term "Calendar Period" means a period of fourteen
calendar days; the term "Federal Reserve Board" means the Board of
Governors of the Federal Reserve System; the term "Special Securities"
means securities which can, at the option of the holder, be surrendered at
face value in payment of any Federal estate tax or which provide tax
benefits to the holder and are priced to reflect such tax benefits or
which were originally issued at a deep or substantial discount; the term
"Ten Year Average Yield" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted
to constant maturities of ten years); and the term "Thirty Year Average
Yield" means the average yield to maturity for actively traded marketable
U.S. Treasury fixed interest rate securities (adjusted to constant
maturities of thirty years.)
(3) If one or more amendments to the Internal Revenue Code of 1986,
as amended (the "Code"), are enacted that change the percentage of the
dividends received deduction (currently 70%) as specified in Section
243(a)(1) of the Code or any successor provision (the "Dividends Received
Percentage"), the amount of each dividend payable per share of this Series
for dividend payments made on or after the date of enactment of such
change shall be adjusted by multiplying the amount of the dividend payable
determined as described above (before
J-5
<PAGE>
adjustment) by a factor which shall be the number determined in accordance
with the following formula (the "DRD Formula"), and rounding the result to
the nearest cent:
1 - .35 (1 - .70)
-----------------
1 - .35 (1 - DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No amendment
to the Code, other than a change in the percentage of the dividends
received deduction set forth in Section 243(a)(1) of the Code or any
successor provision, will give rise to an adjustment. Notwithstanding the
foregoing provisions, in the event that, with respect to any such
amendment, the Corporation shall receive either an unqualified opinion of
independent recognized tax counsel or a private letter ruling or similar
form of authorization from the Internal Revenue Service to the effect that
such an amendment would not apply to dividends payable on shares of this
Series, then any such amendment shall not result in the adjustment
provided for pursuant to the DRD Formula. The Corporation's calculation of
the dividends payable as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified
public accountants then regularly engaged by the Corporation shall be
final and not subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a dividend payable on a Dividend Payment Date
has been declared, the amount of dividend payable on such Dividend Payment
Date will not be increased; but instead, an amount, equal to the excess of
(x) the product of the dividends paid by the Corporation on such Dividend
Payment Date and the DRD Formula (where the DRP used in the DRD Formula
would be equal to the reduced Dividends Received Percentage) and (y) the
dividends paid by the Corporation on such Dividend Payment Date, will be
payable to holders of record on the next succeeding Dividend Payment Date
in addition to any other amounts payable on such date.
In addition, if prior to October 2, 1996, an amendment to the Code
is enacted that reduces the Dividends Received Percentage and such
reduction retroactively applies to a Dividend Payment Date as to which the
Corporation previously paid dividends on shares of this Series (each an
"Affected Dividend Payment Date"), the Corporation will pay (if declared)
additional dividends (the "Additional Dividends") on the next succeeding
Dividend Payment Date (or if such amendment is enacted after the dividend
payable on such Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of enactment) to
holders of record on such succeeding Dividend Payment Date in an amount
equal to the excess of (x) the product of the dividends paid by the
Corporation on each Affected Dividend Payment Date and the DRD Formula
(where the DRP used in the DRD Formula would be equal to
J-6
<PAGE>
the Dividends Received Percentage applied to each Affected Dividend
Payment Date) and (y) the dividends paid by the Corporation on each
Affected Dividend Payment Date.
Additional Dividends will not be paid in respect of the enactment of
any amendment to the Code on or after October 2, 1996 which retroactively
reduces the Dividends Received Percentage, or if prior to October 2, 1996,
such amendment would not result in an adjustment due to the Corporation
having received either an opinion of counsel or tax ruling referred to in
the third preceding paragraph. The Corporation will only make one payment
of Additional Dividends.
In the event that the amount of dividend payable per share of this
Series shall be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Corporation will cause notice of each such
adjustment and, if applicable, any Additional Dividends, to be sent to
each holder of record of the shares of this Series at such holder's
address as the same appears on the stock register of the Corporation.
(4) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on
a parity with or junior to this Series for any period unless full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for
such payment on this Series for all dividend payment periods terminating
on or prior to the date of payment of such full cumulative dividends. When
dividends are not paid in full, as aforesaid, upon the shares of this
Series and any other preferred stock ranking on a parity as to dividends
with this Series, all dividends declared upon shares of this Series and
any other class or series of preferred stock of the Corporation ranking on
a parity as to dividends with this Series shall be declared pro rata so
that the amount of dividends declared per share on this Series and such
other preferred stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the shares of this Series and such
other preferred stock bear to each other. Holders of shares of this Series
shall not be entitled to any dividend, whether payable in cash, property
or stocks, in excess of full cumulative dividends, as herein provided, on
this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series
which may be in arrears.
(5) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in subsection (4) of this Section (b)) shall be
declared or paid or set aside for payment or other distribution declared
or made upon the Common Stock or upon any other stock ranking junior to or
on a parity with this Series as to dividends or
J-7
<PAGE>
upon liquidation, nor shall any Common Stock nor any other stock of the
Corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such stock) by the
Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the full cumulative dividends on all
outstanding shares of this Series shall have been paid for all past
dividend payment periods.
(6) Dividends payable on this Series for any period, including the
period from the original issue of such shares until July 1, 1996, shall be
computed on the basis of a 360-day year consisting of twelve 30-day
months.
(c) Redemption.
(1) (A) The shares of this Series shall not be redeemable prior to
April 1, 2006. On and after April 1, 2006, the Corporation, at its option,
may redeem shares of this Series, in whole or in part, at any time or from
time to time, at a redemption price or $250 per share, plus accrued and
unpaid dividends thereon to the date fixed for redemption.
(B) In the event that fewer than all the outstanding shares of this
Series are to be redeemed pursuant to subsection (1)(A), the number of
shares to be redeemed shall be determined by the Board and the shares to
be redeemed shall be determined by lot or pro rata as may be determined by
the Board or by any other method as may be determined by the Board in its
sole discretion to be equitable.
(2) (A) Notwithstanding subsection (1) above, if the Dividends
Received Percentage is equal to or less than 40% and, as a result, the
amount of dividends on the shares of this Series payable on any Dividend
Payment Date will be or is adjusted upwards as described in Section (b)(2)
above, the Corporation, at its Option, may redeem all, but not less than
all, of the outstanding shares of this Series; provided, that within sixty
days of the date on which an amendment to the Code is enacted which
reduces the Dividends Received Percentage to 40% or less, the Corporation
sends notice to holders of shares of this Series of such redemption in
accordance with subsection (3) below.
(B) Any redemption of this Series in accordance with this subsection
(2) shall be at the applicable redemption price set forth in the following
table, in each case plus accrued and unpaid dividends (whether or not
declared) thereon to the date fixed for redemption, including any changes
in dividends payable due to changes in the Dividends Received Percentage
and Additional Dividends, if any.
Redemption Period Redemption Price
----------------- ----------------
J-8
<PAGE>
April 1, 1996 to March 31, 1997 .................. $262.50
April 1, 1997 to March 31, 1998 .................. 261.25
April 1, 1998 to March 31, 1999 .................. 260.00
April 1, 1999 to March 31, 2000 .................. 258.75
April 1, 2000 to March 31, 2001 .................. 257.50
April 1, 2001 to March 31, 2002 .................. 256.25
April 1, 2002 to March 31, 2003 .................. 255.00
April 1, 2003 to March 31, 2004 .................. 253.75
April 1, 2004 to March 31, 2005 .................. 252.50
April 1, 2005 to March 31, 2006 .................. 251.25
On or after April 1, 2006 ........................ 250.00
(3) In the event the Corporation shall redeem shares of this Series
pursuant to subsections (1) or (2) above, notice of such redemption shall
be given by first class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the redemption date, to each holder of record
of the shares to be redeemed, at such holder's address as the same appears
on the stock register of the Corporation. Each such notice shall state:
(i) the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption under either subsection (1)
or (2) above shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the applicable redemption price. In case fewer than all the
shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the
holder thereof.
(5) Notwithstanding the foregoing provisions of this Section (c), if
any dividends on this Series are in arrears, no shares of this Series
shall be redeemed unless all outstanding shares of this Series are
simultaneously redeemed, and the Corporation shall not purchase or
otherwise acquire any shares of this Series; provided, however, that the
foregoing shall not prevent the purchase or acquisition
J-9
<PAGE>
of shares of this Series pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of this Series.
(d) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or on any other class of stock ranking junior
to the shares of this Series upon liquidation, the amount of $250 per
share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon to the date of final
distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (d),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the shares of
this Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) Conversion or Exchange. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of capital stock of the Corporation.
(f) Voting. The shares of this Series shall not have any voting powers,
either general or special, except that:
J-10
<PAGE>
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be necessary for authorizing,
effecting or validating the amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation or of any certificate
amendatory thereof or supplemental thereto (including any Certificate of
the Voting Powers, Designations, Preferences and Relative, Participating,
Optional or Other Special Rights, and the Qualifications, Limitations or
Restrictions thereof, or any similar document relating to any series of
Preferred Stock) which would adversely affect the preferences, rights,
powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting,
increasing or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the
shares of this Series as to dividends or upon liquidation, or the
reclassification of any authorized stock of the Corporation into any such
prior shares, or the creation, authorization or issue of any obligation or
security convertible into or evidencing the right to purchase any such
prior shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than any other class or series of the Corporation's
preferred stock expressly entitled to elect additional directors to the
Board by a vote separate and distinct from the vote provided for in this
paragraph (3) ("Voting Preferred")) shall exist, the number of directors
constituting the Board shall be increased by two (without duplication of
any increase made pursuant to the terms of any other class or series of
the Corporation's preferred stock other than any Voting Preferred) and the
holders of the Corporation's preferred stock of all classes and series
(other than any such Voting Preferred) shall have the right at such
meeting, voting together as a single class without regard to class or
series, to the exclusion of the holders of Common Stock and the Voting
Preferred, to elect two directors of the Corporation to fill such newly
created directorships. Such right shall continue until there are no
dividends in arrears upon shares of any class or series of the
Corporation's preferred stock ranking prior to or on a parity with shares
of this Series as to dividends (other than any Voting Preferred). Each
director elected by the holders
J-11
<PAGE>
of shares of any series of the Preferred Stock or any other class or
series of the Corporation's preferred stock in an election provided for by
this paragraph (3) (herein called a "Preferred Director") shall continue
to serve as such director for the full term for which he shall have been
elected, notwithstanding that prior to the end of such term a default in
preference dividends shall cease to exist. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of the outstanding shares of the Corporation's preferred stock
entitled to have originally voted for such director's election, voting
together as a single class without regard to class or series, at a meeting
of the stockholders, or of the holders of shares of the Corporation's
preferred stock, called for that purpose. So long as a default in any
preference dividends on any series of the Preferred Stock or any other
class or series of preferred stock of the Corporation shall exist (other
than any Voting Preferred) (A) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following clause (B)) by
an instrument in writing signed by the remaining Preferred Director and
filed with the Corporation and (B) in the case of the removal of any
Preferred Director, the vacancy may be filled by the vote of the holders
of the outstanding shares of the Corporation's preferred stock entitled to
have originally voted for the removed director's election, voting together
as a single class without regard to class or series, at the same meeting
at which such removal shall be voted. Each director appointed as aforesaid
shall be deemed for all purposes hereto to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and
a default in preference dividends shall no longer exist, the number of
directors constituting the Board shall be reduced by two. For purposes
hereof, a "default in preference dividends" on any series of the Preferred
Stock or any other class or series of preferred stock of the Corporation
shall be deemed to have occurred whenever the amount of accrued dividends
upon such class or series of the Corporation's preferred stock shall be
equivalent to six full quarterly dividends or more, and, having so
occurred, such default shall be deemed to exist thereafter until, but only
until, all accrued dividends on all such shares of the Corporation's
preferred stock of each and every series then Outstanding (other than any
Voting Preferred or shares of any class or series ranking junior to shares
of this Series as to dividends) shall have been paid to the end of the
last preceding quarterly dividend period.
(g) Reacquired Shares. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
(h) Relation to Existing Preferred Classes of Stock. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of
J-12
<PAGE>
original issue of the shares of this Series and are senior in rank and
preference to the Common Stock and the Cumulative Participating Junior Preferred
Stock of the Corporation.
(i) Relation to Other Preferred Classes of Stock. For purposes of this
resolution, any stock of any class or classes of the Corporation shall be deemed
to rank:
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one
over the other, as between the holders of such stock and the holders of
shares of this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
J-13
<PAGE>
EXHIBIT K
FLEET BOSTON CORPORATION
(formerly known as FLEET FINANCIAL GROUP, INC.)
SERIES VIII FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK
(a) Designation. The designation of the series of Preferred Stock shall be
"Series VIII Fixed/Adjustable Rate Noncumulative Preferred Stock" (hereinafter
called this "Series") and the number of shares constituting this Series is Two
Hundred Thousand (200,000).
(b) Dividend Rate.
(1) The holders of shares of this Series shall be entitled to
receive dividends thereon at a rate of 6.59% per annum computed on the
basis of an issue price thereof of $250 per share, and no more, payable
quarterly out of the funds of the Corporation legally available for the
payment of dividends. Such dividends shall be payable, when, as and if
declared by the Board, on January 1, April 1, July 1 and October 1 of each
year, commencing January 1, 1997 (a "Dividend Payment Date") through
October 1, 2001. Each such dividend shall be paid to the holders of record
of shares of this Series as they appear on the stock register of the
Corporation on such record date, not exceeding 30 days preceding the
payment date thereof, as shall be fixed by the Board. The rights of
holders of this Series shall be noncumulative. Accordingly, if the Board
fails to declare a dividend on this Series payable on a Dividend Payment
Date, then holders of this Series will have no right to receive a dividend
in respect of the dividend period ending on such Dividend Payment Date,
and the Corporation will have no obligation to pay dividends accrued for
such period, whether or not dividends on this Series are declared payable
on any future Dividend Payment Date.
After October 1, 2001, dividends on this Series will be payable
quarterly, as, if and when declared by the Board or a duly authorized
Committee thereof on each Dividend Payment Date at the Applicable Rate
from time to time in effect. The Applicable Rate per annum for any
dividend period beginning on or after October 1, 2001 will be equal to
.45% plus the highest of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate and the Thirty Year Constant Maturity Rate (each as defined
below under "Adjustable Rate Dividends"), as determined in advance of such
dividend period. The Applicable Rate per annum for any dividend period
beginning on or after October 1, 2001 will not be less than 7.0% nor
greater than 13.0% (without taking into account any adjustments as
described below in subsection (3) of this Section (b)).
(2) Except as provided below in this paragraph, the "Applicable
Rate" per annum for any dividend period beginning on or after October 1,
2001 will be
K-1
<PAGE>
equal to .45% plus the Effective Rate (as defined below), but not less
than 7.0% nor greater than 13.0% (without taking into account any
adjustments as described below in subsection (3) of this Section (b)). The
"Effective Rate" for any dividend period beginning on or after October 1,
2001 will be equal to the highest of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate and the Thirty Year Constant Maturity Rate (each as
defined below) for such dividend period. In the event that the Corporation
determines in good faith that for any reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate cannot be
determined for any dividend period, then the Effective Rate for such
dividend period will be equal to the higher of whichever two of such
rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be
determined for any dividend period, then the Effective Rate for such
dividend period will be equal to whichever such rate can be so
determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant
Maturity Rate or the Thirty Year Constant Maturity Rate can be
determined for any dividend period, then the Effective Rate for the
preceding dividend period will be continued for such dividend
period.
Except as described below in this paragraph, the "Treasury Bill
Rate" for each dividend period will be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per
annum market discount rate, if only one such rate is published during the
relevant Calendar Period (as defined below)) for three-month U.S. Treasury
bills, as published weekly by the Federal Reserve Board (as defined below)
during the Calendar Period immediately preceding the last ten calendar
days preceding the dividend period for which the dividend rate on this
Series is being determined. In the event that the Federal Reserve Board
does not publish such a weekly per annum market discount rate during any
such Calendar Period, then the Treasury Bill Rate for such dividend period
will be the arithmetic average of the two most recent weekly per annum
market discount rates (or the one weekly per annum market discount rate,
if only one such rate is published during the relevant Calendar Period)
for three-month U.S. Treasury bills, as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a per
annum market discount rate for three-month U.S. Treasury bills is not
published by the Federal Reserve Board or by any Federal Reserve Bank or
by any U.S. Government department or agency during such Calendar Period,
then the Treasury Bill Rate for such dividend period will be the
arithmetic average of the two most recent weekly per annum market
K-2
<PAGE>
discount rates (or the one weekly per annum market discount rate, if only
one such rate is published during the relevant Calendar Period) for all of
the U.S. Treasury bills then having remaining maturities of not less than
80 nor more than 100 days, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board does not publish
such rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason no such U.S.
Treasury Bill Rates are published as provided above during such Calendar
Period, then the Treasury Bill Rate for such dividend period will be the
arithmetic average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each or the issues of
marketable non-interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the date of each
such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations are not generally
available) to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Treasury Bill Rate for any dividend period as
provided above in this paragraph, the Treasury Bill Rate for such dividend
period will be the arithmetic average of the per annum market discount
rates based upon the closing bids during such Calendar Period for each of
the issues of marketable interest-bearing U.S. Treasury securities with a
remaining maturity of not less than 80 nor more than 100 days, as chosen
and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
Except as described below in this paragraph, the "Ten Year Constant
Maturity Rate" for each dividend period will be the arithmetic average of
the two most recent weekly per annum Ten Year Average Yields (as defined
below) (or the one weekly per annum Ten Year Average Yield, if only one
such yield is published during the relevant Calendar Period), as published
weekly by the Federal Reserve Board during the Calendar Period immediately
preceding the last ten calendar days preceding the dividend period for
which the dividend rate on this Series is being determined. In the event
that the Federal Reserve Board does not publish such a weekly per annum
Ten Year Average Yield during such Calendar Period, then the Ten Year
Constant Maturity Rate
K-3
<PAGE>
for such dividend period will be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (or the one weekly per
annum Ten Year Average Yield, if only such yield is published during the
relevant Calendar Period), as published weekly during such Calendar Period
by any Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum Ten Year
Average Yield is not published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during
such Calendar Period, then the Ten Year Constant Maturity Rate for such
dividend period will be the arithmetic average of the two most recent
weekly per annum average yields to maturity (or the one weekly per annum
average yield to maturity, if only one such yield is published during the
relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities (as
defined below)) then having remaining maturities of not less than eight
nor more than twelve years, as published during such Calendar Period by
the Federal Reserve Board or, if the Federal Reserve Board does not
publish such yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation
cannot determine the Ten Year Constant Maturity Rate for any dividend
period as provided above in this paragraph, then the Ten Year Constant
Maturity Rate for such dividend period will be the arithmetic average of
the per annum average yields to maturity based upon the closing bids
during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor
more than twelve years from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less frequently if
daily quotations are not generally available) to the Corporation by at
least three recognized dealers in U.S. Government securities selected by
the Corporation.
Except as described below in this paragraph, the "Thirty Year
Constant Maturity Rate" for each dividend period will be the arithmetic
average of the two most recent weekly per annum Thirty Year Average Yields
(as defined below) (or the one weekly per annum Thirty Year Yield, if only
one such yield is published during the relevant Calendar Period), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately preceding the last ten calendar days preceding the dividend
period for which the dividend rate on this Series is being determined. In
the event that the Federal Reserve Board does not publish such a weekly
per annum Thirty Year Average Yield during such Calendar Period, then the
Thirty Year Constant Maturity Rate for such dividend period will be the
arithmetic average of the two most recent weekly per annum Thirty Year
Average Yields (or the one weekly per annum Thirty Year Average Yield, if
only one such yield is published during the relevant Calendar Period), as
published weekly during such Calendar Period by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Thirty Year Average Yield is
not published by the Federal Reserve Board or by any Federal Reserve Bank
or by any U.S. Government department or agency during such Calendar
Period, then the Thirty Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the two most recent weekly per
annum average yields to maturity (or the one weekly per annum average
yield to maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S. Treasury
fixed interest rate securities (other than Special Securities) then having
remaining
K-4
<PAGE>
maturities of not less than twenty-eight, nor more than thirty years, as
published during such Calendar Period by the Federal Reserve Board or, if
the Federal Reserve Board does not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by
the Corporation. In the event that the Corporation determines in good
faith that for any reason the Corporation cannot determine the Thirty Year
Constant Maturity Rate for any dividend period as provided above in this
paragraph, then the Thirty Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each
of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity date
not less than twenty-eight nor more than thirty years from the date of
such quotation, as chosen and quoted daily for each business day in New
York City (or less frequently if daily quotations are not generally
available) to the Corporation by at least three recognized dealers in U.S.
Government securities selected by the Corporation.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate will each be rounded to the nearest
five hundredths of a percent.
The Applicable Rate with respect to each dividend period beginning
on or after October 1, 2001 will be calculated as promptly as practicable
by the Corporation according to the appropriate method described above.
The Corporation will cause notice of each Applicable Rate to be enclosed
with the dividend payment checks next mailed to the holders of this
Series.
As used above, the term "Calendar Period" means a period of fourteen
calendar days; the term "Federal Reserve Board" means the Board of
Governors of the Federal Reserve System; the term "Special Securities"
means securities which can, at the option of the holder, be surrendered at
face value in payment of any Federal estate tax or which provide tax
benefits to the holder and are priced to reflect such tax benefits or
which were originally issued at a deep or substantial discount; the term
"Ten Year Average Yield" means the average yield to maturity for actively
traded marketable U.S. Treasury fixed interest rate securities (adjusted
to constant maturities of ten years); and the term "Thirty Year Average
Yield" means the average yield to maturity for actively traded marketable
U.S. Treasury fixed interest rate securities (adjusted to constant
maturities of thirty years.)
(3) If one or more amendments to the Internal Revenue Code of 1986,
as amended (the "Code"), are enacted that reduce the percentage or the
dividends received deduction (currently 70%) as specified in Section
243(a)(1) of the Code or any successor provision (the "Dividends Received
Percentage"), the amount of each dividend payable per share of this Series
for dividend payments made on or after the date of enactment of such
change shall be increased by multiplying the
K-5
<PAGE>
amount of the dividend payable determined as described above (before
adjustment) by a factor which shall be the number determined in accordance
with the following formula (the "DRD Formula"), and rounding the result to
the nearest cent:
1 - .35 (1 - .70)
-----------------
1 - .35 (1 - DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No amendment
to the Code, other than a change in the percentage of the dividends
received deduction set forth in Section 243(a)(1) of the Code or any
successor provision, will give rise to an adjustment. Notwithstanding the
foregoing provisions, in the event that, with respect to any such
amendment, the Corporation shall receive either an unqualified opinion of
independent recognized tax counsel or a private letter ruling or similar
form of authorization from the Internal Revenue Service to the effect that
such an amendment would not apply to dividends payable on shares of this
Series, then any such amendment shall not result in the adjustment
provided for pursuant to the DRD Formula. The Corporation's calculation of
the dividends payable as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified
public accountants then regularly engaged by the Corporation shall be
final and not subject to review.
If any amendment to the Code which reduces the Dividends Received
Percentage is enacted after a dividend payable on a Dividend Payment Date
has been declared, the amount of dividend payable on such Dividend Payment
Date will not be increased; but instead, an amount, equal to the excess of
(x) the product of the dividends paid by the Corporation on such Dividend
Payment Date and the DRD Formula (where the DRP used in the DRD Formula
would be equal to the reduced Dividends Received Percentage) and (y) the
dividends paid by the Corporation on such Dividend Payment Date, will be
payable to holders of record on the next succeeding Dividend Payment Date
in addition to any other amounts payable on such date.
In addition, if prior to March 31, 1997, an amendment to the Code is
enacted that reduces the Dividends Received Percentage and such reduction
retroactively applies to a Dividend Payment Date as to which the
Corporation previously paid dividends on shares of this Series (each an
"Affected Dividend Payment Date"), the Corporation will pay (if declared)
additional dividends (the "Additional Dividends") on the next succeeding
Dividend Payment Date (or if such Amendment is enacted after the dividend
payable on such Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of enactment) to
holders of record on such succeeding Dividend Payment Date in an amount
equal to the excess of (x) the product of the
K-6
<PAGE>
dividends paid by the Corporation on each Affected Dividend Payment Date
and the DRD Formula (where the DRP used in the DRD Formula would be equal
to the Dividends Received Percentage applied to each Affected Dividend
Payment Date) and (y) the dividends paid by the Corporation on each
Affected Dividend Payment Date.
Additional Dividends will not be paid in respect of the enactment of
any amendment to the Code on or after March 31, 1997, which retroactively
reduces the Dividends Received Percentage, or if prior to March 31, 1997,
such amendment would not result in an adjustment due to the Corporation
having received either an opinion of counsel or tax ruling referred to in
the third preceding paragraph. The Corporation will only make one payment
of Additional Dividends.
In the event that the amount of dividend payable per share of this
Series shall be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, the Corporation will cause notice of each such
adjustment and, if applicable, any Additional Dividends, to be sent to
each holder of record of the shares of this Series at such holder's
address as the same appears on the stock register of the Corporation.
(4) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on
a parity with or junior to this Series for any period unless dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on this
Series for the then-current dividend period (without accumulation of
accrued and unpaid dividends for prior dividend periods). When dividends
are not paid in full, as aforesaid, upon the shares of this Series and any
other preferred stock ranking on a parity as to dividends with this
Series, all dividends declared upon shares of this Series and any other
class or series of preferred stock of the Corporation ranking on a parity
as to dividends with this Series shall be declared pro rata so that the
amount of dividends declared per share on this Series and such other
preferred stock shall in all cases bear to each other the same ratio that
dividends per share on the shares of this Series for the then-current
dividend period (without accumulation of accrued and unpaid dividends for
prior dividend periods) and such other preferred stock bear, to each
other. Holders of shares of this Series shall not be entitled to any
dividend, whether payable in cash, property or stocks, in excess of full
dividends for the then-current dividend period (without accumulation of
accrued and unpaid dividends for prior dividend periods), as herein
provided, on this Series.
(5) So long as any shares of this Series are outstanding, no
dividend (other than a dividend in Common Stock or in any other stock
ranking junior to this Series as to dividends and upon liquidation and
other than as provided in subsection (4) of this Section (b)) shall be
declared or paid or set aside for
K-7
<PAGE>
payment or other distribution declared or made upon the Common Stock or
upon any other stock ranking junior to or on a parity with this Series as
to dividends or upon liquidation, nor shall any Common Stock nor any other
stock of the Corporation ranking junior to or on a parity with this Series
as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by
the Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to this Series as to dividends and upon
liquidation) unless, in each case, the dividends on all outstanding shares
of this Series shall have been paid for the then-current dividend period
(without accumulation of accrued and unpaid dividends for prior dividend
periods).
(6) Dividends payable on this Series for any period, including the
period from the original issue of such shares until January 1, 1997, shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
(c) Redemption.
(1) (A) The shares of this Series shall not be redeemable prior to
October 1, 2001. On and after October 1, 2001, the Corporation, at its
option, may redeem shares of this Series, in whole or in part, at any time
or from time to time, at a redemption price of $250 per share, plus
accrued and unpaid dividends thereon for the then-current dividend period
(without accumulation of accrued and unpaid dividends for prior dividend
periods) to the date fixed for redemption.
(B) in the event that fewer than all the outstanding shares of this
Series are to be redeemed pursuant to subsection (1)(A), the number of
shares to be redeemed shall be determined by the Board and the shares to
be redeemed shall be determined by lot or pro rata as may be determined by
the Board or by any other method as may be determined by the Board in its
sole discretion to be equitable.
(2) (A) Notwithstanding subsection (1) above, if the Dividends
Received Percentage is equal to or less than 40% and, as a result, the
amount of dividends on the shares of this Series payable on any Dividend
Payment Date will be or is adjusted upwards as described in Section (b)(2)
above, the Corporation, at its option, may redeem all, but not less than
all, of the outstanding shares of this Series; provided, that within sixty
days of the date on which an amendment to the Code is enacted which
reduces the Dividends Received Percentage to 40% or less, the Corporation
sends notice to holders of shares of this Series of such redemption in
accordance with subsection (3) below.
(B) Any redemption of this Series in accordance with this subsection
(2) shall be at the applicable redemption price set forth in the following
K-8
<PAGE>
table, in each case plus accrued and unpaid dividends thereon for the
then-current dividend period (without accumulation of accrued and unpaid
dividends for prior dividend periods) to the date fixed for redemption,
including any changes in dividends payable due to changes in the Dividends
Received Percentage and Additional Dividends, if any,
Redemption Period Redemption Price
----------------- ----------------
October 1, 1996 to September 30, 1997................$262.50
October 1, 1997 to September 30, 1998................ 260.00
October 1, 1998 to September 30, 1999................ 257.50
October 1, 1999 to September 30, 2000................ 255.00
October 1, 2000 to September 30, 2001................ 252.50
On or after October 1, 2001.......................... 250.00
(3) In the event the Corporation shall redeem shares of this Series
pursuant to subsections (1) or (2) above, notice of such redemption shall
be given by first class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the redemption date, to each holder of record
of the shares to be redeemed, at such holder's address as the same appears
on the stock register of the Corporation. Each such notice shall state:
(i) the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii)
the redemption price; (iv) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (v)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date.
(4) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption under either subsection (1)
or (2) above shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board shall so require
and the notice shall so state), such shares shall be redeemed by the
Corporation at the applicable redemption price. In case fewer than all the
shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares without cost to the
holder thereof.
(d) Liquidation Rights.
K-9
<PAGE>
(1) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of the shares of this Series shall be entitled to
receive and be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall
be made on the Common Stock or on any other class of stock ranking junior
to the shares of this Series upon liquidation, the amount of $250 per
share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid for the then-current dividend
period (without accumulation of accrued and unpaid dividends for prior
dividend periods) to the date of final distribution.
(2) Neither the sale of all or substantially all the property or
business of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section (d).
(3) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section (d), the
holders of this Series as such shall have no right or claim to any of the
remaining assets of the Corporation.
(4) In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to paragraph (1) of this Section (d),
no such distribution shall be made on account of any shares of any other
class or series of Preferred Stock ranking on a parity with the shares of
this Series upon such dissolution, liquidation or winding up unless
proportionate distributive amounts shall be paid on account of the shares
of this Series, ratably, in proportion to the full distributable amounts
for which holders of all such parity shares are respectively entitled upon
such dissolution, liquidation or winding up.
(e) Conversion or Exchange. The holders of shares of this Series shall not
have any rights herein to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series or any class or
classes of capital stock of the Corporation.
(f) Voting. The shares of this Series shall not have any voting powers,
either general or special, except that:
(1) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares or this Series at the time outstanding,
given in person or by proxy, either in writing or by a vote at a meeting
called for the purpose at which the holders of shares of this Series shall
vote together as a separate class, shall be
K-10
<PAGE>
necessary for authorizing, effecting or validating the amendment,
alteration or repeal of any of the provisions of the Articles of
Incorporation or of any certificate amendatory thereof or supplemental
thereto (including any Certificate of the Voting Powers, Designations,
Preferences and Relative, Participating, Optional or Other Special Rights,
and the Qualifications, Limitations or Restrictions thereof, or any
similar document relating to any series of Preferred Stock) which would
adversely affect the preferences, rights, powers or privileges of this
Series;
(2) Unless the vote or consent of the holders of a greater number of
shares shall then be required by law, the consent of the holders of at
least 66 2/3% of all of the shares of this Series and all other series of
Preferred Stock ranking on a parity with shares of this Series, either as
to dividends or upon liquidation, at the time outstanding, given in person
or by proxy, either in writing or by a vote at a meeting called for the
purpose at which the holders of shares of this Series and such other
series of Preferred Stock shall vote together as a single class without
regard to series, shall be necessary for authorizing, effecting,
increasing or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the
shares of this Series as to dividends or upon liquidation, or the
reclassification of any authorized stock of the Corporation into any such
prior shares, or the creation, authorization or issue of any obligation or
security convertible into or evidencing the right to purchase any such
prior shares.
(3) If, at the time of any annual meeting of stockholders for the
election of directors, a default in preference dividends on any series of
the Preferred Stock or any other class or series of preferred stock of the
Corporation (other than any other class or series of the Corporation's
preferred stock expressly entitled to elect additional directors to the
Board by a vote separate and distinct from the vote provided for in this
paragraph (3) ("Voting Preferred")) shall exist, the number of directors
constituting the Board shall be increased by two (without duplication of
any increase made pursuant to the terms of any other class or series of
the Corporation's preferred stock other than any Voting Preferred) and the
holders of the Corporation's preferred stock of all classes and series
(other than any such Voting Preferred) shall have the right at such
meeting, voting together as a single class without regard to class or
series, to the exclusion of the holders of Common Stock and the Voting
Preferred, to elect two directors of the Corporation to fill such newly
created directorships. Such right of the holders of this Series shall
continue until dividends on this Series have been paid or declared and set
apart for payment regularly for at least one year and until there are no
dividends in arrears upon shares of any class or series of the
Corporation's preferred stock ranking prior to or on a parity with shares
of this Series as to dividends (other than any Voting Preferred). Each
director elected by the holders of shares of any series of the Preferred
Stock or any other class or series of the Corporation's preferred stock in
an election provided for by this paragraph (3) (herein called a "Preferred
Director") shall continue to serve as such director for the full term for
which he
K-11
<PAGE>
shall have been elected, notwithstanding that prior to the end of such
term a default in preference dividends shall cease to exist. Any Preferred
Director may be removed by, and shall not be removed except by, the vote
of the holders of record of the outstanding shares of the Corporation's
preferred stock entitled to have originally voted for such director's
election, voting together as a single class without regard to class or
series, at a meeting of the stockholders, or of the holders of shares of
the Corporation's preferred stock, called for that purpose. So long as a
default in any preference dividends on any series of the Preferred Stock
or any other class or series of preferred stock of the Corporation shall
exist (other than any Voting Preferred) (A) any vacancy in the office of a
Preferred Director may be filled (except as provided in the following
clause (B)) by an instrument in writing signed by the remaining Preferred
Director and filed with the Corporation and (B) in the case of the removal
of any Preferred Director, the vacancy may be filled by the vote of the
holders of the outstanding shares of the Corporation's preferred stock
entitled to have originally voted for the removed director's election,
voting together as a single class without regard to class or series, at
the same meeting at which such removal shall be voted. Each director
appointed as aforesaid shall be deemed for all purposes hereto to be a
Preferred Director.
Whenever the term of office of the Preferred Directors shall end and
a default in preference dividends shall no longer exist, the number of
directors constituting the Board shall be reduced by two. For purposes
hereof, a "default in preference dividends" on any series of the Preferred
Stock or any other class or series of preferred stock of the Corporation
shall be deemed to have occurred whenever the amount of accrued, or in the
case of noncumulative preferred stock, unpaid dividends upon such class or
series of the Corporation's preferred stock shall be equivalent to six
full quarterly dividends or more, and, having so occurred, such default
shall be deemed to exist thereafter until, but only until, all accrued
dividends on all such shares of the Corporation's cumulative preferred
stock of each and every series then outstanding (other than any Voting
Preferred or shares of any class or series ranking junior to shares of
this Series as to dividends) shall have been paid to the end of the last
preceding quarterly dividend period and in the case of noncumulative
preferred stock, until dividends on this Series have been paid or declared
and set apart for payment regularly for at least one year.
(g) Reacquired Shares. Shares of this Series which have been issued and
reacquired through redemption or purchase shall, upon compliance with an
applicable provision of the Rhode Island Business Corporation Act, have the
status of authorized and unissued shares of Preferred Stock and may be reissued
but only as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board.
(h) Relation to Existing Preferred Classes of Stock. Shares of this Series
are equal in rank and preference with all other series of the Preferred Stock
outstanding on the date of
K-12
<PAGE>
original issue of the shares of this Series and are senior in rank and
preference to the Common Stock and the Cumulative Participating Junior Preferred
Stock of the Corporation.
(i) Relation to Other Preferred Classes of Stock. For purposes of this
resolution, any stock of any class or classes of the Corporation shall be deemed
to rank:
(1) prior to the shares of this Series, either as to dividends or
upon liquidation, if the holders of such class or classes shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends
or upon liquidation, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share or sinking fund
provisions, if any, be different from those of this Series, if the holders
of such stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one
over the other, as between the holders of such stock and the holders of
shares of this Series; and
(3) junior to the shares of this Series, either as to dividends or
upon liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
K-13
M. Anne Szostak
[Fleet Financial Group, Inc. Letterhead] Executive Vice President
Fleet Financial Group
Mail Stop: MA OF D36A
One Federal Street
Boston, MA 02110
617-346-0118
Fax 617-346-4740
September 7, 1999
Dear Mr. Higgins:
This letter serves to confirm the terms of your continued employment with
Fleet Financial Group, Inc. following the consummation of Fleet's merger with
BankBoston Corporation (the "Merger"). The terms described herein are contingent
on the consummation of the Merger.
You will serve as President, Commercial and Regional Banking, reporting to
Chad Gifford. Your duties, responsibilities and authority shall include
management of the Company's middle market and small business banking, asset
based lending and leasing activities, cash management, community development and
retail banking business, with such immaterial changes as shall be made thereto
from time to time or such other changes as to which you agree. While employed,
you will also be nominated to serve as a member of the Fleet Boston Board of
Directors and as a member of its Executive Committee through December 31, 2002.
While employed, you will receive a minimum annual base salary of $800,000
and a minimum annual bonus in each year of 70% of the bonus paid to Fleet
Boston's Chief Executive Officer for such year during the period 1999 through
December 31, 2002. You will also receive a grant of 300,000 shares of Fleet
Boston performance based restricted stock and an option to acquire 200,000
shares of Fleet Boston common stock, in each case effective upon consummation of
the Merger; and while you are still employed, additional option grants of
200,000 each on the first and second anniversaries of the Merger (all being
subject to appropriate adjustment in the event of stock/reverse stock splits or
similar restructurings). The restricted stock and option grants will be on the
terms and substantially in the form provided to you herewith.
In the event your employment is terminated by the Company without Cause or
by you for Good Reason (as such terms are defined in your Amended and Restated
Change of Control Agreement, dated as of October 15, 1997 ("the Change of
Control Agreement"), assuming that the date of the consummation of the Merger
was the Effective Date under the Change of Control Agreement, but with duties,
responsibilities and authority as set forth herein) at any time up to and
including December 31, 2002, you will be entitled to salary continuation
payments for two years (the "severance period") and a pro rata bonus for the
year of termination (based on 70% of the CEO's bonus for the prior year),
together with such other benefits as may be provided pursuant to the terms of
such other plans and programs in which you may participate, including
<PAGE>
immediate vesting of any of the options described above which have been granted
(with you deemed employed at least through January 1, 2003 for purposes of
measuring any post termination exercise period), as well as lapsing of
restrictions on the restricted stock grants also described above. Your
entitlement to pension benefits, perquisites and other benefits are unaffected
by this letter, except as provided below. Furthermore, during the severance
period, you will continue to be an employee for purposes of the Company's
welfare, retirement, deferred compensation and stock incentive and other equity
plans (but without entitlement to additional awards under such incentive plan),
and thereafter as a "retiree" under said plans; except if you shall obtain other
employment with comparable health insurance then your health insurance benefits
with the Company shall terminate. Notwithstanding the above, the severance
period shall terminate (except with respect to service and age credit to your
qualified and nonqualified retirement plans), if you shall commence employment
in a senior management position with one of the following competitors or their
subsidiaries: Citizens Bancorp, Bank of New York Corp., Citicorp., or Chase
Manhattan Corp. In addition, your salary continuation payments will be
conditioned upon your delivering to the Company a release (in a form reasonably
satisfactory to the Company) of all claims you may have against the Company with
regard to discrimination or any other violation of law by the Company in
terminating you in accordance herewith.
Your Change of Control Agreement will remain in full force and effect in
accordance with its terms during your employment and the severance period,
except that salary continuation or bonus you receive hereunder as severance will
be applied as a credit against salary or bonus payments, respectively, to which
you might otherwise be entitled under the Change of Control Agreement in the
event of a Change of Control of Fleet Boston, and in no case shall you receive
thereunder on a payment (or benefit) by payment (or benefit) basis less than you
receive hereunder both during the Change of Control period and as a result of
any termination (in such case each type of payment or benefit being compared
separately). A similar approach shall be applied with regard to any other
severance program(s) of the Company as to which program(s) you are eligible; the
intent of this paragraph being that you will not receive duplicate benefits;
but, rather, the higher of each type of payment or benefit under this letter and
the Change of Control Agreement or such other program(s), as the case may be.
If the foregoing is in accordance with our understanding, please sign and
return a copy of this letter.
Very truly yours,
Fleet Financial Group, Inc.
By: /s/ M. Anne Szostak
-------------------------------------
Agreed:
/s/ Robert J. Higgins
- ----------------------------------
Robert J. Higgins
-2-
EXHIBIT 12
FLEET FINANCIAL GROUP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
EXCLUDING INTEREST ON DEPOSITS
(dollars in millions)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Nine Three
Months Months
Ended Ended
Sept. 30, Sept. 30, Years ended December 31,
1999 1999 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $2,173 $ 718 $2,507 $2,294 $2,070 $1,156 $1,460
Adjustments:
(a) Fixed charges:
(1) Interest on borrowed funds 1,076 399 1,061 737 813 1,413 1,074
(2) 1/3 of rent 43 15 54 53 55 52 53
(b) Preferred dividends 62 21 83 104 117 62 51
------ ------ ------ ------ ------ ------ ------
Adjusted earnings $3,354 $1,153 $3,705 $3,188 $3,055 $2,683 $2,638
====== ====== ====== ====== ====== ====== ======
Fixed charges and preferred dividends $1,181 $ 435 $1,198 $ 894 $ 985 $1,527 $1,178
====== ====== ====== ====== ====== ====== ======
Adjusted earnings/fixed charges and
preferred dividends 2.84x 2.65x 3.09x 3.57x 3.10x 1.76x 2.24x
====== ====== ====== ====== ====== ====== ======
</TABLE>
INCLUDING INTEREST ON DEPOSITS
(dollars in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Nine Three
Months Months
Ended Ended
Sept. 30, Sept. 30, Years ended December 31,
1999 1999 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $2,173 $ 718 $2,507 $2,294 $2,070 $1,156 $1,460
Adjustments:
(a) Fixed charges:
(1) Interest on borrowed funds 1,076 399 1,061 737 813 1,413 1,074
(2) 1/3 of rent 43 15 54 53 55 52 53
(3) Interest on deposits 1,215 388 1,835 1,654 1,754 1,726 1,170
(b) Preferred dividends 62 21 83 104 117 62 51
------ ------ ------ ------ ------ ------ ------
Adjusted earnings $4,569 $1,541 $5,540 $4,842 $4,809 $4,409 $3,808
====== ====== ====== ====== ====== ====== ======
Fixed charges and preferred dividends $2,396 $ 823 $3,033 $2,548 $2,739 $3,253 $2,348
====== ====== ====== ====== ====== ====== ======
Adjusted earnings/fixed charges and
preferred dividends 1.91x 1.87x 1.83x 1.90x 1.76x 1.36x 1.62x
====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE>
EXHIBIT 12 (continued)
FLEET FINANCIAL GROUP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES
EXCLUDING INTEREST ON DEPOSITS
(dollars in millions)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Nine Three
Months Months
Ended Ended
Sept. 30, Sept. 30, Years ended December 31,
1999 1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $2,173 $ 718 $2,507 $2,294 $2,070 $1,156 $1,460
Adjustments:
(a) Fixed charges:
(1) Interest on borrowed funds 1,076 399 1,061 737 813 1,413 1,074
(2) 1/3 of rent 43 15 54 53 55 52 53
------ ------ ------ ------ ------ ------ ------
Adjusted earnings $3,292 $1,132 $3,622 $3,084 $2,938 $2,621 $2,587
====== ====== ====== ====== ====== ====== ======
Fixed charges $1,119 $ 414 $1,115 $ 790 $ 868 $1,465 $1,127
====== ===== ====== ===== ===== ====== ======
Adjusted earnings/fixed charges 2.94x 2.74x 3.25x 3.90x 3.38x 1.79x 2.30x
====== ===== ====== ===== ===== ====== ======
</TABLE>
INCLUDING INTEREST ON DEPOSITS
(dollars in millions)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Nine Three
Months Months
Ended Ended
Sept. 30, Sept. 30, Years ended December 31,
1999 1999 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before income taxes $2,173 $ 718 $2,507 $2,294 $2,070 $1,156 $1,460
Adjustments:
(a) Fixed charges:
(1) Interest on borrowed funds 1,076 399 1,061 737 813 1,413 1,074
(2) 1/3 of rent 43 15 54 53 55 52 53
(3) Interest on deposits 1,215 388 1,835 1,654 1,754 1,726 1,170
------ ------ ------ ------ ------ ------ ------
Adjusted earnings $4,507 $1,520 $5,457 $4,738 $4,692 $4,347 $3,757
====== ====== ====== ====== ====== ====== ======
Fixed charges $2,334 $ 802 $2,950 $2,444 $2,622 $3,191 $2,297
====== ====== ====== ====== ====== ====== ======
Adjusted earnings/fixed charges 1.93x 1.90x 1.85x 1.94x 1.79 x 1.36x 1.64x
====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
September 30, 1999 consolidated financial statements and managements discussion
and analysis of financial condition and results of operations contained in the
Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,956
<INT-BEARING-DEPOSITS> 305
<FED-FUNDS-SOLD> 509
<TRADING-ASSETS> 357
<INVESTMENTS-HELD-FOR-SALE> 9,269
<INVESTMENTS-CARRYING> 1,117
<INVESTMENTS-MARKET> 1,119
<LOANS> 76,566
<ALLOWANCE> 1,704
<TOTAL-ASSETS> 108,399
<DEPOSITS> 63,974
<SHORT-TERM> 6,888
<LIABILITIES-OTHER> 7,758
<LONG-TERM> 19,789
6
0
<COMMON> 691
<OTHER-SE> 9,293
<TOTAL-LIABILITIES-AND-EQUITY> 108,399
<INTEREST-LOAN> 4,693
<INTEREST-INVEST> 523
<INTEREST-OTHER> 141
<INTEREST-TOTAL> 5,357
<INTEREST-DEPOSIT> 1,215
<INTEREST-EXPENSE> 2,291
<INTEREST-INCOME-NET> 3,066
<LOAN-LOSSES> 433
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,423
<INCOME-PRETAX> 2,173
<INCOME-PRE-EXTRAORDINARY> 2,173
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,327
<EPS-BASIC> 2.25
<EPS-DILUTED> 2.18
<YIELD-ACTUAL> 4.45
<LOANS-NON> 357
<LOANS-PAST> 232
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,552
<CHARGE-OFFS> 566
<RECOVERIES> 113
<ALLOWANCE-CLOSE> 1,704
<ALLOWANCE-DOMESTIC> 1,405
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 299
</TABLE>
