<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2001
REGISTRATION NO. 333-50346
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLEETBOSTON FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
RHODE ISLAND 6021 05-0341324
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
100 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
617-434-2200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------
WILLIAM C. MUTTERPERL, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
FLEETBOSTON FINANCIAL CORPORATION
100 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
617-434-2200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
RICHARD F. OBER, JR., ESQ. STEPHEN E. JACOBS, ESQ. EDWARD D. HERLIHY, ESQ.
EXECUTIVE VICE PRESIDENT, RONALD F. DAITZ, ESQ. WACHTELL, LIPTON, ROSEN & KATZ
GENERAL COUNSEL AND SECRETARY WEIL, GOTSHAL & MANGES LLP 51 WEST 52ND STREET
SUMMIT BANCORP. 767 FIFTH AVENUE NEW YORK, NEW YORK 10019
301 CARNEGIE CENTER NEW YORK, NEW YORK 10153
PRINCETON, NEW JERSEY 08543
</TABLE>
------------------------
Approximate date of commencement of the proposed sale of the securities to
the public: As soon as practicable after the effective date of this registration
statement and all other conditions precedent to the merger of Summit Bancorp.
with and into the registrant have been satisfied or waived as described in the
enclosed proxy statement-prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PRELIMINARY COPY--SUBJECT TO COMPLETION--DATED JANUARY 19, 2001
[LOGO]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The boards of directors of Summit Bancorp. and FleetBoston Financial
Corporation have approved a merger of Summit with and into FleetBoston. If the
merger is completed, FleetBoston will be the surviving company and you will
become a shareholder of FleetBoston. The FleetBoston common stock being issued
to Summit shareholders in the merger will represent pro forma ownership of
approximately 16.4% of the combined company. Your board of directors believes
that the opportunity to join forces with FleetBoston will provide significant
value to you, as well as to our customers, our employees and the members of the
communities we serve. Before we can complete the merger, we must obtain the
approval of the Summit shareholders. We are sending this proxy
statement-prospectus to you to ask for your vote in favor of the merger
agreement.
IF THE MERGER IS COMPLETED, YOU WILL HAVE THE RIGHT TO RECEIVE 1.02 SHARES
OF FLEETBOSTON COMMON STOCK FOR EACH SHARE OF SUMMIT COMMON STOCK THAT YOU OWN,
EXCEPT THAT INSTEAD OF RECEIVING FRACTIONAL SHARES, YOU WILL BE PAID THE VALUE
OF ANY FRACTIONAL SHARES IN CASH.
Because the 1.02 exchange ratio in the merger is fixed and will not be
adjusted as a result of changes in the market price of FleetBoston common stock,
the market value of the consideration that you will receive in the merger will
fluctuate with the market price of FleetBoston common stock.
- Based on FleetBoston's closing price on September 29, 2000, the last
trading day prior to the public announcement of the merger, the 1.02
exchange ratio represented approximately $39.78 in market value for each
share of Summit common stock.
- Based on FleetBoston's closing price on January , 2001, the 1.02
exchange ratio represented approximately $ in market value for each
share of Summit common stock.
FleetBoston common stock and Summit common stock trade on the New York Stock
Exchange under the symbols "FBF" and "SUB." We encourage you to obtain current
stock price quotations for FleetBoston common stock from a newspaper, the
Internet or your broker.
WE EXPECT THAT THE MERGER GENERALLY WILL BE A TAX-FREE TRANSACTION FOR
FLEETBOSTON, SUMMIT AND THE SUMMIT SHAREHOLDERS, EXCEPT FOR ANY CASH RECEIVED BY
SUMMIT SHAREHOLDERS INSTEAD OF FRACTIONAL SHARES OF FLEETBOSTON COMMON STOCK.
YOUR VOTE IS VERY IMPORTANT. Regardless of whether you plan to attend the
special meeting of Summit shareholders being held on February 26, 2001 to vote
on the merger agreement, please take the time to vote by completing and mailing
the enclosed proxy card to Summit, or by voting by telephone or via the Internet
in the manner described in this proxy statement-prospectus.
/s/ T. Joseph Semrod
T. Joseph Semrod
Chairman, President and Chief
Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE SECURITIES TO BE ISSUED UNDER THIS PROXY
STATEMENT-PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OF FLEETBOSTON BEING OFFERED THROUGH THIS DOCUMENT ARE NOT
SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF EITHER OF OUR COMPANIES, AND THEY ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY.
THIS PROXY STATEMENT-PROSPECTUS IS DATED JANUARY , 2001
AND IS FIRST BEING MAILED TO SUMMIT SHAREHOLDERS ON OR ABOUT JANUARY , 2001
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about FleetBoston and Summit from documents that are not included in or
delivered with this document. This information is available to you without
charge upon your written or oral request. You can obtain documents related to
FleetBoston and Summit that are incorporated by reference in this document,
without charge, by requesting them in writing or by telephone from the
appropriate company:
<TABLE>
<CAPTION>
FLEETBOSTON SUMMIT
<S> <C>
Investor Relations Department
FleetBoston Financial Corporation Corporate Secretary
100 Federal Street Summit Bancorp.
Mail Stop: 301 Carnegie Center
P.O. Box 2016, MA DE 10034F P.O. Box 2066
Boston, Massachusetts 02106-2106 Princeton, New Jersey 08543-2066
(617) 434-7858 (609) 987-3442
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY FEBRUARY 19, 2001 TO
RECEIVE THEM BEFORE THE SPECIAL MEETING.
See "Where You Can Find More Information" on page 81.
<PAGE>
[LOGO]
SUMMIT BANCORP.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 26, 2001
To the Shareholders of
Summit Bancorp.:
We will hold a special meeting of shareholders of Summit Bancorp., a New
Jersey corporation, on Monday, February 26, 2001, at 4:30 p.m., local time, at
the Hilton East Brunswick, Three Tower Center Boulevard, East Brunswick, New
Jersey, for the following purposes:
- To consider and vote upon a proposal to approve the agreement and plan of
merger, dated as of October 1, 2000, by and between Summit Bancorp. and
FleetBoston Financial Corporation, a Rhode Island corporation. The merger
agreement provides the terms and conditions under which Summit proposes to
merge with and into FleetBoston. This proposal is more fully described in
the enclosed proxy statement-prospectus.
- To consider and vote upon any other matters that may be properly brought
before the meeting or any adjournment or postponement of the meeting.
Summit has fixed the close of business on January 9, 2001 as the record date
for determining those shareholders entitled to vote at the Summit special
meeting and any adjournments or postponements of the Summit special meeting.
Only shareholders of record on that date are entitled to notice of, and to vote
at, the Summit special meeting and any adjournments or postponements of the
Summit special meeting.
By Order of the Board of Directors
RICHARD F. OBER, JR.
Executive Vice President, General
Counsel
and Secretary
January , 2001
THE BOARD OF DIRECTORS OF SUMMIT UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE MERGER AGREEMENT.
A majority of the votes cast at the special meeting is required to approve
the merger agreement. Whether or not you plan to attend the Summit special
meeting in person, please vote your shares by telephone, via the Internet or by
mail, in the manner described in this proxy statement-prospectus. If you plan on
attending the special meeting, please so indicate on your proxy.
IMPORTANT NOTICE: ALL SHAREHOLDERS PLANNING TO ATTEND THE SPECIAL MEETING SHOULD
REFER TO THE BACK COVER FOR DIRECTIONS TO THE SPECIAL MEETING SITE AND FOR
IMPORTANT INFORMATION REGARDING PROCEDURES FOR ADMITTANCE TO THE SPECIAL
MEETING.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
SUMMARY..................................................... 1
RECENT DEVELOPMENTS......................................... 6
UNAUDITED COMPARATIVE AND PRO FORMA PER SHARE DATA.......... 7
SELECTED FINANCIAL DATA..................................... 9
UNAUDITED PRO FORMA CONDENSED COMBINED SELECTED FINANCIAL
DATA OF FLEETBOSTON AND SUMMIT............................ 12
SUMMIT SPECIAL MEETING...................................... 14
General................................................... 14
Matters to be Considered.................................. 14
How to Vote Your Shares................................... 14
Solicitation of Proxies................................... 15
Record Date and Voting Rights............................. 15
Recommendation of the Summit Board of Directors........... 16
Dividend Reinvestment Plan and Savings Incentive Plan
Shares.................................................. 16
THE MERGER.................................................. 17
General................................................... 17
Background of the Merger.................................. 17
Recommendation of the Summit Board of Directors and
Reasons for the Merger.................................. 18
Opinion of Summit's Financial Advisor..................... 20
Changing the Method of Effecting the Combination.......... 29
Conversion of Stock....................................... 29
Treatment of Options...................................... 30
Exchange of Certificates; Fractional Shares............... 30
Effective Time............................................ 31
Representations and Warranties............................ 31
Conduct of Business of Summit Pending the Merger and Other
Agreements.............................................. 32
Conduct of Business of FleetBoston Pending the Merger..... 37
Conditions to Consummation of the Merger.................. 37
Regulatory Approvals Required for the Merger.............. 38
Material Federal Income Tax Consequences.................. 41
Accounting Treatment...................................... 42
Termination of the Merger Agreement....................... 43
Extension, Waiver and Amendment of the Merger Agreement... 43
Stock Exchange Listing.................................... 44
Expenses.................................................. 44
Dividends................................................. 44
Interests of Certain Persons in the Merger................ 44
Grantor Trust............................................. 49
Summit Stock Option Agreement............................. 49
Restrictions on Resales by Affiliates..................... 53
MANAGEMENT AND OPERATIONS AFTER THE MERGER.................. 54
Management................................................ 54
Operations................................................ 54
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................... 55
FleetBoston............................................... 55
Summit.................................................... 56
INFORMATION ABOUT FLEETBOSTON............................... 56
INFORMATION ABOUT SUMMIT.................................... 58
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
General................................................... 58
Management and Additional Information..................... 58
REGULATION AND SUPERVISION.................................. 59
Introduction.............................................. 59
Regulatory Agencies....................................... 59
Financial and Bank Holding Company Activities............. 60
Liability for Bank Subsidiaries........................... 61
Capital Requirements...................................... 62
Dividend Restrictions..................................... 63
Deposit Insurance Assessments............................. 64
Depositor Preference Statute.............................. 64
Brokered Deposits......................................... 64
Privacy Provisions of Gramm-Leach-Bliley Act.............. 64
Future Legislation........................................ 65
DESCRIPTION OF FLEETBOSTON CAPITAL STOCK.................... 66
General................................................... 66
FleetBoston Common Stock.................................. 66
Transfer Agent and Registrar.............................. 67
Restrictions on Ownership................................. 67
Preferred Stock Purchase Rights........................... 67
Preferred Stock........................................... 68
SELECTED PROVISIONS IN THE ARTICLES OF INCORPORATION OF
FLEETBOSTON................................................. 71
Business Combinations with Related Persons................ 71
Directors................................................. 72
COMPARISON OF SHAREHOLDERS' RIGHTS.......................... 73
General................................................... 73
Voting Rights............................................. 73
Special Meetings.......................................... 75
Appraisal Rights.......................................... 75
Provisions Relating to Directors.......................... 76
State Anti-Takeover Statutes.............................. 77
RIGHTS OF DISSENTING SHAREHOLDERS........................... 80
LEGAL MATTERS............................................... 80
EXPERTS..................................................... 80
SHAREHOLDER PROPOSALS....................................... 80
OTHER MATTERS............................................... 80
WHERE YOU CAN FIND MORE INFORMATION......................... 81
FORWARD-LOOKING STATEMENTS.................................. 84
</TABLE>
<TABLE>
<S> <C> <C>
Appendix A Agreement and Plan of Merger................................ A-1
Appendix B Summit Stock Option Agreement............................... B-1
Appendix C Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................ C-1
</TABLE>
ii
<PAGE>
SUMMARY
THIS BRIEF SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND
DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD
CAREFULLY READ THIS ENTIRE DOCUMENT AND THE OTHER DOCUMENTS TO WHICH THIS
DOCUMENT REFERS YOU. SEE "WHERE YOU CAN FIND MORE INFORMATION." EACH ITEM IN
THIS SUMMARY CONTAINS A PAGE REFERENCE DIRECTING YOU TO A MORE COMPLETE
DESCRIPTION OF THAT ITEM.
SUMMIT SHAREHOLDERS WILL RECEIVE 1.02 SHARES OF FLEETBOSTON COMMON STOCK FOR
EACH SHARE OF SUMMIT COMMON STOCK (PAGE 17)
FleetBoston and Summit propose a merger in which Summit will merge with and
into FleetBoston, with FleetBoston continuing after the merger as the surviving
corporation. Subject to receipt of Summit shareholder approval, regulatory
approvals and other matters, we expect to complete the merger late in the first
quarter of 2001. When we complete the merger, you will have the right to receive
1.02 shares of FleetBoston common stock for each share of Summit common stock
that you own at the effective time of the merger, with cash paid instead of
fractional shares.
You will have to surrender your Summit common stock certificates to receive
new stock certificates representing FleetBoston common stock. Please do not send
us any certificates now--we will send you written instructions on how to
surrender your Summit common stock certificates for new FleetBoston common stock
certificates after we complete the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 55)
FleetBoston common stock and Summit common stock trade on the New York Stock
Exchange under the symbols "FBF" and "SUB," respectively. Some examples of
recent New York Stock Exchange closing prices for FleetBoston common stock,
Summit common stock and the implied market value of the merger consideration,
based on the FleetBoston common stock price and the 1.02 exchange ratio, are as
follows:
ON SEPTEMBER 22, 2000
<TABLE>
<CAPTION>
FLEETBOSTON: SUMMIT: IMPLIED VALUE:
------------ -------- --------------
<S> <C> <C> <C>
$ 39.750 $27.563 $ 40.545
</TABLE>
ON SEPTEMBER 29, 2000
<TABLE>
<CAPTION>
FLEETBOSTON: SUMMIT: IMPLIED VALUE:
------------ -------- --------------
<S> <C> <C> <C>
$ 39.000 $34.500 $ 39.780
</TABLE>
ON JANUARY , 2001
<TABLE>
<CAPTION>
FLEETBOSTON: SUMMIT: IMPLIED VALUE:
------------ -------- --------------
<S> <C> <C> <C>
$ $ $
</TABLE>
THE EXCHANGE RATIO IS FIXED AND THE VALUE OF THE SHARES TO BE ISSUED IN THE
MERGER WILL FLUCTUATE WITH MARKET PRICES (PAGE 17)
Because the number of shares of FleetBoston common stock that you will
receive in the merger is fixed at the 1.02 exchange ratio, the market value of
the consideration you will receive in the merger will fluctuate as the price of
FleetBoston common stock changes. The exchange ratio will not be adjusted as a
result of changes in the market price of FleetBoston common stock, and there are
no price "collar" protections that would limit the risk of a decrease in the
market value of the consideration you will receive in the merger. You may obtain
current stock price quotations for FleetBoston common stock from a newspaper, on
the Internet or by calling your broker.
THE MERGER WILL GENERALLY BE TAX-FREE TO SHAREHOLDERS (PAGE 41)
[Summit has received a legal opinion from its counsel, Weil, Gotshal &
Manges LLP, and FleetBoston has received a legal opinion from its counsel,
Wachtell, Lipton, Rosen & Katz], that the merger will be treated as a
transaction of a type that is generally tax-free for federal income tax purposes
and that the exchange by Summit shareholders of shares of Summit common stock
for shares of FleetBoston common stock generally will not cause them to
recognize any gain or loss for U.S. federal income tax purposes. Summit
shareholders will, however, have to recognize income or gain in connection with
any cash received instead of fractional
1
<PAGE>
shares. These legal opinions also state that neither FleetBoston nor Summit
generally will recognize any gain or loss for U.S. federal income tax purposes.
THIS TAX TREATMENT MAY NOT APPLY TO ALL SUMMIT SHAREHOLDERS. DETERMINING THE
ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU CAN BE COMPLICATED. THEY WILL
DEPEND ON YOUR SPECIFIC SITUATION AND ON VARIABLES NOT WITHIN OUR CONTROL. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES TO YOU.
DIVIDEND POLICY; DIFFERENCE IN CASH DIVIDENDS PER SHARE (PAGE 55)
After the merger, FleetBoston expects to continue to pay quarterly dividends
on FleetBoston common stock in an amount equal to FleetBoston's current dividend
of $0.33 per quarter. FleetBoston's current quarterly cash dividend per share is
$0.02 less than Summit's current quarterly dividend per share. Future dividend
payments will depend on business conditions and on the combined company's
financial condition and earnings and other factors.
Prior to the merger, the merger agreement permits each of us to continue to
pay regular quarterly cash dividends to our shareholders. We will coordinate our
declaration of dividends, and the related record dates, so that Summit
shareholders receive one, but only one, dividend for each fiscal quarter.
SUMMIT'S FINANCIAL ADVISOR SAYS THE EXCHANGE RATIO IS FAIR TO SHAREHOLDERS
(PAGE 19)
Among other factors considered in deciding to approve the merger, the Summit
board of directors received the oral opinion of its financial advisor, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, that, as of October 1, 2000 (the
date on which the Summit board of directors approved the merger and related
agreements), the 1.02 exchange ratio was fair to the holders of Summit common
stock from a financial point of view. This opinion was subsequently confirmed in
writing as of October 1, 2000 [and as of the date of this proxy
statement-prospectus. The opinion dated as of the date of this proxy
statement-prospectus is included as Appendix C]. Summit has agreed to pay a
transaction fee to Merrill Lynch of $28 million, $23 million of which is
contingent upon the completion of the merger.
SUMMIT SHAREHOLDERS DO NOT HAVE APPRAISAL RIGHTS (PAGE 80)
Summit shareholders do not have any right to dissent from the merger or to
have the value of their shares of Summit common stock appraised in connection
with the merger under New Jersey law or otherwise.
THE SUMMIT BOARD OF DIRECTORS RECOMMENDS THAT YOU APPROVE THE MERGER (PAGE 18)
Based on Summit's reasons for the merger described in this document,
including Merrill Lynch's fairness opinion, the Summit board of directors
believes that the merger is in the best interests of Summit shareholders and
unanimously recommends that you vote "FOR" approval of the merger agreement.
The Summit board of directors and executive officers and their affiliates
held approximately 4,055,759 shares of Summit common stock as of the record
date. The shares held as of the record date by the Summit directors, executive
officers and their affiliates represent approximately 4.62% of the number of
shares of Summit common stock necessary to approve the merger agreement,
assuming that all of the shares of Summit common stock outstanding as of the
record date are voted at the Summit special meeting. Summit currently expects
that all of its directors and executive officers will vote in favor of the
merger.
CONDITIONS OF COMPLETION OF THE MERGER (PAGE 37)
The completion of the merger depends on a number of conditions being met,
including:
- approval of the merger agreement by Summit shareholders;
- receipt of required regulatory approvals, including approval by the Board
of Governors of the Federal Reserve System and applicable state banking
authorities;
- there is no injunction or regulatory prohibition to completion of the
merger;
2
<PAGE>
- the receipt on the closing date of the merger of letters from our
respective independent accountants telling us that the merger will qualify
as a "pooling of interests" for accounting and financial reporting
purposes;
- the receipt of opinions from our respective tax counsel that the merger
will qualify as a tax-free reorganization;
- our respective representations and warranties in the merger agreement must
be true and correct, subject to exceptions that would not have a material
adverse effect on Summit or FleetBoston; and
- we must each be in compliance in all material respects with our respective
covenants in the merger agreement.
Where the law permits, a party to the merger agreement could elect to waive
a condition to its obligation to complete the merger although that condition has
not been satisfied. We cannot be certain when (or if) the conditions to the
merger will be satisfied or waived or that the merger will be completed.
WE MAY DECIDE NOT TO COMPLETE THE MERGER (PAGE 43)
Summit and FleetBoston can agree at any time not to complete the merger,
even if you have voted to approve the merger agreement. Also, either of us can
decide, without the consent of the other, not to complete the merger in a number
of other situations, including:
- final denial of a required regulatory approval;
- failure of the Summit shareholders to approve the merger agreement;
- failure to complete the merger by October 1, 2001; or
- breach by the other party of its representations, warranties, covenants or
agreements contained in the merger agreement if the breach is of the sort
that would permit the terminating party to not complete the merger and the
breach is not, or cannot be, cured within 45 days of notice of the breach.
WE MAY AMEND THE TERMS OF THE MERGER AND WAIVE SOME CONDITIONS (PAGE 43)
FleetBoston and Summit may jointly amend the terms of the merger, and each
of us may waive our right to require the other party to adhere to those terms,
to the extent legally permissible. However, after you approve the merger
agreement, you must approve any amendment or waiver that reduces or changes the
amount or form of the consideration that you will receive as a result of the
merger.
WE EXPECT "POOLING OF INTERESTS" ACCOUNTING TREATMENT (PAGE 42)
We expect the merger to qualify as a "pooling of interests." This means
that, for accounting and financial reporting purposes, we will treat our
companies as if they had always been one. We can decide not to complete the
merger if we do not receive a letter from our respective independent accountants
telling us that the merger will qualify as a pooling of interests.
OFFICERS AND DIRECTORS HAVE SOME INTERESTS IN THE MERGER THAT ARE IN ADDITION TO
THEIR INTERESTS AS SHAREHOLDERS (PAGE 44)
Summit's directors and executive officers have interests in the merger that
are in addition to their interests as shareholders of Summit.
Two of Summit's current executive officers, T. Joseph Semrod, Chairman,
President and Chief Executive Officer, and John G. Collins, Vice Chairman, have
entered into employment agreements with FleetBoston that will become effective
upon the completion of the merger. Mr. Semrod will serve as a Vice Chairman of
FleetBoston and Chairman of FleetBoston's New Jersey operations, and
Mr. Collins will serve as President of FleetBoston's New Jersey operations. Each
of the employment agreements provides for minimum annual base salaries and
bonuses, which over their two-year terms total $2,500,000 for Mr. Semrod and
$1,500,000 for Mr. Collins, and for the receipt of the cash severance payments
and other benefits to which they are entitled under their existing severance
arrangements with Summit. These cash severance payments, which are estimated to
be approximately $6,094,000 for Mr. Semrod and
3
<PAGE>
$2,886,000 for Mr. Collins, will be paid upon completion of the merger. In
addition, Mr. Semrod and T. J. Dermot Dunphy, both current members of Summit's
board of directors, will join the board of directors of FleetBoston.
As a non-employee director of FleetBoston, Mr. Dunphy will be entitled to an
annual retainer of $50,000 and an additional payment of $1,500 for each board
meeting he attends and an additional payment of $1,000 for each telephonic board
meeting in which he participates. Mr. Dunphy will also participate in the
FleetBoston Director Deferred Compensation and Stock Unit Plan as a result of
which he will receive an annual award of stock units equal to 60% of the annual
retainer (currently $30,000). The stock units are payable in shares of
FleetBoston common stock following Mr. Dunphy's termination of service as a
director.
In addition, all of Summit's executive officers hold stock options,
performance stock awards and/or incentive stock awards that vested sooner than
they were scheduled to vest when the parties entered into the merger agreement
on October 1, 2000. A total of 605,550 stock options, 43,125 performance stock
awards and 198,338 incentive stock awards vested sooner than scheduled.
All of Summit's executive officers also have existing severance plan,
enhanced separation pay plan or termination agreements and arrangements with
Summit providing for potential cash severance payments and other benefits if the
employment of any of those officers terminates following the merger. The
aggregate cash severance payments that could become payable to Summit executive
officers (other than to Messrs. Semrod and Collins) under those plans,
agreements and arrangements is estimated to be approximately $27.0 million.
Also, following the merger, FleetBoston has agreed to indemnify, and provide
directors' and officers' insurance for, the officers and directors of Summit for
events occurring before the merger, including events that are related to the
merger. The additional interests of some of Summit's directors and executive
officers in the merger are described in greater detail under "The
Merger--Interests of Certain Persons in the Merger."
The members of Summit's board of directors knew about these additional
interests, and considered them, when they approved the merger.
STOCK OPTION AGREEMENT (PAGE 49)
As a condition to FleetBoston's willingness to enter into the merger
agreement, Summit issued to FleetBoston an option to purchase up to 19.9% of its
outstanding shares of common stock. The exercise price of the option is $34.00
per share, subject to certain adjustments. The option will become exercisable
only if certain triggering events occur relating to, among other things, Summit
entering into a transaction with a party other than FleetBoston or Summit's
board of directors withdrawing its recommendation of the merger. Under certain
circumstances involving a competing acquisition transaction, the holder of the
option may require Summit to repurchase the option and any shares purchased
under the stock option agreement for a price not to exceed $350 million, based
on a formula specified in the stock option agreement. Under the same
circumstances, the holder of the option may instead surrender the option and any
option shares to Summit for a cash fee equal to $210 million, subject to certain
adjustments.
The stock option agreement increases the likelihood that the merger will be
completed in accordance with the terms of the merger agreement and compensates
FleetBoston if the merger is not completed. The existence of the Summit stock
option would significantly increase the cost to a third party acquiror of
acquiring Summit. Consequently, the stock option agreement may discourage
persons who might be interested in making a competing proposal to acquire
Summit, even if those persons were prepared to pay consideration with a higher
current market price than the shares of FleetBoston common stock to be received
under the merger agreement.
THE SPECIAL MEETING OF SHAREHOLDERS (PAGE 14)
The special meeting of Summit shareholders will be held on February 26,
2001, at 4:30 p.m., local time, at the Hilton East Brunswick, Three
4
<PAGE>
Tower Center Boulevard, East Brunswick, New Jersey. At the Summit special
meeting, you will be asked to approve the merger agreement between Summit and
FleetBoston providing for the merger.
RECORD DATE; VOTE REQUIRED (PAGE 15)
You can vote at the Summit special meeting if you owned Summit common stock
at the close of business on January 9, 2001. On that date, there were
175,721,433 shares of Summit common stock outstanding and entitled to vote. You
can cast one vote for each share of Summit common stock you owned on that date.
A majority of the votes cast at the special meeting is required in order to
approve the merger.
THE COMPANIES (PAGE 57)
FLEETBOSTON FINANCIAL CORPORATION
100 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 434-2200
FleetBoston is a diversified financial services company organized under the
laws of Rhode Island and registered under the Bank Holding Company Act of 1956.
FleetBoston offers a comprehensive array of financial solutions to approximately
20 million customers in more than 20 countries. Its key businesses include small
business services, credit card services, asset management, private banking,
consumer banking, retail securities brokerage, consumer lending, student loan
and other processing services, community development banking, mortgage banking,
global markets and foreign exchange, middle market lending, international
banking, debt capital markets, global financial services, commercial finance,
industry banking, investment banking, principal investing and securities
specialist services.
On October 1, 1999, FleetBoston completed its merger with BankBoston
Corporation. In connection with obtaining regulatory approvals for the merger,
the Board of Governors of the Federal Reserve System and the United States
Department of Justice required that FleetBoston agree to divest approximately
$13 billion of deposits and $9 billion of loans from the combined
Fleet-BankBoston company, which is expected to result in an annualized reduction
of net income of approximately $160 million. As of the date of this document,
substantially all of the divestitures have been completed.
At September 30, 2000, FleetBoston's total assets on a consolidated basis
were $179.1 billion, its consolidated total deposits were $98.9 billion and its
consolidated total shareholders' equity was $15.6 billion. Based on total assets
at September 30, 2000, FleetBoston was the eighth largest financial holding
company in the United States.
SUMMIT BANCORP.
301 CARNEGIE CENTER
P.O. BOX 2066
PRINCETON, NEW JERSEY 08543-2066
(609) 987-3200
Summit is a bank holding company engaged in commercial and retail banking
and in providing investment management services in New Jersey, Pennsylvania and
Connecticut. Summit also provides a variety of financial services, including:
- securities brokerage;
- insurance brokerage;
- venture capital investment;
- commercial finance lending;
- lease financing; and
- asset-based lending.
At September 30, 2000, Summit's total assets on a consolidated basis were
$39.5 billion, its consolidated total deposits were $26.6 billion and its
consolidated total shareholders' equity was $3.0 billion. Based on total assets
at September 30, 2000, Summit was the largest bank holding company headquartered
in New Jersey and the twenty-fourth largest bank holding company in the United
States.
INFORMATION
FleetBoston has supplied all information contained or incorporated by
reference in this proxy statement-prospectus relating to FleetBoston, as well as
all pro forma financial information, and Summit has supplied all relevant
information relating to Summit.
5
<PAGE>
RECENT DEVELOPMENTS
On January 17, 2001, FleetBoston and Summit each reported earnings for the
quarter and year ended December 31, 2000. The following table shows selected
unaudited historical financial data for FleetBoston and Summit as of and for the
year ended December 31, 2000.
SELECTED UNAUDITED HISTORICAL FINANCIAL DATA
OF FLEETBOSTON AND SUMMIT
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR
ENDED DECEMBER 31, 2000
--------------------------
FLEETBOSTON SUMMIT
----------- --------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
INCOME DATA:
Net interest income (fully taxable equivalent)............ $ 6,582 $ 1,368
Provision for credit losses............................... 1,196 100
-------- -------
Net interest income after provision for credit losses..... 5,386 1,268
Noninterest income........................................ 9,024 453
Noninterest expense....................................... 8,633 955(c)
Net income................................................ 3,420(a) 514(c)
Diluted earnings per common share......................... 3.68(a) 2.93(c)
BALANCE SHEET DATA:
Total assets.............................................. $179,519 $39,636
Securities................................................ 23,720 11,271
Loans and leases, net..................................... 106,994 25,192
Deposits.................................................. 101,290 27,312
Total stockholders' equity................................ 16,172 3,247
CONSOLIDATED RATIOS:
Return on average assets.................................. 1.84%(a) 1.34%(c)
Return on common equity................................... 23.11(a) 17.32(c)
Net interest margin....................................... 4.24 3.80
Book value (period end)................................... 17.21 18.56
Reserve for credit losses to period-end loans............. 2.17 1.30
Reserve for credit losses to nonperforming loans.......... 269 221
Net charge-offs to average loans.......................... .99(b) .41
</TABLE>
------------------------
(a) Includes impact of gain on divestitures ($843 million pre-tax, $420 million
post-tax) and merger integration costs ($227 million pre-tax, $137 million
post-tax) recorded in 2000.
(b) Excludes impact of a reserve reduction of $75 million related to the sale of
troubled commercial loans in 2000.
(c) Includes impact of nonrecurring pre-tax charges of $21.2 million
($13.8 million, or $0.08 per diluted share, post-tax) related to the vesting
of restricted stock resulting from the change in control provisions
contained in Summit's 1993 Incentive Stock and Option Plan.
FleetBoston adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as of
January 1, 2001. This statement establishes comprehensive accounting and
reporting standards for derivative instruments, and requires, among other
things, that all derivative instruments be recorded in the balance sheet at fair
value. FleetBoston does not expect the impact of adoption of the Statement to be
material to its financial condition or results of operations.
On December 28, 2000, FleetBoston completed a sale of approximately
$1.35 billion in troubled commercial loans, as well as related funding
commitments of approximately $150 million. In consideration for the sale,
FleetBoston received $663 million in cash and $203 million in an investment
grade rated note. The financial impact of the transaction is fully reflected in
the summarized unaudited financial data of FleetBoston set forth above. As a
result of the sale, FleetBoston's loan loss reserves were reduced by
approximately $75 million. The sale did not result in any significant gain or
loss to FleetBoston.
6
<PAGE>
UNAUDITED COMPARATIVE AND PRO FORMA PER SHARE DATA
The following table shows historical information about our net income per
share, cash dividends per share and book value per share, and similar
information reflecting the merger, which we refer to as pro forma information.
In presenting the comparative pro forma information for the time periods shown
in the table, we assumed that we had been merged throughout those periods. See
"Unaudited Pro Forma Condensed Combined Selected Financial Data of FleetBoston
and Summit" on page 12.
We also assumed that we will treat our companies as if they had always been
combined for accounting and financial reporting purposes, a method known as
pooling of interests accounting. The information listed as equivalent pro forma
was obtained by multiplying the pro forma amounts by the exchange ratio of 1.02.
We present this information to reflect the fact that Summit shareholders will
receive more than one share of combined company common stock for each share of
Summit common stock exchanged in the merger.
We expect that we will incur merger and restructuring expenses as a result
of combining our companies. These expenses are described under "Management and
Operations After the Merger--Operations" on page 54. We also anticipate that the
merger will provide the combined company with financial benefits that include
reduced operating expenses. The pro forma information, while helpful in
illustrating the financial characteristics of the combined company under one set
of assumptions, does not reflect these anticipated expenses and financial
benefits and, accordingly, does not attempt to predict or suggest future
results, nor does it include the effects of any divestitures that may be
required by regulatory authorities.
7
<PAGE>
The information in the following table is based on the historical financial
information that we have presented in our prior Securities and Exchange
Commission filings. We are incorporating this material into this document by
reference. See "Where You Can Find More Information" on page 80.
<TABLE>
<CAPTION>
AS OF OR FOR THE
NINE MONTHS
ENDED AS OF OR FOR THE YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- ------------------------------------------
2000 1999 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FLEETBOSTON COMMON STOCK:
Net income per share:
Basic:
Historical................................... $2.90 $2.20 $2.16 $2.47 $2.39
FleetBoston/Summit pro forma (1)............. 2.78 2.15 2.21 2.49 2.33
Diluted:
Historical................................... 2.84 2.15 2.10 2.41 2.33
FleetBoston/Summit pro forma (1)............. 2.73 2.10 2.16 2.44 2.28
Cash dividends declared per common share:
Historical................................... .90 .81 1.11 1.00 .92
FleetBoston/Summit pro forma (2)............. .90 .81 1.11 1.00 .92
Book value per share at period end:
Historical................................... 16.56 15.96
FleetBoston/Summit pro forma (1)............. 16.65 15.95
SUMMIT COMMON STOCK:
Net income per share:
Basic:
Historical................................... 2.23 1.93 2.56 2.66 2.12
FleetBoston/Summit equivalent pro forma
(3)........................................ 2.84 2.20 2.25 2.54 2.38
Diluted:
Historical................................... 2.22 1.91 2.54 2.63 2.09
FleetBoston/Summit equivalent pro forma
(3)........................................ 2.79 2.14 2.20 2.49 2.33
Cash dividends declared per common share:
Historical................................... 1.03 .96 1.29 1.17 1.02
FleetBoston/Summit equivalent pro forma
(3)........................................ .92 .83 1.13 1.02 .94
Book value per share at period end:
Historical................................... 17.45 16.23
FleetBoston/Summit equivalent pro forma
(3)........................................ 16.98 16.27
</TABLE>
------------------------------
(1) The FleetBoston/Summit pro forma information reflects FleetBoston's
historical common shares outstanding and FleetBoston's historical basic and
diluted shares adjusted for the exchange of FleetBoston common stock in
connection with the merger at an exchange ratio of 1.02 shares of
FleetBoston common stock for each share of Summit common stock.
(2) The FleetBoston/Summit pro forma dividends per share represent FleetBoston's
historical dividends per share.
(3) The FleetBoston/Summit equivalent pro forma per share amounts are calculated
by multiplying the FleetBoston pro forma information described in notes (1)
and (2) by the exchange ratio of 1.02.
8
<PAGE>
SELECTED FINANCIAL DATA
The following tables show selected historical financial data for each of us
and also show similar pro forma information reflecting the merger. The pro forma
information reflects the pooling of interests method of accounting.
We expect that we will incur merger and restructuring expenses as a result
of combining our companies. These expenses are described under "Management and
Operations After the Merger--Operations" on page 54. We also anticipate that the
merger will provide the combined company with financial benefits that include
reduced operating expenses. The pro forma information, while helpful in
illustrating the financial characteristics of the combined company under one set
of assumptions, does not reflect these anticipated expenses and financial
benefits and, accordingly, does not attempt to predict or suggest future
results, nor does it include the effects of any divestitures that may be
required by regulatory authorities.
The information in the following tables is based on historical financial
information that we have presented in our prior Securities and Exchange
Commission filings. You should read all of the summary financial information we
provide in the following tables together with this historical financial
information. This historical financial information is also incorporated into
this document by reference. See "Where You Can Find More Information" on
page 81.
9
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF FLEETBOSTON
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATIONS:
Interest income (fully taxable equivalent).... $ 10,251 $ 9,719 $ 13,109 $ 12,400 $ 11,319 $ 10,977 $ 11,398
Interest expense.............................. 5,241 4,608 6,310 5,946 5,127 5,119 6,009
-------- -------- -------- -------- -------- -------- --------
Net interest income (fully taxable
equivalent)................................. 5,010 5,111 6,799 6,454 6,192 5,858 5,389
Provision for credit losses................... 911 688 933 850 522 444 376
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for credit
losses...................................... 4,099 4,423 5,866 5,604 5,670 5,414 5,013
Noninterest income............................ 7,230 5,001 6,974 5,281 4,206 3,658 3,237
Noninterest expense........................... 6,781 6,032 9,357 7,050 6,050 5,831 5,831
Net income.................................... $ 2,645(a) $ 2,072 $ 2,038(b) $ 2,324(c) $ 2,246 $ 1,860(d) $ 1,351(e)
PER COMMON SHARE:
Basic......................................... $ 2.90(a) $ 2.20 $ 2.16(b) $ 2.47(c) $ 2.39 $ 1.88(d) $ 1.25(e)
Diluted....................................... 2.84(a) 2.15 2.10(b) 2.41(c) 2.33 1.84(d) 1.19(e)
Weighted average basic shares outstanding (in
thousands).................................. 903,076 920,667 919,347 916,123 902,442 932,575 895,370
Weighted average diluted shares outstanding
(in thousands).............................. 921,147 944,996 943,528 939,136 924,021 949,824 943,344
Book value.................................... $ 16.56 $ 16.01 $ 15.96 $ 14.70 $ 13.23 $ 12.08 $ 11.15
Cash dividends declared....................... .90 .81 1.11 1.00 .92 .87 .82
Common dividend payout ratio.................. 31.08% 36.79% 51.51% 40.15% 35.55% 40.71% 50.76%
CONSOLIDATED BALANCE SHEET--AVERAGE BALANCES:
Total assets.................................. $187,714 $187,129 $188,779 $170,228 $151,886 $146,108 $141,543
Securities held to maturity................... 952 1,681 1,641 1,874 2,000 1,852 11,777
Securities available for sale................. 22,871 22,773 22,877 19,853 16,321 17,525 16,244
Loans and leases, net of unearned income...... 115,979 116,873 117,528 111,039 102,369 97,598 90,447
Due from brokers/dealers...................... 3,750 3,289 3,239 3,765 2,884 2,179 1,926
Interest-bearing deposit liabilities.......... 82,792 90,976 90,687 88,634 82,437 81,824 74,828
Short-term borrowings......................... 20,972 23,037 23,109 21,669 17,127 15,099 23,919
Due to brokers/dealers........................ 5,022 4,079 4,145 4,501 3,463 2,645 2,341
Long-term debt (f)............................ 26,911 21,311 22,290 10,962 7,993 8,158 8,741
Shareholders' equity.......................... 15,018 14,621 14,767 13,674 12,188 12,139 10,885
CONSOLIDATED RATIOS:
Net interest margin (fully taxable
equivalent)(g).............................. 4.26% 4.27% 4.23% 4.40% 4.68% 4.57% 4.24%
Return on average assets(g)................... 1.88(a) 1.47 1.08(b) 1.37(c) 1.48 1.27(d) .95(e)
Return on average common equity(g)............ 24.22(a) 19.42 14.12(b) 17.64(c) 19.71 16.31(d) 13.16(e)
Average shareholders' equity to
average assets.............................. 8.00 7.81 7.82 8.03 8.02 8.31 7.69
Tier 1 risk-based capital ratio............... 7.61 7.14 6.82 7.11 7.55 8.30 7.97
Total risk-based capital ratio................ 11.93 11.28 11.50 11.51 11.31 12.18 11.91
Period-end reserve for credit losses to
period-end
loans and leases, net of unearned income.... 2.22 2.10 2.08 2.06 2.01 2.35 2.42
Net charge-offs to average loans and leases,
net of unearned income(g)................... .99 .74 .76 .75 .64 .61 .55
Period-end nonperforming assets to period-end
loans and leases, net of unearned income and
other real estate owned..................... .92 .66 .70 .61 .72 1.16 1.03
</TABLE>
----------------------------------
(a) Includes impact of gain on divestitures ($843 million pre-tax, $420 million
post-tax) and merger integration costs ($227 million pre-tax, $137 million
post-tax) recorded in the first nine months of 2000.
(b) Includes impact of merger- and restructuring-related charges and other costs
($1.1 billion pre-tax, $760 million post-tax) recorded in the fourth quarter
of 1999.
(c) Includes impact of merger- and restructuring-related charges and other costs
($218 million pre-tax, $135 million post-tax) recorded in 1998.
(d) Includes impact of merger-related charges ($180 million pre-tax, $117
million post-tax) recorded in 1996.
(e) Includes impact of the loss on assets held for sale by accelerated
disposition ($175 million pre-tax, $112 million post-tax) and merger-
related charges ($490 million pre-tax, $317 million post-tax) recorded in
1995.
(f) Amounts include guaranteed preferred beneficial interests in FleetBoston's
junior subordinated debentures.
(g) Ratios for the nine-month periods are annualized.
10
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF SUMMIT
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
---------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY OF OPERATIONS:
Interest income (fully taxable
equivalent).............................. $ 2,070 $ 1,738 $ 2,366 $ 2,187 $ 2,079 $ 1,922 $ 1,849
Interest expense........................... 1,046 795 1,089 1,001 920 854 822
-------- ------- ------- ------- ------- ------- -------
Net interest income (fully taxable
equivalent).............................. 1,024 943 1,277 1,186 1,159 1,068 1,027
Provision for credit losses................ 70 110 128 66 59 64 72
-------- ------- ------- ------- ------- ------- -------
Net interest income after provision for
credit losses............................ 954 833 1,149 1,120 1,100 1,004 955
Noninterest income......................... 334 299 397 350 302 260 235
Noninterest expense........................ 703 625 878 783 817 816 706
Net income................................. $ 388 $ 333 $ 443(a) $ 466 $ 371(b) $ 284(c) $ 300
PER COMMON SHARE:
Basic...................................... $ 2.23 $ 1.93 $ 2.56(a) $ 2.66 $ 2.12(b) $ 1.69(c) $ 1.89
Diluted.................................... 2.22 1.91 2.54(a) 2.63 2.09(b) 1.67(c) 1.87
Weighted average basic shares outstanding
(in thousands)........................... 174,111 172,809 172,934 175,076 175,128 166,673 157,244
Weighted average diluted shares outstanding
(in thousands)........................... 175,092 174,423 174,471 177,043 177,459 168,788 159,249
Book value................................. $ 17.45 $ 16.31 $ 16.23 $ 15.67 $ 14.79 $ 13.61 $ 13.04
Cash dividends declared.................... 1.03 .96 1.29 1.17 1.02 .90 .79
Common dividend payout ratio (diluted)..... 46.40% 50.26% 50.79% 44.49% 48.80% 53.89% 42.25%
CONSOLIDATED BALANCE SHEET--
AVERAGE BALANCES:
Total assets............................... $ 38,124 $34,047 $34,561 $30,935 $28,883 $27,230 $25,763
Securities held to maturity................ 5,175 6,315 6,180 4,761 4,853 5,565 7,002
Securities available for sale.............. 6,100 4,271 4,487 4,653 3,796 2,625 1,160
Loans and leases, net of unearned income... 24,405 21,536 21,864 19,771 18,452 17,066 15,569
Interest-bearing deposit liabilities....... 20,456 18,874 18,820 17,558 17,848 17,432 16,695
Other funds borrowed....................... 5,507 3,497 3,707 3,721 3,186 2,947 2,731
Long-term debt............................. 3,789 3,900 3,908 2,101 887 430 507
Shareholders' equity....................... 2,908 2,714 2,737 2,661 2,487 2,212 1,966
CONSOLIDATED RATIOS:
Net interest margin (fully taxable
equivalent)(d)........................... 3.83% 3.92% 3.92% 4.05% 4.26% 4.21% 4.28%
Return on average assets(d)................ 1.36 1.31 1.28(a) 1.51 1.28(b) 1.04(c) 1.17
Return on average common shareholders'
equity(d)................................ 17.84 16.39 16.17(a) 17.50 14.92(b) 12.95(c) 15.49
Average shareholders' equity to average
assets................................... 7.63 7.97 7.92 8.60 8.61 8.12 7.63
Tier 1 risk-based capital ratio............ 9.08 9.59 9.46 10.86 12.64 11.68 11.32
Total risk-based capital ratio............. 10.51 11.35 11.06 12.72 14.83 14.17 13.87
Period-end reserve for credit losses to
period-end loans and leases, net of
unearned income.......................... 1.32 1.45 1.42 1.53 1.57 1.61 1.79
Net charge-offs to average loans and
leases, net of unearned income(d)........ .37 .72 .61 .23 .29 .50 .70
Period-end nonperforming assets to
period-end loans and leases, net of
unearned income, and other real estate
owned.................................... .56 .41 .46 .42 .53 .95 1.36
</TABLE>
------------------------------
(a) Includes impact of business realignment restructuring charges ($28 million
pre-tax, $17 million post-tax) recorded in the fourth quarter of 1999.
(b) Includes impact of merger-related restructuring charges ($83 million
pre-tax, $54 million post-tax) recorded in 1997.
(c) Includes impact of merger-related restructuring charge ($111 million
pre-tax, $70 million post-tax) and one-time Savings Association Insurance
Fund assessment ($11 million pre-tax, $7 million post-tax) recorded in 1996.
(d) Ratios for the nine-month periods are annualized.
11
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED SELECTED FINANCIAL DATA OF FLEETBOSTON
AND SUMMIT
The following unaudited pro forma condensed combined selected financial data
combines FleetBoston's historical results with Summit's historical results, in
each case, as of or for the nine months ended September 30, 2000 and 1999 and
the fiscal years ended December 31, 1999, 1998 and 1997, and, in each case,
giving effect to the merger as if it had occurred on the last day of the period,
in the case of balance sheet data, and on January 1 of the applicable period in
the case of income statement data.
We expect that we will incur merger and restructuring expenses as a result
of combining our companies. These expenses are described under "Management and
Operations After the Merger--Operations" on page 54. We also anticipate that the
merger will provide the combined company with financial benefits that include
reduced operating expenses. The pro forma information, while helpful in
illustrating the financial characteristics of the combined company under one set
of assumptions, does not reflect these anticipated expenses and financial
benefits and, accordingly, does not attempt to predict or suggest future
results, nor does it include the effects of any divestitures that may be
required by regulatory authorities.
See "Where You Can Find More Information" on page 81.
12
<PAGE>
The management of FleetBoston and Summit may adjust the pro forma
information included in this document as a result of their review of accounting
classifications and underlying accounting policies. The management of
FleetBoston and Summit do not expect any adjustments to be material.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------------- ------------------------------------
2000 1999 1999 1998 1997
---------- ---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PRO FORMA CONSOLIDATED SUMMARY OF OPERATIONS:
Interest income (fully taxable equivalent).......... $ 12,321 $ 11,457 $ 15,475 $ 14,587 $ 13,398
Interest expense.................................... 6,287 5,403 7,399 6,947 6,047
---------- ---------- ---------- ---------- ----------
Net interest income (fully taxable equivalent)...... 6,034 6,054 8,076 7,640 7,351
Provision for credit losses......................... 981 798 1,061 916 581
---------- ---------- ---------- ---------- ----------
Net interest income after provision for credit
losses............................................ 5,053 5,256 7,015 6,724 6,770
Noninterest income.................................. 7,564 5,300 7,371 5,631 4,508
Noninterest expense................................. 7,484 6,657 10,235 7,833 6,867
Net income.......................................... $ 3,033 $ 2,405 $ 2,481 $ 2,790 $ 2,617
PRO FORMA PER COMMON SHARE:
Basic............................................... $ 2.78 $ 2.15 $ 2.21 $ 2.49 $ 2.33
Diluted............................................. 2.73 2.10 2.16 2.44 2.28
Weighted average basic shares outstanding (in
thousands)........................................ 1,080,669 1,096,932 1,095,740 1,094,700 1,081,072
Weighted average diluted shares outstanding
(in thousands).................................... 1,099,741 1,122,907 1,121,488 1,119,721 1,105,029
Book value.......................................... $ 16.65 $ 15.95
Cash dividends declared (a)......................... .90 $ .81 1.11 $ 1.00 $ .92
PRO FORMA CONSOLIDATED BALANCE SHEET--AVERAGE
BALANCES:
Total assets........................................ $ 225,838 $ 221,176 $ 223,340 $ 201,163 $ 180,769
Securities.......................................... 35,098 35,040 35,185 31,141 26,970
Loans and leases, net of unearned income............ 140,384 138,409 139,392 130,810 120,821
Interest-bearing deposit liabilities................ 103,248 109,850 109,507 106,192 100,285
Short-term borrowings............................... 26,479 26,534 26,816 25,390 20,313
Long-term debt...................................... 30,700 25,211 26,198 13,063 8,880
Shareholders' equity................................ 17,926 17,335 17,504 16,335 14,675
PRO FORMA CONSOLIDATED RATIOS:
Net interest margin (fully taxable equivalent)(b)... 4.18% 4.21% 4.18% 4.34% 4.61%
Return on average assets(b)......................... 1.80 1.45 1.11 1.39 1.45
Return on average common shareholders' equity(b).... 23.15 18.91 14.46 17.62 18.82
Average shareholders' equity to average assets...... 7.94 7.84 7.84 8.12 8.12
Tier 1 risk-based capital ratio..................... 7.80 7.13
Total risk-based capital ratio...................... 11.74 11.43
Period-end reserve for credit losses to period-end
loans and leases, net of unearned income.......... 2.05 2.00 1.97 1.97 1.95
Net charge-offs to average loans and leases, net of
unearned income(b)................................ .88 .74 .74 .67 .59
Period-end nonperforming assets to period-end loans
and leases, net of unearned income and other real
estate owned...................................... .86 .62 .66 .58 .69
</TABLE>
------------------------------
(a) Pro forma cash dividends declared represent FleetBoston's historical cash
dividends declared.
(b) Ratios for the nine-month periods are annualized.
13
<PAGE>
SUMMIT SPECIAL MEETING
GENERAL
This proxy statement-prospectus is first being mailed by Summit to the
holders of Summit common stock, on or about January , 2001, and is accompanied
by the notice of the special meeting and a form of proxy that is solicited by
the board of directors of Summit for use at the special meeting, to be held on
Monday, February 26, 2001, at 4:30 p.m., local time, at the Hilton East
Brunswick, Three Tower Center Boulevard, East Brunswick, New Jersey, and at any
adjournments or postponements of that meeting.
MATTERS TO BE CONSIDERED
The purpose of the Summit special meeting is to approve the merger agreement
and any other matters that may be properly submitted to a vote at the special
meeting. At this time, the Summit board of directors is unaware of any matters
other than approval of the merger agreement that may be presented for action at
the special meeting.
HOW TO VOTE YOUR SHARES
Shareholders of record may vote by telephone, the Internet or mail or by
attending the special meeting and voting in person. If you plan to attend the
special meeting, please so indicate when you submit your proxy and please refer
to the back cover for directions to the special meeting site and for important
information regarding procedures for being admitted to the special meeting.
- VOTING BY TELEPHONE: You can vote your shares by telephone by calling the
toll-free telephone number on your proxy card. Telephone voting is available
24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and
confirm that your instructions have been properly recorded. Our telephone
voting procedures are designed to authenticate shareholders by using
individual control numbers. IF YOU VOTE BY TELEPHONE, YOU DO NOT NEED TO
RETURN YOUR PROXY CARD.
- VOTING VIA THE INTERNET: You can vote via the Internet by accessing the web
site listed on your proxy card and following the instructions you will find on
the web site. Internet voting is available 24 hours a day. As with telephone
voting, you will be given the opportunity to confirm that your instructions
have been properly recorded. IF YOU VOTE VIA THE INTERNET, YOU DO NOT NEED TO
RETURN YOUR PROXY CARD.
- VOTING BY MAIL: If you choose to vote by mail, simply mark the enclosed white
proxy card, date and sign it, and return it to Equiserve, First Chicago Trust
Division, in the postage-paid envelope provided.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted. Each proxy submitted will be voted
as directed; however, if you sign, date and return your proxy card by mail
without specifying how your shares are to be voted, your shares will be voted
FOR the merger.
You may revoke your proxy at any time before it is exercised by any of the
following means:
- submitting to the Secretary of Summit written notice of revocation;
- submitting a new proxy with a later date by telephone, the Internet or
mail; or
- attending the special meeting and electing to vote in person.
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Written notices of revocation and other communications with respect to the
revocation of Summit proxies should be addressed to:
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, New Jersey 08543-2066
Attention: Corporate Secretary
At this time, the Summit board of directors is unaware of any matters other
than approval of the merger agreement that may be presented for action at the
special meeting. If other matters do properly come before the special meeting,
however, the shares represented by proxies will be voted, or not voted, in the
discretion of the persons named in the proxies. However, proxies that indicate a
vote against approval of the merger agreement will not be voted in favor of any
adjournment or postponement of the special meeting to solicit additional proxies
to approve the merger agreement.
SOLICITATION OF PROXIES
Summit will bear the entire cost of soliciting proxies from Summit
shareholders, except that each of FleetBoston and Summit has agreed to pay
one-half of the costs of printing and mailing this proxy statement-prospectus
and related proxy materials. In addition to the solicitation of proxies by mail,
Summit will request that banks, brokers and other record holders send proxies
and proxy material to the beneficial owners of stock held by them and secure
their voting instructions, if necessary. Summit will reimburse those record
holders for their reasonable expenses in so doing. Summit has also made
arrangements with Georgeson Shareholder Communications, Inc. to assist it in
soliciting proxies from banks, brokers and nominees, and has agreed to pay
approximately $10,000 plus expenses for those services. Summit may also use its
regular employees, who will not be specially compensated, to solicit proxies
from Summit shareholders, either personally or by mail, telephone, telegram,
facsimile or other electronic methods.
RECORD DATE AND VOTING RIGHTS
In accordance with the provisions of the New Jersey Business Corporation
Act, the Summit by-laws and the rules of the New York Stock Exchange, Summit has
fixed January 9, 2001 as the record date for determining those Summit
shareholders entitled to notice of, and to vote at, the Summit special meeting.
Accordingly, only Summit shareholders of record at the close of business on the
record date will be entitled to notice of and to vote at the Summit special
meeting. At the close of business on the record date, there were 175,721,433
shares of Summit common stock outstanding held by approximately 26,953 holders
of record. The presence, in person or by proxy, of shares of Summit common stock
representing a majority of those shares outstanding and entitled to vote on the
record date is necessary to constitute a quorum at the Summit special meeting.
Each share of Summit common stock outstanding on the record date entitles its
holder to one vote. The affirmative vote of at least a majority of the votes
cast at the special meeting is required in order to approve the merger
agreement.
For purposes of determining the number of votes cast with respect to a
matter, only those votes cast "for" and "against" a proposal are counted.
"Broker non-votes", if any are submitted by brokers or nominees in connection
with the special meeting, will not be counted as votes "for" or "against" for
purposes of determining the number of votes cast but will be treated as present
for quorum purposes. "Broker non-votes" are shares held by brokers or nominees
as to which voting instructions have not been received from the beneficial
owners or the persons entitled to vote those shares and the broker or nominee
does not have discretionary voting power under the applicable New York Stock
Exchange rules. Abstentions will be treated as shares that are present for
purposes of determining the presence of a quorum but will not be counted "for"
or "against" a proposal.
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As of the record date, directors and executive officers of Summit and their
affiliates owned approximately 4,055,759 shares of Summit common stock
(including shares of Summit common stock held by Summit executive officers in
Summit's Savings Incentive Plan), entitling them to exercise approximately 2.31%
of the voting power of the Summit common stock entitled to vote at the Summit
special meeting. This ownership represents approximately 4.62% of the number of
shares of Summit common stock necessary to approve the merger agreement,
assuming that all of the shares of Summit common stock outstanding as of the
record date are voted at the Summit special meeting. We currently expect that
all directors and executive officers of Summit will vote the shares of Summit
common stock owned by them for approval of the merger agreement and the
transactions contemplated by the merger agreement. As of the record date,
directors and executive officers of FleetBoston owned no shares of Summit common
stock. As of the record date, the banking, trust and investment management
subsidiaries of Summit, as fiduciaries, custodians or agents, held a total of
7,193,157 shares of Summit common stock. These entities maintained sole or
shared voting power with respect to 6,138,839 shares of Summit common stock
(excluding shares of Summit common stock held by Summit directors, but including
3,944,807 shares of Summit common stock held in Summit's Savings Incentive Plan
for participants exclusive of Summit executive officers that Summit Bank, as
trustee, has the power to vote if no voting instructions have been received from
the relevant participants). As of the record date, FleetBoston held no shares of
Summit common stock. As of the record date, the banking and trust subsidiaries
of FleetBoston, as fiduciaries, custodians or agents, held a total of 183,451
shares, representing less than 1.0% of the shares entitled to vote at the
special meeting. These entities maintained sole or shared voting power with
respect to 181,526 of these shares.
More detailed information with respect to beneficial ownership of Summit
common stock by directors and executive officers of Summit is incorporated by
reference to the Annual Report on Form 10-K of Summit for the year ended
December 31, 1999. See "Where You Can Find More Information."
RECOMMENDATION OF THE SUMMIT BOARD OF DIRECTORS
The Summit board of directors has unanimously approved the merger agreement
and the transactions contemplated by the merger agreement. Based on Summit's
reasons for the merger described in this document, including Merrill Lynch's
fairness opinion, the Summit board of directors believes that the merger
agreement is in the best interests of Summit shareholders and recommends that
you vote "FOR" approval of the merger agreement. See "The Merger--Recommendation
of the Summit Board of Directors and Reasons for the Merger."
DIVIDEND REINVESTMENT PLAN AND SAVINGS INCENTIVE PLAN SHARES
If you participate in Summit's Dividend Reinvestment and Stock Purchase
Plan, you will receive a single proxy covering both the shares of Summit common
stock you hold in certificate form and the shares of common stock held in your
Dividend Reinvestment Plan account by the Dividend Reinvestment Plan
Administrator. The Dividend Reinvestment Plan shares cannot be voted in person
at the special meeting. If you do not vote your proxy by telephone, the Internet
or the mail, shares of common stock represented by the proxy, including any held
under the Dividend Reinvestment Plan, will not be voted.
Individuals who hold common stock through participation in Summit's Savings
Incentive Plan will receive a separate card for use in providing voting
instructions to the Savings Plan's Trustee. Full shares held by the Savings Plan
will be voted by the Trustee in accordance with instructions received from
participants. Full shares held by the Savings Plan for which no voting
instructions are received will be voted by the Trustee in its discretion as a
fiduciary.
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THE MERGER
THE FOLLOWING SUMMARY OF THE MATERIAL TERMS AND PROVISIONS OF THE MERGER
AGREEMENT AND THE RELATED STOCK OPTION AGREEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE MERGER AGREEMENT AND THE STOCK OPTION AGREEMENT, EACH OF WHICH
IS DATED AS OF OCTOBER 1, 2000, BETWEEN FLEETBOSTON AND SUMMIT. THE MERGER
AGREEMENT IS ATTACHED AS APPENDIX A TO THIS PROXY STATEMENT-PROSPECTUS. THE
STOCK OPTION AGREEMENT IS ATTACHED AS APPENDIX B TO THIS PROXY
STATEMENT-PROSPECTUS.
GENERAL
The FleetBoston board of directors and the Summit board of directors each
have unanimously approved the merger agreement providing for the merger of
Summit with and into FleetBoston. FleetBoston will be the surviving corporation
in the merger. We expect to complete the merger in March 2001. As a result of
the merger, each share of Summit common stock issued and outstanding at the
effective time of the merger will generally be converted into the right to
receive 1.02 shares of FleetBoston common stock, together with the preferred
stock purchase rights issued to FleetBoston shareholders pursuant to the
FleetBoston Rights Agreement, dated as of August 16, 2000, by and between
FleetBoston and Equiserve, LP, as rights agent. The merger agreement provides
for a fixed 1.02 exchange ratio and does not provide for any adjustment to the
exchange ratio as a result of changes in the market price of FleetBoston common
stock.
This section of the proxy statement-prospectus describes the material terms
of the merger agreement and the stock option agreement.
BACKGROUND OF THE MERGER
The board of directors of Summit has annually reviewed the company's
strategy and prospects at a multiday retreat, in addition to discussions at
regular board meetings, as part of its on-going corporate governance
responsibilities. Starting in February of 2000, the board of directors
intensified its study of strategic alternatives.
Special meetings and executive sessions of the board of directors were held
in May, June, July and August 2000 to discuss Summit's options, both as an
independent company and as a party to a business combination transaction. At
these meetings, management made presentations to the board of directors
concerning stock valuations, balance sheet strategies and approaches to
increasing shareholder value and income, especially noninterest income. At its
August 16, 2000 meeting, the board of directors requested management to contact
an investment banker to informally test the market for interest in a potential
acquisition of the company.
Senior management met with Merrill Lynch on September 5, 2000 to discuss the
solicitation of proposals for the possible acquisition of Summit by another bank
or financial services company. Subsequent to that meeting, Merrill Lynch
contacted eleven domestic and foreign financial institutions that it believed
might be interested in a transaction with Summit and that potentially offered a
strong strategic fit with the company. Merrill Lynch also contacted a number of
non-bank financial services companies to test their potential interest in
acquiring a regional banking company. As a result of these contacts, on
September 21, 2000, three financial institutions, including FleetBoston,
submitted non-binding indications of interest in an acquisition of Summit.
On September 25, 2000, at the annual board retreat, senior management and
representatives of Merrill Lynch made presentations to the board of directors
relating to Summit's future prospects as an independent entity, a likely range
of acquisition prices and the three indications of interest. The board
determined that the FleetBoston indication of interest appeared to be the most
attractive based on the valuation range indicated by FleetBoston and the
strategic fit of the two companies. Based on this determination, the board of
directors authorized management to explore the sale of the company and
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<PAGE>
to enter into exclusive negotiations with FleetBoston for a specified period of
time. Merrill Lynch was formally retained to act as Summit's financial advisor
in connection with this process.
After the September 25, 2000 board meeting, representatives of the parties
reached preliminary agreement on an exchange ratio for the merger, subject to,
among other things, the completion of due diligence, reaching agreement
regarding the stock option grant to FleetBoston, the negotiation of definitive
agreements and the approval of their respective boards of directors. Shortly
after reaching that preliminary agreement, Mr. T. Joseph Semrod, Chairman,
President and Chief Executive Officer of Summit, contacted Mr. Terrence Murray,
Chairman and Chief Executive Officer of FleetBoston, to inform him that Summit
had determined to enter into definitive negotiations and to commence mutual due
diligence investigations. Later that day, FleetBoston and Summit entered into a
customary confidentiality agreement with respect to the exchange of information
in connection with their respective due diligence investigations and the
negotiations. At the same time, the legal advisors of FleetBoston and Summit
commenced drafting definitive documentation with respect to a possible merger of
the two companies.
Between September 27 and September 30, 2000, FleetBoston and Summit,
together with their legal and financial advisors, negotiated and finalized the
terms of the merger agreement and the stock option agreement and completed
mutual due diligence investigations. Also during that time, at FleetBoston's
request, FleetBoston and Messrs. Semrod and Collins negotiated the employment
arrangements described under "--Interests of Certain Persons in the Merger."
On October 1, 2000, the FleetBoston board of directors met and approved the
merger agreement and the related agreements and the transactions contemplated by
those agreements.
Also on October 1, 2000, the Summit board of directors held a special
meeting to consider the proposed merger. Senior management of Summit reviewed
with the board of directors its discussions and negotiations with FleetBoston,
as well as the results of its due diligence investigation. Senior management of
Summit and representatives of Merrill Lynch presented to the board of directors
financial information with respect to both FleetBoston and the potential
transaction. Merrill Lynch rendered its oral opinion (which was subsequently
confirmed in writing) that, as of that date, the 1.02 exchange ratio set forth
in the merger agreement was fair to the Summit shareholders from a financial
point of view. Representatives of Weil, Gotshal & Manges LLP reviewed with the
board of directors the terms of the merger agreement and the stock option
agreement and the legal standards applicable to the board's decision to approve
those agreements and the transactions contemplated thereby. The board was also
informed of the principal terms of the employment agreements discussed under
"--Interests of Certain Persons in the Merger." After questions by and
discussion among the members of the Summit board, and after consideration of the
factors described under "--Recommendation of the Summit Board of Directors and
Reasons for the Merger," the Summit board voted unanimously to approve the
merger agreement and the transactions contemplated by the merger agreement,
including the merger and the stock option agreement.
FleetBoston and Summit entered into the merger agreement and the stock
option agreement during the evening of October 1, 2000. The employment
agreements of Messrs. Semrod and Collins were also entered into at that time.
Later that night, FleetBoston and Summit issued a joint press release announcing
the proposed merger.
RECOMMENDATION OF THE SUMMIT BOARD OF DIRECTORS AND REASONS FOR THE MERGER
THE SUMMIT BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF SUMMIT AND ITS SHAREHOLDERS. ACCORDINGLY, THE SUMMIT BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT SUMMIT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
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In reaching its decision to approve the merger agreement and the stock
option agreement, the Summit board of directors consulted with management of
Summit, as well as with its financial and legal advisors, and considered a
variety of factors, including the following:
- The Summit board's knowledge of the business, operations, financial
condition, earnings and prospects of Summit;
- The business, operations, financial condition, earnings and prospects of
FleetBoston. In making this determination, the Summit board took into
account the results of Summit's due diligence review of FleetBoston;
- The Summit board's knowledge and analysis of the current environment in
the financial services industry, including continued consolidation,
evolving trends in technology and increasing nationwide competition;
- The exchange ratio of 1.02, which represented a 16% premium over the
closing price of Summit common stock on September 29, 2000 and a 45%
premium over the average closing price of Summit common stock for the 30
trading days preceding the Summit board of directors' approval of the
merger agreement;
- The fact that the merger is intended to qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code, which
means that Summit shareholders generally will not recognize gain or loss
for U.S. federal income tax purposes as a result of their exchange of
shares in the merger (except for cash received in lieu of fractional
shares);
- The opinion of Merrill Lynch to the Summit board of directors that, based
on and subject to the considerations set forth in its opinion, the 1.02
exchange ratio was fair from a financial point of view to Summit
shareholders;
- The complementary nature of the businesses of Summit and FleetBoston and
the anticipated improved stability of FleetBoston's businesses and
earnings in varying economic and market climates relative to Summit on a
stand-alone basis as a result of substantially greater geographic, asset
and line-of-business diversification;
- The Summit board's belief that a combination of Summit and FleetBoston
will enhance the combined company's ability to compete effectively,
particularly in the New Jersey and Philadelphia, Pennsylvania markets;
- The effect of the merger on Summit's constituencies, including its
customers, employees and the communities served by it. In this regard, the
Summit board noted FleetBoston's agreement to continue Summit's community
commitments following completion of the merger. The Summit board also
noted that there would likely be job reductions resulting from the merger
and that the merger agreement contained protective severance commitments
from FleetBoston;
- The Summit board's belief that the merger presents manageable execution
risk in view of the similar markets and customer demographics served by
Summit and FleetBoston, the similar business lines and business cultures
of the two companies and the prior experiences of both Summit and
FleetBoston in integrating acquisitions;
- The likelihood that the merger will be approved by the appropriate
regulatory authorities;
- The fact that the merger is intended to be accounted for as a pooling of
interests;
- The fact that Messrs. Semrod and Collins entered into the employment
agreements described under "Interests of Certain Persons in the Merger"
and the fact Mr. Semrod and Mr. T. J. Dermot Dunphy, two of Summit's
current directors, will become directors of FleetBoston; and
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- The fact that certain of Summit's directors and executive officers have
interests in the merger that are in addition to their interests as Summit
shareholders. See "--Interests of Certain Persons in the Merger."
The Summit board of directors also considered that the 1.02 exchange ratio
is fixed and that there are no price "collar" protections that would limit the
risk of a decrease in the market value of the consideration you will receive in
the merger. The Summit board decided to proceed with a fixed exchange ratio and
without a price collar for the following reasons:
- its focus was on providing Summit shareholders with a specified percentage
ownership of the combined company rather than on the nominal premium at
the time of signing; while a fixed exchange ratio will mean that premiums
will vary between signing the merger agreement and completing the merger,
declines in FleetBoston's stock price will not reduce that percentage
ownership;
- it was advised by Merrill Lynch, and was generally familiar with the fact,
that collars are uncommon in merger agreements between major banking
institutions;
- it was advised by Merrill Lynch and it believed that FleetBoston was
unlikely to accept a collar without a reduction in the exchange ratio;
- collars are often reciprocal, meaning that Summit shareholders would be
limited in their ability to participate in the potential upside in
FleetBoston's stock price prior to completion of the merger; and
- the structure of most collars provide only limited protection against
downward price declines.
This discussion of the information and factors considered by the Summit
board of directors is not intended to be exhaustive, but it includes all
material factors considered by the Summit board of directors. In reaching its
determination to approve and recommend the merger, the Summit board of directors
did not assign any relative or specific weights to those factors, and individual
directors may have given differing weights to different factors. The Summit
board of directors is unanimous in its recommendation that Summit shareholders
vote for approval of the merger agreement.
OPINION OF SUMMIT'S FINANCIAL ADVISOR
Summit retained Merrill Lynch to act as its financial advisor in connection
with the merger. On October 1, 2000, the board of directors of Summit held a
meeting to evaluate the proposed merger. At this meeting, Merrill Lynch rendered
its oral opinion that, as of that date and based upon and subject to the factors
and assumptions set forth in its opinion, the 1.02 exchange ratio was fair, from
a financial point of view, to the Summit shareholders. Merrill Lynch
subsequently confirmed its opinion in writing as of October 1, 2000 [and updated
its opinion by delivering to the board of directors of Summit a written opinion
dated as of the date of this document. In connection with its updated written
opinion, Merrill Lynch confirmed the appropriateness of its reliance on the
analyses used to render its earlier opinion. It also performed procedures to
update certain of its analyses and reviewed the assumptions used in its analyses
and the factors considered in connection with its earlier opinion.]
Although Merrill Lynch evaluated the fairness, from a financial point of
view, of the 1.02 exchange ratio to the Summit shareholders, the exchange ratio
itself was determined through arm's length negotiations between Summit's senior
management and FleetBoston's senior management with the assistance of their
financial advisors. Summit did not provide specific instructions to, or place
any limitation on, Merrill Lynch with respect to the procedures to be followed
or factors to be considered by Merrill Lynch in performing its analyses or
providing its opinion.
The full text of the Merrill Lynch opinion, which describes, among other
things, the assumptions made, matters considered, and qualifications and
limitations on the review undertaken by Merrill Lynch
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is attached as Appendix C to this document and is incorporated in this document
by reference. Summit shareholders are urged to, and should, read Merrill Lynch's
opinion carefully and in its entirety.
Merrill Lynch's opinion is directed to the board of directors of Summit and
addresses only the fairness, from a financial point of view, of the 1.02
exchange ratio to Summit shareholders. The opinion does not address any other
aspect of the merger or any related transaction, nor does it constitute a
recommendation to any shareholder as to how to vote at the special meeting. The
summary of the fairness opinion set forth in this document is qualified in its
entirety by reference to the full text of the opinion.
In arriving at its opinion, Merrill Lynch, among other things:
- reviewed certain publicly available business and financial information
relating to Summit and FleetBoston that Merrill Lynch deemed to be
relevant;
- reviewed certain information, including financial forecasts, relating to
the respective businesses, earnings, assets, liabilities and prospects of
Summit and FleetBoston furnished to Merrill Lynch by the senior
managements of Summit and FleetBoston, as well as the amount and timing of
the cost savings and expenses expected to result from the merger furnished
to Merrill Lynch by senior management of FleetBoston;
- conducted discussions with members of senior management and
representatives of Summit and FleetBoston concerning the matters described
in the bullet points set forth above, as well as their respective
businesses and prospects before and after giving effect to the merger and
the expected cost savings and merger-related expenses;
- reviewed the market prices and valuation multiples for Summit common stock
and FleetBoston common stock and compared them with those of certain
publicly traded companies that Merrill Lynch deemed to be relevant;
- reviewed the respective publicly reported financial condition and results
of operations of Summit and FleetBoston and compared them with those of
certain publicly traded companies that Merrill Lynch deemed to be
relevant;
- compared the proposed financial terms of the merger with the financial
terms of certain other transactions that Merrill Lynch deemed to be
relevant;
- participated in certain discussions among representatives of Summit and
FleetBoston and their financial and legal advisors with respect to the
merger;
- reviewed the pro forma impact of the merger;
- reviewed the merger agreement and the related stock option agreement
provided to Merrill Lynch; and
- reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary, including Merrill
Lynch's assessment of general economic, market and monetary conditions.
In rendering its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, or that was discussed with, or reviewed by or for Merrill Lynch,
or that was publicly available, and Merrill Lynch did not assume any
responsibility for independently verifying this information or undertake an
independent evaluation or appraisal of the assets or liabilities of Summit or
FleetBoston nor has Merrill Lynch been furnished any such evaluation or
appraisal.
Merrill Lynch is not an expert in the evaluation of allowances for loan
losses, and neither made an independent evaluation of the adequacy of the
allowances for loan losses of Summit or FleetBoston, nor reviewed any individual
credit files of Summit or FleetBoston or been requested to conduct such a
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review and, as a result, Merrill Lynch has assumed that the aggregate allowances
for loan losses for both Summit and FleetBoston are adequate to cover such
losses and will be adequate on a pro forma basis for the combined company. In
addition, Merrill Lynch did not assume any obligation to conduct, nor did
Merrill Lynch conduct, any physical inspection of the properties or facilities
of Summit or FleetBoston. With respect to the financial and operating
information, including, without limitation, financial forecasts, valuations of
contingencies and projections regarding under-performing or nonperforming
assets, net charge-offs, adequacy of reserves, future economic conditions and
information on the cost savings and expenses expected to result from the merger
furnished to or discussed with Merrill Lynch by Summit and FleetBoston, Merrill
Lynch assumed that the information was reasonably prepared and reflects the best
currently available estimates and judgments of the senior management of each of
Summit and FleetBoston as to the future financial and operating performance of
Summit, FleetBoston or the combined entity, as the case may be, and the expected
cost savings and merger-related expenses. Merrill Lynch's opinion is necessarily
based upon market, economic and other conditions as in effect on, and on the
information made available to Merrill Lynch as of, the date of its opinion.
For purposes of rendering its opinion, Merrill Lynch assumed that, in all
respects material to its analyses:
- the merger will be completed substantially in accordance with the terms
set forth in the merger agreement;
- the representations and warranties of each party in the merger agreement
and in all related documents and instruments referred to in the merger
agreement are true and correct;
- each party to the merger agreement and all related documents will perform
all of the covenants and agreements required to be performed by such party
under the merger agreement and any related documents;
- all conditions to the completion of the merger will be satisfied without
any waivers; and
- in the course of obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the merger, no restrictions,
including any divestiture requirements or amendments or modifications,
will be imposed that will have a material adverse effect on the future
results of operations or financial condition of Summit, FleetBoston or the
combined entity or the contemplated benefits of the merger, including the
cost savings and expenses expected to result from the merger.
Merrill Lynch also assumed that the merger will be accounted for as a
pooling of interests under U.S. generally accepted accounting principles (which
we refer to in this document as "GAAP") and that it will qualify as a tax-free
reorganization for U.S. federal income tax purposes. Merrill Lynch's opinion is
not an expression of an opinion as to the prices at which shares of Summit
common stock or shares of FleetBoston common stock will trade following the
announcement of the merger or the prices at which the shares of common stock of
FleetBoston will trade following the completion of the merger.
ANALYSES OF MERRILL LYNCH
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Merrill Lynch, Summit and FleetBoston. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by these analyses. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
those businesses or securities might actually be sold. Accordingly, these
analyses and estimates are inherently subject to substantial uncertainty. The
Merrill Lynch opinion was among several factors taken into consideration by the
board of directors of Summit in making its determination to approve
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the merger agreement and the merger. In addition, the Summit board did not rely
on any single analysis in making its determination. Consequently, the analyses
described below should not be viewed as determinative of the decision of the
board of directors of Summit or management of Summit with respect to the
fairness of the 1.02 exchange ratio.
The following is a summary of the material financial analyses presented by
Merrill Lynch to the board of directors of Summit on October 1, 2000 in
connection with the rendering of its oral opinion on that date. The summary is
not a complete description of the analyses underlying the Merrill Lynch opinion
or the presentation made by Merrill Lynch to the board of directors of Summit,
but summarizes the material analyses performed and presented in connection with
its opinion. The preparation of a fairness opinion is a complex analytic process
involving various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances. Therefore, a fairness opinion is not readily susceptible to
partial analysis or summary description.
In arriving at its opinion, Merrill Lynch did not attribute any particular
weight to any analysis or factor that it considered, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor. The
financial analyses summarized below include information presented in tabular
format. Accordingly, Merrill Lynch believes that its analyses and the summary of
its analyses must be considered as a whole and that selecting portions of its
analyses and factors or focusing on the information presented below in tabular
format, without considering all analyses and factors or the full narrative
description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete
view of the process underlying its analyses and opinion. The tables alone do not
constitute a complete description of the financial analyses.
The following table sets forth the implied hypothetical value for each share
of Summit common stock or FleetBoston common stock, as the case may be, derived
from the analyses indicated, all of which are described in greater detail below.
The additional analyses of Merrill Lynch that are described below but are not
included in the table were not intended to be used to derive implied per share
equity values.
<TABLE>
<CAPTION>
IMPLIED EQUITY
VALUATION METHODOLOGY VALUE RANGE
--------------------- --------------
<S> <C>
Historical Trading Range Analyses--Summit common stock...... $39.78-$41.74
Summit Discounted Dividend Analyses (stand-alone)--Summit
common stock.............................................. 26.21- 33.42
FleetBoston Discounted Dividend Analyses (stand-alone)
--FleetBoston common stock................................ 38.90- 48.47
Pro Forma Discounted Dividend Analyses
--FleetBoston common stock................................ 41.73- 51.63
--Summit common stock..................................... 42.57- 52.67
Imputed Valuation Analyses--Summit common stock............. 26.67- 45.05
</TABLE>
On September 29, 2000 (the last trading day preceding the October 1, 2000
board meeting), the implied value of the exchange ratio was $39.78 per share of
Summit common stock based upon the closing market price of FleetBoston common
stock of $39.00 on that date. On January , 2001, the implied value of the
exchange ratio was $[ ] per share of Summit common stock based upon the
closing market price of FleetBoston common stock of $[ ] on that date.
CALCULATION OF TRANSACTION VALUE OF THE EXCHANGE RATIO. Merrill Lynch
reviewed the terms of the merger. It noted that the exchange ratio of 1.02
shares of FleetBoston common stock for each share of Summit common stock had an
implied offer value of $39.78 per share of Summit common stock based upon the
closing price of FleetBoston common stock of $39.00 on September 29, 2000 (the
last trading
23
<PAGE>
day preceding the Summit board meeting of October 1, 2000), and an implied value
of $41.37 per share of Summit common stock based upon the closing price of
FleetBoston common stock of $40.56 on September 25, 2000 (the date of the Summit
board meeting immediately preceding the board meeting of October 1, 2000).
Merrill Lynch also noted that the transaction had an implied aggregate value of
approximately $7.0 billion as of September 29, 2000 and approximately
$7.3 billion as of September 25, 2000.
TRANSACTION PRICING MULTIPLES. Based on an exchange ratio of 1.02 and the
per share closing price of FleetBoston common stock on September 29, 2000 of
$39.00 and on September 25, 2000 of $40.56, Merrill Lynch also analyzed the
implied hypothetical transaction value to Summit of $39.78 per share as of
September 29, 2000 and $41.37 per share as of September 25, 2000 as a premium to
Summit's per share closing stock price on those dates. Merrill Lynch also
analyzed the implied hypothetical transaction value as a multiple of Summit's
last twelve months diluted earnings per share, Summit's estimated earnings per
share for the years 2000 and 2001 (based on consensus First Call earnings
estimates as of September 29, 2000 of $3.00 and $3.25, respectively), and
Summit's stated book value and its stated tangible book value (based on
financial data for the period ended June 30, 2000), in each case for both of the
dates mentioned. First Call is a recognized data service that monitors and
publishes compilations of earnings estimates by selected research analysts
regarding companies of interest to institutional investors.
Merrill Lynch also compared the foregoing analyses to comparable data
achieved in selected domestic merger transactions in the banking industry that
have occurred since December 31, 1999 and that were valued at greater than
$1 billion. The following transactions were reviewed by Merrill Lynch in this
process (in each case, the first named company is the acquiror and the second
named company is the acquired company in the transaction): M&T Bank
Corporation/Keystone Financial, Inc., Wells Fargo & Company/First Security
Corporation, and BB&T Corporation/One Valley Bancorp, Inc. Merrill Lynch
considered the earlier transactions to be reasonably similar to the merger, but
none of the transactions are identical to the merger.
The analyses performed by Merrill Lynch indicated that the per share
transaction value as a premium to the closing price of Summit common stock on
September 29, 2000 was 15.7% and to the closing price of Summit common stock on
September 25, 2000 was 49.1%, whereas the average premium in the transactions
selected by Merrill Lynch was 29.7% as measured on the announcement date of
those transactions.
Merrill Lynch's analyses also indicated that the per share transaction value
as a multiple of Summit's last twelve months fully diluted earnings per share
would be 14.9x as of September 29, 2000 and 15.5x as of September 25, 2000, as
compared to the corresponding multiple for the transactions selected by Merrill
Lynch of 12.5x. Merrill Lynch's analyses further indicated that the transaction
value as a multiple of Summit's estimated earnings per share in 2000 would be
13.3x as of September 29, 2000 and 13.8x as of September 25, 2000. Merrill
Lynch's analyses also indicated that the transaction value as a multiple of
Summit's estimated earnings per share in 2001 would be 12.2x as of
September 29, 2000 and 12.7x as of September 25, 2000, as compared to the
corresponding multiple for the transactions selected by Merrill Lynch of 11.7x.
The analysis also indicated that the per share transaction value as a multiple
of Summit's stated book value would be 2.4x as of September 29, 2000 and 2.5x as
of September 25, 2000, as compared to the corresponding multiple for the
transactions selected by Merrill Lynch of 1.8x. Merrill Lynch's analyses further
indicated that the per share transaction value as a multiple of Summit's stated
tangible book value would be 2.9x as of September 29, 2000 and 3.0x as of
September 25, 2000, as compared to the corresponding multiple for the
transactions selected by Merrill Lynch of 2.1x. For the transactions selected by
Merrill Lynch, the comparable data used was taken as of the announcement date of
those transactions.
24
<PAGE>
HISTORICAL TRADING RANGE ANALYSIS. Based on an exchange ratio of 1.02 and
the per share closing price of FleetBoston common stock of $39.00 on
September 29, 2000 (the last trading day preceding the October 1, 2000 board
meeting), and of $40.56 on September 25, 2000 (the date of the Summit board
meeting immediately preceding the October 1, 2000 board meeting), Merrill Lynch
also reviewed the historical trading price of FleetBoston common stock for
different periods during the thirty-day period prior to September 29, 2000 to
determine the implied per share offer value of the transaction to Summit
shareholders and the implied premium to the price of Summit common stock for
such periods. The following table indicates the implied per share offer value of
the transaction to Summit shareholders and the implied premium to the price of
Summit common stock for the periods listed.
<TABLE>
<CAPTION>
IMPLIED VALUE TO IMPLIED PREMIUM TO
SUMMIT SUMMIT PRICE
---------------- ------------------
<S> <C> <C>
FleetBoston Closing Price: September 29,
2000....................................... $39.78 16%
FleetBoston Closing Price: September 25,
2000....................................... 41.37 49
Five-day trading average..................... 40.07 24
Ten-day trading average...................... 40.42 34
Twenty-day trading average................... 41.74 41
Thirty-day trading average................... 41.69 45
</TABLE>
DISCOUNTED DIVIDEND ANALYSIS--SUMMIT. Merrill Lynch performed a discounted
dividend analysis to estimate a range of present values per share of Summit
common stock assuming Summit continued to operate as a stand-alone entity. This
range was determined by adding (1) the present value of the estimated future
dividend stream that Summit could generate through December 31, 2005, and
(2) the present value of the "terminal value" of Summit common stock.
In calculating a terminal value of Summit common stock, Merrill Lynch
applied multiples of 7.0x, 8.0x and 9.0x to year 2006 forecasted cash earnings.
The dividend stream and terminal value were then discounted back to
September 30, 2000 using discount rates of 13.0%, 14.0% and 15.0%, which rates
Merrill Lynch viewed as the appropriate range of discount rates for a company
with Summit's risk characteristics.
In performing this analysis, Merrill Lynch used First Call consensus
earnings per share estimates for 2000 and 2001 of $3.00 and $3.25, respectively.
For periods after 2000, earnings per share were assumed to increase at First
Call's estimated annual long-term earnings growth rate of 9.0%. Merrill Lynch
also assumed an annual asset growth rate of 5.0%, and further assumed that
earnings in excess of those necessary to maintain Summit's tangible common
equity ratio at 6.18% (the tangible common equity ratio of Summit at June 30,
2000) could be paid out as dividends. Based on the above assumptions, Merrill
Lynch determined that the stand-alone present value of the Summit common stock
ranged from $26.21 to $33.42 per share.
DISCOUNTED DIVIDEND ANALYSIS--FLEETBOSTON. Merrill Lynch also performed a
discounted dividend analysis to estimate a range of present values per share of
FleetBoston common stock assuming FleetBoston continued to operate as a
stand-alone entity. As was the analysis performed with regard to Summit, this
range was determined by adding (1) the present value of the estimated future
dividend stream that FleetBoston could generate through December 31, 2005, and
(2) the present value of the "terminal value" of FleetBoston common stock.
In calculating a terminal value of FleetBoston common stock, Merrill Lynch
applied multiples of 9.0x, 10.0x and 11.0x to year 2006 forecasted cash
earnings. The dividend stream and terminal value were then discounted back to
September 30, 2000 using discount rates of 13.0%, 14.0% and 15.0%, which rates
Merrill Lynch viewed as the appropriate range of discount rates for a company
with FleetBoston's risk characteristics.
25
<PAGE>
In performing this analysis, Merrill Lynch used First Call consensus
earnings per share estimates for 2000 and 2001 of $3.39 and $3.73, respectively.
For periods after 2001, earnings were assumed to increase at First Call's
estimated annual long-term earnings growth rate of 11.0%. Merrill Lynch also
assumed an annual asset growth rate of 5.0%, and further assumed that earnings
in excess of those necessary to maintain FleetBoston's tangible common equity
ratio at 6.19% (the tangible common equity ratio of FleetBoston at June 30,
2000) could be paid out as dividends. Based on the above assumptions, Merrill
Lynch determined that the stand-alone present value of the FleetBoston common
stock ranged from $38.90 to $48.47 per share.
PRO FORMA DISCOUNTED DIVIDEND ANALYSIS. Merrill Lynch also performed a pro
forma discounted dividend analysis to estimate a range of present values per
share of Summit common stock and FleetBoston common stock based on the pro forma
combined company. This range was determined by using the same valuation
methodology applied in the preceding six paragraphs in terms of calculating the
terminal value of the combined company and the discount rates applicable to that
value. Merrill Lynch also made the same assumptions as set forth in the
preceding six paragraphs, except that: (1) earnings estimates for pro forma
FleetBoston are based on First Call's Combined Estimates increased at 11.0%
after 2001; (2) cost savings are assumed to equal $150 million pre-tax in 2001
and $300 million pre-tax in 2002, with cost savings increasing at 11.0% annually
thereafter; (3) earnings in excess of those necessary to maintain pro forma
FleetBoston's tangible common equity ratio at 6.19% (the tangible common equity
ratio of FleetBoston at June 30, 2000) could be paid out to shareholders as
dividends; and (4) in calculating a terminal value of pro forma Summit common
stock and FleetBoston common stock, Merrill Lynch applied a multiple of 9.0x,
10.0x and 11.0x to year 2006 forecasted cash earnings.
Based on the above assumptions, the present value of pro forma FleetBoston
common stock ranged from $41.73 to $51.63 per share. Merrill Lynch then applied
the 1.02 exchange ratio to the pro forma discounted dividend values arrived at
per share of pro forma FleetBoston common stock to determine a range of present
values per share of Summit common stock, and determined that the present value
of the Summit common stock under this analysis, based on the exchange ratio,
ranged from $42.57 to $52.67 per share.
The analyses set forth in each of the preceding eight paragraphs do not
necessarily indicate actual values or actual future results and do not purport
to reflect the prices at which any securities may trade at the present or at any
time in the future. The discount rates applied to Summit and FleetBoston
referred to in these paragraphs were based on several factors, including Merrill
Lynch's knowledge of each of Summit and FleetBoston and the industry in which
they operate, the business risk of each company and the overall interest rate
environment as of October 1, 2000. The asset growth rates applied for Summit and
FleetBoston took into consideration several factors, including the historical
asset growth of each of Summit and FleetBoston as well as projected long-term
growth rates. Dividend discount analysis is a widely used valuation methodology,
but the results of this methodology are highly dependent upon the numerous
assumptions that must be made, including earnings growth rates, dividend payout
rates, terminal values and discount rates.
PEER GROUP STOCK TRADING MULTIPLE ANALYSIS--SUMMIT. Merrill Lynch compared
selected operating and stock market results of Summit to the publicly available
corresponding data for the following
26
<PAGE>
companies that Merrill Lynch determined were comparable to Summit, which are
regional banks with market capitalizations of between $3 billion and
$11 billion, excluding West Coast banks:
<TABLE>
<S> <C>
- BB&T Corporation - SouthTrust Banks, Inc.
- KeyCorp - Huntington Bancshares Incorporated
- Comerica Incorporated - Union Planters Corporation
- AmSouth Bancorporation - Old Kent Financial Corporation
- Regions Financial Corporation - M&T Bank Corporation
</TABLE>
The following table compares selected financial data of Summit with
corresponding mean data for the companies selected by Merrill Lynch, which data
is based on financial data at or for the three months ended June 30, 2000,
earnings estimates from First Call as of October 1, 2000, and market prices as
of September 29, 2000 (the last trading day preceding the October 1, 2000 board
meeting) and September 25, 2000 (the date of the Summit board meeting
immediately preceding the October 1, 2000 board meeting). The calculations of
price-to-2000 and price-to-2001 First Call estimated earnings per share are
based on estimated earnings per share calculated in accordance with GAAP. The
calculations of price-to-2000 and price-to-2001 First Call estimated cash
earnings per share are based on estimated earnings per share plus amortization
of intangible assets per share.
<TABLE>
<CAPTION>
FIRST CALL
PRICE/ PRICE/ PRICE/ PRICE/ PRICE/ PROJECTED
2000 2001 2000 2001 PRICE/ STATED FIVE-YEAR 2000 PRICE
ESTIMATED ESTIMATED ESTIMATED ESTIMATED STATED TANGIBLE EPS EARNINGS
GAAP GAAP CASH CASH BOOK BOOK GROWTH GROWTH
EPS EPS EPS EPS VALUE VALUE RATE RATIO
--------- --------- --------- --------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of September 29, 2000
Merrill Lynch Selected
Company Average............... 11.19x 10.18x 10.21x 9.35x 2.02x 2.57x 10.0% 114.1%
Summit.......................... 11.46 10.58 10.66 9.89 2.04 2.52 9.0 117.5
As of September 25, 2000
Merrill Lynch Selected
Company Average............... 11.10x 10.10x 10.13x 9.28x 2.01x 2.56x 10.0% 113.5%
Summit.......................... 9.25 8.54 8.60 7.99 1.64 2.04 9.0 94.9
</TABLE>
PEER GROUP STOCK TRADING MULTIPLE ANALYSIS--FLEETBOSTON. Merrill Lynch also
compared selected operating and stock market results of FleetBoston to the
publicly available corresponding data for the following companies that Merrill
Lynch determined were comparable to FleetBoston, which are regional banks with
market capitalizations greater than $11 billion:
<TABLE>
<S> <C>
- Bank of America Corporation - The PNC Financial Services Group, Inc.
- Wells Fargo & Company - U.S. Bancorp
- Bank One Corporation - SunTrust Banks, Inc.
- First Union Corporation - National City Bancorporation
- Fifth Third Bancorp - Wachovia Corporation
- Firstar Corporation
</TABLE>
The following table compares selected financial data of FleetBoston with
corresponding mean data for the companies selected by Merrill Lynch, which data
is based on financial data at or for the three months ended June 30, 2000,
earnings estimates from First Call as of October 1, 2000, and market prices as
of September 29, 2000 (the last trading day preceding the October 1, 2000 Summit
board
27
<PAGE>
meeting) and September 25, 2000 (the date of the Summit board meeting
immediately preceding the October 1, 2000 board meeting). The calculations of
price-to-2000 and price-to-2001 First Call estimated earnings per share are
based on estimated earnings per share calculated in accordance with GAAP. The
calculations of price-to-2000 and price-to-2001 First Call estimated cash
earnings per share are based on estimated earnings per share plus amortization
of intangible assets per share.
<TABLE>
<CAPTION>
FIRST CALL
PRICE/ PRICE/ PRICE/ PRICE/ PRICE/ PROJECTED
2000 2001 2000 2001 PRICE/ STATED FIVE-YEAR 2000 PRICE
ESTIMATED ESTIMATED ESTIMATED ESTIMATED STATED TANGIBLE EPS EARNINGS
GAAP GAAP CASH CASH BOOK BOOK GROWTH GROWTH
EPS EPS EPS EPS VALUE VALUE RATE RATIO
--------- --------- --------- --------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of September 29, 2000
Merrill Lynch Selected
Company Average............ 14.71x 13.02x 13.70x 12.19x 2.86x 3.91x 11.0% 132.8%
FleetBoston.................. 11.50 10.46 10.35 9.49 2.40 3.20 11.0 104.6
As of September 25, 2000
Merrill Lynch Selected
Company Average............ 14.18x 12.56x 13.20x 11.75x 2.76x 3.78x 11.0% 128.2%
FleetBoston.................. 11.97 10.87 10.77 9.88 2.50 3.33 11.0 108.8
</TABLE>
No company or transaction used in the comparable company analyses described
above is identical to Summit, FleetBoston, the pro forma combined company, or
the merger, as the case may be. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
financial and operating characteristics and other factors that could affect the
merger, public trading or other values of the companies to which they are being
compared. Mathematical analyses (such as determining the average or median) are
not of themselves meaningful methods of using comparable transaction data or
comparable company data.
IMPUTED VALUATION ANALYSIS. Merrill Lynch also analyzed certain multiples
achieved in selected domestic merger transactions in the banking industry that
have occurred since December 31, 1999 and that were valued at greater than
$1 billion to determine the imputed per share value of Summit common stock based
on the comparable multiples achieved in those transactions. The following
transactions were reviewed by Merrill Lynch in this process (in each case, the
first named company is the acquiror and the second named company is the acquired
company in the transaction): M&T Bank Corporation/Keystone Financial, Inc.,
Wells Fargo & Company/First Security Corporation, and BB&T Corporation/One
Valley Bancorp., Inc. These are the same transactions used in the transaction
pricing analysis described above. Merrill Lynch considered these transactions to
be reasonably similar to the merger, but none of the transactions are identical
to the merger. The following table sets forth the imputed per share value of
Summit common stock, based upon selected multiples achieved in the selected
transactions.
<TABLE>
<CAPTION>
PRICE/
PRICE/ PRICE/LAST PRICE/ ONE WEEK
PRICE/ TANGIBLE TWELVE MONTHS FORWARD PRIOR
BOOK VALUE BOOK VALUE EPS EPS MARKET PRICE
---------- ---------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C>
Merrill Lynch Selected
Transaction Average.................. 1.84x 2.11x 12.53x 11.65x 1.30x
Imputed Summit
Value Per Share...................... $31.12 $28.76 $32.82 $37.87 $36.00
</TABLE>
PRO FORMA FINANCIAL IMPACT. The following table sets forth Merrill Lynch's
analyses of the pro forma per share financial impact of the merger, based upon
an exchange ratio of 1.02, on (1) Summit's and FleetBoston's GAAP earnings per
share as projected by First Call for each of 2001 and 2002,
28
<PAGE>
(2) FleetBoston's book value per share, (3) FleetBoston's tangible book value
per share, and (4) Summit's dividend payments. The analyses with regard to
Summit's and FleetBoston's GAAP earnings per share for 2001 and 2002 was based
on consensus First Call earnings and earnings growth rate estimates and
estimated pre-tax cost savings of $150 million in 2001 and $300 million in 2002.
The analyses for FleetBoston's book value per share and tangible book value per
share includes the impact of an estimated merger- and restructuring-related
charge of $450 million pre-tax.
<TABLE>
<CAPTION>
2001 2002 PRO FORMA
ESTIMATED ESTIMATED PRO FORMA TANGIBLE
GAAP GAAP BOOK VALUE BOOK VALUE DIVIDEND
EPS EPS PER SHARE PER SHARE PAYMENTS
--------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Summit..................................... 16.6% 20.8% -- -- (11.2)%
FleetBoston................................ (.04) 1.3 (0.5)% 0.3% --
</TABLE>
The actual operating and financial results achieved by the pro forma
combined company may vary from projected results and variations may be material
as a result of business and operational risks, and the timing, amount and costs
associated with achieving cost savings, if any, as well as other factors.
Summit retained Merrill Lynch based upon its experience and expertise.
Merrill Lynch is an internationally recognized investment banking and advisory
firm. As part of its investment banking business, Merrill Lynch is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
In addition, in the ordinary course of its business, Merrill Lynch and its
affiliates may actively trade the debt and equity securities of Summit and its
affiliates and FleetBoston and its affiliates for their own account and/or the
accounts of their respective customers, and, accordingly, may at any time hold
long or short positions in these securities. During 1999 and 2000, Merrill Lynch
has provided to FleetBoston financial advisory, investment banking and other
services unrelated to the proposed merger, and has received approximately
$28.0 million from FleetBoston (including fees from BankBoston Corporation,
which merged with FleetBoston on October 1, 1999) as compensation for those
services. Merrill Lynch may provide these types of services to the combined
company in the future and receive fees for those services.
Pursuant to a letter agreement between Summit and Merrill Lynch, dated as of
September 25, 2000, Summit agreed to pay Merrill Lynch for financial advisory
services rendered through the closing of the merger (1) a fee of $5 million that
was paid upon the execution of the merger agreement, and (2) a fee of
$23 million payable in cash upon the closing of the merger. Summit also agreed,
among other things, to reimburse Merrill Lynch for certain expenses incurred in
connection with the services provided by Merrill Lynch, and to indemnify Merrill
Lynch and its affiliates from and against certain liabilities and expenses,
which may include certain liabilities under federal securities laws, in
connection with its engagement.
CHANGING THE METHOD OF EFFECTING THE COMBINATION
FleetBoston may at any time change the method of effecting the combination
of FleetBoston and Summit, including a change to provide for the merger of a
wholly-owned subsidiary of FleetBoston with and into Summit. However, no change
may (a) alter or change the amount or kind of consideration to be issued to
holders of the capital stock of Summit as provided for in the merger agreement,
(b) adversely affect the tax treatment of Summit shareholders as a result of
receiving the merger consideration or (c) materially impede or delay completion
of the transactions contemplated by the merger agreement.
CONVERSION OF STOCK
At the effective time of the merger, each share of Summit common stock
outstanding, other than the shares described in the following sentence, will be
converted into the right to receive 1.02 shares of FleetBoston common stock.
Shares of Summit common stock held by FleetBoston or Summit will be cancelled
and will not be converted into the right to receive FleetBoston common stock,
except for shares
29
<PAGE>
held, directly or indirectly, in trust accounts, managed accounts and the like,
or otherwise held in a fiduciary capacity, that are beneficially owned by third
parties or in respect of a debt previously contracted.
BECAUSE THE NUMBER OF SHARES OF FLEETBOSTON COMMON STOCK YOU WILL RECEIVE IN
THE MERGER IS FIXED, THE VALUE OF THE CONSIDERATION YOU WILL RECEIVE IN THE
MERGER WILL FLUCTUATE AS THE PRICE OF FLEETBOSTON COMMON CHANGES.
If the outstanding shares of Summit common stock or FleetBoston common stock
are changed in number or kind prior to the effective time of the merger due to a
change in capitalization such as a stock split, stock dividend, recapitalization
or similar event, an appropriate and proportionate adjustment will be made to
the 1.02 exchange ratio.
TREATMENT OF OPTIONS
At the effective time of the merger, each stock option granted by Summit to
purchase shares of Summit common stock which is outstanding and unexercised
immediately prior to the effective time will cease to represent a right to
acquire shares of Summit common stock and instead will be converted
automatically into a stock option to purchase common stock of FleetBoston.
FleetBoston will assume the Summit stock plans. In each case, the number of
shares of FleetBoston common stock subject to the converted stock option will be
equal to the product of the number of shares of Summit common stock subject to
the Summit stock option and the 1.02 exchange ratio, rounded to the nearest
whole share. The exercise price per share of FleetBoston common stock subject to
the new FleetBoston stock option will be equal to the exercise price per share
of Summit common stock under the Summit stock option divided by the exchange
ratio, rounded to the nearest whole cent. The duration and other terms of the
converted stock options will be the same as the prior Summit stock option. In
any event, stock options that are incentive stock options under the Internal
Revenue Code will be adjusted in the manner prescribed by the Internal Revenue
Code.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
At or prior to the effective time of the merger, FleetBoston will deposit,
or cause to be deposited, with a subsidiary of FleetBoston, or another bank or
trust company reasonably acceptable to both FleetBoston and Summit, certificates
representing the shares of FleetBoston common stock and cash in lieu of any
fractional shares to be issued pursuant to the merger agreement, in exchange for
outstanding shares of Summit common stock. That subsidiary or other bank or
trust company will act as the exchange agent for the benefit of the holders of
certificates of Summit common stock.
As soon as practicable after the effective time, the exchange agent will
mail to each Summit shareholder a form of transmittal letter. This transmittal
letter will contain instructions with respect to the surrender of certificates
representing Summit common stock.
PLEASE DO NOT SEND US ANY STOCK CERTIFICATES NOW -- WE WILL SEND YOU WRITTEN
INSTRUCTIONS ON HOW TO SURRENDER YOUR SUMMIT STOCK CERTIFICATES FOR NEW
FLEETBOSTON STOCK CERTIFICATES AFTER WE COMPLETE THE MERGER.
Until you surrender your Summit stock certificates for exchange after the
effective time, dividends and other distributions declared after the effective
time with respect to FleetBoston common stock into which your shares have been
converted will accrue but will not be paid until you have surrendered your
certificates. Once you surrender your certificates, FleetBoston will pay any
unpaid dividends or other distributions, without interest. After the effective
time, there will be no transfers on the stock transfer books of Summit of shares
of Summit common stock issued and outstanding immediately prior to the effective
time. If certificates representing shares of Summit common stock are presented
after the effective time, they will be cancelled and exchanged for certificates
representing the applicable number of shares of FleetBoston common stock.
30
<PAGE>
No fractional shares of FleetBoston common stock will be issued to any
holder of Summit common stock upon completion of the merger. For each fractional
share that would otherwise be issued, FleetBoston will pay cash in an amount
equal to the fraction of a share of FleetBoston common stock to which the holder
would otherwise be entitled to receive multiplied by the average of the
closing-sale prices of FleetBoston common stock on the New York Stock Exchange
Composite Transactions Tape as reported by THE WALL STREET JOURNAL for the five
trading days immediately preceding the date of the effective time. No interest
will be paid or accrued on cash payable in lieu of fractional shares.
None of FleetBoston, Summit, the exchange agent or any other person will be
liable to any former holder of Summit common stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
If a certificate for Summit common stock has been lost, stolen or destroyed,
the exchange agent will issue the consideration properly payable under the
merger agreement upon receipt of appropriate evidence as to that loss, theft or
destruction, appropriate evidence as to the ownership of that certificate by the
claimant, and the posting of a bond in an amount necessary as indemnity against
any claim made against FleetBoston with respect to that certificate.
For a description of FleetBoston common stock and a description of the
differences between the rights of the holders of Summit common stock, on the one
hand, and the holders of FleetBoston common stock, on the other hand, see
"Description of FleetBoston Capital Stock" and "Comparison of Shareholders'
Rights."
EFFECTIVE TIME
The effective time of the merger will be the time and date when the merger
becomes effective, as set forth in the articles of merger that will be filed
with the Secretary of State of the State of Rhode Island and the certificate of
merger that will be filed with the Secretary of State of the State of New Jersey
on the closing date of the merger. The closing date will occur on a date to be
specified by the parties. Subject to applicable law, this date will be no later
than five business days after the satisfaction or waiver of the latest to occur
of the conditions precedent to the merger set forth in the merger agreement.
FleetBoston and Summit each anticipate that the merger will be completed in
March 2001. However, completion of the merger could be delayed if there is a
delay in obtaining the required regulatory approvals or in satisfying other
conditions to the merger. See "--Regulatory Approvals Required for the Merger"
and "--Conditions to Consummation of the Merger."
REPRESENTATIONS AND WARRANTIES
The merger agreement contains customary reciprocal representations and
warranties of FleetBoston and Summit, as to, among other things,
- their corporate organization and existence and that of their subsidiaries;
- their capitalization and that of their subsidiaries;
- their corporate power and authority;
- the compliance of the merger agreement with (1) their articles and
by-laws, (2) applicable law and (3) certain material agreements;
- governmental and third-party approvals;
- the timely filing of required regulatory reports;
- their financial statements and filings with the Securities and Exchange
Commission (which we refer to in this document as the "SEC");
31
<PAGE>
- their brokers' fees;
- the absence of certain changes in their businesses since December 31,
1999;
- the absence of material legal proceedings and injunctions;
- the filing and accuracy of their tax returns;
- the availability and accuracy of their reports and filings with the SEC;
- their compliance with applicable law;
- their agreements with regulatory agencies;
- their use of interest rate risk management instruments, such as swaps and
options;
- the absence of undisclosed liabilities;
- the absence of environmental liabilities;
- the qualification of the merger as a transaction of a type that is
generally tax-free for U.S. federal income tax purposes and for pooling of
interests accounting treatment; and
- the accuracy of information provided for inclusion in documents filed with
regulatory agencies.
In addition, the merger agreement contains further customary representations
and warranties of Summit, as to, among other things,
- its employee benefit plans and related matters;
- the validity of, and the absence of material defaults under, certain
contracts;
- its intellectual property;
- the inapplicability to the merger of New Jersey anti-takeover laws and the
Rights Agreement, dated as of June 16, 1999, between Summit and First
Chicago Trust Company of New York, as rights agent; and
- its receipt of an opinion from its financial advisor.
CONDUCT OF BUSINESS OF SUMMIT PENDING THE MERGER AND OTHER AGREEMENTS
Prior to the effective time of the merger, except as expressly contemplated
or permitted by the merger agreement or the stock option agreement, Summit has
agreed to, and to cause its subsidiaries to:
- conduct its business in the ordinary course;
- use its reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business relationships,
and to retain the services of its key officers and key employees; and
- take no action that would adversely affect or delay the ability of the
parties to obtain any required regulatory approvals, to perform the
covenants and agreements under the merger agreement or stock option
agreement, or to consummate the transactions contemplated by the merger
agreement or stock option agreement.
In addition, FleetBoston and Summit have agreed to:
- use their reasonable best efforts to have the registration statement, of
which this proxy statement-prospectus forms a part, declared effective as
promptly as practicable under the Securities Act of 1933;
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- cooperate with each other and use their reasonable best efforts to prepare
and file promptly all necessary documentation, to effect all applications,
notices, petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third parties and
governmental entities that are necessary or advisable to complete the
merger and to comply with the terms and conditions of permits, consents,
approvals and authorizations of those governmental entities;
- upon request, furnish each other with all information concerning
themselves and their subsidiaries, directors, officers and shareholders
and any other matters as may be necessary or advisable in connection with
the merger;
- upon reasonable notice and subject to applicable laws, provide each other
access to all of their properties, books, contracts, commitments and
records and furnish information concerning their businesses, properties
and personnel, subject to the restrictions and for the purposes set forth
in the merger agreement; and
- use their reasonable best efforts to take all necessary actions to comply
promptly with all legal requirements that may be imposed on a party or its
subsidiaries to consummate the merger, and to obtain any material consent,
authorization, order or approval of, or any exemption by, any governmental
entity and any other third party that is required to be obtained in
connection with the merger.
FleetBoston and Summit have also agreed that until December 31, 2001, the
benefits to be provided to employees of Summit and its subsidiaries as of the
effective time (which we refer to in this document as "COVERED EMPLOYEES") will
be substantially the same benefits provided by Summit or its subsidiaries, as
the case may be, to these employees as of October 1, 2000. From and after
December 31, 2001, the benefits to be provided to these employees will be the
benefits provided to similarly situated employees of FleetBoston.
FleetBoston will, from and after the effective time, (1) comply with the
Summit benefit plans, (2) provide covered employees credit for the most recent
period of uninterrupted service with Summit or its subsidiaries prior to the
effective time under the employee benefits plans of FleetBoston or its
subsidiaries, other than FleetBoston's cash balance pension plan, (3) cause all
pre-existing condition limitations and eligibility waiting periods under group
health plans of FleetBoston to be waived with respect to covered employees who
become participants in these group health plans, and (4) assume all contracts
and agreements with employees of Summit entered into prior to October 1, 2000.
In addition, from and after the effective time, FleetBoston will honor all
vacation and paid time off of covered employees accrued as of the effective
time, in accordance with Summit policy as in effect on October 1, 2000.
From and after the effective time, a covered employee who is terminated
during the period commencing on the effective time and ending on the 12-month
anniversary of the effective time will be entitled to receive the greater of
(1) the severance payments and benefits under the applicable Summit severance
plan or policy as in effect on October 1, 2000 and (2) the severance payments
and benefits under the applicable FleetBoston severance plan or policy as in
effect on the date of termination of the employee. FleetBoston may amend, modify
or terminate any FleetBoston benefit plans or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
law.
FleetBoston and Summit have also reached certain agreements with respect to
directors' and officers' indemnification and insurance, and with respect to
dividends. See "--Interests of Certain Persons in the Merger."
Assuming that Summit delivers to FleetBoston the Section 16 information
described below in a timely fashion, FleetBoston also has agreed to adopt a
resolution providing that the receipt by Summit
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insiders of FleetBoston common stock in exchange for Summit common stock and of
options to acquire FleetBoston common stock upon conversion of options to
acquire Summit common stock is intended to be exempt from liability pursuant to
Section 16(b) under the Securities and Exchange Act of 1934.
"SECTION 16 INFORMATION" means accurate information regarding the Summit
insiders, the number of shares of Summit common stock held by each Summit
insider and expected to be exchanged for FleetBoston common stock in the merger,
and the number and description of the options to acquire Summit common stock
held by each Summit insider and expected to be converted into options to acquire
FleetBoston common stock in connection with the merger.
"SUMMIT INSIDERS" means those officers and directors of Summit who are
subject to the reporting requirements of Section 16(a) of the Exchange Act and
who are listed in the Section 16 information.
Furthermore, prior to the effective time, except as expressly contemplated
by the merger agreement or specified in a schedule to the merger agreement,
Summit has agreed that, without the consent of FleetBoston, it and its
subsidiaries will not, among other things:
INDEBTEDNESS
- other than in the ordinary course of business consistent with past
practice,
-- incur any indebtedness for borrowed money, other than the refinancing
of short-term indebtedness and inter-company indebtedness,
-- assume, guarantee or otherwise become responsible for the obligations
of any other individual or entity, or
-- make any loan or advance;
DIVIDENDS AND STOCK REPURCHASES
- make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, except for:
-- regular quarterly cash dividends at a rate not in excess of $.35 per
share of Summit common stock,
-- dividends paid by any of its subsidiaries to Summit or any of its
wholly-owned subsidiaries, and
-- the acceptance of shares of Summit common stock as payment for the
exercise price of stock options or for withholding taxes incurred in
connection with the exercise of stock options or the vesting of
restricted stock, in each case in accordance with past practice and
the terms of the applicable award agreements;
CAPITAL STOCK
- adjust, split, combine or reclassify any capital stock;
- grant any stock appreciation rights or grant any individual, corporation
or other entity any right to acquire any shares of its capital stock other
than:
-- pursuant to the Rights Agreement, dated as of June 16, 1999, between
Summit and First Chicago Trust Company of New York, as rights agent
(which we refer to in this document as the "SUMMIT RIGHTS AGREEMENT")
or any renewal or replacement of that agreement, and
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-- grants to newly hired employees of Summit, other than officers who
will be Summit insiders, made in the ordinary course of business
consistent with past practice under the Summit stock plans;
- issue any additional shares of capital stock, except:
-- pursuant to the exercise of stock options outstanding as of
October 1, 2000 or issued to newly hired employees of Summit in
compliance with the preceding bullet point,
-- pursuant to the stock option agreement, or
-- pursuant to the Summit rights agreement or any renewal or replacement
of that agreement;
COMPENSATION
- increase the wages, salaries, compensation, pension or other fringe
benefits or perquisites payable to any officer, employee or director other
than for increases in the ordinary course of business consistent with past
practice, increases agreed to with FleetBoston and increases required by
applicable law or existing agreements;
- pay any pension or retirement allowance not required by any existing plan
or agreement or by applicable law;
- pay any bonus other than customary year-end bonuses for fiscal year 2000;
- become a party to, amend or commit itself to, any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee, other than in the
ordinary course of business consistent with past practice or as required
by applicable law;
- except as required under any existing plan, grant or agreement, accelerate
the vesting of, or the lapsing of restrictions with respect to, any stock
options or other equity-based compensation;
DISPOSITIONS AND ACQUISITIONS
- sell, transfer, mortgage, encumber or otherwise dispose of any of its
material properties or assets to any individual, corporation or other
entity, or cancel, release or assign any indebtedness to any person or any
claims held by any person, in each case other than in the ordinary course
of business consistent with past practice or as required by applicable
law;
- except for transactions in the ordinary course of business consistent with
past practice, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of
any property or assets of any other individual, corporation or other
entity;
CONTRACTS
- except for transactions in the ordinary course of business consistent with
past practice, terminate or waive any material provision of any Summit
contract, or make any change in any instrument or agreement governing the
terms of any of its securities or material leases or contracts, other than
normal renewals of contracts and leases without material adverse changes
of terms;
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ACQUISITION PROPOSALS
- solicit or encourage from any third party, enter into any negotiations,
discussions or agreements in respect of, authorize any individual,
corporation or other entity to take any of the prohibited actions or
provide or cause to be provided any confidential information in connection
with, any inquiries or proposals relating to the disposition of all or
significant portion of its business or assets, the acquisition of 15% or
more of its voting securities, or the merger, consolidation or similar
business combination transaction involving it or any of its subsidiaries
with any corporation or other entity; provided that Summit may take those
actions if the Summit board of directors determines, in good faith after
consultation with outside legal counsel, that failure to take those
actions would be inconsistent with its fiduciary duties under applicable
law;
SETTLING CLAIMS
- settle any claim, action or proceeding requiring Summit or any of its
subsidiaries to pay any monetary damages in excess of $500,000 or
subjecting Summit or any of its subsidiaries to any restrictions on its
current or future business or operations;
ADVERSE ACTIONS
- knowingly take, or fail to take, any action that is reasonably likely to
jeopardize the treatment of the merger as a pooling of interests for
accounting purposes or prevent or impede the merger from qualifying as a
transaction of a type that is generally tax-free for U.S. federal income
tax purposes;
- take any action that is intended or is reasonably likely to result in any
of its representations or warranties set forth in the merger agreement
being or becoming untrue in any material respect at any time prior to the
effective time, in any of the conditions to the merger set forth in the
merger agreement not being satisfied, or in violation of any provision of
the merger agreement, except, in every case, as may be required by
applicable law;
AMENDMENTS TO GOVERNING DOCUMENTS
- except as required under the merger agreement, amend its certificate of
incorporation or its by-laws, amend or redeem the rights issued under the
Summit rights agreement, or otherwise take any action to exempt any person
or entity (other than FleetBoston or its subsidiaries) or any action taken
by that person or entity from the Summit rights agreement or any state
anti-takeover law or similar restrictive provisions of Summit's
organizational documents, or terminate, amend or waive any provisions of
any third-party confidentiality or standstill agreements;
INVESTMENT PORTFOLIO
- other than in prior consultation with FleetBoston, restructure or
materially change its investment securities portfolio or its gap position
through purchases, sales or otherwise;
- other than in prior consultation with FleetBoston, materially change the
manner in which the portfolio is classified or reported;
ACCOUNTING
- implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP or regulatory guidelines;
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TAX
- file or amend any tax return other than in the ordinary course of
business, make or change any material tax election, settle or compromise
any material tax liability or, except as required by applicable law,
change any method of accounting for tax purposes;
APPROVAL
- take any action that would materially impede or delay the ability of the
parties to obtain any necessary approvals of any regulatory agency or
governmental entity required for the merger; or
OTHER AGREEMENTS
- agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of these prohibited actions.
CONDUCT OF BUSINESS OF FLEETBOSTON PENDING THE MERGER
Prior to the effective time, except as expressly contemplated or permitted
by the merger agreement, FleetBoston has agreed that, without the consent of
Summit, it and its subsidiaries will not:
AMENDMENTS TO GOVERNING DOCUMENTS
- amend its articles of incorporation or by-laws in a manner that would
adversely affect the economic benefits of the merger to Summit
shareholders;
ADVERSE ACTIONS
- knowingly take, or fail to take, any action that is reasonably likely to
jeopardize the treatment of the merger as a pooling of interests for
accounting purposes or prevent or impede the merger from qualifying as a
transaction of a type that is generally tax-free for U.S. federal income
tax purposes (provided that FleetBoston is not limited in its ability to
exercise its rights under the stock option agreement);
- take any action that is intended or is reasonably likely to result in any
of its representations or warranties set forth in the merger agreement
being or becoming untrue in any material respect at any time prior to the
effective time, in any of the conditions to the merger set forth in the
merger agreement not being satisfied, or in violation of any provision of
the merger agreement, except, in every case, as may be required by
applicable law;
APPROVAL
- take any action that would materially impede or delay the ability of the
parties to obtain any necessary approvals of any regulatory agency or
governmental entity required for the merger; or
OTHER AGREEMENTS
- agree to take, make any commitment to take, or adopt any resolutions of
its board of directors in support of, any of these prohibited actions.
CONDITIONS TO CONSUMMATION OF THE MERGER
Each party's obligation to effect the merger is subject to the satisfaction
or waiver, where permissible, of the following conditions:
- approval of the merger agreement by Summit shareholders;
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- authorization for listing on the New York Stock Exchange of the shares of
FleetBoston common stock that are to be issued to Summit shareholders upon
completion of the merger;
- receipt of all regulatory approvals required to complete the merger and
all those approvals remaining in effect and all statutory waiting periods
with respect to those approvals having expired;
- effectiveness of the registration statement, of which this proxy
statement-prospectus forms a part, under the Securities Act, and no stop
order suspending the effectiveness of the registration statement having
been issued and no proceedings for that purpose having been initiated or
threatened by the SEC;
- no order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
completion of the merger or any of the other transactions contemplated by
the merger agreement being in effect, and no statute, rule, regulation,
order, injunction or decree having been enacted, entered, promulgated or
enforced by any governmental entity which prohibits, materially restricts
or makes illegal completion of the merger or the merger of Summit's bank
subsidiaries with Fleet National Bank;
- receipt by FleetBoston and Summit of the opinions of their respective tax
counsel, Wachtell, Lipton, Rosen & Katz and Weil, Gotshal & Manges LLP, in
form and substance reasonably satisfactory to FleetBoston and Summit, as
the case may be, dated as of the closing date, that the merger will be
treated as a transaction of a type that is generally tax-free for U.S.
federal income tax purposes;
- receipt on the closing date of the merger by each of FleetBoston and
Summit of a letter from their respective independent accountants,
PricewaterhouseCoopers LLP and KPMG LLP, addressed to FleetBoston or
Summit, as the case may be, that the merger will qualify for pooling of
interests accounting treatment;
- the representations and warranties of the other party will be true and
correct in all material respects as of October 1, 2000 and, except to the
extent those representations and warranties speak as of an earlier date,
as of the closing date of the merger as though made on the closing date.
For purposes of this condition, those representations and warranties will
be deemed to be true and correct, unless the failure or failures of those
representations and warranties to be true and correct would have or would
be reasonably likely to have a material adverse effect on the party making
the representation or on the combined company; and
- each party will have performed in all material respects all obligations
required to be performed by it under the merger agreement at or prior to
the closing date.
We cannot assure you if, or when, we will obtain the required regulatory
approvals necessary to consummate the merger, or whether all of the other
conditions precedent to the merger will be satisfied or waived by the party
permitted to do so. If the merger is not completed on or before October 1, 2001,
either FleetBoston or Summit may terminate the merger agreement, unless the
failure to effect the merger by that date is due to the failure of the party
seeking to terminate the merger agreement to perform or observe covenants and
agreements of that party set forth in the merger agreement.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
FleetBoston and Summit have agreed to use their reasonable best efforts to
obtain all regulatory approvals required to complete the merger. These approvals
include approval from the Board of Governors of the Federal Reserve System
(which we refer to in this document as the "FEDERAL RESERVE
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BOARD") and various state regulatory authorities. The merger cannot proceed in
the absence of those required regulatory approvals.
FleetBoston and Summit are not aware of any material governmental approvals
or actions that are required prior to the parties' completion of the merger
other than those described below. If any additional governmental approvals or
actions are required, the parties presently intend to seek those approvals or
actions.
We cannot assure you that we will obtain the required regulatory approvals,
or, if we obtain them, when we will do so or whether there will be any
litigation challenging those approvals. We likewise cannot assure you that the
U.S. Department of Justice (which we refer to in this document as the
"DEPARTMENT OF JUSTICE") or any state attorney general will not attempt to
challenge the merger on antitrust grounds, or, if a challenge is made, the
result of the challenge.
FEDERAL RESERVE BOARD. The merger is subject to approval by the Federal
Reserve Board pursuant to Section 3 of the Bank Holding Company Act of 1956 (we
refer to in this document as the "BANK HOLDING COMPANY ACT"). FleetBoston has
filed the required application and notification with the Federal Reserve Board
for approval of the merger. Assuming Federal Reserve Board approval, the parties
may not complete the merger until 30 days after that approval. During that time,
the Department of Justice may challenge the merger on antitrust grounds and seek
the divestiture of certain assets and liabilities. With the approval of the
Federal Reserve Board and the Department of Justice, the waiting period may be
reduced to no fewer than 15 days.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes that (1) results in a monopoly, (2) would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United States, or (3) may
have the effect in any section of the United States of substantially lessening
competition, tending to create a monopoly or resulting in a restraint of trade,
unless the Federal Reserve Board finds that the anti-competitive effects of the
transaction are clearly outweighed in the public interest by the probable effect
of the transaction in meeting the convenience and needs of the communities to be
served.
In addition, in reviewing a transaction under the applicable statutes, the
Federal Reserve Board will consider the financial and managerial resources of
the companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of, or in addition to, consideration of these
factors, the parties anticipate that the Federal Reserve Board will consider the
regulatory status of FleetBoston and Summit, current and projected economic
conditions in the areas of the United States where FleetBoston and Summit
operate, and the overall capital and safety and soundness standards established
by the Federal Deposit Insurance Corporation Improvement Act of 1991 (which we
refer to in this document as "FDICIA") and the regulations promulgated under
FDICIA.
Under the Community Reinvestment Act of 1977, the Federal Reserve Board must
take into account the record of performance of each of FleetBoston and Summit in
meeting the credit needs of the entire community, including low- and
moderate-income neighborhoods, served by each company and its subsidiaries. Each
of FleetBoston's and Summit's subsidiary depository institutions has either an
outstanding or satisfactory Community Reinvestment Act rating with the
appropriate federal regulator.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the merger to the Office of the Comptroller of the Currency
(which we refer to in this document as the "OCC"). The OCC has 30 days to submit
its views and recommendations to the Federal Reserve Board. The Federal Reserve
Board is required to hold a public hearing in the event it receives a written
recommendation of disapproval of the application from the OCC within that 30-day
period. Furthermore, the Bank Holding Company Act and Federal Reserve Board
regulations require publication of notice of, and the opportunity for public
comment on, the application submitted by
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FleetBoston for approval of the merger, and authorize the Federal Reserve Board
to hold a public meeting in connection with the application if the Federal
Reserve Board determines that a meeting would be appropriate. Any meeting or
comments provided by third parties could prolong the period during which the
application is subject to review by the Federal Reserve Board.
As noted above, the merger may not be completed until 30 days after Federal
Reserve Board approval, during which time the Department of Justice may
challenge the merger on antitrust grounds and seek the divestiture of certain
assets and liabilities. With the approval of the Federal Reserve Board and the
Department of Justice, the waiting period may be reduced to no fewer than
15 days. The commencement of an antitrust action by the Department of Justice
would stay the effectiveness of Federal Reserve Board approval of the merger,
unless a court specifically orders otherwise. In reviewing the merger, the
Department of Justice could analyze the merger's effect on competition
differently from the Federal Reserve Board, and, thus, it is possible that the
Department of Justice could reach a different conclusion than the Federal
Reserve Board regarding the merger's competitive effects. Failure of the
Department of Justice to object to the merger may not prevent the filing of
antitrust actions by private persons or state attorneys general.
In addition, FleetBoston's right to exercise the Summit stock option under
the stock option agreement is also subject to the prior approval of the Federal
Reserve Board to the extent that the exercise of the option would result in
FleetBoston owning more than 5% of the outstanding shares of Summit common
stock. In considering whether to approve FleetBoston's right to exercise its
option, including its right to purchase more than 5% of the outstanding shares
of Summit common stock, the Federal Reserve Board would generally apply the same
statutory criteria it will apply to its consideration of the merger.
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT. As a result of the
acquisition of Summit, FleetBoston will also acquire Summit's non-banking
subsidiaries. The acquisition of these entities will require prior notice to the
Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (which we refer to in this document as the "HART-SCOTT-RODINO ACT"), and
the rules of the Federal Trade Commission under the Hart-Scott-Rodino Act, and
the expiration of the 30-day statutory waiting period under the
Hart-Scott-Rodino Act. However, prior to the expiration of that period, the
Federal Trade Commission could extend the period by requesting additional
information or documentary material relevant to the merger. In addition, at any
time prior to or after completion of the merger, the Federal Trade Commission or
the Department of Justice could take action under the federal antitrust laws,
including seeking to enjoin the merger or seeking conditions to the merger.
Similarly, state antitrust authorities and private parties in certain
circumstances may bring legal action under the antitrust laws seeking to enjoin
the merger or to impose conditions on the merger. FleetBoston and Summit made
the required filing on December 15, 2000, and the 30-day statutory period
expired on January 14, 2001.
STATE REGULATORY AUTHORITIES. The parties have filed applications and
notifications with various state financial institution regulatory and insurance
authorities in connection with acquisitions or changes in control of
subsidiaries of Summit that may be deemed to result from the completion of the
merger. In addition, the state attorneys general in the various states in which
FleetBoston and Summit have bank subsidiaries may review the merger. These
authorities may be empowered under the applicable state laws and regulations to
investigate and/or disapprove the merger under the circumstances and based upon
the criteria set forth in applicable state laws and regulations.
APPROVAL REQUIRED FOR MERGER OF SUBSIDIARY BANKS. The parties intend to
merge Summit's subsidiary banks into Fleet National Bank on the closing date
essentially simultaneously with the merger of Summit into FleetBoston. The
merger of the Summit bank subsidiaries into Fleet National Bank is subject to
the prior approval of the OCC. The OCC will review the bank-level merger in
accordance with statutory criteria that are substantially the same as those
considered by the Federal
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Reserve Board in its review of the parent-level merger, except that the OCC will
not conduct an independent antitrust analysis of the bank-level merger. The
parties have filed the required application with the OCC for approval of the
bank-level merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated U.S. federal income
tax consequences of the merger to Summit shareholders who hold Summit common
stock as a capital asset, that is, generally for investment. The summary is
based on the Internal Revenue Code, Treasury regulations issued under the
Internal Revenue Code, and administrative rulings and court decisions in effect
as of the date of this proxy statement-prospectus, all of which are subject to
change at any time, possibly with retroactive effect. This summary is not a
complete description of all of the consequences of the merger and, in
particular, may not address U.S. federal income tax considerations applicable to
Summit shareholders subject to special treatment under U.S. federal income tax
law. Summit shareholders subject to special treatment include, for example,
foreign persons, financial institutions, dealers in securities, traders in
securities who elect to apply a mark-to-market method of accounting, insurance
companies, tax-exempt entities, holders who acquired their shares of Summit
common stock pursuant to the exercise of an employee stock option or right or
otherwise as compensation, and holders who hold Summit common stock as part of a
"hedge," "straddle," "constructive sale" or "conversion transaction." In
addition, no information is provided in this document with respect to the tax
consequences of the merger under applicable foreign, state or local laws.
SUMMIT SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING
THE TAX CONSEQUENCES OF THE MERGER TO THEM IN THEIR PARTICULAR SITUATIONS,
INCLUDING THE EFFECTS OF U. S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS.
GENERAL. In connection with the filing of the Registration Statement,
Wachtell, Lipton, Rosen & Katz and Weil, Gotshal & Manges LLP have delivered to
FleetBoston and Summit, respectively, opinions, dated the date of this proxy
statement-prospectus, addressing the U.S. federal income tax consequences of the
merger. The material aspects of those opinions are as set forth below. Wachtell,
Lipton, Rosen & Katz and Weil, Gotshal & Manges LLP have rendered their opinions
on the basis of facts, representations and assumptions set forth or referred to
in their opinions that are consistent with the state of facts expected to exist
at the effective time. In rendering their opinions, Wachtell, Lipton, Rosen &
Katz and Weil, Gotshal & Manges LLP required and relied upon factual
representations contained in certificates of officers of FleetBoston and Summit.
The opinions are that, for U.S. federal income tax purposes, the merger will be
treated as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, that is, it will be treated as a transaction of a type that is
generally tax-free for U.S. federal income tax purposes and that, accordingly:
- neither FleetBoston nor Summit will recognize any gain or loss as a result
of the merger;
- Summit shareholders who exchange their Summit common stock solely for
FleetBoston common stock pursuant to the merger will recognize no gain or
loss, except with respect to cash received in lieu of a fractional share
interest in FleetBoston common stock;
- the aggregate tax basis of the shares of FleetBoston common stock received
by Summit shareholders, including fractional shares deemed received and
redeemed as described below, will equal the aggregate tax basis of the
shares of Summit common stock surrendered in exchange for that FleetBoston
common stock; and
- the holding period of a share of FleetBoston common stock received in the
merger, including a fractional share deemed received and redeemed as
described below, will include the holder's holding period in the Summit
common stock surrendered in exchange for that FleetBoston common stock.
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The obligations of FleetBoston and Summit to consummate the merger are
conditioned upon the receipt of further opinions of their respective counsel,
Wachtell, Lipton, Rosen & Katz and Weil, Gotshal & Manges LLP, in form and
substance reasonably satisfactory to FleetBoston and Summit, as the case may be,
dated as of the closing date, that, on the basis of facts, representations and
assumptions set forth in each opinion that are consistent with the state of
facts existing at the effective time, the merger will be treated as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, that is, it will be treated as a transaction of a type that is generally
tax-free for U.S. federal income tax purposes. In rendering those opinions,
counsel may require and rely upon representations contained in certificates of
officers of FleetBoston and Summit, reasonably satisfactory in form and
substance to counsel. None of the tax opinions to be delivered to the parties in
connection with the merger as described in this document is binding on the
Internal Revenue Service or the courts, and the parties do not intend to request
a ruling from the IRS with respect to the merger. Accordingly, there can be no
assurance that the IRS will not challenge the conclusions reflected in those
opinions or that a court will not sustain such challenge.
SUMMIT SHAREHOLDERS WILL BE TAXED ON CASH RECEIVED INSTEAD OF FRACTIONAL
SHARES. Cash received by a Summit shareholder instead of a fractional share
interest in FleetBoston common stock will be treated as received in redemption
of that fractional share interest. If the deemed redemption meaningfully reduces
the Summit shareholder's actual or constructive ownership in FleetBoston, the
Summit shareholder will recognize capital gain or loss for U.S. federal income
tax purposes measured by the difference between the amount of cash received and
the portion of the tax basis of the share of Summit common stock allocable to
that fractional share interest. This capital gain or loss will be a long-term
capital gain or loss if the holding period for that share of Summit common stock
is greater than one year at the effective time. A common shareholder that owns
an extremely small percentage of the stock of Summit, exercises no control over
the affairs of FleetBoston or Summit, and who does not actually or
constructively own any shares of FleetBoston stock other than those received in
the merger, will be treated as experiencing a meaningful reduction in interest.
ACCOUNTING TREATMENT
FleetBoston and Summit anticipate that the merger will be accounted for as a
pooling of interests under GAAP. Under this method of accounting, FleetBoston
shareholders and Summit shareholders will be deemed to have combined their
existing voting common stock interests by virtue of the exchange of shares of
Summit common stock for shares of FleetBoston common stock. Accordingly, the
book value of the assets, liabilities and shareholders' equity of each of
FleetBoston and Summit, as reported on their respective consolidated balance
sheets, will be carried over to the consolidated balance sheet of the combined
company, and no goodwill will be created. The combined company will be able to
include in its consolidated income the consolidated income of both companies for
the entire fiscal year in which the merger occurs. However, the combined company
must treat certain expenses incurred to effect the merger as current charges
against income, rather than as adjustments to the combined company balance
sheet.
It is a condition to completion of the merger that each of FleetBoston and
Summit receive on the closing date of the merger an opinion from its respective
independent accountants, PricewaterhouseCoopers LLP and KPMG LLP, that the
merger will be accounted for as a pooling of interests. See "--Conditions to
Consummation of the Merger."
The parties have prepared the unaudited pro forma financial information
contained in this proxy statement-prospectus using the pooling of interests
accounting method to account for the merger. See "Unaudited Comparative and Pro
Forma Per Share Data" and "Unaudited Pro Forma Condensed Combined Selected
Financial Data of FleetBoston and Summit."
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TERMINATION OF THE MERGER AGREEMENT
The parties may terminate the merger agreement and abandon the merger at any
time prior to the effective time, whether before or after approval by the
holders of Summit common stock:
- by written agreement of FleetBoston and Summit, with board of directors
approval;
- by the board of directors of either party, if any governmental entity that
must grant a requisite regulatory approval has denied approval of the
merger and that denial has become final and non-appealable, or any
governmental entity of competent jurisdiction has issued a final
non-appealable order enjoining or otherwise prohibiting the completion of
the transactions contemplated by the merger agreement;
- by either FleetBoston or Summit if the approval of Summit shareholders
required for the completion of the merger has not been obtained;
- by the board of directors of either party, if the merger is not completed
on or before October 1, 2001, unless the failure of the closing to occur
by this date is due to the default of the party seeking to terminate the
merger agreement; and
- by the board of directors of either party, so long as the terminating
party is not then in breach of the merger agreement, if:
-- there has been a breach of any of the covenants or agreements or any
of the representations or warranties set forth in the merger
agreement on the part of the non-terminating party;
-- the breach, individually or in the aggregate, would constitute, if
occurring or continuing on the closing date, the failure of the
conditions described under "--Conditions to Consummation of the
Merger;" and
-- the breach is not cured within 45 days following written notice to
the party committing the breach or cannot by virtue of its nature or
timing be cured prior to the closing date.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
EXTENSION AND WAIVER. At any time prior to the effective time, FleetBoston
and Summit, by action taken or authorized by their respective boards of
directors, may, if legally allowed:
- extend the time for the performance of any of the obligations or other
acts of the other party;
- waive any inaccuracies in the representations and warranties contained in
the merger agreement or in any document delivered pursuant to the merger
agreement; and
- waive compliance with any of the agreements or conditions contained in the
merger agreement.
However, after any approval of the transactions contemplated by the merger
agreement by the shareholders of Summit, there may not be, without further
approval of those shareholders, any extension or waiver of the merger agreement
or any portion of the merger agreement which reduces the amount or changes the
form of the consideration to be delivered to the Summit shareholders under the
merger agreement, other than as contemplated by the merger agreement.
AMENDMENT. Subject to compliance with applicable law and the ability of the
parties to change the method of effecting the combination of FleetBoston and
Summit, FleetBoston and Summit may amend the merger agreement by action taken or
authorized by their respective boards of directors at any time before or after
approval of the merger agreement by Summit shareholders. However, after any
approval of the merger agreement by Summit shareholders, there may not be,
without further approval of those shareholders, any amendment of the merger
agreement that changes the amount or the form of the consideration to be
delivered to the Summit shareholders, other than as contemplated by the merger
agreement.
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STOCK EXCHANGE LISTING
FleetBoston has agreed to cause the shares of FleetBoston common stock to be
issued in the merger to be approved for listing on the New York Stock Exchange.
It is a condition to the completion of the merger that the New York Stock
Exchange authorize those shares for listing, subject to official notice of
issuance.
EXPENSES
The merger agreement provides that each of FleetBoston and Summit will pay
its own costs and expenses incurred in connection with the merger agreement and
the transactions contemplated by the merger agreement. However, FleetBoston and
Summit will divide equally the costs and expenses of printing and mailing this
proxy statement-prospectus, and all filing and other fees paid to the SEC in
connection with the merger.
DIVIDENDS
The merger agreement provides that, after October 1, 2000, FleetBoston and
Summit will coordinate the declaration of dividends in respect of FleetBoston
common stock and Summit common stock and the record dates and payment dates
relating to those dividends. It is the intent of the parties that Summit
shareholders will not receive two dividends, or fail to receive one dividend,
for any quarter with respect to their shares of Summit common stock and any
shares of FleetBoston common stock they receive in the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Summit's executive officers and its board of directors have interests in the
merger that are in addition to their interests as Summit shareholders generally.
These interests arise as a result of:
- existing employment, termination and severance agreements and plans with
Summit;
- new employment agreements entered into with FleetBoston that will become
effective upon completion of the merger;
- Summit's stock based compensation and incentive plans and awards made
under those plans;
- Summit's retirement plan for outside directors;
- FleetBoston's agreement to continue Summit's existing director and officer
indemnification and insurance arrangements; and
- FleetBoston's agreement to appoint Mr. Semrod and Mr. Dunphy to serve as
members of the FleetBoston board of directors following completion of the
merger.
The Summit board of directors was aware of these interests and considered
them, among other matters, in approving the merger agreement and the
transactions contemplated by the merger agreement.
EMPLOYMENT AGREEMENTS WITH FLEETBOSTON. Each of T. Joseph Semrod, Chairman
of the Board, President and Chief Executive Officer of Summit and John G.
Collins, Vice Chairman of the Board of Summit, have entered into agreements
relating to their employment with FleetBoston after the effective time. The
employment agreements for these executives will supersede certain existing
severance agreements in effect between Summit and each of these executives.
Pursuant to the employment agreements, for a two-year period beginning at the
effective time, Mr. Semrod will serve on FleetBoston's board of directors and
will be employed as Vice Chairman of FleetBoston and Chairman of FleetBoston's
New Jersey operations, and Mr. Collins will be employed as President of
FleetBoston's New Jersey operations.
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The employment agreements provide that upon completion of the merger both
Messrs. Semrod and Collins will receive all payments due under their respective
termination agreements entered into between each of the executives and Summit
dated October 15, 1997 and under Summit's Executive Severance Plan (described
below). However, the payments to each executive pursuant to his termination
agreement will be reduced by payments to which the executive is entitled under
Summit's Executive Severance Plan. The cash severance payments due to Messrs.
Semrod and Collins upon completion of the merger are estimated to be
approximately $6,094,000 and $2,886,000, respectively. In addition, they will be
entitled to the other benefits described under "--Termination Agreements" and
"--Executive Severance Plan" below.
During the two-year employment term, Mr. Semrod will be paid an annual base
salary of not less than $900,000 and an annual bonus of not less than
$1,600,000, and Mr. Collins will be paid an annual base salary of not less than
$600,000 and an annual bonus of not less than $900,000. Under the employment
agreements, Messrs. Semrod and Collins will be granted, respectively, at the
effective time 200,000 and 125,000 shares of restricted stock of FleetBoston.
The restrictions with respect to the restricted shares will lapse on the second
anniversary of the effective time. In addition, Messrs. Semrod and Collins will
be granted at the effective time an option to purchase, respectively, 300,000
and 200,000 shares of common stock of FleetBoston, in each case, at an exercise
price per share equal to the fair market value per share of the common stock of
FleetBoston on the date of grant. The shares subject to each option grant will
become exercisable upon the second anniversary of the effective time. If
Mr. Semrod's or Mr. Collins' employment is terminated by FleetBoston for "cause"
or if Mr. Semrod or Mr. Collins terminates his employment with FleetBoston
without "good reason," as those terms are defined in their employment
agreements, the unvested options and restricted shares will be forfeited. If the
termination of employment is for any other reason, all options will vest and all
restrictions on restricted shares will lapse. Once vested, the options granted
to Messrs. Semrod and Collins will remain exercisable for ten years from the
date of grant, whether or not the executive remains employed by FleetBoston.
In addition, Messrs. Semrod and Collins will be entitled to participate in
all savings and retirement plans of FleetBoston on a basis no less favorable
than provided to similarly situated senior executives of FleetBoston.
Messrs. Semrod and Collins and their eligible dependents will also be entitled
to participate in all applicable welfare benefit plans subject to the same
terms, conditions, cost-sharing requirements and the like as similarly situated
senior executives of FleetBoston and Messrs. Semrod and Collins will each be
entitled to receive fringe benefits on a basis no less favorable than provided
to similarly situated senior executive officers of FleetBoston.
Messrs. Semrod and Collins and their respective spouses will be entitled to
medical benefits for the remainder of their respective lives on a basis no less
favorable than the medical benefits provided to them immediately prior to the
date of termination of their employment. Upon termination of employment,
Messrs. Semrod and Collins will also be entitled to annual aggregate defined
benefit retirement incomes of $1.5 million and $750,000, respectively,
calculated on a single life annuity basis. These aggregate defined benefit
retirement incomes are inclusive of and not in addition to other defined benefit
retirement incomes payable by Summit or any successor.
The employment agreements of Messrs. Semrod and Collins further provide that
if the executive's employment is terminated during the employment term by
FleetBoston other than for cause, or by the executive for good reason or by
reason of the executive's death or disability, the executive will be entitled
to, among other things:
- any unpaid portion of any severance payments owed to the executive as more
fully described above;
- any portion of the executive's base salary and bonus through the second
anniversary of the agreement that is unpaid;
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- all compensation and benefits payable to the executive under the terms of
FleetBoston's compensation and benefits plans; and
- the lapse of restrictions on all existing restricted shares and the
acceleration of exercisability of all shares subject to stock options
previously granted.
If either Mr. Semrod or Mr. Collins voluntarily terminates employment for
other than good reason during the employment term, Mr. Semrod or Mr. Collins'
employment terminates for any reason after the employment term, or Mr. Semrod or
Mr. Collins' employment is terminated by FleetBoston for cause, the executive
will be entitled to receive any portion of the annual base salary through the
date of termination that has been earned but not paid and all compensation and
benefits payable to the executive under the terms of FleetBoston's compensation
and benefits plans, programs or arrangements as in effect immediately prior to
the date of termination.
If any payments received under the employment agreements are subjected to
the excise tax imposed under Section 4999 of the Internal Revenue Code, each
agreement provides for an additional payment to the executive to restore him to
the same after-tax position which he would have been in if the excise tax had
not been imposed. However, in the event that the amount to which the executive
is entitled would not result in an excise tax under Section 4999 if the amount
to which the executive is entitled were reduced by $50,000 or less, the amount
to which the executive is entitled will be reduced by the amount required to
eliminate any excise tax.
TERMINATION AGREEMENTS. Sixteen executive officers of Summit have
termination agreements with Summit which provide for the payment of benefits
after a termination of employment for "good reason" or without "cause," as those
terms are defined under those agreements, during the three-year period following
a change in control of Summit within the meaning of those agreements. Under the
termination agreements, "good reason" includes a termination of employment by
the executive officer for any reason, other than disability or normal
retirement, during the 30-day period following the first anniversary of the
closing of the merger. The execution of the merger agreement on October 1, 2000
constituted a change in control for purposes of the termination agreements. The
termination agreements provide that following a covered termination of
employment the executive is entitled to receive, subject to offset of any
comparable amounts or benefits under the Executive Severance Plan and to the
executive's execution of a release:
- a lump-sum cash payment equal to three times base salary and three times
the executive's bonus amount;
- service credit under Summit's retirement plans for the lesser of
(1) 120 months and (2) the number of months until the executive's normal
retirement date; and
- continuation of all welfare benefits for a period that is the lesser of
(1) 36 months after the date of termination and (2) the period until the
executive's normal retirement date.
In addition, if any payments received under the agreements are subjected to
the excise tax imposed under Section 4999 of the Internal Revenue Code, each
agreement provides for an additional payment to the executive to restore the
executive to the same after-tax position which the executive would have had if
the excise tax not been imposed. However, in the event that the amount to which
the executive is entitled would not result in an excise tax under Section 4999
if the amount to which the executive is entitled were reduced by $50,000 or
less, the amount to which the executive is entitled will be reduced by the
amount required to eliminate any excise tax. The cash severance payments which
would be payable upon termination to those 16 executive officers of Summit,
other than Messrs. Semrod and Collins, are estimated to be approximately
$25.5 million. This amount is calculated on the assumption that the employment
of each executive officer with FleetBoston is terminated immediately after the
effective time without cause. In addition, those officers would be entitled to
the other benefits
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described in the previous paragraph and under "--Executive Severance Plan"
below, including pension credits estimated to be approximately $6,500,000 in the
aggregate.
EXECUTIVE SEVERANCE PLAN. Upon a termination of any of the sixteen
executives' employment for "good reason" (as defined in the plan) or without
"cause" (as defined in the plan), subject to the executive's execution of a
release, the executive will be entitled to, among other things:
- a lump-sum cash payment equal to two times the executive's base salary and
two times the executive's annual bonus;
- any awards granted but not yet paid to the executive under Summit's
Incentive Bonus Plan;
- unpaid amounts for any accrued vacation or other paid time off;
- the aggregate amount of matching contributions that Summit would have been
required to contribute to its 401(k) plan assuming the executive had
contributed the maximum amount allowable by law for 24 months following
the date of termination;
- 24 months' service credit under all retirement plans in which the
executive participates;
- continuation of all welfare benefits for a period of 24 months after the
date of termination or the normal retirement date, if earlier;
- continued perquisites for 12 months; and
- outplacement services.
OTHER SEVERANCE ARRANGEMENTS. Four of the executive officers of Summit,
none of whom have termination agreements with Summit, may be entitled to
severance benefits under the enhanced separation pay plan described on page 32
under "--Conduct of Business of Summit Pending the Merger and Other Agreements"
and other arrangements. These severance payments are estimated to be
approximately $1.5 million for those officers.
STOCK-BASED RIGHTS. Under Summit's 1993 Incentive Stock and Option Plan and
1999 Non-Executive Option Plan, all options to purchase Summit common stock held
by employees of Summit, including all of its executive officers, that were not
previously exercisable became exercisable upon execution of the merger agreement
on October 1, 2000, in accordance with the terms of the stock option grants. In
addition, at that time, all restrictions governing the transfer and ownership of
incentive stock and performance stock previously awarded to employees of Summit,
including its executive officers, lapsed, causing those shares to vest in
accordance with the terms of the awards. The following table sets forth, for
each of the named executive officers of Summit, and for all of the executive
officers of Summit as a group:
- the number of shares of Summit common stock subject to stock options that
became exercisable as a result of the execution of the merger agreement;
- the weighted average exercise price per share of Summit common stock
subject to these stock options;
- the number of shares of Summit common stock subject to incentive stock
awards that vested as a result of the execution of the merger agreement;
and
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- the number of shares of Summit common stock subject to performance stock
awards that vested as a result of the execution of the merger agreement.
<TABLE>
<CAPTION>
SHARES SUBJECT WEIGHTED SHARES OF SHARES OF
TO ACCELERATED AVERAGE EXERCISE INCENTIVE STOCK PERFORMANCE STOCK
OPTIONS(1) PRICE ACCELERATED(2) ACCELERATED(3)
-------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Semrod...................... 190,750 $26.5938 69,570 10,375
Collins..................... 65,000 $26.5938 31,720 4,475
Mackoul..................... 40,000 $26.5938 12,545 2,500
Lynch....................... 40,000 $26.5938 1,840 2,500
Executive Officers as a
Group (20 persons)........ 605,550 $26.5938 198,338 43,125
</TABLE>
------------------------
(1) All of the option grants reflected in this table were originally scheduled
to vest on February 16, 2001.
(2) Incentive stock awards, which have accelerated, typically consisted of a
portion (generally one-fifth of the total award) which was transferred
without restriction to the participant immediately upon being awarded and a
remaining portion (generally four-fifths of the total award) which contained
restrictions on transferability which lapse in annual increments, generally
over the four years following the award, provided the executive remained in
the employ of Summit during that time.
(3) Performance stock awards, which have accelerated, under Summit's 1993
Incentive Stock and Option plan were made subject to the attainment of
performance goals for the year during which the award was made. Upon the
attainment of the performance goals, the performance stock became fully
vested as to one-fifth of the award. The remaining four-fifths of the award
became subject to restrictions on transferability which were originally
scheduled to lapse in four equal annual installments.
None of Summit's non-employee directors holds any stock options that became
exercisable as a result of entering into the merger agreement or otherwise as a
result of the merger, or any incentive stock awards or performance stock awards.
Upon completion of the merger, each Summit stock option that is outstanding
immediately prior to the time of the merger will automatically convert into an
option to purchase a number of shares of FleetBoston common stock equal to the
number of shares of Summit common stock subject to the option multiplied by
1.02, the exchange ratio. The exercise price per share of FleetBoston common
stock subject to the converted option will be equal to the current exercise
price per share of Summit common stock divided by the exchange ratio.
Performance and incentive stock will be converted into the right to receive
shares of FleetBoston common stock on the same basis as all other shares of
Summit common stock.
It is anticipated that FleetBoston will make grants of stock options and
other awards to employees of Summit, including some of the current executive
officers of Summit, who become employees of FleetBoston after the merger.
FleetBoston is expected to make the grants promptly after completion of the
merger on a basis consistent with elements of both the Summit and FleetBoston
stock plans. FleetBoston has not determined the specific recipients of awards or
the size of the awards as of the date of this proxy statement-prospectus.
RETIREMENT PLAN FOR OUTSIDE DIRECTORS. A retirement plan for individuals
who are outside directors of Summit provides that upon the completion of the
merger, each director then sitting on the Summit board of directors will become
entitled to receive annually, for ten years or twice the number of years served
as a director, whichever is less, payments equal to the higher of (1) the
director's annual retainer at the time of the merger, or (2) the highest annual
retainer in effect at any time during the two-year period immediately preceding
the completion of the merger, commencing on the latest to
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occur of (a) the termination of the director's board service, (b) attainment of
age 65 or (c) any date designated by the director prior to the completion of the
merger.
DIRECTOR COMPENSATION. As a non-employee director of FleetBoston,
Mr. Dunphy will be entitled to an annual retainer of $50,000 and an additional
payment of $1,500 for each board meeting he attends and an additional payment of
$1,000 for each telephonic board meeting in which he participates. Mr. Dunphy
will also participate in the FleetBoston Director Deferred Compensation and
Stock Unit Plan as a result of which he will receive an annual award of stock
units equal to 60% of the annual retainer (currently $30,000). The stock units
will be payable in shares of FleetBoston common stock following Mr. Dunphy's
termination of service as a director.
INDEMNIFICATION; DIRECTORS AND OFFICERS LIABILITY INSURANCE. The merger
agreement provides that in the event of any threatened or actual claim or
proceeding in which any person who is or has been a director, officer or
employee of Summit or any of its subsidiaries is, or is threatened to be, made a
party based in whole or in part on, or pertaining to, the fact that the person
was a director, officer or employee of Summit or any of its subsidiaries, or the
merger agreement, the stock option agreement or the transactions contemplated by
these agreements, FleetBoston will, subject to the conditions set forth in the
merger agreement, indemnify that person to the fullest extent permitted by law
against any liability or expense incurred in connection with any of these claims
or proceedings. The merger agreement further provides that FleetBoston will,
subject to the conditions set forth in the merger agreement, use its reasonable
best efforts to cause the persons serving as officers and directors of Summit
immediately prior to the merger to be covered for a period of at least six years
following the effective time by Summit's directors' and officers' liability
insurance policy, or any equivalent substitute for that policy.
GRANTOR TRUST
Summit has established a grantor trust for the purpose of holding cash and
other property for the payment of benefits under certain unfunded benefit plans
of Summit and severance and termination agreements with Summit executives. The
plans and agreements covered by the grantor trust include the Summit executive
severance plan and termination agreements described above, as well as certain
retirement plans in which the executive officers of Summit participate. Summit
has funded the grantor trust with $60 million, as permitted by the merger
agreement.
SUMMIT STOCK OPTION AGREEMENT
GENERAL. Simultaneously with the execution of the merger agreement, Summit
and FleetBoston entered into a stock option agreement pursuant to which Summit
granted FleetBoston an irrevocable option to purchase from Summit a number of
shares of Summit common stock equal to up to 19.9% of the issued and outstanding
Summit common stock, without giving effect to shares issued or issuable under
the option, subject to certain adjustments. The exercise price of the Summit
option is $34.00 per share, subject to certain adjustments. Entering into the
stock option agreement was a condition to FleetBoston's willingness to enter
into the merger agreement, and, accordingly, the Summit board of directors
approved the issuance of the stock option to induce FleetBoston to enter into
the merger agreement.
The stock option agreement increases the likelihood that the merger will be
completed in accordance with the terms of the merger agreement and compensates
FleetBoston if the merger is not completed. The existence of the Summit stock
option could significantly increase the cost to a potential acquiror of
acquiring Summit. In addition, the exercise or repurchase of the Summit stock
option is likely to prohibit another acquiror from accounting for an acquisition
of Summit using the "pooling of interests" accounting method for a period of two
years following the exercise or repurchase. Consequently, aspects of the stock
option agreement may discourage persons who might be interested in acquiring all
of or a significant interest in Summit from considering or proposing an
acquisition, even if these persons were prepared to offer to pay consideration
with a higher current market price than the shares of FleetBoston common stock
to be received under the merger agreement.
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Some rights and obligations of FleetBoston and Summit under the stock option
agreement are subject to receipt of required regulatory approvals. For example,
FleetBoston must obtain the approval of the Federal Reserve Board to acquire
more than 5% of the outstanding shares of Summit common stock. Accordingly,
FleetBoston has included in its applications with the Federal Reserve Board a
request for approval of the right of FleetBoston to exercise its rights under
the stock option agreement, including its right to purchase more than 5% of the
outstanding shares of Summit common stock.
The option will become exercisable, subject to regulatory approval, only if
both an initial triggering event and a subsequent triggering event occur.
"Initial triggering event" and "subsequent triggering event" are defined below.
An "INITIAL TRIGGERING EVENT" means the occurrence of any of the following:
- Summit or any of its subsidiaries, without FleetBoston's prior written
consent, enters into an agreement to engage in (1) a merger or
consolidation, or any similar transaction involving Summit or any of its
significant subsidiaries, (2) a purchase or other acquisition of
beneficial ownership of all or substantially all of the assets or deposits
of Summit or any of its significant subsidiaries, (3) a purchase or other
acquisition of beneficial ownership of securities representing 15% or more
of the voting power of Summit, or (4) any substantially similar
transaction (we refer to these transactions in this document as
"ACQUISITION TRANSACTIONS");
- Summit or any of its significant subsidiaries, without FleetBoston's prior
written consent, authorizes, recommends, proposes or publicly announces
its intention to authorize, recommend or propose to engage in an
acquisition transaction;
- the Summit board of directors fails to recommend that its shareholders
approve the merger agreement with FleetBoston in anticipation of an
acquisition transaction;
- the Summit board of directors publicly withdraws or modifies, or publicly
announces its intention to withdraw or modify, in any manner adverse to
FleetBoston, its recommendation that its shareholders approve the merger
agreement in anticipation of engaging in an acquisition transaction;
- a third party acquires beneficial ownership, or the right to acquire
beneficial ownership, of 15% or more of the outstanding shares of Summit
common stock;
- a third party makes a BONA FIDE proposal to Summit or its shareholders by
public announcement or written communication that becomes the subject of
public disclosure to engage in an acquisition transaction;
- Summit breaches and does not cure within a specified time period any
covenant or obligation in the merger agreement after an overture is made
by a third party to engage in an acquisition transaction, and following
that breach FleetBoston would be entitled to terminate the merger
agreement; or
- any third party, other than in connection with a transaction to which
FleetBoston has given its prior written consent, files an application or
notice with the Federal Reserve Board, or another U.S. federal or state
bank regulatory authority, which has been accepted for processing, for
approval to engage in an acquisition transaction.
A "SUBSEQUENT TRIGGERING EVENT" means the occurrence of any of the following
events:
- any person acquires beneficial ownership of 25% or more of the
then-outstanding shares of issuer common stock; or
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- the occurrence of an initial triggering event described above in the first
bullet point of the definition of Initial Triggering Event, except that
the percentage referred to in the definition of "acquisition transaction"
is 25%.
The option will not be exercisable unless both an initial triggering event
and a subsequent triggering event occur prior to any of the following events:
- the effective time of the merger;
- termination of the merger agreement in accordance with its terms if the
termination occurs prior to the occurrence of an initial triggering event,
except in the case of the termination of the merger agreement by
FleetBoston as a result of an uncured, volitional and material breach by
Summit of any of its representations, warranties, covenants or agreements;
or
- the date that is 12 months after the termination of the merger agreement.
As of the date of this proxy statement-prospectus, to the knowledge of
FleetBoston and Summit, no initial triggering event or subsequent triggering
event has occurred.
REPURCHASE OF THE OPTION. The stock option agreement permits FleetBoston to
require Summit to repurchase the option, and any shares purchased under the
option, if either of the following two events occur during the period in which
the option is exercisable or would be exercisable had if not been exercised:
- the completion of an acquisition transaction or
- the acquisition by any person of the beneficial ownership of 50% or more
of the then outstanding shares of Summit common stock.
During the period in which the option is exercisable or would be exercisable
had it not been exercised, any holder of the option may require Summit, or any
successor to Summit, to repurchase the option at a price equal to the amount by
which the "market/offer price" exceeds the exercise price, multiplied by the
number of shares for which the option may then be exercised. In addition, within
90 days after the repurchase right arises, any holder of shares purchased under
the option may require Summit, or any successor to Summit, to repurchase those
shares at a price equal to the market/offer price multiplied by the number of
option shares designated for repurchase.
The term "MARKET/OFFER PRICE" means the highest of:
- the price per share of Summit common stock at which a tender offer or
exchange offer for the Summit common stock has been made;
- the price per share of Summit common stock to be paid by any third party
under an agreement with Summit;
- the highest closing price for shares of Summit common stock within the
six-month period immediately preceding the date of the repurchase request;
or
- in the event of a sale of all or a substantial portion of Summit's assets,
the sum of the price paid in the sale for these assets and the net current
market value of the remaining assets of Summit as determined by a
nationally recognized investment banking firm divided by the number of
shares of Summit common stock outstanding at the time of the sale.
SUBSTITUTE OPTION. In some situations, the option will convert into an
option to purchase the shares of a successor to Summit. These situations include
Summit entering into any of the following types of agreements at any time prior
to an exercise termination event:
- an agreement to consolidate with or merge into any person, other than
FleetBoston or one of its subsidiaries, unless Summit is the continuing or
surviving corporation;
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- an agreement to permit any third party to merge into Summit where Summit
is the continuing or surviving corporation and the then outstanding shares
of Summit common stock are changed into or exchanged for stock or other
securities of any other person or cash or any other property, or the then
outstanding shares of Summit common stock after the merger will represent
less than 50% of the outstanding voting shares and voting share
equivalents of the merged corporation; or
- an agreement to sell or otherwise transfer all or substantially all of
Summit's assets to any third party.
If Summit enters into any of those agreements, then the applicable agreement
must provide that, upon completion of the transaction, the Summit stock option
will be converted into, or exchanged for, an option to purchase securities, at
the election of the holder, of either the acquiring person or any person that
controls the acquiring person on substantially the same terms as the Summit
stock option.
CASH SURRENDER VALUE. FleetBoston may, at any time during which Summit
would be required to repurchase the option or any option shares, surrender the
option (together with any option shares issued to and then owned by the holder
of the option) to Summit in exchange for a cash payment equal to the surrender
price, except that FleetBoston may not exercise this right if Summit has
previously repurchased the option (or any portion of the option) or any option
shares as described above. The surrender price is equal to $210 million plus, if
applicable, the aggregate purchase price previously paid by FleetBoston with
respect to any option shares, minus, if applicable, the excess of (1) the net
cash, if any, received by FleetBoston in an arm's-length sale of option shares
(or any other securities into which these Issuer Option Shares were converted or
exchanged) to any party not affiliated with FleetBoston over (2) the purchase
price paid by FleetBoston with respect to these option shares.
MAXIMUM PROFIT LIMITATION. The stock option agreement limits FleetBoston's
total profit to $350 million. Total profit means the aggregate pre-tax amount of
the following:
- the excess of (1) the net cash amounts or fair market value of any
property received by FleetBoston pursuant to the sale of the option or the
option shares to any unaffiliated party, other than any amount received by
FleetBoston upon the repurchase of the option or the option shares,
respectively, by Summit, after payment of applicable brokerage or sales
commissions and discounts, over (2) FleetBoston's aggregate purchase price
for those option shares;
- all amounts received by FleetBoston upon the repurchase of the option or
the option shares by Summit; and
- all equivalent amounts with respect to the substitute option and
substitute option shares.
In addition, FleetBoston may not exercise the stock option for a number of
shares as would, as of the date of exercise, result in a notional total profit
of more than $350 million and, if exercise of the option would otherwise result
in the notional total profit exceeding that amount, FleetBoston, in its
discretion, may take any of several permitted steps so that the notional total
profit will not restrict any subsequent exercise of the option which at that
time complies with this limitation. As used in the stock option agreement,
"NOTIONAL TOTAL PROFIT" means, with respect to any number of option shares, the
total profit, determined as of the date of the proposed exercise assuming that
the option was exercised on that date for that number of shares, and assuming
that those shares, together with all other option shares held by FleetBoston and
its affiliates as of that date, were sold for cash at the closing market price
for the Summit common stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
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ADJUSTMENT. The stock option agreement provides for adjustment to the
number of shares and the exercise price of the option upon the occurrence of
certain changes to the capital structure of Summit or certain other events or
transactions.
RESTRICTIONS ON RESALES BY AFFILIATES
Shares of FleetBoston common stock to be issued to Summit shareholders in
the merger have been registered under the Securities Act of 1933. Shares of
FleetBoston common stock issued in the merger may be traded freely and without
restriction by those shareholders not deemed to be affiliates (as that term is
defined under the Securities Act) of Summit. Any subsequent transfer of shares,
however, by any person who is an affiliate of Summit at the time the merger is
submitted for vote of the Summit shareholders will, under existing law, require
either:
- the further registration under the Securities Act of the shares of
FleetBoston common stock to be transferred;
- compliance with Rule 145 promulgated under the Securities Act, which
permits limited sales under certain circumstances; or
- the availability of another exemption from registration.
An "AFFILIATE" of Summit is a person who directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, Summit. These restrictions are expected to apply to the directors and
executive officers of Summit and the holders of 10% or more of the Summit common
stock. The same restrictions apply to certain relatives or the spouse of those
persons and any trusts, estates, corporations or other entities in which those
person have a 10% or greater beneficial or equity interest. FleetBoston will
give stop transfer instructions to the transfer agent with respect to the shares
of FleetBoston common stock to be received by persons subject to these
restrictions, and the certificates for their shares will bear appropriate
legends.
SEC guidelines regarding qualifying for the pooling of interests method of
accounting also limit sales of shares of the acquiring and acquired company by
affiliates of either company in a business combination. SEC guidelines indicate
that the pooling of interests method of accounting generally will not be
challenged on the basis of sales by affiliates of the acquiring or acquired
company if those affiliates do not dispose of any of the shares of the
corporation they own or shares of a corporation they receive in connection with
a merger during the period beginning 30 days before the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
Each of Summit and FleetBoston has agreed in the merger agreement to use its
reasonable best efforts to cause each person who is an affiliate of that party
for purposes of qualifying the merger for pooling of interests accounting
treatment, and Summit has agreed to use its reasonable best efforts to cause
each person who is an affiliate of it for purposes of Rule 145 under the
Securities Act, to deliver to the other party a written agreement intended to
ensure compliance with the Securities Act and preserve the ability to treat the
merger as a pooling of interests.
FleetBoston has agreed in the merger agreement to use its reasonable best
efforts to publish as promptly as reasonably practicable, but in no event later
than 90 days after the end of the first month after the effective time in which
there are at least 30 days of post-merger combined operations, combined revenue
and net income figures as contemplated by Accounting Series Release No. 135, the
SEC's release addressing pooling of interests transactions.
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MANAGEMENT AND OPERATIONS AFTER THE MERGER
MANAGEMENT
Pursuant to the merger agreement, Mr. Semrod and Mr. Dunphy will be
appointed to the FleetBoston board of directors, where they will serve in the
class of FleetBoston directors with terms expiring at FleetBoston's 2004 annual
meeting of shareholders. In addition, Mr. Semrod and Mr. Collins will become
employees of FleetBoston as described above under "The Merger--Interests of
Certain Persons in the Merger."
OPERATIONS
While there can be no assurance as to the achievement of business and
financial goals, FleetBoston and Summit currently expect to achieve
approximately $275 million in annual pre-tax cost savings as a result of the
merger, with 60% to be realized by the end of 2001 and 100% to be realized by
the end of 2002. FleetBoston and Summit also expect that the combined company
will incur an after-tax charge to earnings of approximately $250 million upon
completion of the merger or shortly thereafter. This charge will be primarily
composed of the following:
- personnel-related costs, including costs related to employee severance and
outplacement services for separated employees;
- costs related to information technology and operations, including contract
cancellation penalties resulting from duplicate or incompatible systems
and losses incurred from the write-off of computer hardware and software
held for disposition; and
- transaction costs, consisting primarily of investment banker fees, legal
and accounting expenses and costs of required regulatory filings.
This charge will result from a merger and integration plan which we anticipate
will be finalized in the first quarter of 2001. We also expect to recognize
approximately $60 million of after-tax charges to earnings in subsequent periods
related to the costs of integrating our two companies. These costs will be
expensed as incurred. We anticipate that we will reposition the combined
company's balance sheet subsequent to completion of the merger, by disposing of
approximately $15 billion of low margin assets, primarily investment securities
and residential mortgage loans, at an after-tax loss of approximately
$175 million. These statements constitute "forward-looking statements" for
purposes of the Private Securities Litigation Reform Act of 1995, and actual
results, which are dependent on a number of factors, many of which are beyond
the control of FleetBoston and Summit, may differ materially. See
"Forward-Looking Statements."
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PRICE RANGE OF COMMON STOCK AND DIVIDENDS
FLEETBOSTON
FleetBoston common stock is listed on the New York Stock Exchange and traded
under the symbol "FBF." The following table sets forth, for the periods
indicated, the high and low sales prices per share of FleetBoston common stock
on the New York Stock Exchange and cash dividends declared per share of
FleetBoston common stock. The cash dividend and stock price information has been
adjusted to reflect FleetBoston's two-for-one stock split paid on October 7,
1998.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
------------------- DIVIDENDS
HIGH LOW DECLARED
-------- -------- ---------
<S> <C> <C> <C>
1998
First Quarter............................................. $42.875 $34.188 $.245
Second Quarter............................................ 45.375 38.563 .245
Third Quarter............................................. 44.625 32.531 .245
Fourth Quarter............................................ 45.250 30.000 .270
1999
First Quarter............................................. 46.813 37.375 .270
Second Quarter............................................ 45.250 36.688 .270
Third Quarter............................................. 45.000 34.938 .270
Fourth Quarter............................................ 44.063 33.250 .300
2000
First Quarter............................................. 37.938 25.125 .300
Second Quarter............................................ 42.500 32.750 .300
Third Quarter............................................. 43.750 34.250 .300
Fourth Quarter............................................ 39.625 31.750 .330
2001
First Quarter (through January , 2001)..................
</TABLE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of FleetBoston and its subsidiaries,
applicable government regulations and other factors deemed relevant by the
FleetBoston board of directors. As described under "Regulation and
Supervision--Dividend Restrictions," various U.S. state and federal laws limit
the ability of affiliated banks to pay dividends to FleetBoston. See "The
Merger--Conduct of Business Pending the Merger and Other Agreements."
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SUMMIT
Summit common stock is listed on the New York Stock Exchange and traded
under the symbol "SUB." The following table sets forth, for the periods
indicated, the high and low sales prices per share of Summit common stock on the
New York Stock Exchange, and cash dividends declared per share of Summit common
stock.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
------------------- DIVIDENDS
HIGH LOW DECLARED
-------- -------- ---------
<S> <C> <C> <C>
1998
First Quarter............................................. $53.875 $45.875 $.270
Second Quarter............................................ 53.500 44.750 .300
Third Quarter............................................. 49.438 32.750 .300
Fourth Quarter............................................ 45.000 30.750 .300
1999
First Quarter............................................. 44.500 37.125 .300
Second Quarter............................................ 44.000 37.375 .330
Third Quarter............................................. 42.563 30.625 .330
Fourth Quarter............................................ 35.500 28.500 .330
2000
First Quarter............................................. 30.750 22.125 .330
Second Quarter............................................ 31.000 24.438 .350
Third Quarter............................................. 34.938 24.188 .350
Fourth Quarter............................................ 39.938 31.500 .350
2001
First Quarter (through January , 2001)..................
</TABLE>
The timing and amount of any dividends paid prior to the completion of the
merger will depend upon earnings, cash requirements, the financial condition of
Summit and its subsidiaries, applicable government regulations and other factors
deemed relevant by the Summit board of directors. In addition, the merger
agreement contains limitations on the ability of Summit to pay dividends. See
"The Merger--Conduct of Business Pending the Merger and Other Agreements."
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<PAGE>
INFORMATION ABOUT FLEETBOSTON
FleetBoston is a diversified financial services company organized under the
laws of Rhode Island and registered under the Bank Holding Company Act.
FleetBoston offers a comprehensive array of financial solutions to approximately
20 million customers in more than 20 countries. Its key businesses include small
business services, credit card services, asset management, private banking,
consumer banking, retail securities brokerage, consumer lending, student loan
and other processing services, community development banking, mortgage banking,
global markets and foreign exchange, middle market lending, international
banking, debt capital markets, global financial services, commercial finance,
industry banking, investment banking, principal investing and securities
specialist services.
On October 1, 1999, FleetBoston completed its merger with BankBoston. In
connection with obtaining regulatory approvals for the merger, the Federal
Reserve Board and the United States Department of Justice required that
FleetBoston agree to divest approximately $13 billion of deposits and
$9 billion of loans from the combined company, which is expected to result in an
annualized reduction of net income of approximately $160 million. As of the date
of this document, substantially all of the divestitures have been completed.
At September 30, 2000, FleetBoston's consolidated total assets were
$179.1 billion, its consolidated total deposits were $98.9 billion and its
consolidated total shareholders' equity was $15.6 billion. Based on total assets
at September 30, 2000, FleetBoston was the eighth largest financial holding
company in the United States.
The principal office of FleetBoston is located at 100 Federal Street,
Boston, Massachusetts 02110, telephone number (617) 434-2200.
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INFORMATION ABOUT SUMMIT
GENERAL
Summit is a bank holding company registered under the Bank Holding Company
Act and incorporated in New Jersey. Summit's bank subsidiaries engage in the
general banking business in Connecticut, New Jersey and Pennsylvania. Summit's
non-banking subsidiaries engage primarily in securities brokerage, insurance
brokerage, venture capital investment, commercial finance lending, lease
financing, asset-based lending, letter of credit issuance, data processing and
reinsuring credit life and disability insurance policies related to consumer
loans. At September 30, 2000, Summit's consolidated total assets were
$39.5 billion, its consolidated total deposits were $26.6 billion and its
consolidated total shareholders' equity was $3.0 billion. Based on total assets
at September 30, 2000, Summit was the largest bank holding company based in New
Jersey and the twenty-fourth largest bank holding company in the United States.
The principal office of Summit is located at 301 Carnegie Center, P.O. Box
2066, Princeton, New Jersey 08543-2066, telephone number (609) 987-3200.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various benefit
plans (including stock option plans), voting securities, including the principal
holders of those securities, certain relationships and related transactions and
other matters as to Summit is incorporated by reference or set forth in Summit's
Annual Report on Form 10-K for the year ended December 31, 1999, which is
incorporated in this proxy statement-prospectus by reference. Shareholders
desiring copies of this document and other documents may contact Summit at its
address or telephone number indicated under "Where You Can Find More
Information."
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REGULATION AND SUPERVISION
INTRODUCTION
The following discussion sets forth the material elements of the regulatory
framework applicable to financial and bank holding companies and their
subsidiaries, and provides certain specific information relevant to FleetBoston.
This regulatory framework primarily is intended for the protection of depositors
and the deposit insurance funds that insure deposits of banks, and not for the
protection of security holders.
As discussed in more detail below, this regulatory framework, among other
things, may restrict FleetBoston's ability to diversify into certain areas of
financial services, acquire depository institutions in certain states and pay
dividends on its capital stock. It may also require FleetBoston to provide
financial support to one or more of its banking subsidiaries, maintain capital
balances in excess of those desired by management and pay higher deposit
insurance premiums as a result of a deterioration in the financial condition of
depository institutions in general.
To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to those
provisions. A change in the statutes, regulations or regulatory policies
applicable to FleetBoston or its subsidiaries may have a material effect on the
business of FleetBoston.
Additional information about the regulation and supervision of FleetBoston
can be found in FleetBoston's annual and quarterly reports filed with the SEC.
See "Where You Can Find More Information."
REGULATORY AGENCIES
FINANCIAL HOLDING COMPANY. FleetBoston elected to become a financial
holding company on March 13, 2000. As such, FleetBoston is subject to regulation
under the Bank Holding Company Act and to inspection, examination and
supervision by the Federal Reserve Board.
SUBSIDIARY BANKS. FleetBoston's national banking subsidiaries are subject
to regulation and examination primarily by the Office of the Comptroller of the
Currency (which we refer to in this document as the "OCC") and secondarily by
the Federal Reserve Board and the Federal Deposit Insurance Corporation. In
connection with its international operations, FleetBoston is also subject to
regulation by various foreign bank and securities regulatory agencies in those
countries in which it does business. FleetBoston has one principal banking
subsidiary, Fleet National Bank, a national banking association. Upon completion
of the merger with Summit, FleetBoston will acquire Summit's bank subsidiaries,
which include Summit Bank, a New Jersey chartered bank, Summit Bank, a
Pennsylvania chartered bank, and Summit Bank, a Connecticut chartered bank.
These banks are, and will be, subject to regulation by the FDIC and the Federal
Reserve Board, as well as the banking department of the state in which they are
chartered. FleetBoston intends to merge those banks into Fleet National Bank
promptly following the Summit merger.
NONBANK SUBSIDIARIES. Many of FleetBoston's and Summit's nonbank
subsidiaries also are subject to regulation by the Federal Reserve Board and
other applicable federal and state agencies. FleetBoston's brokerage
subsidiaries and the brokerage subsidiaries of Summit that FleetBoston will
acquire as a result of the merger are regulated by the SEC, the National
Association of Securities Dealers, Inc. and state securities regulators.
FleetBoston's insurance subsidiaries, and those insurance subsidiaries of Summit
that FleetBoston will acquire as a result of the merger, are subject to
regulation by applicable state insurance regulatory agencies. Other nonbank
subsidiaries of FleetBoston and Summit are subject to the laws and regulations
of both the federal government and the various states in which they conduct
business.
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OTHER REQUIREMENTS AND REGULATIONS. FleetBoston and its subsidiaries are
also affected by the fiscal and monetary policies of the U.S. federal government
and the Federal Reserve Board, and by various other governmental requirements
and regulations in the states and countries where FleetBoston and its
subsidiaries operate.
FINANCIAL AND BANK HOLDING COMPANY ACTIVITIES
"FINANCIAL IN NATURE" REQUIREMENT. As a bank holding company that has
elected also to become a financial holding company, FleetBoston may affiliate
with securities firms and insurance companies and engage in other activities
that are financial in nature. Activities that are "financial in nature" include
securities underwriting, dealing and market making, sponsoring mutual funds and
investment companies, insurance underwriting and agency, merchant banking, and
activities that the Federal Reserve Board has determined to be closely related
to banking. A bank holding company that is not also a financial holding company
is limited to engaging in banking and such other activities previously
determined by the Federal Reserve Board to be closely related to banking.
No Federal Reserve Board approval is required for FleetBoston to acquire a
company, other than a bank holding company, bank or savings association, engaged
in activities that are financial in nature or incidental to activities that are
financial in nature, as determined by the Federal Reserve Board. Prior Federal
Reserve Board approval is required before FleetBoston may acquire the beneficial
ownership or control of more than 5% of the voting shares or substantially all
of the assets of a bank holding company, bank or savings association. If any
subsidiary bank of FleetBoston ceases to be "well capitalized" or "well managed"
under applicable regulatory standards, the Federal Reserve Board may, among
other actions, order FleetBoston to divest the subsidiary bank. Alternatively,
FleetBoston may elect to conform its activities to those permissible for a bank
holding company that is not also a financial holding company. If any subsidiary
bank of FleetBoston receives a rating under the Community Reinvestment Act of
1977 of less than satisfactory, FleetBoston will be prohibited from engaging in
new activities or acquiring companies other than bank holding companies, banks
or savings associations.
AFFILIATE TRANSACTIONS. Various governmental requirements, including
Sections 23A and 23B of the Federal Reserve Act, limit borrowings by FleetBoston
and its non-bank subsidiaries from its affiliate insured depository
institutions, and also limit various other transactions between FleetBoston and
its non-bank subsidiaries, on the one hand, and its affiliate insured depository
institutions, on the other. For example, Section 23A of the Federal Reserve Act
limits to no more than 10% of its total capital the aggregate outstanding amount
of any insured depository institution's loans and other "covered transactions"
with any particular non-bank affiliate, and limits to no more than 20% of its
total capital the aggregate outstanding amount of any insured depository
institution's covered transactions with all of its non-bank affiliates.
Section 23A of the Federal Reserve Act also generally requires that an insured
depository institution's loans to its non-bank affiliates be secured, and
Section 23B of the Federal Reserve Act generally requires that an insured
depository institution's transactions with its non-bank affiliates be on
arms-length terms.
INTERSTATE BANKING AND BRANCHING. Under the Riegle-Neal Interstate Banking
and Branching Efficiency Act (which we refer to in this document as
"RIEGLE-NEAL"), subject to certain concentration limits and other requirements:
- bank holding companies such as FleetBoston are permitted to acquire banks
and bank holding companies located in any state;
- any bank that is a subsidiary of a bank holding company is permitted to
receive deposits, renew time deposits, close loans, service loans and
receive loan payments as an agent for any other bank subsidiary of that
bank holding company; and
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<PAGE>
- banks are permitted to acquire branch offices outside their home states by
merging with out-of-state banks, purchasing branches in other states and
establishing DE NOVO branch offices in other states. The ability of banks
to acquire branch offices through purchase or opening of other branches is
contingent, however, on the host state having adopted legislation "opting
in" to those provisions of Riegle-Neal. In addition, the ability of a bank
to merge with a bank located in another state is contingent on the host
state not having adopted legislation "opting out" of that provision of
Riegle-Neal.
FleetBoston may from time to time use Riegle-Neal to acquire banks in
additional states and to consolidate its bank subsidiaries.
CONTROL ACQUISITIONS. The Change in Bank Control Act prohibits a person or
group of persons from acquiring "control" of a bank holding company, unless the
Federal Reserve Board has been notified and has not objected to the transaction.
Under a rebuttable presumption established by the Federal Reserve Board, the
acquisition of 10% or more of a class of voting stock of a bank holding company
with a class of securities registered under Section 12 of the Exchange Act, such
as FleetBoston, would, under the circumstances set forth in the presumption,
constitute acquisition of control of the bank holding company.
In addition, a company is required to obtain the approval of the Federal
Reserve Board under the Bank Holding Company Act before acquiring 25% (5% in the
case of an acquiror that is a bank holding company) or more of any class of
outstanding voting stock of a bank holding company, or otherwise obtaining
control or a "controlling influence" over that bank holding company.
LIABILITY FOR BANK SUBSIDIARIES
Under current Federal Reserve Board policy, a bank holding company is
expected to act as a source of financial and managerial strength to each of its
subsidiary banks and to maintain resources adequate to support each subsidiary
bank. This support may be required at times when the bank holding company may
not have the resources to provide it. In addition, Section 55 of the National
Bank Act permits the OCC to order the PRO RATA assessment of shareholders of a
national bank whose capital has become impaired. If a shareholder, such as
FleetBoston, failed, within three months, to pay that assessment, the OCC could
order the sale of the shareholder's stock to cover the deficiency. In the event
of a bank holding company's bankruptcy, any commitment by the bank holding
company to a U.S. federal bank regulatory agency to maintain the capital of a
subsidiary bank would be assumed by the bankruptcy trustee and entitled to
priority of payment.
Any depository institution insured by the FDIC can be held liable for any
loss incurred, or reasonably expected to be incurred, by the FDIC in connection
with:
- the "default" of a commonly controlled FDIC-insured depository
institution; or
- any assistance provided by the FDIC to a commonly controlled FDIC-insured
depository institution "in danger of default."
"Default" generally is defined as the appointment of a conservator or
receiver and "in danger of default" generally is defined as the existence of
certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance.
All of FleetBoston's subsidiary banks, as well as those bank subsidiaries of
Summit that will be acquired as a result of the merger, are FDIC-insured
depositary institutions. If a default occurred with respect to a bank, any
capital loans to the bank from its parent holding company would be subordinate
in right of payment to payment of the bank's depositors and certain of its other
obligations.
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CAPITAL REQUIREMENTS
FleetBoston is subject to risk-based capital requirements and guidelines
imposed by the Federal Reserve Board, which are substantially similar to the
capital requirements and guidelines imposed by the Federal Reserve Board, the
OCC, the OTS and the FDIC on the depository institutions within their respective
jurisdictions. For this purpose, a depository institution's or holding company's
assets and certain specified off-balance sheet commitments are assigned to four
risk categories, each weighted differently based on the level of credit risk
that is ascribed to those assets or commitments. In addition, risk-weighted
assets are adjusted for low-level recourse and market risk equivalent assets. A
depository institution's or holding company's capital, in turn, is divided into
three tiers:
- core (commonly referred to as "Tier 1") capital, which includes common
equity, non-cumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock and related surplus (excluding
auction rate issues), and a limited amount of cumulative perpetual
preferred stock and minority interests in equity accounts of consolidated
subsidiaries, less goodwill, certain identifiable intangible assets and
certain other assets;
- supplementary (commonly referred to as "Tier 2") capital, which includes,
among other items, perpetual preferred stock not meeting the Tier 1
definition, mandatory convertible securities, subordinated debt and
reserves for credit losses, subject to certain limitations, less certain
required deductions; and
- market risk (commonly referred to as "Tier 3") capital, which includes
qualifying unsecured subordinated debt.
FleetBoston, like other financial and bank holding companies, currently is
required to maintain Tier 1 and "total capital" (the sum of Tier 1, Tier 2 and
Tier 3 capital) equal to at least 4% and 8% of its total risk-weighted assets
(including certain off-balance-sheet items, such as unused lending commitments
and standby letters of credit), respectively. At September 30, 2000, each of
FleetBoston and Summit met both requirements, with FleetBoston's Tier 1 and
total capital equal to 7.61% and 11.93% of its total risk-weighted assets,
respectively, and Summit's Tier 1 and total capital equal to 9.08% and 10.51% of
its total risk-weighted assets, respectively.
The Federal Reserve Board, the FDIC and the OCC have adopted rules to
incorporate market and interest rate risk components into their risk-based
capital standards. Amendments to the risk-based capital requirements,
incorporating market risk, became effective January 1, 1998. Under these market
risk requirements, capital must be allocated to support the amount of market
risk related to a financial institution's ongoing trading activities.
The Federal Reserve Board also requires bank holding companies to maintain a
minimum "leverage ratio" (Tier 1 capital to adjusted total assets) of 3%, if the
bank holding company has the highest regulatory rating or meets certain other
requirements, or of 4% if the bank holding company does not meet these
requirements. At September 30, 2000, FleetBoston's leverage ratio was 7.90% and
Summit's leverage ratio was 6.95%. Neither FleetBoston nor Summit was subject to
any additional leverage ratio requirements as of that date.
The Federal Reserve Board may set capital requirements higher than the
minimums noted above for holding companies whose circumstances warrant it. For
example, bank holding companies experiencing or anticipating significant growth
may be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"tangible Tier I capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
Each of FleetBoston's bank subsidiaries is subject to similar risk-based and
leverage capital requirements adopted by its applicable U.S. federal banking
agency. FleetBoston's bank subsidiaries
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and Summit's bank subsidiaries were all in compliance with the applicable
minimum capital requirements as of September 30, 2000.
Failure to meet capital requirements could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business, which are described under
"--FDICIA."
FDICIA. The Federal Deposit Insurance Corporation Improvement Act of 1991
(which we refer to in this document as "FDICIA"), and the regulations
promulgated under FDICIA, among other things, identifies five capital categories
for insured depository institutions--well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized--and requires U.S. federal bank regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements based on these
categories. The FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Unless a bank or thrift is well-capitalized,
it is subject to restrictions on its ability to offer brokered deposits and on
certain other aspects of its operations. An undercapitalized bank or thrift must
develop a capital restoration plan and its parent bank holding company must
guarantee the bank's or thrift's compliance with the plan up to the lesser of 5%
of the bank's or thrift's assets at the time it became undercapitalized and the
amount needed to comply with the plan.
As of September 30, 2000, each of FleetBoston's and Summit's bank
subsidiaries was well-capitalized based on the prompt corrective action ratios
and guidelines described above. It should be noted, however, that a bank's
capital category is determined solely for the purpose of applying the OCC's, or
the FDIC's, prompt corrective action regulations and that the capital category
may not constitute an accurate representation of the bank's overall financial
condition or prospects.
DIVIDEND RESTRICTIONS
Various U.S. federal and state statutory provisions limit the amount of
dividends FleetBoston's bank subsidiaries can pay to FleetBoston without
regulatory approval. Dividend payments by national banks are limited to the
lesser of:
- the level of undivided profits;
- the amount in excess of which the bank ceases to be at least adequately
capitalized; and
- absent regulatory approval, an amount not in excess of net income for the
current year combined with retained net income for the preceding two
years.
Likewise, the approval of the Federal Reserve Board is required for any
dividend by a state-chartered bank that is a member of the Federal Reserve
System (which we refer to in this document as a "STATE MEMBER BANK") if the
total of all dividends declared by the bank in any calendar year would exceed
the total of its net profits, as defined by regulatory agencies, for that year
combined with its retained net profits for the preceding two years. In addition,
a state member bank may not pay a dividend in an amount greater than its net
profits then on hand.
At September 30, 2000, approximately $1.2 billion of the total shareholders'
equity of the FleetBoston bank subsidiaries was available for payment of
dividends to FleetBoston without approval by the applicable regulatory
authority. Also, at September 30, 2000, $236.6 million of the total
shareholders' equity of the Summit bank subsidiaries was available for payment
of dividends to Summit without approval by the applicable regulatory authority.
In addition, U.S. federal bank regulatory authorities have authority to
prohibit FleetBoston's bank subsidiaries from engaging in an unsafe or unsound
practice in conducting their business. The payment of dividends, depending upon
the financial condition of the bank in question, could be deemed to
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constitute an unsafe or unsound practice. The ability of FleetBoston's bank
subsidiaries to pay dividends in the future is currently, and could be further,
influenced by bank regulatory policies and capital guidelines.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of FleetBoston's bank subsidiaries, as well as those of Summit,
are insured up to regulatory limits by the FDIC, and, accordingly, are subject
to deposit insurance assessments to maintain the Bank Insurance Fund (which we
refer to in this document as the "BIF") and/or the Savings Association Insurance
Fund (which we refer to in this document as the "SAIF") administered by the
FDIC. The FDIC has adopted regulations establishing a permanent risk-related
deposit insurance assessment system. Under this system, the FDIC places each
insured bank in one of nine risk categories based on (1) the bank's
capitalization and (2) supervisory evaluations provided to the FDIC by the
institution's primary U.S. federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC.
The annual insurance premiums on bank deposits insured by the BIF and the
SAIF vary between $0.00 per $100 of deposits for banks classified in the highest
capital and supervisory evaluation categories to $0.27 per $100 of deposits for
banks classified in the lowest capital and supervisory evaluation categories.
The Deposit Insurance Funds Act provides for assessments to be imposed on
insured depository institutions with respect to deposits insured by the BIF and
the SAIF (in addition to assessments currently imposed on depository
institutions with respect to BIF- and SAIF-insured deposits) to pay for the cost
of Financing Corporation (which we refer to in this document as "FICO") funding.
The FDIC has established the FICO assessment rates at $0.0202 per $100 annually
for both BIF-assessable deposits and SAIF-assessable deposits. The FICO
assessments do not vary depending upon a depository institution's capitalization
or supervisory evaluations. As of June 30, 2000, FleetBoston's bank subsidiaries
held approximately $87.2 billion and $3.4 billion, respectively, of BIF- and
SAIF-assessable deposits and Summit's bank subsidiaries held approximately $20.9
billion and $5.6 billion, respectively, of BIF- and SAIF-assessable deposits.
DEPOSITOR PREFERENCE STATUTE
In the "liquidation or other resolution" of an institution by any receiver,
U.S. federal legislation provides that deposits and certain claims for
administrative expenses and employee compensation against the insured depository
institution would be afforded a priority over other general unsecured claims
against that institution, including federal funds and letters of credit.
BROKERED DEPOSITS
Under FDIC regulations, no FDIC-insured depository institution can accept
brokered deposits unless it (1) is well capitalized, or (2) is adequately
capitalized and receives a waiver from the FDIC. In addition, these regulations
prohibit any depository institution that is not well-capitalized from
(1) paying an interest rate on deposits in excess of 75 basis points over
certain prevailing market rates or (2) offering "pass through" deposit insurance
on certain employee benefit plan accounts, unless it provides certain notice to
affected depositors.
PRIVACY PROVISIONS OF GRAMM-LEACH-BLILEY ACT
Under the Gramm-Leach-Bliley Act, federal banking regulators are required to
adopt rules that will limit the ability of banks and other financial
institutions to disclose non-public information about consumers to nonaffiliated
third parties. These limitations will require disclosure of privacy policies to
consumers and, in some circumstances, will allow consumers to prevent disclosure
of certain personal
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information to a nonaffiliated third party. Federal banking regulators issued
final rules on May 10, 2000. The rules will become effective November 13, 2000,
but compliance is optional until July 1, 2001. The privacy provisions of this
Act will affect how consumer information is transmitted through diversified
financial companies and conveyed to outside vendors. It is not possible at this
time to assess the impact of the privacy provisions on FleetBoston's financial
condition or results of operations.
FUTURE LEGISLATION
Changes to the laws and regulations in the states and countries where
FleetBoston, Summit and their respective subsidiaries do business can affect the
operating environment of bank holding companies and their subsidiaries in
substantial and unpredictable ways. Neither FleetBoston nor Summit can
accurately predict whether those changes in laws and regulations will occur,
and, if those changes occur, the ultimate effect they would have upon the
financial condition or results of operations of FleetBoston or any of its
subsidiaries after the merger.
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DESCRIPTION OF FLEETBOSTON CAPITAL STOCK
GENERAL
The authorized capital stock of FleetBoston consists of 2 billion shares of
FleetBoston common stock, and 16 million shares of FleetBoston preferred stock,
issuable in one or more series from time to time by action of the FleetBoston
board of directors.
At September 30, 2000, 904,959,647 shares of FleetBoston common stock were
outstanding. In addition, as of September 30, 2000, FleetBoston had outstanding
four series of FleetBoston preferred stock as follows:
- 765,010 shares of Series V 7.25% perpetual preferred stock, having a
liquidation value of $250 per share, plus accrued and unpaid dividends,
were designated, issued and outstanding;
- 600,000 shares of Series VI 6.75% perpetual preferred stock, having a
liquidation value of $250 per share, plus accrued and unpaid dividends,
were designated, issued and outstanding;
- 700,000 shares of Series VII fixed/adjustable rate cumulative preferred
stock, having a liquidation value of $250 per share, plus accrued and
unpaid dividends, were designated, issued and outstanding; and
- 200,000 shares of Series VIII fixed/adjustable rate noncumulative
preferred stock, having a liquidation value of $250 per share, plus
accrued and unpaid dividends, were designated, issued and outstanding.
In addition, the FleetBoston board of directors has established a series of
500,000 shares of cumulative participating junior preferred stock (Series 2000)
issuable upon exercise of the FleetBoston rights described under "--Preferred
Stock Purchase Rights," of which no shares are issued and outstanding. Each of
these outstanding series and classes of FleetBoston preferred stock is described
under "--Preferred Stock."
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island Business Corporation
Act, the FleetBoston articles of incorporation and the FleetBoston by-laws.
FLEETBOSTON COMMON STOCK
Holders of FleetBoston common stock are entitled to receive dividends when,
as and if declared by the FleetBoston board of directors out of any funds
legally available for dividends. Holders of FleetBoston common stock are also
entitled, upon the liquidation of FleetBoston, and after claims of creditors and
preferences of FleetBoston preferred stock, and any other class or series of
FleetBoston preferred stock outstanding at the time of liquidation, to receive
PRO RATA the net assets of FleetBoston. FleetBoston pays dividends on
FleetBoston common stock only if it has paid or provided for all dividends on
the outstanding series of FleetBoston preferred stock, and any other class or
series of preferred stock at the time outstanding, for the then-current period
and, in the case of any cumulative FleetBoston preferred stock, all prior
periods.
FleetBoston preferred stock has, or upon issuance will have, preference over
FleetBoston common stock with respect to the payment of dividends and the
distribution of assets in the event of the liquidation or dissolution of
FleetBoston. FleetBoston preferred stock also has such other preferences as may
be fixed by the FleetBoston board of directors.
Holders of FleetBoston common stock are entitled to one vote for each share
that they hold and are vested with all of the voting power except as the
FleetBoston board of directors has provided, or may provide in the future, with
respect to FleetBoston preferred stock or any other class or series of
FleetBoston preferred stock that it may authorize in the future. See
"--Preferred Stock." Shares of
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FleetBoston common stock are not redeemable, and have no subscription,
conversion or preemptive rights.
The affirmative vote of not less than 80% of FleetBoston's outstanding
voting stock, voting separately as a class, is required for certain business
combinations between FleetBoston and/or its subsidiaries and persons owning 10%
or more of its voting stock. See "Selected Provisions in the Articles of
FleetBoston--Business Combinations With Related Persons."
FleetBoston common stock is listed on the New York Stock Exchange and the
Boston Stock Exchange. The outstanding shares of FleetBoston common stock are,
and the shares to be issued to holders of Summit common stock upon completion of
the merger, will be validly issued, fully paid and non-assessable. The holders
of FleetBoston common stock are not, and will not be, generally subject to any
liability as shareholders; however if the FleetBoston board of directors
approves, and FleetBoston makes, a dividend or other distribution when
FleetBoston is insolvent, or that renders FleetBoston insolvent, and any of
FleetBoston's directors is found liable for the distribution, then FleetBoston
shareholders may be required to pay back the amount of the distribution made to
them, or the portion of the distribution that caused FleetBoston to become
insolvent.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for FleetBoston common stock is First
Chicago Trust Company of New York, a division of EquiServe LP.
RESTRICTIONS ON OWNERSHIP
The Bank Holding Company Act requires any "bank holding company," as defined
in the Bank Holding Company Act, to obtain the approval of the Federal Reserve
Board prior to the acquisition of 5% or more of FleetBoston common stock. Any
person, other than a bank holding company, is required to obtain prior approval
of the Federal Reserve Board to acquire 10% or more of FleetBoston common stock
under the Change in Bank Control Act. Any holder of 25% or more of FleetBoston
common stock, or a holder of 5% or more if the holder otherwise exercises a
"controlling influence" over FleetBoston, is subject to regulation as a bank
holding company under the Bank Holding Company Act. See "Regulation and
Supervision."
PREFERRED STOCK PURCHASE RIGHTS
On August 16, 2000, the FleetBoston board of directors declared a dividend
of one preferred stock purchase right (a "FLEETBOSTON RIGHT") for each share of
FleetBoston common stock outstanding as of the close of business on
November 21, 2000. Each FleetBoston right, when exercisable and prior to
adjustment, will entitle the registered holder to purchase from FleetBoston one
ten-thousandth of a share of junior preferred stock (Series 2000) at an exercise
price of $175 per one ten-thousandth of a share of junior preferred stock,
subject to certain adjustments. Until the earlier of the "distribution date" or
the "expiration date" (each as defined in the FleetBoston rights agreement),
FleetBoston will issue one FleetBoston right with each share of FleetBoston
common stock.
Initially, the rights will be attached to the FleetBoston common stock and
will not be exercisable. In general, the rights would become exercisable and
trade separately from the FleetBoston common stock (1) ten business days after
any person or group acquires 10% or more of FleetBoston's outstanding common
stock or (2) ten business days (subject to extension by the FleetBoston board of
directors) after any person or group commences or announces an intention to
commence a tender offer for 10% or more of the FleetBoston common stock.
Subject to certain exceptions, if a person or group acquires 10% or more of
the FleetBoston common stock, the rights held by the shareholders other than
that person or group would become
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exercisable to purchase FleetBoston common stock having a market value of twice
the exercise price of the rights. In addition, if FleetBoston is acquired in a
merger or other business combination transaction after a person or group has
acquired 10% or more of FleetBoston common stock, the rights held by
shareholders other than that person or group would become exercisable to
purchase the acquiring company's common stock having a market value of twice the
exercise price of the rights.
The FleetBoston rights will expire on November 22, 2010, or earlier if they
are redeemed or exchanged.
The FleetBoston rights have certain anti-takeover effects. The FleetBoston
rights may cause substantial dilution to a person or group that attempts to
acquire FleetBoston on terms not approved by the FleetBoston board of directors,
except pursuant to an offer conditioned on a substantial number of FleetBoston
rights being acquired. The FleetBoston rights should not interfere with any
merger or other business combination approved by the FleetBoston board of
directors prior to the time that there is an "acquiring person," as defined in
the FleetBoston Rights Agreement, dated August 16, 2000, by and between
FleetBoston and Equiserve, L.P., as rights agent.
PREFERRED STOCK
GENERAL. FleetBoston may issue FleetBoston preferred stock in series, with
those relative rights, preferences and limitations of each series as may be
fixed by the FleetBoston board of directors.
The following summary of the outstanding series of FleetBoston preferred
stock does not purport to be complete, and is subject in all respects to the
applicable provisions of the Rhode Island Business Corporation Act, the
FleetBoston articles of incorporation and the FleetBoston by-laws.
SERIES V 7.25% PERPETUAL PREFERRED STOCK. The holders of Series V preferred
are entitled to receive dividends at the rate of 7.25% PER ANNUM, payable
quarterly, before FleetBoston may declare or pay any dividend on its common
stock or the junior preferred stock. The dividends on the Series V preferred are
cumulative. FleetBoston may redeem the Series V preferred, in whole or in part,
at FleetBoston's option, on and after April 15, 2001, at $250 per share, plus
accrued and unpaid dividends, if any. However, so long as any shares of the
Series V preferred are outstanding, FleetBoston may not redeem any shares of
FleetBoston common stock or any other class of FleetBoston preferred stock
ranking junior to or on a parity with the Series V preferred, unless FleetBoston
has paid full cumulative dividends on all outstanding shares of the Series V
preferred for all past dividend payment periods.
If any dividends on the Series V preferred are in arrears, FleetBoston may
not redeem any shares of the Series V preferred, unless FleetBoston
simultaneously redeems all outstanding shares of the Series V preferred, except
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of the Series V preferred.
SERIES VI 6.75% PERPETUAL PREFERRED STOCK. The holders of Series VI
preferred are entitled to receive dividends at the rate of 6.75% PER ANNUM,
payable quarterly, before FleetBoston may declare or pay any dividend on its
common stock or the junior preferred stock. The dividends on the Series VI
preferred are cumulative. FleetBoston will increase the amount of dividends
payable in respect of the Series VI preferred if the Internal Revenue Code is
amended to reduce the dividends received deduction.
FleetBoston may redeem the Series VI preferred, in whole or in part, at
FleetBoston's option, on and after April 15, 2006, at $250 per share, plus
accrued and unpaid dividends, if any. FleetBoston may also redeem the Series VI
preferred prior to April 15, 2006, in whole, at FleetBoston's option, if the
Internal Revenue Code is amended to reduce the dividends received deduction.
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So long as any shares of the Series VI preferred are outstanding,
FleetBoston may not redeem any shares of FleetBoston common stock or any other
class of FleetBoston preferred stock ranking junior to or on a parity with the
Series VI preferred unless FleetBoston has paid full cumulative dividends on all
outstanding shares of the Series VI preferred for all past dividend payment
periods. Further, if any dividends on the Series VI preferred are in arrears,
FleetBoston may not redeem any shares of the Series VI preferred unless
FleetBoston simultaneously redeems all outstanding shares of the Series VI
preferred, except pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of the Series VI preferred.
SERIES VII FIXED/ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK. Through
April 1, 2006, the holders of the Series VII preferred are entitled to receive
dividends at the rate of 6.60% PER ANNUM computed on the basis of the issue
price of the Series VII preferred of $250 per share, payable quarterly, before
FleetBoston may declare or pay any dividend upon its common stock or junior
preferred stock. Thereafter, the dividend rate on the Series VII preferred will
be a rate PER ANNUM equal to 0.50% plus the highest of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate,
as each term is defined in the Certificate of Designation establishing the
Series VII preferred. 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%.
The dividends on the Series VII preferred are cumulative. FleetBoston will
increase the amount of dividends that will be payable in respect of the
Series VII preferred if the Internal Revenue Code is amended to reduce the
dividends received deduction.
FleetBoston may redeem the Series VII preferred, in whole or in part, at
FleetBoston's option, on and after April 1, 2006, at $250 per share, plus
accrued and unpaid dividends, if any. FleetBoston may also redeem the
Series VII preferred prior to April 1, 2006, in whole, at FleetBoston's option,
if the Internal Revenue Code is amended to reduce the dividends received
deduction.
So long as any shares of the Series VII preferred are outstanding,
FleetBoston may not redeem any shares of FleetBoston common stock or any other
class of FleetBoston preferred stock ranking junior to or on a parity with the
Series VII preferred, unless FleetBoston has paid full cumulative dividends on
all outstanding shares of Series VII preferred for all past dividend payment
periods. Further, if any dividends on the Series VII preferred are in arrears,
FleetBoston may not redeem any shares of the Series VII preferred, unless
FleetBoston simultaneously redeems all outstanding shares of the Series VII
preferred, except pursuant to a purchase or exchange offer made on the same
terms to holders of all outstanding shares of the Series VII preferred.
SERIES VIII FIXED/ADJUSTABLE RATE NON-CUMULATIVE PREFERRED STOCK. Through
October 1, 2001, the holders of the Series VIII preferred are entitled to
receive dividends at the rate of 6.59% PER ANNUM, payable quarterly, before
FleetBoston may declare or pay any dividend on the FleetBoston common stock or
the junior preferred stock. Thereafter, the dividend rate on the Series VIII
preferred will be a rate PER ANNUMequal to 0.45% plus the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate, as each term is defined in the Certificate of
Designations establishing the Series VIII preferred. 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%. The dividends on the Series VIII
preferred are noncumulative. FleetBoston will increase the amount of dividends
payable in respect of the Series VIII preferred if the Internal Revenue Code is
amended to reduce the dividends received deduction.
FleetBoston may redeem the Series VIII preferred, in whole or in part, at
FleetBoston's option on and after October 1, 2001, at $250 per share, plus
accrued and unpaid dividends, if any, for the then-current dividend period,
without accumulation of accrued and unpaid dividends for prior dividend periods.
FleetBoston may also redeem the Series VIII preferred prior to October 1, 2001,
in whole, at
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the option of FleetBoston, if the Internal Revenue Code is amended to reduce the
dividends received deduction.
So long as any shares of the Series VIII preferred are outstanding,
FleetBoston may not redeem any shares of the FleetBoston common stock or any
other class of FleetBoston preferred stock ranking junior to or on a parity with
the Series VIII preferred unless FleetBoston has paid all dividends on all
outstanding shares of Series VIII preferred for the then-current dividend
period. Further, if FleetBoston has not paid dividends on the Series VIII
preferred for the then-current dividend period, FleetBoston may not redeem any
shares of the Series VIII preferred, unless FleetBoston simultaneously redeems
all outstanding shares of that class, except pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of the
Series VIII preferred.
JUNIOR PREFERRED STOCK. As of the date of this proxy statement-prospectus,
there were 500,000 shares of cumulative participating junior preferred stock
(Series 2000) reserved for issuance upon the exercise of the FleetBoston rights.
See "Description of FleetBoston Capital Stock--Preferred Stock Purchase Rights."
Shares of the junior preferred stock purchasable upon exercise of the
FleetBoston rights will rank junior to FleetBoston preferred stock and will not
be redeemable. Each share of junior preferred stock will, subject to the rights
of the senior securities of FleetBoston, be entitled to a preferential
cumulative quarterly dividend payment equal to the greater of $100 per share or,
subject to certain adjustments, 10,000 times the dividend declared per share of
FleetBoston common stock. Upon the liquidation, dissolution or winding up of
FleetBoston, holders of junior preferred stock will, subject to the rights of
those senior securities, be entitled to a preferential liquidation payment of
$10,000 per share, plus an amount equal to accrued and unpaid dividends and
distributions. Finally, in the event of any merger, consolidation or other
transaction in which shares of FleetBoston common stock are exchanged, each
share of junior preferred stock will, subject to the rights of those senior
securities, be entitled to receive 10,000 times the amount received per share of
FleetBoston common stock. Each share of junior preferred stock will have 10,000
votes, voting together with FleetBoston common stock. The rights of junior
preferred stock are protected by customary antidilution provisions.
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SELECTED PROVISIONS IN THE ARTICLES OF INCORPORATION OF FLEETBOSTON
The following discussion sets forth material provisions of the FleetBoston
articles of incorporation.
BUSINESS COMBINATIONS WITH RELATED PERSONS
The FleetBoston articles provide that neither FleetBoston nor any of its
subsidiaries may engage in business transactions known as "business
combinations" with persons known as "related persons" unless the transaction:
- was approved by an 80% vote of the FleetBoston board of directors prior to
the time the related person became a related person, and
- is approved by a vote of 80% of the continuing directors and a majority of
the entire FleetBoston board of directors and the transaction complies
with certain conditions related to price and procedure, or
- if there is not full compliance with the preceding two bullet points, the
transaction is approved by a vote of 80% of the outstanding shares of
FleetBoston capital stock entitled to vote generally in the election of
directors, voting as a single class.
A "BUSINESS COMBINATION" includes:
- any merger or consolidation of FleetBoston or any of its subsidiaries with
a related person or any of its affiliates or associates,
- any sale, exchange, lease, transfer or other disposition to or with a
related person of all, substantially all or any substantial part (defined
as assets having a value of more than 5% of the total consolidated assets
of FleetBoston) of the assets of FleetBoston or any of its subsidiaries,
- any purchase, exchange, lease or other acquisition by FleetBoston or any
of its subsidiaries of all or any substantial part of the assets or
business of a related person or any of its affiliates or associates,
- any reclassification of securities, recapitalization or other transaction
that has the effect, directly or indirectly, of increasing the
proportionate amount of voting shares of FleetBoston or any subsidiary
which are beneficially owned by a related person, and
- the acquisition by a related person of beneficial ownership of voting
securities, securities convertible into voting securities or any rights,
warrants or options to acquire voting securities of a subsidiary of
FleetBoston.
A "RELATED PERSON" includes any person who is the beneficial owner of 10% or
more of FleetBoston's voting shares prior to the completion of a business
combination, or any person who is an affiliate of FleetBoston and was the
beneficial owner of 10% or more of FleetBoston's voting shares at any time
within the five years preceding the date on which FleetBoston's board of
directors authorizes a binding agreement providing for a business combination.
"CONTINUING DIRECTORS" are those individuals who were members of the
FleetBoston board of directors prior to the time a related person became the
beneficial owner of 10% or more of FleetBoston's voting stock or those
individuals designated as continuing directors (prior to their initial election
as directors) by a majority of the then-continuing directors.
To amend these provisions, the affirmative vote of 80% of the FleetBoston
board of directors, a majority vote of the continuing directors and the
affirmative vote of 80% of FleetBoston's outstanding capital stock entitled to
vote on the matter are required. If the amendment is recommended to the
shareholders by a majority of the FleetBoston board of directors and not less
than 80% of the
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continuing directors, only the vote provided under the Rhode Island Business
Corporation Act is required.
DIRECTORS
The FleetBoston articles contain a number of additional provisions that are
intended to delay an outside party's ability to take control of the FleetBoston
board of directors, even after the outside party has obtained majority ownership
of FleetBoston common stock. The FleetBoston articles provide for a classified
board of directors, consisting of three classes of directors serving staggered
three-year terms.
Directors of FleetBoston may only be removed for cause and only by a vote
of:
- a majority of the continuing directors and a majority of the FleetBoston
board of directors as it exists at that time, or
- the holders of 80% or more of the outstanding shares of stock entitled to
vote on the election of directors, voting separately as a class at a
meeting called for that purpose.
Vacancies on the FleetBoston board of directors, regardless of the reason,
may only be filled by the FleetBoston board of directors, acting by a vote of
80% of the directors then in office.
The FleetBoston articles provide that the FleetBoston board of directors is
to consist of 13 members, unless otherwise determined by resolution adopted by
80% of the FleetBoston board of directors and a majority of the continuing
directors. The FleetBoston board of directors has adopted a resolution fixing
the number of directors at 24. In connection with FleetBoston's merger with
BankBoston Corporation, FleetBoston amended its by-laws to provide for a ratio
of 13 directors selected by the FleetBoston board of directors prior to the
merger and 11 directors selected by the board of directors of BankBoston. The
amended by-laws include procedures for maintaining this ratio for a specified
period. These by-law provisions may only be amended by a vote of at least 75% of
FleetBoston's board of directors then in office at a meeting at which at least
66 2/3% of FleetBoston's directors then in office are in attendance.
As required by the merger agreement, the FleetBoston board of directors has
adopted a resolution increasing the number of directors that may serve to 26.
If FleetBoston fails to pay quarterly dividends on its non-voting preferred
stock, the holders of that preferred stock, voting separately as a class, will
be entitled to elect additional directors.
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COMPARISON OF SHAREHOLDERS' RIGHTS
GENERAL
FleetBoston and Summit are incorporated in Rhode Island and New Jersey,
respectively. The rights of Summit shareholders receiving FleetBoston common
stock in connection with the merger are currently governed by the New Jersey
Business Corporation Act, the Summit certificate of incorporation and the Summit
by-laws. Upon completion of the merger, Summit shareholders will automatically
become FleetBoston shareholders, and their rights will be governed by the Rhode
Island Business Corporation Act, the FleetBoston articles of incorporation and
the FleetBoston by-laws. The following is a summary of the material differences
between the rights of holders of FleetBoston common stock and the rights of
holders of Summit common stock, but does not purport to be a complete
description of those differences. These differences may be determined in full by
reference to the Rhode Island Business Corporation Act, the New Jersey Business
Corporation Act, the FleetBoston articles of incorporation, the Summit
certificate of incorporation, the FleetBoston by-laws and the Summit by-laws.
VOTING RIGHTS
REQUIRED VOTE FOR CERTAIN BUSINESS COMBINATIONS.
FLEETBOSTON. The Rhode Island Business Corporation Act generally requires
approval of a merger, consolidation, dissolution or sale of all or substantially
all of a corporation's assets by the affirmative vote of the holders of a
majority of the outstanding shares of the corporation entitled to vote on the
matter, unless otherwise provided by statute. The Rhode Island Business
Corporation Act further provides that, unless the articles of incorporation
provide otherwise, the vote of the shareholders of a surviving corporation is
not required to approve a merger if: (1) the plan of merger does not amend the
corporation's articles of incorporation, and (2) the number of shares of common
stock to be issued or transferred in the merger plus the number of shares of
common stock into which any other securities to be issued in the merger are
convertible within one year does not exceed one-third of the total combined
voting power of all classes of stock then entitled to vote for the election of
directors that would be outstanding immediately after the merger.
SUMMIT. The New Jersey Business Corporation Act provides that a plan of
merger or plan of consolidation must be approved by the affirmative vote of a
majority of the votes cast by the holders of shares entitled to vote on the
matter. The New Jersey Business Corporation Act provides that, unless otherwise
provided in the corporation's certificate of incorporation, approval of the
shareholders of a surviving corporation in a merger is not required if (1) the
plan of merger does not make an amendment of the certificate of incorporation of
the surviving corporation that would otherwise require shareholder approval,
(2) the shares outstanding immediately before the effectiveness of the merger
are not changed by the merger, and (3) the number of voting or participating
shares outstanding after the merger, after giving effect to the merger,
including shares issuable upon conversion of other securities or upon exercise
of rights or warrants issued pursuant to the merger, will not exceed by more
than 40% the number of voting and participating shares, as the case may be, of
the surviving corporation outstanding immediately prior to the merger.
CONFLICT OF INTEREST TRANSACTIONS.
FLEETBOSTON. As more fully described above, the FleetBoston articles
contain certain provisions regarding business combinations with certain persons.
See "Selected Provisions in the Articles of FleetBoston."
SUMMIT. Neither the Summit certificate of incorporation nor by-laws contain
provisions regarding conflict of interest transactions. The New Jersey Business
Corporation Act requires the approval of
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two-thirds of the voting stock of a corporation not beneficially owned by an
"interested shareholder" for some business combinations between the corporation
and the interested shareholder.
CHARTER AND BY-LAW AMENDMENTS.
FLEETBOSTON. The Rhode Island Business Corporation Act generally provides
that an amendment to a corporation's articles of incorporation requires
(1) adoption by the board of directors of a resolution submitting the proposed
amendment to the shareholders, and (2) approval by the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote on the matter.
The Rhode Island Business Corporation Act also provides for any class of
stock or series to vote as a class on the proposed amendment if the amendment
would change the number or par value of the aggregate authorized shares of the
affected class. The Rhode Island Business Corporation Act also requires separate
class voting if the amendment would, among other things, change the
designations, preferences, limitations or relative rights of the affected class,
effect an exchange or create a right of exchange of all or any part of the
shares of another class into shares of the affected class, or create a new class
of shares having rights and preferences prior and superior to the shares of the
affected class.
The FleetBoston articles provide that any amendment, alteration, change or
repeal of the provisions of the FleetBoston articles relating to directors and
business combinations requires the affirmative vote of 80% of the FleetBoston
board of directors, a majority of the continuing directors and the affirmative
vote of the holders of 80% or more of the outstanding shares of capital stock
entitled to vote generally in the election of directors, voting separately as a
class.
Under the Rhode Island Business Corporation Act, the board of directors'
authority to adopt, amend or repeal the by-laws of a corporation does not divest
or limit the power of shareholders to adopt, amend or repeal the by-laws. The
Rhode Island Business Corporation Act specifically provides that any amendment
by the board of directors to the by-laws may be subsequently changed by the
affirmative vote of holders of a majority of the shares entitled to vote on the
matter.
The FleetBoston by-laws may be altered, amended or repealed in whole or in
part, and new by-laws may be adopted in whole or in part, only by the
affirmative vote of 80% of the FleetBoston board of directors and a majority of
the continuing directors or by an affirmative vote of the holders of at least
50% of the FleetBoston common stock entitled to vote on the matter.
SUMMIT. The New Jersey Business Corporation Act generally provides that an
amendment to a corporation's certificate of incorporation requires (1) approval
of the board of directors, and (2) the affirmative vote of a majority of the
votes cast by holders of shares entitled to vote on the matter.
The Summit certificate of incorporation provides that the Summit board of
directors is authorized to amend the certificate of incorporation so as (1) to
divide the authorized shares of preferred stock into series; (2) to determine
the designation and number of shares of any series; and (3) to determine the
relative voting, dividend, conversion, redemption, liquidation and other rights,
preferences and limitations of the authorized shares of preferred stock. The
Summit certificate of incorporation prohibits any amendment to the certificate
of incorporation that would adversely affect the rights, privileges or powers of
the series of Summit preferred stock issuable under the Rights Agreement dated
as of June 16, 1999, between Summit and First Chicago Trust Company of New York,
as rights agent, without, in addition to any other vote of shareholders required
by law, the affirmative vote of the holders of two-thirds of the outstanding
shares of that series of preferred stock, voting together as a single class. The
Summit certificate of incorporation requires the affirmative vote of the holders
of 80% of the combined voting power of the then outstanding shares of all
classes and series of stock entitled to vote generally in the election of
directors, voting together as a single class, to amend, alter or repeal, or
adopt any provision inconsistent with, the provisions of the certificate of
incorporation
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pertaining to board classification, director disqualification and increasing the
size of the board, and to action by shareholders at a duly called meeting or by
unanimous written consent.
The Summit by-laws provide that the by-laws may be altered, amended or
repealed, and new by-laws adopted, by resolution adopted by two-thirds of the
entire Summit board of directors at any regular or special meeting. Under the
New Jersey Business Corporation Act, by-laws adopted by the board of directors
may be amended or repealed, and new by-laws adopted, by the shareholders and the
shareholders may prescribe in the by-laws that the board may not amend or repeal
by-laws approved by the shareholders.
SPECIAL MEETINGS
FLEETBOSTON. The Rhode Island Business Corporation Act provides that a
special meeting of shareholders may be called by the board of directors or by
those persons as may be authorized by the articles of incorporation or by-laws.
The FleetBoston by-laws permit special meetings of shareholders to be called by
the FleetBoston board of directors pursuant to a resolution adopted by a
majority of the FleetBoston board of directors, the Chairman of FleetBoston, or
the President of FleetBoston. In addition, the FleetBoston by-laws require that
the Secretary of FleetBoston must call a special meeting of shareholders upon
written request of three or more shareholders holding at least 80% of the
outstanding shares of stock of FleetBoston entitled to vote at a meeting.
SUMMIT. The New Jersey Business Corporation Act provides that a special
meeting of shareholders may be called by the president or the board, or by such
other officers, directors or shareholders as may be provided in the by-laws. In
addition, upon the application of the holder or holders of not less than 10% of
all the shares entitled to vote at a meeting, the New Jersey Superior Court, in
an action in which the court may proceed in a summary manner, for good cause
shown, may order a special meeting of the shareholders to be called and held at
such time and place, upon such notice and for the transaction of such business
as may be designated in such order. In addition, under the Summit by-laws,
special meetings of shareholders may be called at any time only by the Chairman
of the Summit board, any Vice Chairman, the President or a majority of the
entire board of directors.
APPRAISAL RIGHTS
FLEETBOSTON. Under the Rhode Island Business Corporation Act, appraisal
rights are available only in connection with:
- a statutory merger or consolidation, unless the Rhode Island corporation
is to be the surviving corporation and no vote of its shareholders is
required to approve the merger,
- acquisitions that require shareholder approval, and
- sales or exchanges of all or substantially all of the property and assets
of a corporation in a transaction requiring shareholder approval.
In addition, unless otherwise provided in the articles of incorporation, no
appraisal rights are available to holders of shares of any class of stock that,
as of the date fixed to determine the shareholders entitled to receive notice of
the proposed transaction, are (1) registered on a national securities exchange
or included as national market securities in the National Association of
Securities Dealers, Inc.'s automated quotation system, or (2) held of record by
not less than 2,000 shareholders.
There are no provisions in the FleetBoston articles providing for appraisal
rights.
SUMMIT. Under the New Jersey Business Corporation Act, appraisal rights are
available in connection with, among other things, any plan of merger or
consolidation to which the corporation is a party, provided that a shareholder
does not have appraisal rights with respect to shares:
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- of a class or series which is listed on a national securities exchange or
is held of record by not less than 1,000 holders on the record date fixed
to determined the shareholders entitled to vote upon the plan or merger or
consolidation, or
- for which, pursuant to a plan of merger or consolidation, the shareholder
will receive (1) cash, (2) shares, obligations or other securities which,
upon completion of the merger or consolidation, will either be listed on a
national securities exchange or held of record by not less than 1,000
holders or (3) cash and such securities.
There are no provisions in the Summit certificate of incorporation providing
for appraisal rights. Pursuant to the New Jersey Business Corporation Act and
the Summit certificate of incorporation, holders of Summit capital stock will
not have any appraisal rights in connection with the merger.
PROVISIONS RELATING TO DIRECTORS
NUMBER OF DIRECTORS.
FLEETBOSTON. Under the Rhode Island Business Corporation Act, a corporation
must have a board of directors consisting of at least one director. The
FleetBoston articles provide that the FleetBoston board of directors is to
consist of 13 members (exclusive of directors to be elected by holders of any
one or more series or classes of FleetBoston preferred stock voting separately
as a class or classes), unless otherwise determined from time to time by
resolution adopted by an affirmative vote of at least 80% of the FleetBoston
board of directors and a majority of the continuing directors. Pursuant to an
adopted resolution, the number of directors of FleetBoston that may serve is
currently fixed at 24.
At the effective time, the total number of individuals serving on
FleetBoston's board of directors will be 26, unless otherwise determined from
time to time by the FleetBoston board of directors in accordance with the
FleetBoston articles and by-laws. See "Selected Provisions in the Articles of
Incorporation of FleetBoston--Directors."
SUMMIT. Under the New Jersey Business Corporation Act, the board of
directors of a corporation must consist of one or more directors. The Summit
certificate of incorporation and by-laws provide that the number of directors
constituting the Summit board may not be less than five nor more than 40, with
the specific number fixed by resolution adopted by a majority of the entire
board or by the shareholders. Summit's board of directors currently consists of
17 directors.
CLASSIFICATION.
FLEETBOSTON. The Rhode Island Business Corporation Act permits
classification of the board of directors if the corporate charter so provides.
The FleetBoston articles of incorporation and by-laws provide for classification
of the FleetBoston board of directors into three classes as nearly equal in
number as possible, with one class being elected annually for a three-year term.
SUMMIT. The New Jersey Business Corporation Act permits classification of
the board of directors if the certificate of incorporation so provides. The
Summit certificate of incorporation provides for classification of the Summit
board into three classes as nearly equal in number as possible, with one class
being elected annually for a three-year term.
SHAREHOLDER NOMINATIONS.
FLEETBOSTON. Holders of FleetBoston common stock may nominate individuals
for election to the FleetBoston board of directors. The procedure for
nominations is set forth in the FleetBoston by-laws. The FleetBoston by-laws
specify that nominations of individuals for election as directors may be made at
a meeting of shareholders by or at the direction of the FleetBoston board of
directors, or by any holder of stock entitled to vote on the election of
directors that complies with the requisite notice
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procedure. The notice procedure requires that a shareholder's nomination of an
individual for election as a director must be made in writing and received by
the Secretary of FleetBoston not less than 30 days prior to the date of the
meeting of shareholders. If, however, FleetBoston gives shareholders fewer than
40 days' notice or prior public disclosure of the date of the meeting,
FleetBoston must receive the shareholder's nomination notice not later than the
close of business on the seventh day following the first to occur of the
publication or mailing of the notice of the meeting date.
The FleetBoston by-laws require that a shareholder's notice to nominate an
individual to the FleetBoston board of directors include certain information
about the nominee, including the information required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Exchange Act (including an individual's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected),
together with the name, address, class and number of shares of FleetBoston
capital stock beneficially owned by the shareholder giving the notice and by
other shareholders known by that shareholder to be supporting the nominee on the
date of that shareholder's notice.
SUMMIT. The Summit by-laws contain procedures that must be followed for
shareholders to nominate individuals for election to the Summit board. For
nominations by shareholders to be properly brought before an annual meeting of
shareholders, the shareholder must have given timely notice in writing to the
Secretary of Summit. To be timely, a shareholder's notice must be delivered to
the Secretary at Summit's principal executive offices not later than the close
of business on the 80th day nor earlier than the close of business on the 100th
day prior to the first anniversary of the preceding year's annual meeting.
However, in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after the anniversary date, notice by the
shareholder to be timely must be delivered not earlier than the close of
business on the 100th day prior to the annual meeting and not later than the
close of business on the later of the 80th day prior to the annual meeting or
the 10th day following the day on which public announcement of the date of the
meeting is first made by Summit. The Summit by-laws set forth specific
requirements as to the content of the nomination notice that are substantially
identical to those contained in the FleetBoston by-laws.
REMOVAL OF DIRECTORS.
FLEETBOSTON. Under the Rhode Island Business Corporation Act, if the
articles of incorporation or by-laws so provide, shareholders may remove a
director without cause. However, in the case of a corporation permitting
cumulative voting for the election of directors, directors may be removed
without cause only if the number of shares voted against removal would not be
sufficient to elect the director if voted cumulatively. Under the FleetBoston
articles, directors of FleetBoston may only be removed for cause. The
FleetBoston articles do not currently provide for cumulative voting. For a
discussion of provisions regarding the removal of directors in the FleetBoston
articles, see "Selected Provisions in the Articles of FleetBoston."
SUMMIT. Summit's Restated Certificate of Incorporation contains no specific
provisions with respect to removal of directors, other than for directors
elected by preferred shareholders. Under the New Jersey Business Corporation
Act, directors on a classified board may only be removed by shareholders for
cause, by the affirmative vote of the majority of voting shareholders.
STATE ANTI-TAKEOVER STATUTES
FLEETBOSTON. Pursuant to the Rhode Island Business Corporation Act, a
corporation may not engage in any business combination with an "interested
stockholder" (generally defined under the Rhode Island Business Corporation Act
as the beneficial owner of 10% or more of the corporation's outstanding voting
stock or an affiliate of the corporation who, within five years prior to the
date in
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question, was the beneficial owner of 10% or more of the corporation's
outstanding voting stock) for a period of five years following the date the
shareholder became an interested stockholder, unless:
- the board of directors of the corporation approved the business
combination or transaction prior to the date the shareholder became an
interested stockholder;
- no earlier than five years after the interested stockholder's stock
acquisition date, holders of two-thirds of the outstanding voting stock,
excluding any stock owned by the interested stockholder or any affiliate
or associate of the interested stockholder, have approved the business
combination at a meeting called for that purpose; or
- the business combination meets each of the following conditions: (1) the
nature, form and adequacy of the consideration to be received by the
corporation's shareholders in the business combination transaction
satisfies certain specific enumerated criteria, (2) the holders of all the
outstanding shares of stock of the corporation not beneficially owned by
the interested stockholder are entitled to receive the specified
consideration in the business combination transaction and (3) the
interested stockholder may not acquire additional shares of voting stock
of the corporation, except in certain specifically identified
transactions.
The restrictions prescribed by the Rhode Island Business Corporation Act
will not be applicable to any business combination:
- involving a corporation that does not have a class of voting stock
registered under the Exchange Act, unless the charter provides otherwise;
- involving a corporation that did not have a class of voting stock
registered under the Exchange Act at the time the corporation's articles
of incorporation was amended to provide that the corporation is to be
subject to these statutory restriction provisions and the interested
stockholder's stock acquisition date is prior to the effective date of the
articles of incorporation amendment;
- involving a corporation whose original charter contains a provision
expressly electing not to be subject to these statutory restrictions or
that adopted an amendment expressly electing not to be subject to these
statutory restrictions either to its by-laws prior to March 31, 1991, or
to its articles of incorporation if the articles of incorporation
amendment is approved by the affirmative vote of holders, other than the
interested stockholders and their affiliates and associates, of two-thirds
of the outstanding voting stock, excluding the voting stock of the
interested stockholder. However, this amendment to the articles of
incorporation will not be effective until 12 months after the vote of the
shareholders and will not apply to any business combination of the
corporation with an interested stockholder whose stock acquisition date is
on or prior to the effective date of the amendment; or
- involving a corporation with an interested stockholder that became an
interested stockholder inadvertently if the interested stockholder divests
itself of that number of shares so that it is no longer the beneficial
owner of 10% of the outstanding voting stock and, but for the inadvertent
ownership, was not an interested stockholder within the five-year period
preceding the announcement of the business combination.
The FleetBoston articles and the FleetBoston by-laws do not contain any
provisions opting out of the restrictions prescribed by the statute.
SUMMIT. Subject to specific exceptions and qualifications, the New Jersey
Business Corporation Act generally prohibits New Jersey corporations from
engaging in a business combination with any interested stockholder for a period
of five years following the interested stockholder's stock acquisition date.
However, a New Jersey corporation can engage in a business combination with an
interested
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stockholder if the business combination is approved by the board of directors
prior to the stock acquisition date and, in addition, at any time, a business
combination may only be effected if:
- the transaction was approved by the corporation's board of directors prior
to the stockholder becoming an interested stockholder;
- the transaction receives the approval of two-thirds of the voting stock of
the corporation not beneficially owned by the interested stockholder, or
- the transaction meets certain minimum financial terms.
An "interested stockholder" under the New Jersey Business Corporation Act is
any person who is the beneficial owner, directly or indirectly, of 10% or more
of the voting power of the corporation's outstanding voting stock, or is an
affiliate or associate of the corporation and at any time with the five-year
period immediately prior to the stock acquisition date was the beneficial owner,
directly or indirectly, of 10% or more of the voting power of the corporation's
then outstanding stock. A "business combination" under the New Jersey Business
Corporation Act includes mergers and consolidations with an interested
stockholder or corporation which is, or after the merger or consolidation would
be, an affiliate or associate of an interested stockholder, and sales to an
interested stockholder or any affiliate or associate of an interested
stockholder of corporation assets (1) having an aggregate market value equal to
10% or more of the aggregate market value of all corporation assets, (2) having
an aggregate market value equal to 10% or more of the aggregate market value of
all the corporation's outstanding stock or (3) representing 10% or more of the
earnings power or income of the corporation or the issuance or transfer to an
interested stockholder or any affiliate or associate of the interested
stockholder of 5% or more of the aggregate market value of the stock of the
corporation.
Under the New Jersey Business Corporation Act, a director of a New Jersey
corporation, in discharging his or her duties to the corporation, and in
determining what he or she reasonably believes to be in the best interest of the
corporation may, in addition to considering the effects of any action on
shareholders, consider any of the following:
- the effects of the action on the corporation's employees, suppliers,
creditors and customers;
- the effects of the action on the community in which the corporation
operates; and
- the long-term as well as the short-term interest of the corporation and
its shareholders, including the possibility that these interests may best
be served by the continued independence of the corporation. Determinations
resulting in the rejection of a proposal or offer to acquire the
corporation are covered by this provision of the New Jersey Business
Corporation Act.
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RIGHTS OF DISSENTING SHAREHOLDERS
Under the New Jersey Business Corporation Act, holders of Summit capital
stock do not have any appraisal or dissenters' rights in connection with the
merger.
LEGAL MATTERS
The validity of the FleetBoston common stock to be issued in connection with
the merger will be passed upon for FleetBoston by Edwards & Angell, LLP, 101
Federal Street, Boston, Massachusetts 02110-1800. V. Duncan Johnson, a partner
of Edwards & Angell, LLP, is a director of Fleet Bank (RI), National
Association, one of FleetBoston's wholly owned subsidiaries, and beneficially
owns 9,856 shares of FleetBoston common stock.
EXPERTS
The consolidated financial statements of FleetBoston Financial Corporation,
formerly Fleet Boston Corporation, incorporated in this proxy
statement-prospectus by reference to its Annual Report on Form 10-K for the year
ended December 31, 1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in auditing and accounting.
The consolidated financial statements of Summit Bancorp. and subsidiaries as
of December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999, included in Summit's Annual Report on Form 10-K,
incorporated by reference herein, have been so incorporated in reliance upon the
report of KPMG LLP, independent certified public accountants, and upon the
authority of KPMG LLP as experts in accounting and auditing.
SHAREHOLDER PROPOSALS
Summit will hold a 2001 Annual Meeting of Shareholders only if the merger is
not completed before the time of the meeting. In the event that this meeting is
held, Summit shareholders may submit proposals to be considered for shareholder
action at the 2001 Annual Meeting of Shareholders if they do so in accordance
with the applicable regulations of the SEC, the applicable provisions of New
Jersey law and the applicable provisions of the Summit by-laws. Any proposals of
shareholders intended to be presented at the 2001 Annual Meeting of Shareholders
must have been received by the Secretary of Summit no later than November 6,
2000 in order to be considered for inclusion in the Summit proxy materials
relating to that meeting.
The by-laws of Summit provide that shareholder proposals which do not appear
in the proxy statement may be considered at an annual meeting of shareholders
only if written notice of the proposal is received by the secretary of Summit
not less than 80 nor more than 100 days before the anniversary of the preceding
year's annual meeting (April 14, 2000). However, if the date of the annual
meeting is more than 30 days before or more than 60 days after such anniversary
date, the notice of a shareholder proposal, to be timely, must be received by
the secretary not later than the close of business on the later of the 80th day
prior to such annual meeting or the tenth day following the day on which public
announcement of the meeting date is first made.
OTHER MATTERS
As of the date of this proxy statement-prospectus, the Summit board of
directors knows of no matters that will be presented for consideration at the
special meeting other than as described in this proxy statement-prospectus. If
any other matters do properly come before the special meeting or any
adjournments or postponements of that special meeting and are voted upon, the
enclosed proxy will be deemed to confer discretionary authority on the
individuals named as proxies to vote the shares represented by that proxy as to
any of those other matters. However, proxies that indicate a vote
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against approval of the merger agreement will not be voted in favor of any
adjournment or postponement of the special meeting to solicit additional proxies
to approve the merger agreement. The individuals named as proxies intend to vote
in accordance with the recommendation of the board of directors of Summit.
WHERE YOU CAN FIND MORE INFORMATION
FleetBoston has filed with the SEC a registration statement under the
Securities Act that registers the distribution to Summit shareholders of the
shares of FleetBoston common stock to be issued in connection with the merger.
The registration statement, including the attached exhibits and schedules,
contains additional relevant information about FleetBoston and FleetBoston
common stock. The rules and regulations of the SEC allow FleetBoston to omit
certain information included in the registration statement from this proxy
statement-prospectus.
In addition, FleetBoston and Summit file reports, proxy statements and other
information with the SEC under the Exchange Act. You may read and copy this
information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room Northeast Regional Office Midwest Regional Office
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like FleetBoston
and Summit, who file electronically with the SEC. The address of that site is
HTTP://WWW.SEC.GOV.
You can also inspect reports, proxy statements and other information about
FleetBoston and Summit at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, and, with respect to FleetBoston, the Boston
Stock Exchange, 100 Franklin Street, Boston, Massachusetts 02110.
The SEC allows FleetBoston and Summit to "incorporate by reference"
information into this proxy statement-prospectus. This means that the companies
can disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
considered to be a part of this proxy statement-prospectus, except for any
information that is superseded by information that is included directly in this
document.
This proxy statement-prospectus incorporates by reference the documents
listed below that FleetBoston and Summit have previously filed with the SEC.
They contain important information about our companies and their financial
condition.
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<TABLE>
<CAPTION>
FLEETBOSTON SEC FILINGS PERIOD
----------------------- ------
<S> <C>
Annual Report on Form 10-K for: Year ended December 31, 1999, as filed on
March 9, 2000
Quarterly Reports on Form 10-Q for: - Quarter ended March 31, 2000, as filed on
May 15, 2000
- Quarter ended June 30, 2000, as filed on
August 11, 2000
- Quarter ended September 30, 2000, as filed
on November 14, 2000
The description of FleetBoston common stock
set forth in the FleetBoston registration
statement filed by Industrial National
Corporation (predecessor to FleetBoston) on
Form 8-B dated May 29, 1970, and the
description of the preferred share purchase
rights set forth in the FleetBoston
registration statement on Form 8-A dated
November 7, 2000, and any amendment or
report filed for the purpose of updating
those descriptions.
Current Reports on Form 8-K filed: - January 12, 2000
- February 2, 2000, as amended by a
Form 8-K/A filed March 9, 2000
- March 9, 2000
- April 20, 2000
- June 12, 2000
- July 7, 2000
- July 20, 2000
- August 22, 2000
- September 21, 2000
- October 3, 2000
- October 24, 2000
- January 17, 2001
</TABLE>
<TABLE>
<CAPTION>
SUMMIT SEC FILINGS PERIOD
------------------ ------
<S> <C>
Annual Report on Form 10-K for: Year ended December 31, 1999, as filed on
March 28, 2000
Quarterly Reports on Form 10-Q for: - Quarter ended March 31, 2000, as filed on
May 12, 2000
- Quarter ended June 30, 2000, as filed on
August 14, 2000
- Quarter ended September 30, 2000, as filed
on November 14, 2000
The description of Summit common stock and
the description of the Summit preferred
stock purchase rights and preferred stock
set forth in the Summit registration
statement on Form 10 filed under Section 12
of the Exchange Act on August 13, 1970 and
on Form 8-A dated July 27, 1999,
respectively, including any amendment or
report filed with the SEC for the purpose of
updating those descriptions.
Current Reports on Form 8-K filed: - August 18, 2000
- October 3, 2000
</TABLE>
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FleetBoston and Summit incorporate by reference additional documents that
either company may file with the SEC between the date of this proxy
statement-prospectus and the date of the special meeting. These documents
include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document through FleetBoston or Summit, as the case may be, or from the SEC
through the SEC's Internet world wide web site at the address described above.
Documents incorporated by reference are available from the companies without
charge, excluding any exhibits to those documents, unless the exhibit is
specifically incorporated by reference as an exhibit in this proxy
statement-prospectus. You can obtain documents incorporated by reference in this
proxy statement-prospectus by requesting them in writing or by telephone from
the appropriate company at the following addresses:
<TABLE>
<S> <C>
FLEETBOSTON SUMMIT
Investor Relations Department Corporate Secretary
FleetBoston Financial Corporation Summit Bancorp.
100 Federal Street 301 Carnegie Center
P.O. Box 2016, MA DE 10034F P.O. Box 2066
Boston, Massachusetts 02106-2106 Princeton, New Jersey 08543-2066
(617) 434-7858 (609) 987-3442
</TABLE>
If you would like to request documents, please do so by February 19, 2001 to
receive them before the special meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another
equally prompt means, within one business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this proxy statement-prospectus or in any of the
materials that we have incorporated into this proxy statement-prospectus.
Therefore, if anyone does give you information of this sort, you should not rely
on it. If you are in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities offered by this
document or the solicitation of proxies is unlawful, or if you are a person to
whom it is unlawful to direct these types of activities, then the offer
presented in this document does not extend to you. The information contained in
this document speaks only as of the date of this document unless the information
specifically indicates that another date applies.
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FORWARD-LOOKING STATEMENTS
This proxy statement-prospectus, including information included or
incorporated by reference in this document, contains certain forward-looking
statements with respect to the financial condition, results of operations,
plans, objectives, future performance and business of each of FleetBoston and
Summit, as well as certain information relating to the merger, including,
without limitation,
- statements relating to the cost savings and accretion to reported earnings
estimated to result from the merger;
- statements relating to revenues of the combined company after the merger;
- statements relating to the restructuring charges estimated to be incurred
in connection with the merger; and
- statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "estimates" or similar expressions.
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from those contemplated by the
forward-looking statements due to, among others, the following factors:
- expected cost savings from the merger may not be fully realized or
realized within the expected time frame;
- revenues following the merger may be lower than expected;
- costs or difficulties related the integration of the businesses of
FleetBoston and Summit may be greater than expected;
- the negative impact of any divestitures required by the Federal Reserve
Board and the Department of Justice in connection with the merger may be
greater than expected;
- general political and economic conditions, either domestically or
internationally or in the states in which FleetBoston or Summit are doing
business, may be less favorable than expected;
- interest rate and currency fluctuations, equity and bond market
fluctuations and perceptions, the level of nonperforming assets and
inflation, may be greater than expected;
- competitive product and pricing pressures among financial services
organizations may increase significantly;
- legislative or regulatory developments, including changes in laws
concerning taxes, banking, securities, insurance and other aspects of the
financial services industry, may adversely affect the businesses in which
FleetBoston and Summit are engaged; and
- technological changes, including the impact of the Internet on
FleetBoston's businesses, may be more difficult or expensive than
anticipated.
See "Where You Can Find More Information."
84
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FLEETBOSTON FINANCIAL CORPORATION
AND
SUMMIT BANCORP.
----------------
DATED AS OF OCTOBER 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
ARTICLE I
THE MERGER
1.1 The Merger.................................................. A-1
1.2 Effective Time.............................................. A-1
1.3 Effects of the Merger....................................... A-2
1.4 Conversion of Summit Common Stock........................... A-2
1.5 FleetBoston Capital Stock................................... A-2
1.6 Options..................................................... A-3
1.7 Articles of Incorporation of FleetBoston.................... A-3
1.8 By-Laws of FleetBoston...................................... A-3
1.9 Tax and Accounting Consequences............................. A-3
ARTICLE II
EXCHANGE OF SHARES
2.1 FleetBoston to Make Shares Available........................ A-4
2.2 Exchange of Shares.......................................... A-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUMMIT
3.1 Corporate Organization...................................... A-5
3.2 Capitalization.............................................. A-6
3.3 Authority; No Violation..................................... A-7
3.4 Consents and Approvals...................................... A-8
3.5 Reports..................................................... A-8
3.6 Financial Statements........................................ A-9
3.7 Broker's Fees............................................... A-9
3.8 Absence of Certain Changes or Events........................ A-9
3.9 Legal Proceedings........................................... A-10
3.10 Taxes and Tax Returns....................................... A-10
3.11 Employees................................................... A-10
3.12 SEC Reports................................................. A-12
3.13 Compliance with Applicable Law.............................. A-12
3.14 Certain Contracts........................................... A-12
3.15 Agreements with Regulatory Agencies......................... A-13
3.16 Interest Rate Risk Management Instruments................... A-13
3.17 Undisclosed Liabilities..................................... A-13
3.18 Environmental Liability..................................... A-13
3.19 Intellectual Property....................................... A-14
3.20 State Takeover Laws; Summit Rights Agreement................ A-14
3.21 Reorganization; Pooling of Interests........................ A-15
3.22 Opinions.................................................... A-15
3.23 Summit Information.......................................... A-15
</TABLE>
i
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<TABLE>
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<C> <S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FLEETBOSTON
4.1 Corporate Organization...................................... A-15
4.2 Capitalization.............................................. A-15
4.3 Authority, No Violation..................................... A-16
4.4 Consents and Approvals...................................... A-17
4.5 Reports..................................................... A-17
4.6 Financial Statements........................................ A-18
4.7 Broker's Fees............................................... A-18
4.8 Absence of Certain Changes or Events........................ A-18
4.9 Legal Proceedings........................................... A-18
4.10 Taxes and Tax Returns....................................... A-19
4.11 SEC Reports................................................. A-19
4.12 Compliance with Applicable Law.............................. A-19
4.13 Agreements with Regulatory Agencies......................... A-20
4.14 Interest Rate Risk Management Instruments................... A-20
4.15 Undisclosed Liabilities..................................... A-20
4.16 Environmental Liability..................................... A-21
4.16 Reorganization; Pooling of Interests........................ A-21
4.17 FleetBoston Information..................................... A-21
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time........... A-21
5.2 Forbearances................................................ A-21
5.3 FleetBoston Forbearances.................................... A-24
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.......................................... A-24
6.2 Access to Information....................................... A-25
6.3 Summit Stockholder Approvals................................ A-26
6.4 Legal Conditions to Merger.................................. A-26
6.5 Affiliates; Publication of Combined Financial Results....... A-26
6.6 Stock Exchange Listing...................................... A-27
6.7 Employee Benefit Plans...................................... A-27
6.8 Indemnification; Directors' and Officers' Insurance......... A-27
6.9 Additional Agreements....................................... A-28
6.10 Advice of Changes........................................... A-28
6.11 Dividends................................................... A-28
6.12 Exemption from Liability Under Section 16(b)................ A-29
6.13 Directorships............................................... A-29
6.14 Aggregate Capitalization.................................... A-29
6.15 Community Commitments....................................... A-29
</TABLE>
ii
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<TABLE>
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<C> <S> <C>
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger...................................................... A-29
7.2 Conditions to Obligations of FleetBoston.................... A-30
7.3 Conditions to Obligations of Summit......................... A-30
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination................................................. A-31
8.2 Effect of Termination....................................... A-31
8.3 Amendment................................................... A-32
8.4 Extension; Waiver........................................... A-32
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing..................................................... A-32
9.2 Nonsurvival of Representations, Warranties and Agreements... A-32
9.3 Expenses.................................................... A-32
9.4 Notices..................................................... A-33
9.5 Interpretation.............................................. A-33
9.6 Counterparts................................................ A-33
9.7 Entire Agreement............................................ A-34
9.8 Governing Law............................................... A-34
9.9 Publicity................................................... A-34
9.10 Assignment; Third Party Beneficiaries....................... A-34
</TABLE>
Exhibit A--Summit Option Agreement
Exhibit 6.5(a)(1)--Form of Affiliate Letter Addressed to Summit
Exhibit 6.5(a)(2)--Form of Affiliate Letter Addressed to FleetBoston
iii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
Agreement................................................... A-1
Articles of Merger.......................................... A-1
Bank Merger................................................. A-1
BHC Act..................................................... A-6
Certificate................................................. A-2
Certificate of Merger....................................... A-1
Closing..................................................... A-32
Closing Date................................................ A-32
Code........................................................ A-1
Covered Employees........................................... A-27
DPC Shares.................................................. A-2
Effective Time.............................................. A-2
ERISA....................................................... A-11
Exchange Act................................................ A-9
Exchange Agent.............................................. A-4
Exchange Fund............................................... A-4
Exchange Ratio.............................................. A-2
Federal Reserve Board....................................... A-8
FleetBoston................................................. A-1
FleetBoston Articles........................................ A-15
FleetBoston Capital Stock................................... A-2
FleetBoston Common Stock.................................... A-2
FleetBoston Disclosure Schedule............................. A-15
FleetBoston Preferred Stock................................. A-2
FleetBoston Regulatory Agreement............................ A-20
FleetBoston Reports......................................... A-19
FleetBoston Rights Agreement................................ A-2
FleetBoston Stock Plans..................................... A-16
FleetBoston Stockholder Rights.............................. A-2
FleetBoston Subsidiary...................................... A-6
FleetBoston 1999 Financial Information...................... A-18
FleetBoston 1999 10-K....................................... A-18
FleetBoston Warrants........................................ A-16
GAAP........................................................ A-3
Governmental Entity......................................... A-8
HSR Act..................................................... A-8
Indemnified Parties......................................... A-27
Information................................................. A-25
Injunction.................................................. A-30
Insurance Amount............................................ A-28
Intellectual Property....................................... A-14
IRS......................................................... A-10
Liens....................................................... A-7
Material Adverse Effect..................................... A-6
Merger...................................................... A-1
</TABLE>
iv
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<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
Merger Consideration........................................ A-1
NJBCA....................................................... A-1
NYSE........................................................ A-5
Proxy Statement............................................. A-8
Receiving Party............................................. A-26
Regulatory Agencies......................................... A-8
Requisite Regulatory Approvals.............................. A-29
RIBCA....................................................... A-1
SBA......................................................... A-8
SEC......................................................... A-8
Section 16 Information...................................... A-29
Securities Act.............................................. A-12
SRO......................................................... A-8
State Approvals............................................. A-8
Subsidiary.................................................. A-6
Summit...................................................... A-1
Summit Bank Subsidiaries.................................... A-1
Summit Benefit Plans........................................ A-11
Summit By-Laws.............................................. A-6
Summit Capital Stock........................................ A-6
Summit Certificate.......................................... A-6
Summit Common Stock......................................... A-2
Summit Contract............................................. A-13
Summit Disclosure Schedule.................................. A-6
Summit DRIP................................................. A-7
Summit ERISA Affiliate...................................... A-11
Summit Insiders............................................. A-29
Summit Option Agreement..................................... A-1
Summit Regulatory Agreement................................. A-13
Summit Reports.............................................. A-12
Summit Rights............................................... A-7
Summit Rights Agreement..................................... A-2
Summit Stock Plans.......................................... A-3
Summit Stockholder Rights................................... A-2
Summit Subsidiary........................................... A-6
Summit 1999 10-K............................................ A-9
Surviving Corporation....................................... A-1
S-4......................................................... A-8
Takeover Statutes........................................... A-14
Tax(es)..................................................... A-10
Trust Account Shares........................................ A-2
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 1, 2000 (this
"Agreement"), by and between Summit Bancorp., a New Jersey corporation
("Summit"), and FleetBoston Financial Corporation, a Rhode Island corporation
("FleetBoston").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Summit and FleetBoston have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the strategic business combination transaction
provided for herein in which Summit will, subject to the terms and conditions
set forth herein, merge with and into FleetBoston (the "Merger"), so that
FleetBoston is the surviving corporation in the Merger (sometimes referred to in
such capacity as the "Surviving Corporation"); and
WHEREAS, as a condition to the execution of this Agreement, and
simultaneously with the execution hereof, Summit and FleetBoston are entering
into a stock option agreement (the "Summit Option Agreement") in the form
attached hereto as Exhibit A; and
WHEREAS, for Federal Income Tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is
intended to be and is adopted as a plan of reorganization for purposes of
Sections 354, 361 and 368 of the Code; and
WHEREAS, the parties intend to effect the merger of Summit's bank
subsidiaries (the "Summit Bank Subsidiaries") with and into Fleet National Bank,
promptly following the Merger (the "Bank Merger"); and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. (a) Subject to the terms and conditions of this Agreement,
in accordance with the New Jersey Business Corporation Act (the "NJBCA") and the
Rhode Island Business Corporation Act (the "RIBCA"), at the Effective Time,
Summit shall merge with and into FleetBoston. FleetBoston shall be the Surviving
Corporation in the Merger, and shall continue its corporate existence under the
laws of the State of Rhode Island.
(b) FleetBoston may at any time change the method of effecting the
combination with Summit (including by providing for the merger of a wholly owned
subsidiary of FleetBoston with and into Summit) if and to the extent FleetBoston
deems such change to be desirable; PROVIDED, HOWEVER, that no such change shall
(i) alter or change the amount or kind of consideration to be issued to holders
of the capital stock of Summit as provided for in this Agreement (the "Merger
Consideration"), (ii) adversely affect the Tax treatment of Summit's
stockholders as a result of receiving the Merger Consideration or
(iii) materially impede or delay consummation of the transactions contemplated
by this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in the
articles of merger (the "Articles of Merger") that shall be filed with the
Secretary of State of the State of Rhode Island and the certificate of merger
(together with the Articles of Merger, the "Certificate of Merger") that shall
be filed with the Secretary of State of the State of New Jersey on the Closing
Date. The term
A-1
<PAGE>
"Effective Time" shall be the date and time when the Merger becomes effective as
set forth in the Certificate of Merger which shall not be later than the Closing
Date.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Section 7-1.1-69 of the RIBCA and
Section 14A:10-6 of the NJBCA.
1.4 CONVERSION OF SUMMIT COMMON STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of FleetBoston, Summit or the
holder of any of the following securities:
(a) Subject to Section 2.2(e), each share of the common stock, par value
$0.80 per share, of Summit issued and outstanding immediately prior to the
Effective Time (together with the preferred stock purchase rights ("Summit
Stockholder Rights") attached thereto issued pursuant to that certain Rights
Agreement, between Summit and First Chicago Trust Company of New York, dated
as of June 16, 1999 (the "Summit Rights Agreement"), the "Summit Common
Stock"), except for shares of Summit Common Stock owned by Summit as
treasury stock or owned, directly or indirectly, by Summit or FleetBoston
(other than shares of Summit Common Stock held, directly or indirectly, in
trust accounts, managed accounts and the like, or otherwise held in a
fiduciary capacity, that are beneficially owned by third parties (any such
shares of Summit Common Stock which are similarly held, whether held
directly or indirectly by Summit or FleetBoston, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of
Summit Common Stock held by Summit or FleetBoston in respect of a debt
previously contracted (any such shares of Summit Common Stock which are
similarly held, whether held directly or indirectly by Summit or
FleetBoston, being referred to herein as "DPC Shares")), shall be converted
into the right to receive 1.02 shares (the "Exchange Ratio") of the common
stock, par value $0.01 per share, of FleetBoston (together with the
preferred stock purchase rights (the "FleetBoston Stockholder Rights")
attached thereto pursuant to that certain Rights Agreement, dated as of
August 16, 2000, between FleetBoston and Equiserve, LP, as Rights Agent (the
"FleetBoston Rights Agreement"), the "FleetBoston Common Stock").
(b) All of the shares of Summit Common Stock converted into the right to
receive FleetBoston Common Stock pursuant to this Article I shall no longer
be outstanding and shall automatically be cancelled and shall cease to exist
as of the Effective Time, and each certificate previously representing any
such shares of Summit Common Stock (each a "Certificate") shall thereafter
represent only the right to receive (i) a certificate representing the
number of whole shares of FleetBoston Common Stock and (ii) cash in lieu of
fractional shares into which the shares of Summit Common Stock represented
by such Certificate have been converted pursuant to this Section 1.4 and
Section 2.2(e). Certificates previously representing shares of Summit Common
Stock shall be exchanged for certificates representing whole shares of
FleetBoston Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Certificates in accordance
with Section 2.2, without any interest thereon. If, prior to the Effective
Time, the outstanding shares of FleetBoston Common Stock or Summit Common
Stock shall have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities as a result of a
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar change in capitalization, an
appropriate and proportionate adjustment shall be made to the Exchange
Ratio.
(c) Notwithstanding anything in the Agreement to the contrary, at the
Effective Time, all shares of Summit Common Stock that are owned, directly
or indirectly, by Summit or FleetBoston (other than Trust Account Shares and
DPC Shares) shall be cancelled and shall cease to exist and no stock of
FleetBoston or other consideration shall be delivered in exchange therefor.
1.5 FLEETBOSTON CAPITAL STOCK. At and after the Effective Time, each share
of FleetBoston Common Stock and each share of preferred stock, par value $1.00
per share, of FleetBoston ("FleetBoston Preferred Stock," and together with the
FleetBoston Common Stock, the "FleetBoston
A-2
<PAGE>
Capital Stock") issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding and shall not be affected by the Merger.
1.6 OPTIONS. (a) At the Effective Time, each option granted by Summit to
purchase shares of Summit Common Stock which is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
Summit Common Stock and shall be converted automatically into an option to
purchase shares of FleetBoston Common Stock in an amount and at an exercise
price determined as provided below (and otherwise subject to the terms of, as
the case may be, the Converted Summit Bancorporation Stock Option Plan, Summit
Bancorp. 1993 Incentive Stock and Option Plan, as amended, the UJB Financial
Corp. 1990 Stock Option Plan, as amended, Management Incentive Plan, United
Jersey Banks 1982 Stock Option Plan, as amended, Summit Bancorp, 1999
Non-Executive Option Plan, as amended, United Jersey Banks 1987 Stock Option
Plan, as amended, Converted Collective Bancorp, Inc. Stock Option Plan of Summit
Bancorp., Converted Bancorp NJ Stock Option Plan, Converted BMJ Financial Corp.
Stock Option Plan, Converted NMBT Stock Option Plan, Converted NSS Bancorp Stock
Option Plan, Converted New Canaan Bank & Trust Stock Option Plan, Converted
Prime Bancorp Stock Option Plan (collectively, the "Summit Stock Plans"), and
the agreements evidencing grants thereunder):
(i) The number of shares of FleetBoston Common Stock to be subject to
the new option shall be equal to the product of the number of shares of
Summit Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of FleetBoston Common Stock resulting
from such multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of FleetBoston Common Stock under the
new option shall be equal to the exercise price per share of Summit Common
Stock under the original option divided by the Exchange Ratio, provided that
such exercise price shall be rounded to the nearest whole cent.
(b) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the Code. The duration and other terms of the new option shall be the same as
the original option except that all references to Summit shall be deemed to be
references to FleetBoston.
(c) FleetBoston shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of FleetBoston Common Stock for delivery
upon exercise of Summit Stock Options, as adjusted in accordance with this
Section 1.6. As soon as practicable after the Effective Time, FleetBoston shall
file a registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of FleetBoston Common Stock subject to such
options and shall use its reasonable best efforts to maintain the effectiveness
of such registration statement or registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding.
1.7 ARTICLES OF INCORPORATION OF FLEETBOSTON. At the Effective Time, the
FleetBoston Articles shall be the articles of incorporation of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.8 BY-LAWS OF FLEETBOSTON. At the Effective Time, the FleetBoston By-Laws
shall be the By-Laws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.9 TAX AND ACCOUNTING CONSEQUENCES. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
that this Agreement shall constitute a "plan of reorganization" for the purposes
of Sections 354, 361 and 368 of the Code and that the Merger shall be accounted
for as a "pooling of interests" under generally accepted accounting principles
("GAAP").
A-3
<PAGE>
ARTICLE II
EXCHANGE OF SHARES
2.1 FLEETBOSTON TO MAKE SHARES AVAILABLE. At or prior to the Effective
Time, FleetBoston shall deposit, or shall cause to be deposited, with a bank or
trust company Subsidiary of FleetBoston, or another bank or trust company
reasonably acceptable to each of Summit and FleetBoston (the "Exchange Agent"),
for the benefit of the holders of Certificates, for exchange in accordance with
this Article II, certificates representing the shares of FleetBoston Common
Stock, and cash in lieu of any fractional shares (such cash and certificates for
shares of FleetBoston Common Stock, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund"), to
be issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in
exchange for outstanding shares of Summit Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, but in no event more than 10 days after the later of the Closing Date or
the date the Exchange Agent shall have received from Summit a substantially
complete list of the final shareholders of Summit as of the Effective Time, the
Exchange Agent shall mail to each holder of record of one or more Certificates a
letter of transmittal in customary form as reasonably agreed to by the parties
(which shall specify, among other things, that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of FleetBoston Common Stock and any cash in lieu of fractional shares
into which the shares of Summit Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon proper
surrender of a Certificate or Certificates for exchange and cancellation to the
Exchange Agent, together with such properly completed letter of transmittal,
duly executed, the holder of such Certificate or Certificates shall be entitled
to receive in exchange therefor, as applicable, (i) a certificate representing
that number of whole shares of FleetBoston Common Stock to which such holder of
Summit Common Stock shall have become entitled pursuant to the provisions of
Article I, (ii) a check representing the amount of any cash in lieu of
fractional shares which such holder has the right to receive in respect of the
Certificate or Certificates surrendered pursuant to the provisions of this
Article II, and (iii) a check representing the amount of any dividends or
distributions then payable pursuant to Section 2.2(b)(i) and the Certificate or
Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on any cash in lieu of fractional shares or on any unpaid
dividends and distributions payable to holders of Certificates.
(b) No dividends or other distributions declared with respect to FleetBoston
Common Stock shall be paid to the holder of any unsurrendered Certificate until
the holder thereof shall surrender such Certificate in accordance with this
Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive (i) the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid, without any interest thereon, which theretofore
had become payable and (ii), at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender, with respect to
shares of FleetBoston Common Stock represented by such Certificate.
(c) If any certificate representing shares of FleetBoston Common Stock is to
be issued in a name other than that in which the Certificate or Certificates
surrendered in exchange therefor is or are registered, it shall be a condition
of the issuance thereof that the Certificate or Certificates so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any transfer
or other Taxes required by reason of the issuance of a certificate representing
shares of FleetBoston Common Stock in any name other than that of the
A-4
<PAGE>
registered holder of the Certificate or Certificates surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Summit of the shares of Summit Capital Stock that were issued
and outstanding immediately prior to the Effective Time other than to settle
transfers of Summit Common Stock that occurred prior to the Effective Time and
otherwise as necessary to prepare a list of the final shareholders of Summit.
If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for certificates representing shares of FleetBoston Common Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of FleetBoston Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to FleetBoston Common Stock shall be payable on or
with respect to any fractional share, and such fractional share interests shall
not entitle the owner thereof to vote or to any other rights of a stockholder of
FleetBoston. In lieu of the issuance of any such fractional share, FleetBoston
shall pay to each former stockholder of Summit who otherwise would be entitled
to receive such fractional share an amount in cash determined by multiplying
(i) the average of the closing-sale prices of FleetBoston Common Stock on the
New York Stock Exchange, Inc. (the "NYSE") Composite Transactions Tape as
reported by The Wall Street Journal for the five trading days immediately
preceding the date of the Effective Time by (ii) the fraction of a share
(rounded to the nearest thousandth when expressed in decimal form) of
FleetBoston Common Stock to which such holder would otherwise be entitled to
receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Summit for 12 months after the Effective Time shall be paid to
FleetBoston. Any former stockholders of Summit who have not theretofore complied
with this Article II shall thereafter look only to FleetBoston for payment of
the shares of FleetBoston Common Stock, cash in lieu of any fractional shares
and any unpaid dividends and distributions on the FleetBoston Common Stock
deliverable in respect of each share of Summit Common Stock, as the case may be,
such stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of
FleetBoston, Summit, the Exchange Agent or any other person shall be liable to
any former holder of shares of Summit Common Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if reasonably required by
FleetBoston, the posting by such person of a bond in such amount as FleetBoston
may determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of
FleetBoston Common Stock and any cash in lieu of fractional shares deliverable
in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Except as disclosed in Summit disclosure schedule delivered to FleetBoston
prior to the execution of this Agreement (the "Summit Disclosure Schedule"),
Summit hereby represents and warrants to FleetBoston as follows:
3.1 CORPORATE ORGANIZATION. (a) Summit is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
Summit has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
A-5
<PAGE>
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on Summit. As used in this Agreement, the term "Material Adverse Effect"
means, with respect to FleetBoston, Summit or the Surviving Corporation, as the
case may be, a material adverse effect on (i) the business, results of
operations or financial condition of such party and its Subsidiaries taken as a
whole or (ii) the ability of such party to timely consummate the transactions
contemplated hereby; PROVIDED, HOWEVER, that Material Adverse Effect shall not
be deemed to include effects to the extent resulting from (a) changes in
generally accepted accounting principles or regulatory accounting requirements
applicable to banks or savings associations and their holding companies
generally, (b) actions or omissions of FleetBoston or Summit taken with the
prior written consent of the other in contemplation of the transactions
contemplated hereby and (c) changes in general economic conditions affecting
banks or their holding companies generally.
(b) Summit is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). True and complete
copies of the Restated Certificate of Incorporation of Summit (the "Summit
Certificate") and the By-Laws of Summit (the "Summit By-Laws") have previously
been made available by Summit to FleetBoston.
(c) Each of Summit's Subsidiaries (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Summit and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted. As used in this Agreement,
the word "Subsidiary" when used with respect to any party, means any bank,
corporation, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes, and the words "Summit Subsidiary" and
"FleetBoston Subsidiary" shall mean any direct or indirect Subsidiary of Summit
or FleetBoston, respectively.
3.2 CAPITALIZATION. (a) The authorized capital stock of Summit consists of
(i) 390,000,000 shares of Summit Common Stock, of which, as of September 28,
2000, 173,591,527 shares were issued and outstanding and 3,671,290 shares were
held in treasury, and (ii) 6,000,000 shares of preferred stock, without par
value and together with Summit Common Stock, "Summit Capital Stock"), of which
no shares are issued or outstanding. All of the issued and outstanding shares of
Summit Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
described in this Section 3.2(a) and except pursuant to the terms of (i) the
Summit Option Agreement, (ii) options issued pursuant to the Summit Stock Plans
and (iii) the Summit Rights Agreement, Summit does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Summit Capital Stock or any other equity securities of Summit or any
securities representing the right to purchase or otherwise receive any shares of
Summit Capital Stock (collectively, including the items contemplated by clauses
(i) through (iii) of this sentence, the "Summit Rights"). As of September 30,
2000, no shares of Summit Capital Stock were reserved for issuance, except for
68,846 shares of Summit Common Stock reserved for issuance in connection with
Summit Automatic Dividend Reinvestment and Common Stock Purchase Plan (the
"Summit DRIP"), 19,173,336 shares of Summit Common Stock reserved for issuance
upon the exercise of stock options pursuant to the Summit Stock Plans and in
respect of the employee and director savings, compensation and deferred
compensation plans described in Section 3.11(a) of the Summit Disclosure
Schedule and 1,772,629 Series S Preferred
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Shares of Summit, reserved for issuance in connection with the Summit Rights
Agreement. Since September 28, 2000, Summit has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than as permitted by Section 5.2(b). Summit has
previously provided FleetBoston with a list of the aggregate number of options
outstanding under the Summit Stock Plans as of September 28, 2000 and the
weighted average exercise price for such options.
(b) Summit owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each of Summit's
Subsidiaries, free and clear of any material liens, pledges, charges and
security interests and similar encumbrances ("Liens"), and all of such shares or
equity ownership interests are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Summit Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary. Section 3.2(b) of the
Summit Disclosure Schedule sets forth a list of the material investments of
Summit in corporations, joint ventures, partnerships, limited liability
companies and other entities other than its Subsidiaries.
3.3 AUTHORITY; NO VIOLATION. (a) Summit has full corporate power and
authority to execute and deliver this Agreement and the Summit Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Summit Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of Summit. The Board of Directors
of Summit has determined that this Agreement and the transactions contemplated
hereby are in the best interests of Summit and its stockholders and has directed
that this Agreement and the transactions contemplated hereby be submitted to
Summit's stockholders for adoption at a duly held meeting of such stockholders
and, except for the approval of this Agreement and the transactions contemplated
hereby by the affirmative vote of the holders of a majority of the outstanding
shares of Summit Common Stock voted at such meeting, no other corporate
proceedings on the part of Summit are necessary to approve this Agreement or the
Summit Option Agreement or to consummate the transactions contemplated hereby or
thereby. This Agreement and the Summit Option Agreement have been duly and
validly executed and delivered by Summit and (assuming due authorization,
execution and delivery by FleetBoston) constitute valid and binding obligations
of Summit, enforceable against Summit in accordance with its terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies).
(b) Neither the execution and delivery of this Agreement or the Summit
Option Agreement by Summit nor the consummation by Summit of the transactions
contemplated hereby or thereby, nor compliance by Summit with any of the terms
or provisions hereof or thereof, will (i) violate any provision of the Summit
Certificate or the Summit By-Laws or (ii) assuming that the consents and
approvals referred to in Section 3.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Summit, any of its Subsidiaries or any of their respective
properties or assets or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of Summit, any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Summit or any of its Subsidiaries is a
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party, or by which they or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which, either individually or in the aggregate,
will not have a Material Adverse Effect on Summit.
3.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and the Federal Reserve
Act, as amended, and approval of such applications and notices, (ii) the filing
of any required applications or notices with any state agencies and approval of
such applications and notices (the "State Approvals"), (iii) the filing with the
Securities and Exchange Commission (the "SEC") of a proxy statement in
definitive form relating to the meetings of Summit's stockholders to be held in
connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement"), and of the registration statement on Form S-4 (the "S-4") in
which the Proxy Statement will be included as a prospectus, (iv) the filing of
the Articles of Merger with the Rhode Island Secretary pursuant to the RIBCA and
the issuance by the Rhode Island Secretary of a Certificate of Merger and the
filing of the Articles of Merger with the Secretary of State of the State of New
Jersey pursuant to the NJBCA, (v) any notices to or filings with the Small
Business Administration (the "SBA"), (vi) any notices or filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (vii) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers, investment
advisers or transfer agents, and federal commodities laws relating to the
regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable industry self-regulatory organization ("SRO"),
and the rules of the NYSE, or which are required under consumer finance,
mortgage banking and other similar laws, (viii) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of FleetBoston
Common Stock pursuant to this Agreement, and (ix) the approval of this Agreement
by the requisite vote of stockholders of Summit, no consents or approvals of or
filings or registrations with any court, administrative agency or commission or
other governmental authority or instrumentality (each a "Governmental Entity")
are necessary in connection with (A) the execution and delivery by Summit of
this Agreement and the Summit Option Agreement and (B) the consummation by
Summit of the Merger and the other transactions contemplated hereby and by the
Summit Option Agreement.
3.5 REPORTS. Summit and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1997 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority, (iv) the SEC, (v) any foreign
regulatory authority and (vi) any SRO (collectively, "Regulatory Agencies"), and
all other reports and statements required to be filed by them since January 1,
1997, including, without limitation, any report or statement required to be
filed pursuant to the laws, rules or regulations of the United States, any
state, any foreign entity, or any Regulatory Agency, and have paid all fees and
assessments due and payable in connection therewith, except where the failure to
file such report, registration or statement or to pay such fees and assessments,
either individually or in the aggregate, will not have a Material Adverse Effect
on Summit. Except for normal examinations conducted by a Regulatory Agency in
the ordinary course of the business of Summit and its Subsidiaries, no
Regulatory Agency has initiated or has pending any proceeding or, to the best
knowledge of Summit, investigation into the business or operations of Summit or
any of its Subsidiaries since January 1, 1997, except where such proceedings or
investigation will not, either individually or in the aggregate, have a Material
Adverse Effect on Summit. There (i) is no unresolved violation, criticism, or
exception by any Regulatory Agency with respect to any report or statement
relating to any examinations or inspections of Summit or any of its Subsidiaries
and (ii) has been no formal or informal inquiries by, or disagreements or
disputes with, any Regulatory Agency with respect to the business, operations
policies or procedures of Summit since
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January 1, 1997, which, in the reasonable judgment of Summit, will, either
individually or in the aggregate, have a Material Adverse Effect on Summit.
3.6 FINANCIAL STATEMENTS. Summit has previously made available to
FleetBoston copies of (i) the consolidated balance sheet of Summit and its
Subsidiaries as of December 31, for the fiscal years 1998 and 1999, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1997 through 1999, inclusive, as reported in
Summit's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(the "Summit 1999 10-K") filed with the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), accompanied by the audit report of KPMG
LLP, independent public accountants with respect to Summit and (ii) the
unaudited consolidated balance sheet of Summit and its Subsidiaries as of
June 30, 1999 and 2000, and the related consolidated statements of income,
changes in shareholders' equity and cash flows of the six month periods then
ended, as reported in Summit's Quarterly Report on Form 10-Q for the fiscal
period ended June 30, 2000. The December 31, 1999 consolidated balance sheet of
Summit (including the related notes, where applicable) fairly presents in all
material respects the consolidated financial position of Summit and its
Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 3.6 (including the related notes, where applicable) fairly
present in all material respects the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of Summit
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth, subject to normal year-end audit adjustments in amounts
consistent with past experience in the case of unaudited statements; each of
such statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except, in each case, as indicated in such statements or in
the notes thereto. The books and records of Summit and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
3.7 BROKER'S FEES. Neither Summit nor any Summit Subsidiary nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly disclosed
in the Summit Reports filed prior to the date hereof, since December 31, 1999,
no event or events have occurred that have had, either individually or in the
aggregate, a Material Adverse Effect on Summit.
(b) Except as publicly disclosed in the Summit Reports filed prior to the
date hereof, since December 31, 1999 through and including the date hereof,
Summit and its Subsidiaries have carried on their respective businesses in all
material respects in the ordinary course.
(c) Since December 31, 1999, neither Summit nor any of its Subsidiaries has
(i) except for normal increases for employees (other than officers subject to
the reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past practice or as required by
applicable law, increased the wages, salaries, compensation, pension, or other
fringe benefits or perquisites payable to any executive officer, employee, or
director from the amount thereof in effect as of December 31, 1999, granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than the customary
year-end bonuses for fiscal 2000 and 1999 in amounts consistent with past
practice, (ii) granted any stock appreciation rights or granted any rights to
acquire any shares of its capital stock to any executive officer, director or
employee other than grants to employees (other than officers subject to the
reporting requirements of Section 16(a) of the Exchange Act) made in the
ordinary course of business consistent with past
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practice under the Summit Stock Plans and except as permitted by
Section 5.2(b)(iii), or (iii) suffered any strike, work stoppage, slow-down, or
other labor disturbance.
3.9 LEGAL PROCEEDINGS. (a) Neither Summit nor any of its Subsidiaries is a
party to any, and there are no pending or, to the best of Summit's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Summit or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement or the Summit Option Agreement
as to which, in any such case, there is a reasonable probability of an adverse
determination and which, if adversely determined, will, either individually or
in the aggregate, have a Material Adverse Effect on Summit.
(b) There is no injunction, judgment, or regulatory (other than those of
general application that apply to similarly situated bank holding companies or
their Subsidiaries) imposed upon Summit, any of its Subsidiaries or the assets
of Summit or any of its Subsidiaries that has had, or will have, either
individually or in the aggregate, a Material Adverse Effect on Summit or the
Surviving Corporation.
3.10 TAXES AND TAX RETURNS. (a) Each of Summit and its Subsidiaries has
duly filed all federal, state, foreign and local information returns and Tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities (including, without limitation, if
and to the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than (i) Taxes or other government charges which are not yet delinquent or
are being contested in good faith, have not been finally determined and have
been adequately reserved against or (ii) information returns, Tax returns, Taxes
or other governmental charges as to which the failure to file, pay or make
provision for will not have, either individually or in the aggregate, a Material
Adverse Effect on Summit. The federal income Tax returns of Summit and its
Subsidiaries have been examined by the Internal Revenue Service (the "IRS") for
all years to and including 1997 and any liability with respect thereto has been
satisfied or any liability with respect to deficiencies asserted as a result of
such examination is covered by adequate reserves. There are no material disputes
pending, or claims asserted, for Taxes or assessments upon Summit or any of its
Subsidiaries for which Summit does not have adequate reserves. Neither Summit
nor any of its Subsidiaries is a party to or is bound by any Tax sharing,
allocation or indemnification agreement or arrangement (other than such an
agreement or arrangement exclusively between or among Summit and its
Subsidiaries). Within the past five years, neither Summit nor any of its
Subsidiaries has been a "distributing corporation" or a "controlled corporation"
in a distribution intended to qualify under Section 355(a) of the Code.
(b) As used in this Agreement, the term "Tax" or "Taxes" means (i) all
federal, state, local, and foreign income, excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use, payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon and (ii) any liability
for Taxes described in clause (i) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law).
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Summit or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding
would be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Summit.
3.11 EMPLOYEES. (a) The Summit Disclosure Schedule sets forth a true and
complete list of each material employee or director benefit or compensation
plan, arrangement or agreement, and any material bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or agreement that is
maintained, or
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contributed to, as of the date of this Agreement (the "Summit Benefit Plans") by
Summit, any of its Subsidiaries or by any trade or business, whether or not
incorporated (a "Summit ERISA Affiliate"), all of which together with Summit
would be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Summit has heretofore made available to FleetBoston true and complete
copies of each of the Summit Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such Summit Benefit
Plan (if applicable) for each of the last two years and (ii) the most recent
determination letter from the IRS (if applicable) for such Summit Benefit Plan.
(c) Except for such noncompliance as would not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Summit, (i) each of the Summit Benefit Plans has been operated
and administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Summit
Benefit Plans intended to be "qualified" within the meaning of Section 401
(a) of the Code is so qualified, and there are no existing circumstances or any
events that have occurred that will adversely affect the qualified status of any
such Summit Benefit Plan, (iii) with respect to each Summit Benefit Plan that is
subject to Title IV of ERISA, the present value (as defined under Section 3(26)
of ERISA) of accumulated benefit obligations under such Summit Benefit Plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Summit Benefit Plan's actuary with
respect to such Summit Benefit Plan, did not, as of its latest valuation date,
exceed the then current value (as defined under Section 3(26) of ERISA) of the
assets of such Summit Benefit Plan allocable to such accrued benefits, (iv) no
Summit Benefit Plan provides benefits coverage, including, without limitation,
death or medical benefits coverage (whether or not insured), with respect to
current or former employees or directors of Summit or its Subsidiaries beyond
their retirement or other termination of service, other than (A) coverage
mandated by applicable law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of ERISA),
(C) deferred compensation benefits accrued as liabilities on the books of Summit
or its Subsidiaries, (D) benefits the full cost of which is borne by the current
or former employee or director (or his beneficiary), (E) coverage through the
last day of the calendar month in which retirement or other termination of
service occurs, or (F) medical expense reimbursement accounts, (v) no liability
under Title IV of ERISA has been incurred by Summit, its Subsidiaries or any
Summit ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to Summit, its Subsidiaries or any Summit
ERISA Affiliate of incurring a liability thereunder, (vi) no Summit Benefit Plan
is a "multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA), (vii) none of Summit, its Subsidiaries or any other person, including
any fiduciary, has engaged in a transaction in connection with which Summit, its
Subsidiaries or any Summit Benefit Plan will be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material
Tax imposed pursuant to Section 4975 or 4976 of the Code, and (viii) to the best
knowledge of Summit there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Summit Benefit Plans or any trusts related thereto that will have, either
individually or in the aggregate, a Material Adverse Effect on Summit.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of Summit or any of its
affiliates from Summit or any of its affiliates under any Summit Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Summit Benefit
Plan or (iii) result in any acceleration of the time of payment or vesting of
any such benefits.
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3.12 SEC REPORTS. Summit has previously made available to FleetBoston an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
Summit with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "Summit Reports") and prior to the
date hereof and (b) communication mailed by Summit to its stockholders since
January 1, 1997 and prior to the date hereof, and no such Summit Report or
communication, as of the date thereof, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date hereof) shall be deemed to modify
information as of an earlier date. Since January 1, 1997, as of their respective
dates, all Summit Reports filed under the Securities Act and the Exchange Act
complied in all material respects with the published rules and regulations of
the SEC with respect thereto.
3.13 COMPLIANCE WITH APPLICABLE LAW. (a) Summit and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
Summit or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
will not, either individually or in the aggregate, have a Material Adverse
Effect on Summit.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on Summit, Summit and each Summit Subsidiary have
properly administered all accounts for which it acts as a fiduciary, including
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents, applicable state and federal law and
regulation and common law. None of Summit, any Summit Subsidiary, or any
director, officer or employee of Summit or of any Summit Subsidiary, has
committed any breach of trust with respect to any such fiduciary account that
will have a Material Adverse Effect on Summit, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
3.14 CERTAIN CONTRACTS. (a) Neither Summit nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval of
the transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from FleetBoston, Summit, the Surviving
Corporation, or any of their respective Subsidiaries to any officer or employee
thereof, (iii) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the Summit
Reports, (iv) which materially restricts the conduct of any line of business by
Summit or upon consummation of the Merger will materially restrict the ability
of the Surviving Corporation to engage in any line of business in which a bank
holding company may lawfully engage, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any stockholder
approval or the consummation of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement. Summit has
previously made available to FleetBoston true and correct copies of all
employment and deferred compensation agreements which are in writing and to
which Summit or any of its Subsidiaries is a party. Each contract, arrangement,
commitment or understanding of the type described in this
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Section 3.14(a), whether or not set forth in the Summit Disclosure Schedule, is
referred to herein as a "Summit Contract," and neither Summit nor any of its
Subsidiaries knows of, or has received notice of, any violation of the above by
any of the other parties thereto which, either individually or in the aggregate,
will have a Material Adverse Effect on Summit.
(b) With such exceptions that, either individually or in the aggregate, will
not have a Material Adverse Effect on Summit, (i) each Summit Contract is valid
and binding on Summit or any of its Subsidiaries, as applicable, and is in full
force and effect, (ii) Summit and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date under
each Summit Contract, and (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, will constitute, a material default
on the part of Summit or any of its Subsidiaries under any such Summit Contract.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Summit nor any of its
Subsidiaries is subject to any cease-and-desist or other order or enforcement
action issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or has been
ordered to pay any civil money penalty by, or has been since January 1, 1997, a
recipient of any supervisory letter from, or since January 1, 1997, has adopted
any policies, procedures or board resolutions at the request or suggestion of
any Regulatory Agency or other Governmental Entity that currently restricts in
any material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its ability to pay dividends, its credit or
risk management policies, its management or its business (each item in this
sentence, whether or not set forth in the Summit Disclosure Schedule, a "Summit
Regulatory Agreement"), nor has Summit or any of its Subsidiaries been advised
since January 1, 1997, by any Regulatory Agency or other Governmental Entity
that it is considering issuing, initiating, ordering, or requesting any such
Summit Regulatory Agreement.
3.16 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Summit or for the account
of a customer of Summit or any of its Subsidiaries, were entered into in the
ordinary course of business consistent with past practice and, to Summit's
knowledge, in accordance with prudent banking practice and applicable rules,
regulations and policies of any Regulatory Authority and with counterparties
believed to be financially responsible at the time and are legal, valid and
binding obligations of Summit or one of its Subsidiaries enforceable in
accordance with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and are in full force and
effect. Summit and each of its Subsidiaries have duly performed in all material
respects all of their material obligations thereunder to the extent that such
obligations to perform have accrued; and, to Summit's knowledge, there are no
material breaches, violations or defaults or allegations or assertions of such
by any party thereunder.
3.17 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Summit
included in the Summit 1999 10-K and for liabilities incurred in the ordinary
course of business consistent with past practice since December 31, 1999, since
such date, neither Summit nor any of its Subsidiaries has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either individually or in the aggregate
(including if considered together with liabilities incurred in the ordinary
course of business consistent with past practice since December 31, 1999), has
had or will have a Material Adverse Effect on Summit.
3.18 ENVIRONMENTAL LIABILITY. There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the
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imposition, on Summit of any liability or obligation arising under common law or
under any local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or threatened
against Summit, which liability or obligation will, either individually or in
the aggregate, have a Material Adverse Effect on Summit. To the knowledge of
Summit, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that
will, individually or in the aggregate, have a Material Adverse Effect on
Summit. Summit is not subject to any agreement, order, judgment, decree, letter
or memorandum by or with any Governmental Authority or third party imposing any
liability or obligation with respect to the foregoing that will have, either
individually or in the aggregate, a Material Adverse Effect on Summit.
3.19 INTELLECTUAL PROPERTY. Except as would not reasonably be expected to
have a Material Adverse Effect on Summit, to the knowledge of Summit:
(a) Summit and each of its Subsidiaries owns, or is licensed to use (in each
case, free and clear of any liens), all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as currently conducted;
(b) the use of any Intellectual Property by Summit and its Subsidiaries does not
infringe on or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Summit or any Subsidiary acquired
the right to use any Intellectual Property; (c) no Person is challenging,
infringing on or otherwise violating any right of Summit or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or licensed
to Summit or its Subsidiaries; and (d) neither Summit nor any of its
Subsidiaries has received any written notice of any pending claim with respect
to any Intellectual Property used by Summit and its Subsidiaries and no
Intellectual Property owned and/or licensed by Summit or its Subsidiaries is
being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any similar intellectual
property or proprietary rights.
3.20 STATE TAKEOVER LAWS; SUMMIT RIGHTS AGREEMENT. (a) The Board of
Directors of Summit has approved this Agreement and the Summit Option Agreement
and the transactions contemplated hereby and thereby for purposes of rendering
inapplicable to such agreements and transactions the New Jersey Shareholder
Protection Act, the Summit Rights Agreement and, to the best knowledge of
Summit, any similar "takeover" or "interested stockholder" law (all such laws,
including the New Jersey Shareholder Protection Act, "Takeover Statutes").
(b) Summit has taken all action, if any, necessary or appropriate so that
the entering into of this Agreement and the Summit Option Agreement, and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the ability of any person to exercise any Summit Stockholder
Rights under the Summit Rights Agreement or enable or require Summit Stockholder
Rights to separate from the shares of Summit Common Stock to which they are
attached or to be triggered or become exercisable. No "Distribution Date" or
"Stock Acquisition Date" (as such terms are defined in the Summit Rights
Agreement) has occurred.
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3.21 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, Summit has no reason to believe that the Merger will not qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
3.22 OPINIONS. Prior to the execution of this Agreement, Summit has
received an opinion from Merrill Lynch, Pierce, Fenner & Smith to the effect
that as of the date thereof and based upon and subject to the matters set forth
therein, the Exchange Ratio is fair to the stockholders of Summit from a
financial point of view. Such opinion has not been amended or rescinded as of
the date of this Agreement.
3.23 SUMMIT INFORMATION. The information relating to Summit and its
Subsidiaries which is provided by Summit or its representatives for inclusion in
the Proxy Statement and the S-4, or in any other document filed with any other
Regulatory Agency in connection herewith, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The Proxy Statement (except for such portions thereof that relate
only to FleetBoston or any of its Subsidiaries) will comply with the provisions
of the Exchange Act and the rules and regulations thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FLEETBOSTON
Except as disclosed in the FleetBoston disclosure schedule delivered to
Summit prior to the execution of this Agreement (the "FleetBoston Disclosure
Schedule") FleetBoston represents and warrants to Summit as follows:
4.1 CORPORATE ORGANIZATION. (a) FleetBoston is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Rhode Island. FleetBoston has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on FleetBoston. FleetBoston is duly registered as a financial holding
Summit under the BHC Act. True and complete copies of the Restated Articles of
Incorporation (the "FleetBoston Articles") and By-Laws of FleetBoston, as in
effect as of the date of this Agreement, have previously been made available by
FleetBoston to Summit.
(b) Each FleetBoston Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether Federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on FleetBoston, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 CAPITALIZATION. (a) The authorized capital stock of FleetBoston
consists of 2,000,000,000 shares of FleetBoston Common Stock, of which, as of
September 28, 2000, no more than 902,450,000 shares were issued and outstanding,
and 16,000,000 shares of preferred stock, $1.00 par value, of which (i) 500,000
shares were designated, issued and outstanding as FleetBoston 9.35% Cumulative
Preferred, (ii) 765,010 shares were designated, issued and outstanding as
FleetBoston Series V 7.25% Perpetual Preferred, (iii) 600,000 shares were
designated, issued and outstanding as FleetBoston Series VI 6.75% Perpetual
Preferred, (iv) 700,000 shares were designated, issued and outstanding as
FleetBoston Series VII Fixed/Adjustable Rate Cumulative Preferred, (v) 200,000
shares were designated, issued and outstanding as FleetBoston Series VIII
Fixed/Adjustable Rate Noncumulative Preferred, (vi) 1,100,000
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shares were designated and no shares were issued or outstanding as Series III
10.12% Perpetual Preferred Stock, (vii) 1,000,000 shares were designated and no
shares were issued or outstanding as Series IV 9.375% Perpetual Preferred Stock,
(viii) 1,415,000 shares were designated and no shares were issued or outstanding
as Dual Convertible Preferred Stock, (ix) 3,000,000 shares were designated and
no shares were issued or outstanding as Cumulative Participating Junior
Preferred Stock, (x) 688,700 shares were designated and no shares were issued or
outstanding as Preferred Stock with Cumulative and Adjustable Dividends,
(xi) 575,000 shares were designated and no shares were issued or outstanding as
9.30% Cumulative Preferred Stock, (xii) 500,000 shares were designated and no
shares were issued or outstanding as 9.35% Cumulative Preferred Stock,
(xiii) 1,265,000 shares were designated and no shares were issued or outstanding
as Series V 7.25% Perpetual Preferred Stock, (xiv) 690,000 shares were
designated and no shares were issued or outstanding as Series VI 6.75% Perpetual
Preferred Stock, (xv) 805,000 shares were designated and no shares were issued
or outstanding as Series VII Fixed/Adjustable Rate Cumulative Preferred Stock
and (xvi) 200,000 shares were designated and no shares were issued or
outstanding as Series VIII Fixed/Adjustable Rate Noncumulative Preferred Stock.
As of September 28, 2000, no more than 13,600,000] shares of FleetBoston Common
Stock were held in FleetBoston's treasury. As of the date hereof, no shares of
FleetBoston Common Stock or FleetBoston Preferred Stock were reserved for
issuance, except as described in this Section 4.2(a) and except for
89.2 million shares reserved for issuance upon exercise of options issued
pursuant to employee and director stock plans of FleetBoston in effect as of the
date hereof (the "FleetBoston Stock Plans"), (ii) 13.2 million shares reserved
for issuance pursuant to outstanding warrants to purchase FleetBoston Common
Stock (the "FleetBoston Warrants"), (iv) 3,000,000 shares of Cumulative
Participating Junior Preferred Stock, $1.00 par value, reserved for issuance
pursuant to the FleetBoston Rights Agreement. All of the issued and outstanding
shares of FleetBoston Capital Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except for this Agreement, the FleetBoston Stock Plans, the
FleetBoston Warrants, the FleetBoston Purchase Rights and the FleetBoston Rights
Agreement, FleetBoston does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of FleetBoston
Capital Stock or any other equity securities of FleetBoston or any securities
representing the right to purchase or otherwise receive any shares of
FleetBoston Capital Stock. The shares of FleetBoston Common Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at the
Effective Time, all such shares will be fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) FleetBoston owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other equity ownership interests of each
of the FleetBoston Subsidiaries, free and clear of any Liens, and all of such
shares or equity ownership interests are duly authorized and validly issued and
are fully paid, nonassessable (subject to 12 U.S.C. SectionSection 55) and free
of preemptive rights, with no personal liability attaching to the ownership
thereof. No FleetBoston Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
4.3 AUTHORITY, NO VIOLATION. (a) FleetBoston has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of FleetBoston and no other corporate
proceedings on the part of FleetBoston are necessary to approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by FleetBoston and (assuming due
authorization, execution and delivery by Summit) constitutes valid and
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binding obligations of each of FleetBoston, enforceable against each of
FleetBoston in accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by FleetBoston, nor
the consummation by FleetBoston of the transactions contemplated hereby, nor
compliance by FleetBoston with any of the terms or provisions hereof, will
(i) violate any provision of the FleetBoston Articles or By-Laws, or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, writ, or Injunction applicable to FleetBoston, any of its Subsidiaries
or any of their respective properties or assets or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of FleetBoston, any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which
FleetBoston, any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected, except (in the
case of clause (y) above) for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not have a Material Adverse
Effect on FleetBoston.
4.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and the
Federal Reserve Act, as amended, and approval of such applications and notices,
(ii) the State Approvals, (iii) the filing with the SEC of the Proxy Statement
and the filing and declaration of effectiveness of the S-4, (iv) the filing of
the Articles of Merger with the Rhode Island Secretary pursuant to the RIBCA and
the issuance by the Rhode Island Secretary of a Certificate of Merger and the
filing of the Articles of Merger with the Secretary of State of the State of New
Jersey pursuant to the NJBCA, (v) any notices to or filings with the SBA,
(vi) any notices or filings under the HSR Act, (vii) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with the applicable provisions of federal and state securities laws relating to
the regulation of broker-dealers, investment advisers or transfer agents, and
federal commodities laws relating to the regulation of futures commission
merchants and the rules and regulations thereunder and of any applicable SRO,
and the rules of the NYSE, or which are required under consumer finance,
mortgage banking and other similar laws and (viii) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of FleetBoston
Capital Stock pursuant to this Agreement, no consents or approvals of or filings
or registrations with any Governmental Entity are necessary in connection with
(A) the execution and delivery by FleetBoston of this Agreement and (B) the
consummation by FleetBoston of the Merger and the other transactions
contemplated hereby.
4.5 REPORTS. FleetBoston and each of its Subsidiaries have timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since
January 1, 1997 with the Regulatory Agencies, and all other reports and
statements required to be filed by them since January 1, 1997, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, any foreign entity
or any Regulatory Agency, and have paid all fees and assessments due and payable
in connection therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessments, either
individually or in the aggregate, will not have a Material Adverse Effect on
FleetBoston. Except for normal examinations conducted by a Regulatory Agency in
the ordinary course of the business of FleetBoston and its Subsidiaries, no
Regulatory Agency has initiated or has pending any proceeding or, to the best
knowledge of FleetBoston, investigation into the business or operations of
FleetBoston or any of its Subsidiaries since January 1, 1997, except where such
proceedings or investigation will not have, either individually or in the
aggregate, a Material
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Adverse Effect on FleetBoston. There (i) is no unresolved violation, criticism,
or exception by any Regulatory Agency with respect to any report or statement
relating to any examinations or inspections of FleetBoston or any of its
Subsidiaries, and (ii) has been no formal or informal inquiries by, or
disagreements or disputes with, any Regulatory Agency with respect to the
business, operations, policies or procedures of FleetBoston since January 1,
1997, which, in the reasonable judgment of FleetBoston, will have, either
individually or in the aggregate, a Material Adverse Effect on FleetBoston.
4.6 FINANCIAL STATEMENTS. FleetBoston has previously provided to Summit
copies of (i) the audited consolidated balance sheets of FleetBoston and its
Subsidiaries as of December 31, for the fiscal years 1998 and 1999, and the
related audited consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1997 through 1999, inclusive (the
"FleetBoston 1999 Financial Information"), as reported in FleetBoston's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999 (the
"FleetBoston 1999 10-K") filed with the SEC under the Exchange Act, accompanied
by the audit report of PricewaterhouseCoopers LLP, independent public
accountants with respect to FleetBoston and (ii) the unaudited consolidated
balance sheet of FleetBoston and its Subsidiaries as of June 30, 1999 and 2000,
and the related consolidated statements of income, changes in shareholders'
equity and cash flows of the six month periods then ended, as reported in the
Fleet Boston Quarterly Report on Form 10-Q for the fiscal period ended June 30,
2000. The December 31, 1999 consolidated balance sheet of FleetBoston (including
the related notes, where applicable) fairly presents in all material respects
the consolidated financial position of FleetBoston and its Subsidiaries as of
the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present in
all material respects the results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of FleetBoston and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth, subject to normal year-end audit adjustments in amounts
consistent with past experience in the case of unaudited statements; each of
such statements (including the related notes, where applicable) complies in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto. The books and records of FleetBoston and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 BROKER'S FEES. Neither FleetBoston nor any FleetBoston Subsidiary nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any brokers fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly disclosed
in FleetBoston Reports filed prior to the date hereof, since December 31, 1999,
no event or events have occurred which has had, individually or in the
aggregate, a Material Adverse Effect on FleetBoston.
(b) Except as publicly disclosed in FleetBoston Reports filed prior to the
date hereof, from December 31, 1999 through and including the date hereof,
FleetBoston and the FleetBoston Subsidiaries have carried on their respective
businesses in all material respect in the ordinary course.
4.9 LEGAL PROCEEDINGS. (a) Neither FleetBoston nor any of its Subsidiaries
is a party to any, and there are no pending or, to the best of FleetBoston's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against FleetBoston or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement as to which, in any
such case, there is a reasonable probability of an
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adverse determination and which, if adversely determined, will have, either
individually or in the aggregate, a Material Adverse Effect on FleetBoston.
(b) There is no Injunction, judgment, or regulatory restriction (other than
those of general application that apply to similarly situated bank holding
companies or their Subsidiaries) imposed upon FleetBoston, any of its
Subsidiaries or the assets of FleetBoston or any of its Subsidiaries that has
had or will have, either individually or in the aggregate, a Material Adverse
Effect on FleetBoston or the Surviving Corporation.
4.10 TAXES AND TAX RETURNS. Each of FleetBoston and its Subsidiaries has
duly filed all federal, state, foreign and local information returns and Tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision for the payment of all Taxes and other governmental charges
which have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities (including, without limitation, if
and to the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than (i) Taxes or other governmental charges which are not yet delinquent
or are being contested in good faith and have not been finally determined, or
(ii) information returns, tax returns, Taxes or other governmental charges as to
which the failure to file, pay or make provision for will not have, either
individually or in the aggregate, a Material Adverse Effect on FleetBoston. The
federal income Tax returns of FleetBoston and its Subsidiaries have been
examined by the IRS through 1990 and any liability with respect thereto has been
satisfied or any liability with respect to deficiencies asserted as a result of
such examination is covered by adequate reserves. There are no material disputes
pending, or claims asserted for, Taxes or assessments upon FleetBoston or any of
its Subsidiaries for which FleetBoston does not have adequate reserves. Neither
FleetBoston nor any of its Subsidiaries is a party to or is bound by any Tax
sharing, allocation or indemnification agreement or arrangement (other than such
an agreement or arrangement exclusively between or among FleetBoston and its
Subsidiaries). Within the past five years, neither FleetBoston nor any of its
Subsidiaries has been a "distributing corporation" or a "controlled corporation"
in a distribution intended to qualify under Section 355(a) of the Code.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by FleetBoston or any of its
Subsidiaries under any contract, plan, program, arrangement or understanding
would be reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FleetBoston.
4.11 SEC REPORTS. FleetBoston has previously made available to Summit an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1997 by
FleetBoston with the SEC pursuant to the Securities Act or the Exchange Act (the
"FleetBoston Reports") and prior to the date hereof and (b) communication mailed
by FleetBoston to its stockholders since January 1, 1997 and prior to the date
hereof, and no such FleetBoston Report or communication, as of the date thereof,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date. Since
January 1, 1997, as of their respective dates, all FleetBoston Reports filed
under the Securities Act and the Exchange Act complied in all material respects
with the published rules and regulations of the SEC with respect thereto.
4.12 COMPLIANCE WITH APPLICABLE LAW. (a) FleetBoston and each of its
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to each, and have complied in all material respects with and are not in
default in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
FleetBoston or any of its Subsidiaries,
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except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default will not, either individually or
in the aggregate, have a Material Adverse Effect on FleetBoston.
(b) Except as will not have, either individually or in the aggregate, a
Material Adverse Effect on FleetBoston, FleetBoston and each FleetBoston
Subsidiary have properly administered all accounts for which it acts as a
fiduciary, including accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents, applicable state and
federal law and regulation and common law. None of FleetBoston, any FleetBoston
Subsidiary, or any director, officer or employee of FleetBoston or of any
FleetBoston Subsidiary, has committed any breach of trust with respect to any
such fiduciary account that will have a Material Adverse Effect on FleetBoston,
and the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account.
4.13 AGREEMENTS WITH REGULATORY AGENCIES. Neither FleetBoston nor any of
its Subsidiaries is subject to any cease-and-desist or other order or
enforcement action issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or directive by, or
has been since January 1, 1997, a recipient of any supervisory letter from, or
has been ordered to pay any civil money penalty by, or since January 1, 1997,
has adopted any policies, procedures or board resolutions at the request of any
Regulatory Agency or other Governmental Entity that currently restricts in any
material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its ability to pay dividends, its credit or
risk management policies, its management or its business (each, whether or not
set forth in the FleetBoston Disclosure Schedule, a "FleetBoston Regulatory
Agreement"), nor has FleetBoston or any of its Subsidiaries been advised since
January 1, 1997, by any Regulatory Agency or other Governmental Entity that it
is considering issuing, initiating, ordering or requesting any such FleetBoston
Regulatory Agreement.
4.14 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of FleetBoston or for the
account of a customer of FleetBoston or one of its Subsidiaries, were entered
into in the ordinary course of business consistent with past practice and, to
FleetBoston's knowledge, in accordance with prudent banking practice and
applicable rules, regulations and policies of any Regulatory Authority and with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations of FleetBoston or one of its Subsidiaries
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies), and
are in full force and effect. FleetBoston and each of its Subsidiaries have duly
performed in all material respects all of their material obligations thereunder
to the extent that such obligations to perform have accrued; and to
FleetBoston's knowledge, there are no material breaches, violations or defaults
or allegations or assertions of such by any party thereunder.
4.15 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of FleetBoston
included in the FleetBoston 1999 Financial Information and for liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 1999, since such date, neither FleetBoston nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either individually or in the aggregate (including if considered together
with liabilities incurred in the ordinary course of business consistent with
past practice since December 31, 1999), has had or will have, a Material Adverse
Effect on FleetBoston.
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4.16 ENVIRONMENTAL LIABILITY. There are no legal, administrative, arbitral
or other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably result in the imposition, on
FleetBoston of any liability or obligation arising under common law or under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, pending or threatened
against FleetBoston, which liability or obligation will, either individually or
in the aggregate, have a Material Adverse Effect on Summit. To the knowledge of
FleetBoston, there is no reasonable basis for any such proceeding, claim, action
or governmental investigation that would impose any liability or obligation that
will, individually or in the aggregate, have a Material Adverse Effect on
FleetBoston. FleetBoston is not subject to any agreement, order, judgment,
decree, letter or memorandum by or with any Governmental Authority or third
party imposing any liability or obligation with respect to the foregoing that
will have, either individually or in the aggregate, a Material Adverse Effect on
FleetBoston.
4.17 REORGANIZATION; POOLING OF INTERESTS. As of the date of this
Agreement, FleetBoston has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
4.18 FLEETBOSTON INFORMATION. The information relating to FleetBoston and
its Subsidiaries to be contained in the Proxy Statement and the S-4, or the
information relating to FleetBoston and its Subsidiaries that is provided by
FleetBoston or its representatives for inclusion in any other document filed
with any other Regulatory Agency in connection herewith, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances in which they are
made, not misleading. The Proxy Statement (except for such portions thereof that
relate only to Summit or any of its Subsidiaries) will comply with the
provisions of the Exchange Act and the rules and regulations thereunder. The S-4
will comply with the provisions of the Securities Act and the rules and
regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the Summit Disclosure
Schedule) or the Summit Option Agreement, Summit shall, and shall cause each of
its Subsidiaries to, (a) conduct its business in the ordinary course, (b) use
reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its key officers and key employees and (c) take no action which
would adversely affect or delay the ability of the parties to obtain any
necessary approvals of any Regulatory Agency or other Governmental Entity
required for the transactions contemplated hereby or to perform its covenants
and agreements under this Agreement or the Summit Option Agreement or to
consummate the transactions contemplated hereby or thereby.
5.2 FORBEARANCES. During the period from the date of this Agreement to the
Effective Time, except as set forth in the Summit Disclosure Schedule and except
as expressly contemplated or permitted by this Agreement, Summit shall not, and
shall not permit any of its Subsidiaries to, without the prior written consent
of FleetBoston (which consent shall not be unreasonably withheld):
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness
of Summit or any of its wholly owned Subsidiaries to Summit or any of its
Subsidiaries), assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation
or other entity, or
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make any loan or advance (it being understood and agreed that incurrence of
indebtedness in the ordinary course of business consistent with past
practice shall include, without limitation, the creation of deposit
liabilities, purchases of Federal funds, sales of certificates of deposit
and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible
(whether currently convertible or convertible only after the passage of time
or the occurrence of certain events) into or exchangeable for any shares of
its capital stock (except (A) for regular quarterly cash dividends at a rate
not in excess of $0.35 per share of Summit Common Stock, (B) dividends paid
by any of the Subsidiaries of Summit to Summit or to any of its wholly owned
Subsidiaries and (C) the acceptance of shares of Summit Common Stock as
payment of the exercise price of stock options or for withholding taxes
incurred in connection with the exercise of stock options or the vesting of
restricted stock, in each case in accordance with past practice and the
terms of the applicable award agreements);
(iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its capital
stock, other than (A) pursuant to the Summit Rights Agreement or any renewal
or replacement thereof and (B) grants to newly hired employees of Summit
(other than officers that will be subject to the reporting requirements of
Section 16(a) of the Exchange Act) made in the ordinary course of business
consistent with past practice under the Summit Stock Plans and consistent
with the additional terms set forth in Section 5.2 of the Summit Disclosure
Schedule; or
(iv) issue any additional shares of capital stock except (A) pursuant to
the exercise of stock options outstanding as of the date hereof or issued in
compliance with Section 5.2(b)(iii), (B) pursuant to the Summit Option
Agreement or (C) pursuant to the Summit Rights Agreement or any renewal or
replacement thereof;
(c) (i) except for normal increases for employees (other than officers
subject to the reporting requirements of Section 16(a) of the Exchange Act)
made in the ordinary course of business consistent with past practice, or as
required by applicable law or agreements disclosed in Section 5.2 of the
Summit Disclosure Schedule, increase the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any officer,
employee, or director, or (ii) pay any pension or retirement allowance not
required by any existing plan or agreement or by applicable law, or
(iii) pay any bonus other than customary year-end bonuses for fiscal 2000
determined in accordance with Section 5.2 of the Summit Disclosure Schedule,
or (iv) become a party to, amend or commit itself to, any pension,
retirement, profit-sharing or welfare benefit plan or agreement or
employment agreement with or for the benefit of any employee other than in
the ordinary course of business consistent with past practice or as required
by applicable law, or (v) except as required under any existing plan, grant,
or agreement disclosed in Section 5.2 of the Summit Disclosure Schedule,
accelerate the vesting of, or the lapsing of restrictions with respect to,
any stock options or other equity-based compensation;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets to any individual, corporation or other
entity or cancel, release or assign any indebtedness to any such person or
any claims held by any such person, in each case other than in the ordinary
course of business consistent with past practice or as required by
applicable law or as set forth in the Summit Disclosure Schedule;
(e) except for transactions in the ordinary course of business
consistent with past practice (other than as set forth in Section 5.2 of the
Summit Disclosure Schedule), make any material
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investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any
other individual, corporation or other entity;
(f) except for transactions in the ordinary course of business
consistent with past practice, terminate, or waive any material provision of
any Summit Contract or make any change in any instrument or agreement
governing the terms of any of its securities, or material lease or contract,
other than normal renewals of contracts and leases without material adverse
changes of terms;
(g) solicit or encourage from any third party or enter into any
negotiations, discussions or agreement in respect of, or authorize any
individual, corporation or other entity to solicit or encourage from any
third party or enter into any negotiations, discussions or agreements in
respect of, or provide or cause to be provided any confidential information
in connection with, any inquiries or proposals relating to the disposition
of all or significant portion of its business or assets, the acquisition of
15% or more of its voting securities, or the merger, consolidation or
similar business combination transaction involving it or any of its
Subsidiaries with any corporation or other entity, other than as provided by
this Agreement (and each party shall promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it may
receive relating to any of such matters), provided that Summit may, and may
permit its employees, agents and representatives to furnish or cause to be
furnished confidential information, and may participate in negotiations or
discussions, to the extent that the Board of Directors of Summit determines,
in good faith after consultation with outside legal counsel, that the
failure to take such action would be inconsistent with its fiduciary duties
under applicable law, provided further that prior to providing any
non-public information permitted to be provided pursuant to the foregoing
proviso, Summit shall have entered into a confidentiality agreement with
such third party on customary terms as advised by outside legal counsel;
(h) settle any claim, action or proceeding requiring Summit or any of
its Subsidiaries to pay (whether or not such payments would be covered in
whole or in part by insurance) any monetary damages in excess of $500,000 or
subjecting Summit or any of its Subsidiaries to any restrictions (other than
DE MINIMIS restrictions) on its current or future business or operations
(including the future business and operations of the Surviving Corporation);
(i) knowingly take any action, or knowingly fail to take any action,
that is reasonably likely to (A) jeopardize the treatment of the Merger as a
"pooling of interests" for accounting purposes (including by terminating and
electing to pay cash for any option to purchase Summit Common Stock as may
be permitted under the Summit Stock Plans or otherwise) or (B) prevent or
impede the Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code;
(j) amend its articles of incorporation, its bylaws or comparable
governing documents, or amend, or redeem the rights issued under, the Summit
Rights Agreement (except as required hereunder), or otherwise take any
action to exempt any person or entity (other than FleetBoston or its
Subsidiaries) or any action taken by such person or entity from the Summit
Rights Agreement or any Takeover Statute or similarly restrictive provisions
of such party's organizational documents or terminate, amend or waive any
provisions of any confidentiality or standstill agreements in place with any
third parties;
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise, or the
manner in which the portfolio is classified or reported;
(l) take any action that is intended or is reasonably likely to result
in any of its representations or warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth
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in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law;
(m) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines;
(n) file or amend any Tax return other than in the ordinary course of
business, make or change any material Tax election, settle or compromise any
material Tax liability or, except as required by applicable law, change any
method of accounting for Tax purposes;
(o) take any action that would materially impede or delay the ability of
the parties to obtain any necessary approvals of any Regulatory Agency or
Governmental Entity required for the transaction, contemplated hereby or by
the Summit Option Agreement; or
(p) agree to take, make any commitment to take, or adopt any resolutions
of its board of directors in support of, any of the actions prohibited by
this Section 5.2.
5.3 FLEETBOSTON FORBEARANCES. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or permitted
by this Agreement, FleetBoston shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Summit (which consent
shall not be unreasonably withheld), (i) amend the FleetBoston Articles or
FleetBoston By-Laws in a manner that would adversely affect the economic
benefits of the Merger to the Summit stockholders, (ii) knowingly take any
action, or knowingly fail to take any action, that is reasonably likely to
(A) jeopardize the treatment of the Merger as a "pooling of interests" for
accounting purposes or (B) prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code (provided that
nothing contained herein shall limit the ability of FleetBoston to exercise its
rights under the Summit Option Agreement), (iii) take any action which would
materially impede or delay the ability of the parties to obtain any necessary
approvals of any Regulatory Agency or other Governmental Entity required for the
transactions contemplated hereby, (iv) take any action that is intended or is
reasonably likely to result in any of its representations or warranties set
forth in this Agreement being or becoming untrue in any material respect at any
time prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law or
(v) agree to take, make any commitment to take, or adopt any resolutions of its
board of directors in support of, any of the actions prohibited by this
Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) FleetBoston and Summit shall promptly prepare
and file with the SEC the Proxy Statement and FleetBoston shall promptly prepare
and file with the SEC the S-4, in which the Proxy Statement will be included as
a prospectus. Each of FleetBoston and Summit shall use their reasonable best
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and Summit shall thereafter mail or deliver
the Proxy Statement to its stockholders. FleetBoston shall also use its
reasonable best efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement, and Summit shall furnish all information concerning Summit
and the holders of Summit Capital Stock as may be reasonably requested in
connection with any such action.
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(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger and the Bank Merger), and
to comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Entities. FleetBoston and Summit
shall have the right to review in advance, and, to the extent practicable, each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to Summit or
FleetBoston, as the case may be, and any of their respective Subsidiaries, which
appear in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) FleetBoston and Summit shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of FleetBoston, Summit or any of
their respective Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement.
(d) FleetBoston and Summit shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
that causes such party to believe that there is a reasonable likelihood that any
Requisite Regulatory Approval will not be obtained or that the receipt of any
such approval will be materially delayed.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the parties shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records, and, during such
period, the parties shall, and shall cause its Subsidiaries to, make available
to the other party (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of federal securities laws or federal or state banking laws (other
than reports or documents which such party is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as the other party may reasonably request. None of the
parties nor any of their Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would jeopardize the
attorney-client privilege of such party or its Subsidiaries or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Except as provided in Section 9.9, each party to this Agreement shall
hold, and shall cause its respective Subsidiaries and its and its Subsidiaries'
directors, officers, employees, agents, consultants and advisors to hold, in
strict confidence, unless disclosure is compelled by judicial or administrative
process or, based on the advice of its counsel, by other requirement of law or
any relevant stock exchange, all non-public records, books, contracts,
instruments, computer data and other data and information (collectively, and
including any copies thereof and any reports, analyses, compilations,
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forecasts, studies or other documents prepared by the Receiving Party,
"Information") concerning the other party furnished to it (the "Receiving
Party") by the other party or its representatives in connection with entering
into this Agreement or in fulfilling its obligations hereunder, and no Receiving
Party shall release or disclose such Information to any other person, except its
auditors, attorneys, financial advisors, bankers, other consultants and advisors
and, to the extent permitted above, to any Governmental Entity or use such
information other than in connection with this Agreement (in all cases except to
the extent the Receiving Party can demonstrate that such Information or
applicable portion thereof (i) is or has become generally available to the
public other than as a result of a disclosure directly or indirectly by the
Receiving Party or its representatives, (ii) was already known to such party
prior to receipt from the other party or its representatives and were not made
known to the Receiving Party by a source that was then prohibited from
disclosing such information, or (iii) becomes available on a non-confidential
basis from a source other than the Receiving Party or its representatives
provided that such source was not then known by the Receiving Party to be
prohibited from disclosing such information). In the event of a termination of
this Agreement, the parties to this Agreement shall upon request by the party
providing the Information destroy or return to the party providing the
Information all Information, as well as all copies and translations thereof,
provided by the other party or any of its representatives; provided, however,
that upon such request, the Receiving Party may at its option chose not to
return, and shall instead destroy (and certify such destruction by an authorized
officer of the Receiving Party), any reports, analyses, compilations, forecasts,
studies or other documents prepared by the Receiving Party constituting
"Information."
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 SUMMIT STOCKHOLDER APPROVAL. Summit shall call a meeting of its
stockholders to be held as soon as reasonably practicable for the purpose of
voting upon the requisite stockholder approvals required in connection with this
Agreement and the Merger. The Board of Directors of Summit shall use its
reasonable best efforts to obtain from the stockholders of Summit the vote in
favor of the adoption of this Agreement required by the NJBCA and the Summit
Certificate and By-Laws to consummate the transactions contemplated hereby;
provided that the Board of Directors of Summit may withdraw its recommendation
of the Agreement and the Merger if the Board of Directors of Summit determines,
in good faith after consultation with outside legal counsel, that the failure to
take such action would be inconsistent with its fiduciary duties under
applicable law.
6.4 LEGAL CONDITIONS TO MERGER. Each of FleetBoston and Summit shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements that may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement, and (b) to obtain (and to cooperate with the other party to obtain)
any material consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party that is required to be
obtained by Summit or FleetBoston or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS. (a) Each of
FleetBoston and Summit shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders' meeting called by Summit to approve this
Agreement, a written agreement, in the form of Exhibit 6.5(a)(1) or (2), as
applicable, hereto.
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(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least
30 days of post-Merger combined operations (which month may be the month in
which the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
6.6 STOCK EXCHANGE LISTING. FleetBoston shall cause the shares of
FleetBoston Common Stock, to be issued in the Merger to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the Effective
Time.
6.7 EMPLOYEE BENEFIT PLANS. (a) Until December 31, 2001, the benefits to
be provided to employees of Summit and its Subsidiaries as of the Effective Time
("Covered Employees") shall be substantially the same benefit plans and programs
provided by Summit or its Subsidiaries, as the case may be, to such employees as
of the date hereof. From and after December 31, 2001, the benefits to be
provided to the Covered Employees shall be the benefit plans and programs
provided to similarly situated employees of FleetBoston. FleetBoston shall, from
and after the Effective Time, (i) comply with Summit Benefit Plans and other
contractual commitments of Summit to its current and former employees in
accordance with their terms and honor all employee benefit obligations to
current and former employees of Summit and its Subsidiaries under Summit Plans
or the applicable contractual commitment, (ii) provide Covered Employees credit
for the most recent period of uninterrupted service (including any bridging or
prior service credit, without regard to whether there has been an interruption
in service, solely to the extent provided by Summit and its Subsidiaries as of
the date hereof) with Summit or any of its Subsidiaries (and their predecessors)
prior to the Effective Time under employee benefit plans of FleetBoston or its
Subsidiaries (other than FleetBoston's noncontributory cash balance defined
benefit pension plan), (iii) cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under comparable Summit Plans) and eligibility waiting periods under
group health plans of FleetBoston to be waived with respect to Covered Employees
(and their eligible dependents) who become participants in such group health
plans and (iv) assume, or cause its applicable Subsidiary to assume, all
contracts and agreements with employees of Summit, which agreements were entered
into prior to the date hereof and which are listed on Section 5.2 of the Summit
Disclosure Schedule, and all obligations thereunder. From and after the
Effective Time, FleetBoston shall honor all vacation and paid time off of the
Covered Employees accrued as of the Effective Time, in accordance with Summit
policy as in effect on the date hereof. From and after the Effective Time, a
Covered Employee who is terminated (as defined in the applicable Summit
severance plan or policy as in effect on the date hereof) during the period
commencing at the Effective Time and ending on the 12-month anniversary thereof
shall be entitled to receive the greater of (i) the severance payments and
benefits under the applicable Summit severance plan or policy as in effect on
the date hereof (without amendment on or after the Effective Time) and (ii) the
severance payments and benefits under FleetBoston's severance plan or policy as
in effect on the date of termination of such Covered Employee. In addition,
FleetBoston will comply with Section 6.7 of the FleetBoston Disclosure Schedule.
(b) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation or FleetBoston from amending, modifying or terminating any
FleetBoston Benefit Plans or other contracts, arrangements, commitments or
understandings, in accordance with their terms and applicable law.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer or employee of Summit
or any of its Subsidiaries (the "Indemnified Parties"), is, or is threatened to
be, made a party based in whole or in part on, or arising
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in whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of Summit or any of its Subsidiaries or (ii) this
Agreement, the Summit Option Agreement or any of the transactions contemplated
hereby or thereby, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that after
the Effective Time, FleetBoston shall indemnify and hold harmless, as and to the
fullest extent provided by applicable law, the Summit Certificate, the Summit
By-Laws and any agreement set forth in Section 6.8 of the Summit Disclosure
Schedule, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reimbursement for reasonable fees and
expenses incurred in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party as provided by the Summit
Certificate, the Summit By-Laws and any agreement set forth in Section 6.8 of
the Summit Disclosure Schedule), judgments, fines and amounts paid in settlement
in connection with any such threatened or actual claim, action, suit, proceeding
or investigation.
(b) FleetBoston shall use its reasonable best efforts to cause the
individuals serving as officers and directors of Summit or any of its
Subsidiaries immediately prior to the Effective Time to be covered for a period
of six (6) years from the Effective Time by the directors' and officers'
liability insurance policy maintained by Summit (provided that FleetBoston may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided that in no event shall FleetBoston be required to expend in any one
year an amount in excess of 200% of the annual premiums currently paid by Summit
(which current amount is set forth in Section 6.8 of the Summit Disclosure
Schedule) for such insurance (the "Insurance Amount), and provided further that
if FleetBoston is unable to maintain such policy (or such substitute policy) as
a result of the preceding proviso, FleetBoston shall use its reasonable best
efforts to obtain as much comparable insurance as is available for the Insurance
Amount.
(c) The provisions of this Section 6.8 shall survive the Effective Time and
are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
FleetBoston, on the one hand, and a Subsidiary of Summit, on the other) or to
vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of any of the parties to the
Merger, the proper officers and directors of each party to this Agreement and
their respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, FleetBoston.
6.10 ADVICE OF CHANGES. FleetBoston and Summit shall each promptly advise
the other party of any change or event (i) having a Material Adverse Effect on
it or (ii) which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
6.11 DIVIDENDS. After the date of this Agreement, each of FleetBoston and
Summit shall coordinate with the other the declaration of any dividends in
respect of FleetBoston Common Stock and Summit Common Stock and the record dates
and payment dates relating thereto, it being the intention of the parties hereto
that holders of Summit Common Stock shall not receive two dividends, or fail to
receive one dividend, for any quarter with respect to their shares of Summit
Common Stock and any shares of FleetBoston Common Stock any such holder receives
in exchange therefor in the Merger.
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6.12 EXEMPTION FROM LIABILITY UNDER SECTION 16(B). Assuming that Summit
delivers to FleetBoston the Section 16 Information (as defined below) in a
timely fashion, the Board of Directors of FleetBoston, or a committee of
Non-Employee Directors thereof (as such term is defined for purposes of
Rule 16b-3(d) under the Exchange Act), shall adopt a resolution providing that
the receipt by Summit Insiders of FleetBoston Common Stock in exchange for
shares of Summit Common Stock, and of options on FleetBoston Common Stock upon
conversion of options on Summit Common Stock, in each case pursuant to the
transactions contemplated hereby and to the extent such securities are listed in
the Section 16 Information, are intended to be exempt from liability pursuant to
Section 16(b) under the Exchange Act. "Section 16 Information" shall mean
information accurate in all respects regarding Summit Insiders, the number of
shares of Summit Common Stock held by each such Summit Insider and expected to
be exchanged for FleetBoston Common Stock in the Merger, and the number and
description of the options on Summit Common Stock held by each such Summit
Insider and expected to be converted into options on FleetBoston Common Stock in
connection with the Merger. The "Summit Insiders" shall mean those officers and
directors of Summit who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Section 16
Information.
6.13 DIRECTORSHIPS. FleetBoston shall take such actions as may be
reasonably required (including as set forth in Section 6.13 of the FleetBoston
Disclosure Schedule) to cause its Board of Directors to be expanded by two
members and to appoint Mr. T. Joseph Semrod and one of the current outside
directors of Summit Board of Directors (to be mutually agreed upon by
FleetBoston and Summit) to the class of FleetBoston directors with terms
expiring at the 2004 Annual Meeting of FleetBoston Stockholders.
6.14 AGGREGATE CAPITALIZATION. Summit will not take any action, or fail to
take any action, that results in the aggregate number of shares of Summit Common
Stock outstanding immediately prior to the Effective Time (including all shares
of Summit Common Stock subject to Summit Rights other than the Summit Option
Agreement, but not including shares of Summit Common Stock held in treasury)
exceeding 186,365,926.
6.15 COMMUNITY COMMITMENTS. From and after the Effective Time, FleetBoston
shall use its reasonable efforts to continue the community commitments
undertaken by Summit Bank Subsidiaries prior to the date hereof in the
communities currently served by such banks.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted by the
requisite affirmative vote of the holders of Summit Common Stock entitled to
vote thereon.
(b) NYSE LISTING. The shares of FleetBoston Common Stock which shall be
issued to the stockholders of Summit upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
(c) REGULATORY APPROVALS. All regulatory approvals set forth under
Sections 3.4 and 4.4 required to consummate the transactions contemplated
hereby, including the Merger, shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all such
waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
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(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the consummation
of the Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order,
Injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts or
makes illegal consummation of the Merger or the Bank Merger.
(f) Federal Tax Opinion. The parties hereto shall have received the
opinions of their respective counsel, Wachtell, Lipton, Rosen & Katz, and
Weil, Gotshal & Manges LLP, in form and substance reasonably satisfactory to
FleetBoston and Summit, as the case may be, dated as of the Closing Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in each such opinion which are consistent with the
state of facts existing at the Effective Time, the Merger will be treated as
a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinions, counsel may require and rely upon representations
contained in certificates of officers of FleetBoston, Summit and others,
reasonably satisfactory in form and substance to such counsel.
(g) Pooling of Interests. FleetBoston and Summit shall each have
received a letter from their respective independent accountants addressed to
Summit or FleetBoston, as the case may be, to the effect that the Merger
will qualify for "pooling of interests" accounting treatment.
7.2 CONDITIONS TO OBLIGATIONS OF FLEETBOSTON. The obligation of
FleetBoston to effect the Merger is also subject to the satisfaction, or waiver
by FleetBoston, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Summit set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; PROVIDED,
HOWEVER, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and correct,
either individually or in the aggregate, and without giving effect to any
qualification as to materiality or Material Adverse Effect set forth in such
representations or warranties, will have or are reasonably likely to have a
Material Adverse Effect on Summit or the Surviving Corporation. FleetBoston
shall have received a certificate signed on behalf of Summit by the Chief
Executive Officer and the Chief Financial Officer of Summit to the foregoing
effect.
(b) Performance of Obligations of Summit. Summit shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and FleetBoston shall have
received a certificate signed on behalf of Summit by the Chief Executive
Officer and the Chief Financial Officer of Summit to such effect.
7.3 CONDITIONS TO OBLIGATIONS OF SUMMIT. The obligation of Summit to
effect the Merger is also subject to the satisfaction or waiver by Summit at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
of FleetBoston set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, PROVIDED,
HOWEVER, that for purposes of this paragraph, such representations and
warranties shall be deemed to be
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true and correct unless the failure or failures of such representations and
warranties to be so true and correct, either individually or in the
aggregate, and without giving effect to any qualification as to materiality
or Material Adverse Effect set forth in such representations or warranties,
will have or are reasonably likely to have a Material Adverse Effect on
FleetBoston. Summit shall have received a certificate signed on behalf of
FleetBoston by the Chief Executive Officer and the Chief Financial Officer
of FleetBoston to the foregoing effect.
(b) Performance of Obligations of FleetBoston. FleetBoston shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Summit shall
have received a certificate signed on behalf of FleetBoston by the Chief
Executive Officer and the Chief Financial Officer of FleetBoston to such
effect.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Summit:
(a) by mutual consent of FleetBoston and Summit in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of
the members of its entire Board;
(b) by either the Board of Directors of FleetBoston or the Board of
Directors of Summit if any Governmental Entity that must grant a Requisite
Regulatory Approval has denied approval of the Merger or the Bank Merger and
such denial has become final and nonappealable or any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable order
permanently enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
(c) by either FleetBoston or Summit if the approval of Summit's
stockholders required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required vote at the meeting
of the Summit stockholders contemplated by Section 6.3, or at any
adjournment or postponement thereof;
(d) by either the Board of Directors of FleetBoston or the Board of
Directors of Summit if the Merger shall not have been consummated on or
before the first anniversary of the date hereof unless the failure of the
Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein; or
(e) by either the Board of Directors of FleetBoston or the Board of
Directors of Summit (provided that the terminating party is not then in
breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a breach of any of the covenants
or agreements or any of the representations or warranties set forth in this
Agreement on the part of Summit, in the case of a termination by
FleetBoston, or FleetBoston, in the case of a termination by Summit, which
breach, either individually or in the aggregate, would constitute, if
occurring or continuing on the Closing Date, the failure of the conditions
set forth in Section 7.2 or 7.3, as the case may be, and which is not cured
within 45 days following written notice to the party committing such breach
or by its nature or timing cannot be cured prior to the Closing Date.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either FleetBoston or Summit as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, and none of FleetBoston, Summit, any
of their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or in
connection with the
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transactions contemplated hereby, except that (i) Sections 6.2(b), 8.2, 9.2 and
9.3 shall survive any termination of this Agreement, and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither FleetBoston nor
Summit shall be relieved or released from any liabilities or damages arising out
of its willful breach of any provision of this Agreement.
8.3 AMENDMENT. Subject to compliance with applicable law and
Section 1.1(b), this Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at any time before
or after approval of the matters presented in connection with Merger by the
stockholders of Summit; PROVIDED, HOWEVER, that after any approval of the
transactions contemplated by this Agreement by the stockholders of Summit, there
may not be, without further approval of such stockholders, any amendment of this
Agreement that changes the amount or the form of the consideration to be
delivered hereunder to the holders of Summit Common Stock, other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; PROVIDED, HOWEVER,
that after any approval of the transactions contemplated by this Agreement by
the stockholders of Summit, there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which reduces the amount or changes the form of the consideration to be
delivered to the holders of Summit Common Stock hereunder, other than as
contemplated by this Agreement. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no later than five
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof (other
than those conditions that by their nature are required to be satisfied or
waived at the Closing), unless extended by mutual agreement of the parties (the
"Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Summit
Option Agreement, which shall terminate in accordance with its terms) shall
survive the Effective Time, except for Section 6.8 and for those other covenants
and agreements contained herein and therein which by their terms apply or are to
be performed in whole or in part after the Effective Time.
9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, PROVIDED, HOWEVER, that the costs and expenses of
printing and mailing the Proxy Statement, and all filing and other fees paid to
the SEC in connection with the Merger, shall be borne equally by FleetBoston and
Summit.
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9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to FleetBoston, to:
FleetBoston Financial Corporation
One Federal Street
Boston, Massachusetts 02110
Attention: General Counsel
Telecopier: (617) 434-2186
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Craig M. Wasserman, Esq.
Telecopier: (212) 403-2000
and
(b) if to Summit, to:
Summit Bancorp.
301 Carnegie Center
Princeton, New Jersey 08543
Attention: General Counsel
Telecopier: (609) 987-3435
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Ronald F. Daitz, Esq.
Stephen E. Jacobs, Esq.
Telecopier: (212) 310-8007
9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Nothing contained herein shall require any party hereto or the
Board of Directors of such party to take or refrain from taking any action in
violation of applicable law. The Summit Disclosure Schedule and the FleetBoston
Disclosure Schedule, as well as all other schedules and all exhibits hereto,
shall be deemed part of this Agreement and included in any reference to this
Agreement.
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
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9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) together with the Option Agreement constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law principles.
9.9 PUBLICITY. Neither FleetBoston nor Summit shall, and neither
FleetBoston nor Summit shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement with respect
to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of Summit (which consent
shall not be unreasonably withheld), in the case of a proposed announcement or
statement by FleetBoston, or FleetBoston, in the case of a proposed announcement
or statement by Summit (which consent shall not be unreasonably withheld);
PROVIDED, HOWEVER, that a party may, without the prior consent of the other
party (but after prior consultation with the other party to the extent
practicable under the circumstances) issue or cause the publication of any press
release or other public announcement to the extent required by law or by the
rules and regulations of the NYSE.
9.10 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Section 6.8, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, FleetBoston Financial Corporation and Summit Bancorp.
have caused this Agreement to be executed by their respective officers thereunto
duly authorized as of the date first above written.
SUMMIT BANCORP.
BY: /S/ T. JOSEPH SEMROD______________
Name: T. Joseph Semrod
Title: Chairman of the Board,
President
and Chief Executive Officer
By: /s/ JOHN G. COLLINS_______________
Name: John G. Collins
Title: Vice Chairman
FLEETBOSTON FINANCIAL CORPORATION
BY: /S/ BRIAN T. MOYNIHAN_____________
Name: Brian T. Moynihan
Title: Executive Vice President
By: /s/ H. JAY SARLES_________________
Name: H. Jay Sarles
Title: Vice Chairman, National
Financial
Services, and Chief
Administrative
Officer
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
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<PAGE>
SCHEDULE 6.5(A)(1)
FORM OF AFFILIATE LETTER ADDRESSED TO SUMMIT BANCORP.
Summit Bancorp.
301 Carnegie Center
Princeton, New Jersey 08543
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of FleetBoston Financial Corporation, a Rhode Island corporation
("FleetBoston"), as the term "affiliate" is used in and for purposes of
Accounting Series Releases Nos. 130 and 135, as amended, of the Securities and
Exchange Commission ("Commission"). I have been further advised that pursuant to
the terms of the Agreement and Plan of Merger dated as of October 1, 2000 (the
"Merger Agreement"), by and betweeen FleetBoston and Summit Bancorp., a New
Jersey corporation ("Summit"), Summit shall be merged with and into FleetBoston
(the "Merger") and each share of the common stock, par value $0.80 per share, of
Summit ("Summit Common Stock") shall be converted into the right to receive 1.02
shares of common stock, par value $0.01 per share, of FleetBoston ("FleetBoston
Common Stock"). All terms used in this letter but not defined herein shall have
the meanings ascribed thereto in the Merger Agreement.
I represent to and covenant with Summit that, from the date that is 30 days
prior to the Effective Time, I will not sell, transfer or otherwise dispose of
shares of Summit Common Stock held by me and that I will not sell, transfer or
otherwise dispose of any shares of FleetBoston Common Stock, until after such
time as results covering at least 30 days of combined operations of FleetBoston
and Summit after the Merger have been published by FleetBoston in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other
public filing or announcement which includes the results of at least 30 days of
combined operations as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 35; provided, however, that this paragraph shall
not prevent me from selling, transferring or disposing of such number of shares
of FleetBoston Common Stock or Summit Common Stock as will not, in the
reasonable judgment of accountants to FleetBoston, interfere with or prevent the
Merger being accounted for as a "pooling of interests," taking into account the
nature, extent and timing of such sale, transfer or disposition and of similar
sales, transfers or dispositions by all affiliates of Summit and all other
affiliates of FleetBoston.
It is understood and agreed that this Letter Agreement shall terminate and
be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect at such time as
financial results covering at least thirty days of combined operations following
the effective date of the Merger have been published as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 35.
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<PAGE>
Execution of this letter should not be construed as an admission on my part
that I am an "affiliate" of FleetBoston as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Very truly yours,
By: __________________________
Name:
Accepted this [ ] day of
[ ], 2000 by
Summit Bancorp.
By: __________________________________
Name:
Title:
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<PAGE>
SCHEDULE 6.5(A)(2)
FORM OF AFFILIATE LETTER ADDRESSED TO FLEETBOSTON
FleetBoston Financial Corporation
One Federal Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Summit, a New Jersey corporation ("Summit"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145 of
the Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and/or (ii) used in and for purposes of Accounting Series
Releases Nos. 130 and 135, as amended, of the Commission. I have been further
advised that pursuant to the terms of the Agreement and Plan of Merger dated as
of October 1, 2000 (the "Merger Agreement"), by and between FleetBoston and
Summit, Summit shall be merged with and into FleetBoston (the "Merger") and each
share of the common stock, par value $0.80 per share, of Summit ("Summit Common
Stock") shall be converted into the right to receive 1.02 shares of common
stock, par value $0.01 per share, of FleetBoston ("FleetBoston Common Stock").
All terms used in this letter but not defined herein shall have the meanings
ascribed thereto in the Merger Agreement.
I represent, warrant and covenant to FleetBoston that in the event I receive
any FleetBoston Common Stock as a result of the Merger:
(a) I shall not make any sale, transfer or other disposition of
FleetBoston Common Stock in violation of the Act or the Rules and
Regulations.
(b) I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of FleetBoston Common Stock to the
extent I believed necessary with my counsel or counsel for Summit.
(c) I have been advised that the issuance of FleetBoston Common Stock to
me pursuant to the Merger will be registered with the Commission under the
Act on a Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger will be submitted for a vote of
the stockholders of Summit I may be deemed to have been an affiliate of
Summit and the distribution by me of FleetBoston Common Stock has not been
registered under the Act, I may not sell, transfer or otherwise dispose of
FleetBoston Common Stock issued to me in the Merger unless (i) such sale,
transfer or other disposition has been registered under the Act, (ii) such
sale, transfer or other disposition is made in conformity with the volume
and other limitations of Rule 145 promulgated by the Commission under the
Act, or (iii) in the opinion of counsel reasonably acceptable to
FleetBoston, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
(d) I understand that FleetBoston is under no obligation to register the
sale, transfer or other disposition of FleetBoston Common Stock by me or on
my behalf under the Act or to take any other action necessary in order to
make compliance with an exemption from such registration available.
(e) I also understand that stop transfer instructions will be given to
FleetBoston's transfer agents with respect to FleetBoston Common Stock and
that there will be placed on the certificates
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<PAGE>
for FleetBoston Common Stock issued to me, or any substitutions therefor, a
legend stating in substance:
"The securities represented by this certificate have been issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies and may only be sold or otherwise transferred in
compliance with the requirements of Rule 145 or pursuant to a
registration statement under said act or an exemption from such
registration."
(f) I also understand that unless the transfer by me of my FleetBoston
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, FleetBoston reserves the right
to put the following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs
(e) and (f) above shall be removed by delivery of substitute certificates
without such legend if the undersigned shall have delivered to FleetBoston a
copy of a letter from the staff of the Commission, an opinion of counsel in form
and substance reasonably satisfactory to FleetBoston, or other evidence
reasonably satisfactory to FleetBoston, to the effect that such legend is not
required for purposes of the Act.
I further represent to and covenant with FleetBoston that, from the date
that is 30 days prior to the Effective Time, I will not sell, transfer or
otherwise dispose of shares of Summit Common Stock held by me and that I will
not sell, transfer or otherwise dispose of any shares of FleetBoston Common
Stock received by me in the Merger, until after such time as results covering at
least 30 days of combined operations of FleetBoston and Summitafter the Merger
have been published by FleetBoston, in the form of a quarterly earnings report,
an effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the results of at least 30 days of combined operations; provided,
however, that this paragraph shall not prevent me from selling, transferring or
disposing of such number of shares of Summit Common Stock or FleetBoston Common
Stock as will not, in the reasonable judgment of accountants to FleetBoston,
interfere with or prevent the Merger being accounted for as a "pooling of
interests," taking into account the nature, extent and timing of such sale,
transfer or disposition and of similar sales, transfers or dispositions by all
other affiliates of Summit and all affiliates of FleetBoston.
I recognize and agree that the foregoing provisions also apply to (i) my
spouse, (ii) any relative of mine or my spouse occupying my home, (iii) any
trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporate or other organization in which I, my
spouse or any such relative owns at least 10% of any class of equity securities
or of the equity interest.
It is understood and agreed that this Letter Agreement shall terminate and
be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect upon the later
of (i) such time as financial results covering at least thirty days of combined
operations following the effective date of the Merger have been published as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 35 and (ii) delivery by the undersigned to FleetBoston of
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<PAGE>
a copy of a letter from the staff of the SEC, an opinion of counsel in form and
substance reasonably satisfactory to FleetBoston, or other evidence reasonably
satisfactory to FleetBoston, to the effect that a transfer of the undersigned's
shares of FleetBoston Common Stock will not violate the Act or any of the rules
and regulations of the SEC thereunder.
Execution of this letter should not be construed as an admission on my part
that I am an "affiliate" of Summit as described in the first paragraph of this
letter or as a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
Very truly yours,
By: __________________________________
Name:
Accepted this [ ] day of
[ ], 2000 by
FleetBoston Financial Corporation
By: __________________________________
Name:
Title:
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APPENDIX B
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of October 1, 2000 (the "Agreement"), by
and between Summit Bancorp., a New Jersey corporation ("Issuer"), and
FleetBoston Financial Corporation, a Rhode Island corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, concurrently herewith Issuer and Grantee are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement"),
providing for, among other things, the merger (the "Merger") of Issuer with and
into Grantee; and
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Merger Agreement and in consideration therefor, Issuer has agreed to
grant Grantee the Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, Issuer and Grantee agree as follows:
Section 1. GRANT OF OPTION; ADJUSTMENT. (a) Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase that number of fully paid and
non-assessable shares of common stock, par value $0.80 per share, of Issuer
("Common Stock") equal to 19.9% of the currently issued and outstanding shares
of Common Stock, without giving effect to any shares subject to or issued
pursuant to the Option, at a purchase price of $34.00 per share (the "Option
Price"). The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common Stock are either
(i) issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement) or (ii) redeemed, repurchased, retired
or otherwise cease to be outstanding after the date of this Agreement, the
number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after such issuance or redemption,
repurchase, retirement or other action, such number equals 19.9% of the number
of shares of Common Stock then issued and outstanding without giving effect to
any shares subject or issued pursuant to the Option. Nothing contained in this
Section 1(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
or Grantee to breach any provision of the Merger Agreement.
Section 2. EXERCISE OF OPTION. (a) The holder or holders of the Option
(the "Holder") may exercise the Option, in whole or in part, at any time or from
time to time, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined); PROVIDED that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
90 days following such Subsequent Triggering Event. Each of the following shall
be an "Exercise Termination Event": (i) the Effective Time (as defined in the
Merger Agreement) of the Merger; (ii) termination of the Merger Agreement in
accordance with the provisions thereof, if such termination occurs prior to the
occurrence of an Initial Triggering Event, except a termination by
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Grantee pursuant to Section 8.1(e) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is non-volitional); or
(iii) the passage of 12 months after termination of the Merger Agreement, if
such termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 8.1(e) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional).
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations promulgated thereunder) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary"). For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Significant Subsidiary (as
defined in Rule 1-02(w) of Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC")) of Issuer, (x) a purchase, lease or other
acquisition or assumption of all or a substantial portion of the assets or
deposits of Issuer or any Significant Subsidiary of Issuer, (y) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of beneficial ownership (the term "BENEFICIAL
OWNERSHIP" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the Exchange Act, and the rules and regulations
thereunder) of securities representing 15% or more of the voting power of
Issuer, or (z) any substantially similar transaction; PROVIDED, HOWEVER,
that in no event shall any merger, consolidation, purchase or similar
transaction involving only the Issuer and one or more Issuer Subsidiaries or
involving only any two or more Issuer Subsidiaries, be deemed to be an
Acquisition Transaction; PROVIDED that any such transaction is not entered
into in violation of the terms of the Merger Agreement;
(ii) (x) Issuer or any Significant Subsidiary of Issuer, or the Board of
Directors of Issuer, without having received Grantee's prior written
consent, shall have authorized, recommended to its stockholders, proposed or
publicly announced its intention to authorize, recommend to its stockholders
or propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, (y) the Board of Directors of Issuer
shall have failed to make its recommendation that the Issuer stockholders
approve the Merger Agreement and the transactions contemplated thereby in
anticipation of engaging in an Acquisition Transaction or (z) the Board of
Directors of Issuer shall have publicly withdrawn or modified, or publicly
announced its intention to withdraw or modify, in any manner adverse to
Grantee, its recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement in anticipation of
engaging in an Acquisition Transaction;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this Agreement
having the meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations promulgated thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall have
made a BONA FIDE proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
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(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement (other
than a non-volitional breach) and such breach (x) would entitle Grantee to
terminate the Merger Agreement and (y) shall not have been cured prior to
the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other than
in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event of which it has notice
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (a "Closing"; and the date of such Closing, a
"Closing Date"); PROVIDED that if prior notification to or approval of the
Federal Reserve Board or any other regulatory agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval and shall expeditiously process the same and the period
of time that otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have expired or been
terminated, or such approvals have been obtained, and any requisite waiting
period or periods shall have passed. For purposes of determining the timeliness
of exercise, any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At a Closing, the Holder shall pay to Issuer an amount equal to the
Option Price multiplied by the number of shares of Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, PROVIDED that failure or
refusal of Issuer to designate such a bank account shall not preclude the Holder
from exercising the Option.
(g) At such Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder, which shares shall be free and
clear of all liens, charges or encumbrances, and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
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(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer, dated as of October 1, 2000, and to resale
restrictions arising under the Securities Act of 1933, as amended. A
copy of such agreement is on file at the principal office of Issuer and
will be provided to the holder hereof without charge upon receipt by
Issuer of a written request therefor."
It is understood and agreed that:
(i) The reference to the resale restrictions of the Securities Act of
1933, as amended (the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the Holder
shall have delivered to Issuer a copy of a letter from the staff of the SEC,
or an opinion of counsel, in form and substance reasonably satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
1933 Act;
(ii) The reference to the provisions to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without
such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference; and
(iii) The legend shall be removed in its entirety if the conditions in
the preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
Section 3. ADDITIONAL COVENANTS OF ISSUER. Issuer agrees: (a) that it
shall at all times maintain, free from preemptive rights, sufficient authorized
but unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after giving effect
to all other options, warrants, convertible securities and other rights to
purchase Common Stock; (b) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (c) promptly to take all action as may from time to time be
required (including (i) complying with all premerger notification, reporting and
waiting period requirements specified in 15 U.S.C. Section 18a and the
regulations promulgated thereunder and (ii) in the event, under the Bank Holding
Company Act of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board or such state regulatory authority as they may require) in
order to permit the Holder to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (d) promptly to
take all action provided herein to protect the rights of the Holder against
dilution.
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Section 4. EXCHANGE, LOSS, THEFT, ETC. OF AGREEMENT. This Agreement and
the Option granted hereby are exchangeable, without expense, at the option of
the Holder, upon presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms and
subject to the same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
Section 5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. In addition to
the adjustment in the number of shares of Common Stock that are purchasable upon
exercise of the Option pursuant to subsection (b) of Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of reclassifications,
recapitalizations, stock dividends, stock splits, split-ups, mergers,
combinations, subdivisions, conversions, exchanges of shares, dividends,
dividends payable in other securities, distributions on or in respect of the
Common Stock, or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof and the Option Price therefor (including for
purposes of repurchase thereof pursuant to Section 7) shall be appropriately
adjusted in such manner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement governing any such
transaction to provide for such proper adjustment and the full satisfaction of
the Issuer's obligations hereunder.
Section 6. REGISTRATION RIGHTS. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within 90 days of such Subsequent
Triggering Event (whether on its own behalf or on behalf of any subsequent
Holder of this Option, or part thereof, or any of the shares of Common Stock
issued pursuant hereto), promptly prepare, file and keep current a shelf
registration statement under the 1933 Act covering any shares issued and
issuable pursuant to this Option and shall use its reasonable best efforts to
cause such registration statement to become effective and remain current in
order to permit the sale or other disposition of this Option and any shares of
Common Stock issued upon total or partial exercise of this Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee. Issuer
will use its reasonable best efforts to cause such registration statement first
to become effective and then to remain effective for such period not in excess
of 180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of Common
Stock, and if, in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering, the registration of the Holder's Option or Option Shares at such
time would interfere with the successful marketing of the shares of Common Stock
then being offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
PROVIDED, HOWEVER, that after any such required reduction the number of Option
Shares to be registered for the account of the Holder shall constitute at least
25% of the total number of shares to be sold by the Holder and Issuer in the
aggregate; and PROVIDED FURTHER, however, that if such reduction occurs, then
the Issuer shall file a
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registration statement for the balance as promptly as practicable and no
reduction pursuant to this Section 6 shall thereafter occur. Each Holder on
behalf of which registration is requested shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Grantee as a result of any assignment or division of this Agreement.
Section 7. REPURCHASE OF OPTION. (a) From and after a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (x) the Market/Offer Price (as defined below) exceeds
(y) the Option Price, multiplied by the number of shares for which this Option
may then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated, PROVIDED, HOWEVER, that the Option
Purchase Price and Option Share Repurchase Price shall be subject to the
limitations set forth in Section 24. The term "Market/Offer Price" shall mean
the highest of (i) the price per share of Common Stock at which a tender offer
or exchange offer therefor has been made, (ii) the price per share of Common
Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the six-month
period immediately preceding the date the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, and (iv) in the event of a sale of all or
a substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer,
less the current market value of the remaining liabilities of Issuer, each such
value as determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer, divided by the number of shares of Common Stock of Issuer outstanding at
the time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
this Agreement or certificates for Option Shares, as applicable, accompanied by
a written notice or notices stating that the Holder or the Owner, as the case
may be, elects to require Issuer to repurchase this Option and/or the Option
Shares in accordance with the provisions of this Section 7. Such notice or
notices shall also contain representations and warranties to the effect that the
Holder owns the Option Shares to be repurchased, free and clear of all Liens,
with full power, right and authority to present such Option Shares for
repurchase hereunder. Within the latter to occur of (i) five business days after
the surrender of the Option and/or certificates representing Option Shares and
the receipt of such notice or notices relating thereto and (ii) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share
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Repurchase Price therefor or the portion thereof, if any, that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation or as a consequence of administrative policy arising thereunder from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify the Holder and/or the Owner and thereafter deliver or
cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, HOWEVER, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation or as a consequence of administrative policy
arising thereunder from repurchasing the Option or the Option Shares, as the
case may be, or from delivering to the Holder and/or the Owner, as appropriate,
the Option Repurchase Price and the Option Share Repurchase Price, respectively,
in full (and Issuer hereby undertakes to use its best efforts to obtain all
required regulatory and legal approvals and to file any required notices, in
each case as promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the Option or the
Option Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, Issuer shall promptly (i) deliver to the Holder and/or the
Owner, as appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (x) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, or
(y) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed to
have occurred (i) upon the consummation of any merger, consolidation or similar
transaction involving Issuer or any purchase, lease or other acquisition of all
or a substantial portion of the assets of IssuerIssuer, other than any such
transaction which would not constitute an Acquisition Transaction pursuant to
the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition by any
person of beneficial ownership of 50% or more of the then outstanding shares of
Common Stock, PROVIDED that no such event described in clause (i) or (ii) shall
constitute a Repurchase Event unless a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise Termination
Event, unless no Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
Section 8. SUBSTITUTE OPTION. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, and shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than Grantee or a Grantee Subsidiary, to merge
into Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than 50% of the outstanding voting shares
and voting share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or a Grantee Subsidiary, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be
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converted into, or exchanged for, an option (the "Substitute Option"), at the
election of the Holder, of either (x) the Acquiring Corporation (as hereinafter
defined) or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than Issuer),
(y) Issuer in a merger in which Issuer is the continuing or surviving
person, and (z) the transferee of all or substantially all of Issuer's
assets.
(ii) "Substitute Common Stock" shall mean the common stock issued by the
issuer of the Substitute Option upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as defined in
Section 7.
(iv) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect to a
share of common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder may
elect.
(c) The Substitute Option shall have the same terms as the Option, PROVIDED
that if the terms of the Substitute Option cannot, for legal reasons, be the
same as the Option, such terms shall be as similar as possible and in no event
less advantageous to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then holder or holders of the Substitute Option
(the "Substitute Option Holder") in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option is then exercisable,
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option is then exercisable and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
Section 9. REPURCHASE OF SUBSTITUTE OPTION. (a) At the request of the
Substitute Option Holder, the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder
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at a price (the "Substitute Option Repurchase Price") equal to the amount by
which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the
exercise price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be exercised,
and at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to the Highest Closing Price multiplied by the number
of Substitute Shares so designated. The term "Highest Closing Price" shall mean
the highest closing price for shares of Substitute Common Stock within the
six-month period immediately preceding the date the Substitute Option Holder
gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable, and in any event within five business
days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation or as a
consequence of administrative policy arising thereunder from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation or as a consequence of administrative policy
arising thereunder from repurchasing the Substitute Option and/or the Substitute
Shares in part or in full, the Substitute Option Issuer following a request for
repurchase pursuant to this Section 9 shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; PROVIDED, HOWEVER that if the
Substitute Option Issuer is at any time after delivery of a notice of repurchase
pursuant to subsection (b) of this Section 9 prohibited under applicable law or
regulation or as a consequence of administrative policy arising thereunder from
delivering to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, in full (and the Substitute Option Issuer shall
use its best efforts to obtain all required regulatory and legal approvals, in
each case as promptly as practicable, in order to accomplish such repurchase),
the Substitute Option Holder or Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares either in whole or
to the extent of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option Holder or
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (x) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number of
shares of the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator
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<PAGE>
of which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (y) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
Section 10. EXTENSION OF EXERCISE PERIOD. The 90-day period for exercise
of certain rights under Sections 2, 6, 7 and 13 shall be extended: (a) to the
extent necessary to obtain all regulatory approvals for the exercise of such
rights and for the expiration of all statutory waiting periods; and (b) to the
extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
Section 11. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of Issuer and no other corporate proceedings on
the part of Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly
and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all
claims, liens, encumbrance and security interests and not subject to any
preemptive rights.
(c) Issuer has taken all action (including, if required, amending or
terminating the Rights Agreement dated as of June 16, 1999, between Issuer
and First Chicago Trust Company of New York, as rights agent, or redeeming
all of the rights ("Rights") under such Rights Agreement) so that the
entering into this Agreement, the acquisition of shares of Common Stock
hereunder and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any person under the Rights Agreement
or enable or require the Rights to be exercised, distributed or triggered.
Section 12. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Grantee. This Agreement has been duly and validly
executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act.
Section 13. ASSIGNMENT. Neither of the parties hereto may assign any of
its rights or obligations under this Agreement or the Option created hereunder
to any other person, without the express written consent of the other party,
except that in the event a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event, Grantee, subject to the express provisions
hereof, may
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<PAGE>
assign in whole or in part its rights and obligations hereunder within 90 days
following such Subsequent Triggering Event (or such later period as provided in
Section 10); PROVIDED, HOWEVER, that until the date 15 days following the date
on which the Federal Reserve Board approves an application by Grantee under the
BHCA to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option, except in (a) a widely dispersed public
distribution, (b) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (c) an assignment to
a single party (E.G., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf or
(d) any other manner approved by the Federal Reserve Board.
Section 14. FURTHER ASSURANCES. Each of Grantee and Issuer will use its
reasonable best efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without limitation making
application to list the shares of Common Stock issuable hereunder on the New
York Stock Exchange upon official notice of issuance and applying to the Federal
Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
Section 15. SURRENDER. (a) Grantee may, at any time during which Issuer
would be required to repurchase the Option or any Option Shares pursuant to
Section 7, surrender the Option (together with any Option Shares issued to and
then owned by Grantee) to Issuer in exchange for a cash fee equal to the
Surrender Price (as defined below); PROVIDED, HOWEVER, that Grantee may not
exercise its rights pursuant to this Section 15 if Issuer has repurchased the
Option (or any portion thereof) or any Option Shares pursuant to Section 7. The
"Surrender Price" shall be equal to (i) $210 million, plus (ii) if applicable,
the aggregate purchase price previously paid pursuant hereto by Grantee with
respect to any Option Shares, minus (iii) if applicable, the sum of (x) the
excess of (1) the net cash amounts, if any, received by Grantee pursuant to the
arms' length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any party not affiliated with
Grantee, over (2) the aggregate purchase price previously paid pursuant hereto
by Grantee with respect to such Option Shares and (y) the net cash amounts, if
any, received by Grantee pursuant to an arms' length sale of a portion of the
Option to any party not affiliated with Grantee.
(b) Grantee may exercise its right to surrender the Option and any Option
Shares pursuant to this Section 15 by surrendering to Issuer, at its principal
office, this Agreement together with certificates for Option Shares, if any,
accompanied by a written notice stating (i) that Grantee elects to surrender the
Option and Option Shares, if any, in accordance with the provisions of this
Section 15 and (ii) the Surrender Price. The Surrender Price shall be payable in
immediately available funds on or before the second business day following
receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation or as a consequence of administrative policy arising thereunder from
paying the Surrender Price to Grantee in full, Issuer shall immediately so
notify Grantee and thereafter deliver or cause to be delivered, from time to
time, to Grantee, the portion of the Surrender Price that Issuer is no longer
prohibited from paying, within five business days after the date on which Issuer
is no longer so prohibited, PROVIDED, HOWEVER, that if Issuer at any time after
delivery of a notice of surrender pursuant to paragraph (b) of this Section 15
is prohibited under applicable law or regulation or as a consequence of
administrative policy arising thereunder from paying to Grantee the Surrender
Price in full (i) Issuer shall (x) use its reasonable best efforts to obtain all
required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to make such payments, (y) within five days of
the submission or receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (z) keep Grantee
advised of both the status of any such request for regulatory and legal
approvals, as well as any discussions with any relevant regulatory or other
third party
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<PAGE>
reasonably related to the same and (ii) Grantee may revoke such notice of
surrender by delivery of a notice of revocation to Issuer and, upon delivery of
such notice of revocation, the Exercise Termination Date shall be extended to a
date six months from the date on which the Exercise Termination Date would have
occurred if not for the provisions of subsection (c) of this Section 15 (during
which period Grantee may exercise any of its rights hereunder, including any and
all rights pursuant to this Section 15).
(d) Grantee shall have rights substantially identical to those set forth in
subsections (a), (b) and (c) of this Section 15 with respect to the Substitute
Option and the Substitute Option Issuer during any period in which the
Substitute Option Issuer would be required to repurchase the Substitute Option
pursuant to Section 9.
Section 16. EQUITABLE RELIEF. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief.
Section 17. SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to
Section 1(b) or 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
Section 18. DELIVERY. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
Section 19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof (except to the extent that mandatory provisions of federal or state
law apply).
Section 20. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 21. EXPENSES. Except as otherwise expressly provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
Section 22. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors and permitted assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
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Section 23. CAPITALIZED TERMS. Capitalized terms used in this Agreement
and not defined herein shall have the meanings assigned thereto in the Merger
Agreement.
Section 24. LIMITATION ON GRANTEE'S TOTAL PROFIT. (a) Notwithstanding any
other provision herein, in no event shall Grantee's Total Profit (as defined in
subsection (c) of this Section 24) exceed $350 million (the "Maximum Profit"),
and, if the Total Profit would otherwise exceed such amount, Grantee, at its
sole election, shall either (i) reduce the number of shares subject to the
Option (and any Substitute Option), (ii) deliver to Issuer, or Substitute
Issuer, as the case may be, for cancellation shares of Common Stock or
Substitute Common Stock, as the case may be, previously purchased by Grantee
valued at fair market value at the time of delivery, (iii) pay cash to Issuer,
or Substitute Issuer, as the case may be, (iv) reduce the amount of the
Section 7 Option Repurchase Price or Section 9 Substitute Option Repurchase
Price, or (v) undertake any combination of the foregoing, so that Grantee's
actually realized Total Profit shall not exceed the Maximum Profit after taking
into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of shares as would, as of the date of exercise,
result in a Notional Total Profit (as defined in subsection (d) of this
Section 24) of more than the Maximum Profit and, if exercise of the Option would
otherwise result in the Notional Total Profit exceeding such amount, Grantee, in
its discretion, may take any of the actions specified in subsection (a) of this
Section 24 so that the Notional Total Profit shall not restrict any subsequent
exercise of the Option which at such time complies with this sentence.
(c) For purposes of this Agreement, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the excess of (x) the net
cash amounts or fair market value of any property received by Grantee pursuant
to the sale of the Option or the Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
other than any amount received by Grantee upon the repurchase of the Option or
the Option Shares, respectively, by Issuer pursuant to Section 7 hereof, after
payment of application brokerage or sales commissions and discounts, over
(y) Grantee's aggregate purchase price for such Option Shares (or other
securities), plus (ii) all amounts received by Grantee upon the repurchase of
the Option or the Option Shares by Issuer pursuant to Section 7 hereof, plus
(iii) all equivalent amounts with respect to the Substitute Option and
Substitute Shares and any amounts paid pursuant to Section 9 hereof.
(d) For purposes of this Agreement, the term "Notional Total Profit" with
respect to any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit, determined as of the date of such proposed
exercise assuming that the Option were exercised on such date for such number of
shares, and assuming that such shares, together with all other Option Shares
held by Grantee and its affiliates as of such date, were sold for cash at the
closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions). For purposes of
this Section 24, transactions by a wholly-owned subsidiary transferee of Grantee
in respect of the Option Shares transferred to it shall be treated as if made by
Grantee.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C> <C>
SUMMIT BANCORP.
By: /s/ T. JOSEPH SEMROD
-----------------------------------------
Name: T. Joseph Semrod
Title: Chairman of the Board, President
and Chief Executive Officer
</TABLE>
<TABLE>
<S> <C> <C>
FLEETBOSTON FINANCIAL CORPORATION
By: /s/ H. JAY SARLES
-----------------------------------------
Name: H. Jay Sarles
Title: Vice Chairman, National Financial
Services, and Chief Administrative
Officer
</TABLE>
SIGNATURE PAGE TO STOCK OPTION AGREEMENT
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APPENDIX C
[Letterhead of Merrill Lynch, Pierce, Fenner & Smith Incorporated]
January , 2001
Board of Directors of Summit Bancorp.
301 Carnegie Center
Princeton, NJ 08543
Members of the Board:
We understand that Summit Bancorp. ("Summit") and FleetBoston Financial
Corporation ("FleetBoston") have entered into an Agreement and Plan of Merger,
dated as of October 1, 2000 (the "Agreement"), pursuant to which Summit is to be
merged with and into FleetBoston, with FleetBoston as the surviving corporation
(the "Merger"). Pursuant to the Merger, and as set forth more fully in the
Agreement, each outstanding share of Summit common stock, par value $0.80 per
share (the "Summit Shares"), other than certain excluded shares specified in the
Agreement, will be converted into the right to receive 1.02 shares (the
"Exchange Ratio") of the common stock, par value $0.01 per share, of FleetBoston
(the "FleetBoston Shares").
You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view to the shareholders of Summit.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to Summit and FleetBoston that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating to
the respective businesses, earnings, assets, liabilities and prospects of
Summit and FleetBoston furnished to us by senior management of Summit and
FleetBoston, as well as the amount and timing of the cost savings and
expenses expected to result from the Merger (the "Expected Synergies")
furnished to us by senior management of FleetBoston;
(3) Conducted discussions with members of senior management and
representatives of Summit and FleetBoston concerning the matters
described in clauses (1) and (2) above, as well as their respective
businesses and prospects before and after giving effect to the Merger and
the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the Summit Shares
and the FleetBoston Shares and compared them with those of certain
publicly traded companies that we deemed to be relevant;
(5) Reviewed the respective publicly reported financial condition and
results of operations of Summit and FleetBoston and compared them with
those of certain publicly traded companies that we deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of Summit and FleetBoston and their respective financial
and legal advisors with respect to the Merger;
(8) Reviewed the potential pro forma impact of the Merger;
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(9) Reviewed the Agreement and the related stock option agreement provided
to us; and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of Summit or FleetBoston or been furnished with any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowances for loan losses of Summit or FleetBoston, nor have we reviewed any
individual credit files of Summit or FleetBoston or been requested to conduct
such a review, and, as a result, we have assumed that the respective allowances
for loan losses for Summit and FleetBoston are adequate to cover such losses and
will be adequate on a pro forma basis for the combined entity. In addition, we
have not assumed any obligation to conduct, nor have we conducted, any physical
inspection of the properties or facilities of Summit or FleetBoston. With
respect to the financial and operating information, including without
limitation, financial forecasts, valuations of contingencies, projections
regarding under-performing or non-performing assets, net charge offs, adequacy
of reserves, future economic conditions, and the Expected Synergies, furnished
to or discussed with us by Summit or FleetBoston, we have assumed that all such
information has been reasonably prepared and reflect the best currently
available estimates and judgments of the senior management of Summit and
FleetBoston as to the future financial and operating performance of Summit,
FleetBoston or the combined entity, as the case may be. We have further assumed
that the Merger will be accounted for as a pooling-of-interests under generally
accepted accounting principles and that it will qualify as a tax-free
reorganization for U.S. federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions
as in effect on, and on the information made available to us as of, the date
hereof. For the purposes of rendering this opinion, we have assumed that the
Merger will be consummated substantially in accordance with the terms set forth
in the Agreement, including in all respects material to our analysis, that the
representations and warranties of each party in the Agreement and in all related
documents and instruments (collectively, the "Documents") that are referred to
therein are true and correct, that each party to the Documents will perform all
of the covenants and agreements required to be performed by such party under
such Documents and that all conditions to the consummation of the Merger will be
satisfied without waiver thereof. We have also assumed that, in the course of
obtaining the necessary regulatory or other consents or approvals (contractual
or otherwise) for the Merger, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the future results of operations or financial
condition of Summit, FleetBoston, or the combined entity, as the case may be, or
on the contemplated benefits of the Merger, including the Expected Synergies.
We have been retained by the Board of Directors of Summit to act as
financial advisor to Summit in connection with the Merger and will receive a fee
from Summit for our services, a significant portion of which is contingent upon
the consummation of the Merger. In addition, Summit has agreed to indemnify us
for certain liabilities arising out of our engagement. We have in the past two
years provided financial advisory, investment banking and other services to
Summit and FleetBoston and have received fees for the rendering of such
services, and we may continue to provide such services in the future. In
addition, in the ordinary course of our business, we may actively trade the
Summit Shares and other securities of Summit and its affiliates and the
FleetBoston Shares and other securities of FleetBoston and its affiliates for
our own account and for the accounts of our customers, and, accordingly, may at
any time hold long or short positions in such securities.
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<PAGE>
This opinion is for the information of the Board of Directors of Summit in
connection with its consideration of the Merger. It is further understood that
this opinion will not be reproduced, summarized, described or referred to or
given to any person without Merrill Lynch's prior written consent. This opinion
does not address the merits of the underlying decision by Summit to engage in
the Merger and does not constitute a recommendation to any shareholder of Summit
as to how such shareholder should vote on the proposed Merger or any other
matter related thereto.
We have not considered, nor are we expressing any opinion herein with
respect to, the prices at which Summit Shares or FleetBoston Shares will trade
following the announcement of the Merger or the price at which FleetBoston
Shares will trade following the consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Exchange Ratio is fair, from a financial point of view,
to the shareholders of Summit.
Very truly yours,
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<PAGE>
DIRECTIONS TO SPECIAL MEETING
HILTON EAST BRUNSWICK
THREE TOWER CENTER BOULEVARD
EAST BRUNSWICK, NJ 08816
DIRECTIONS
FROM NJ TURNPIKE NORTH OR SOUTH
EXIT 9 OF THE NJ TURNPIKE THROUGH THE TOLL PLAZA, GET ON ROUTE 18
NORTH AND TAKE THE FIRST RIGHT, THEN BEAR RIGHT ONTO BURNET STREET
AND ENTER THE HOTEL FROM THE MIDDLE OF THE TWO TOWERS.
FROM ROUTE 18 NORTH
TURN RIGHT AT THE FIRST LIGHT AFTER THE NJ TURNPIKE ENTRANCE-TOWER
CENTER BOULEVARD.
FROM ROUTE 18 SOUTH
FROM NEW BRUNSWICK, TAKE ROUTE 18 SOUTH TO ROUTE ONE NORTH.
FOLLOW SIGNS FOR ROUTE 18 NORTH/NEW BRUNSWICK. THERE WILL
ALSO BE SIGNS FOR THE NEW JERSEY TURNPIKE. AT FORK IN ROAD, BEAR
LEFT FOLLOWING SIGNS FOR TUNISON ROAD, NEW JERSEY TURNPIKE. GO
THROUGH TRAFFIC LIGHT AND FOLLOW SIGNS FOR NEW JERSEY TURNPIKE
AND "U TURN" (RIGHT). PROCEED TO TRAFFIC LIGHT AND MAKE LEFT INTO HOTEL
ENTRANCE.
FROM INTERSTATE 287
ROUTE 287 TO NEW JERSEY TURNPIKE. NEW JERSEY TURNPIKE SOUTH
TO EXIT 9. AFTER THE TOLL PLAZA, GET ON ROUTE 18 NORTH AND TAKE THE
FIRST RIGHT, THEN BEAR RIGHT ONTO BURNET STREET. PROCEED TO TRAFFIC
LIGHT AND MAKE LEFT INTO HOTEL ENTRANCE.
FROM ROUTE 1 NORTHBOUND AND SOUTHBOUND
TAKE THE EXIT FOR ROUTE 18 SOUTH. PASS THE HOTEL AT THE INTERSECTION OF ROUTE 18
AND
THE NEW JERSEY TURNPIKE (LEFT TURNS ARE NOT ALLOWED AT THE TRAFFIC LIGHT). AT
THE SEC-
OND TRAFFIC LIGHT (EGGERS STREET) TAKE A RIGHT TO MAKE A U-TURN. FOLLOW SIGNS
FOR THE
U-TURN AND GET ON ROUTE 18 NORTHBOUND. MAKE A RIGHT AT THE FIRST TRAFFIC LIGHT
FOR
THE ENTRANCE TO THE HOTEL.
NOTICE
ADMITTANCE TO THE SPECIAL MEETING
In order to accommodate our shareholders, admission to the Special Meeting
must be limited to shareholders, proxies, press and meeting staff. Two Welcome
Desks will be set up to greet meeting attendees. If you hold stock in your own
name, please proceed to the RECORD HOLDER Welcome Desk when you arrive. If you
hold stock through a bank, broker or otherwise, please proceed to the STREET
NAME Welcome Desk and please be prepared to furnish an account statement from
your bank or broker, a copy of a proxy card mailed to you, or other proof of
ownership of Summit Common Stock. PERSONS WITHOUT SUCH PROOF WILL NOT BE SEATED
UNTIL THE MEETING STAFF DETERMINES THERE IS ADEQUATE SEATING FOR ALL ATTENDEES
AND MAY BE DENIED ADMITTANCE ALTOGETHER.
<PAGE>
Attendees should at all times wear the official name tag provided by the
Welcome Desks in order that the meeting staff may readily identify attendees
admitted to the meeting in accordance with the procedures administered by the
Welcome Desks. If you own stock in your own name and plan to attend the Special
Meeting, please mark the appropriate box on the proxy card. If you wish to
attend the Special Meeting but will not be submitting a proxy card with the
appropriate box marked, please notify Summit at the following address as soon as
possible: Corporate Secretary, ATTN: Special Meeting Admissions, Summit
Bancorp., 301 Carnegie Center, PO. Box 2066, Princeton, NJ 08543-2066. Doing
this will allow us to prepare your official name tag in advance and eliminate
unnecessary delays upon your arrival at the Special Meeting.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's by-laws provide for indemnification to the extent permitted
by Section 7-1.1-4.1 of the Rhode Island Business Corporation Law. Such section,
as adopted by the by-laws, requires the Registrant to indemnify directors,
officers, employees or agents against judgments, fines, reasonable costs,
expenses and counsel fees paid or incurred in connection with any proceeding to
which such director, officer, employee or agent or his legal representative may
be a party (or for testifying when not a party) by reason of his being a
director, officer, employee or agent, provided that such director, officer,
employee or agent shall have acted in good faith and shall have reasonably
believed (a) if he was acting in his official capacity that his conduct was in
the Registrant's best interest, (b) in all other cases that his conduct was at
least not opposed to its best interest, and (c) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful. The
Registrant's by-laws provide that such rights to indemnification are contract
rights and that the expenses incurred by an indemnified person shall be paid in
advance of a final disposition of any proceeding; provided, however, that if
required under applicable law, such person must deliver a written affirmation
that he has met the standards of care required under such provisions to be
entitled to indemnification and provides an undertaking by or on behalf of such
person to repay all amounts advanced if it is ultimately determined that such
person is not entitled to indemnification. With respect to possible
indemnification of directors, officers and controlling persons of the Registrant
for liabilities arising under the Securities Act of 1933, as amended, pursuant
to such provisions, the Registrant is aware that the Securities and Exchange
Commission has publicly taken the position that such indemnification is against
public policy as expressed in said Act and is, therefore, unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following is a list of Exhibits to this Registration
Statement:
<TABLE>
<S> <C> <C>
2 -- Agreement and Plan of Merger, dated as of October 1, 2000,
by and between FleetBoston Financial Corporation and Summit
Bancorp. (included in Part I as Appendix A to the proxy
statement-prospectus included in this Registration
Statement)
3(a ) -- Restated Articles of Incorporation of the Registrant, as
amended through November 5, 1999 (incorporated by reference
to Exhibit 3 of Registrant's Form 10-Q for the quarter ended
September 30, 1999)
3(b ) -- Amendment, dated April 18, 2000, to the Registrant's
Restated Articles of Incorporation (incorporated by
reference to Exhibit 3(b) of Registrant's Form 10-Q for the
quarter ended March 31, 2000)
3(ii ) -- By-laws of the Registrant, as amended (incorporated by
reference to Exhibit 4(l) of Registrant's Registration
Statement on Form S-3 (333-86829))
4(a ) -- Rights Agreement, dated as of August 16, 2000, between
FleetBoston Financial Corporation and EquiServe, LP, as
Rights Agent (incorporated by reference to Exhibit 4 of
FleetBoston's Registration Statement on Form 8-A dated
November 7, 2000)
4(b ) -- Instruments defining the rights of security holders,
including indentures (FleetBoston 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 FleetBoston and its subsidiaries
on a consolidated basis. FleetBoston hereby agrees to
furnish a copy of any such instrument to the Commission upon
request)
5 -- Opinion of Edwards & Angell, LLP as to legality
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C> <C>
8(a ) -- Form of Opinion of Wachtell, Lipton, Rosen & Katz as to U.S.
federal income tax matters
8(b ) -- Form of Opinion of Weil, Gotshal & Manges LLP as to U.S.
federal income tax matters
10(a ) -- Employment Agreement, dated as of October 1, 2000, by and
between T. Joseph Semrod and the Registrant*
10(b ) -- Employment Agreement, dated as of October 1, 2000, by and
between John G. Collins and the Registrant*
23(a ) -- Consent of KPMG LLP
23(b ) -- Consent of PricewaterhouseCoopers LLP
23(c ) -- Consent of Edwards & Angell, LLP (included in Exhibit 5)
23(d ) -- Consent of Wachtell, Lipton, Rosen & Katz (included in
Exhibit 8(a))
23(e ) -- Consent of Weil, Gotshal & Manges LLP (included in Exhibit
8(b))
99(a ) -- Form of Proxy for Summit Special Meeting of Shareholders
99(b ) -- Stock Option Agreement dated October 1, 2000 between Summit
and FleetBoston (included in Part I as Exhibit B to the
proxy statement-prospectus)
99(c ) -- Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated
99(d ) -- Consent of Mr. T. Joseph Semrod to be named as a director*
99(e ) -- Consent of Mr. T. J. Dermot Dunphy to be named as a
director*
</TABLE>
------------------------
* Previously filed.
(b) Financial Statement Schedules.
Not Applicable.
(c) Fairness Opinions.
Included in Part I as Exhibit C to the proxy statement-prospectus included
in this Registration Statement.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement (notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement); and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(6) That every prospectus (i) that is filed pursuant to paragraph (5) above,
or (ii) that purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to this
registration statement and will not be used until such amendment has become
effective, and that for the purpose of determining liabilities under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(8) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this registration statement when it
became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Amendment No. 2 to the Form S-4
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, Commonwealth of Massachusetts, on
January 19, 2001.
FLEETBOSTON FINANCIAL CORPORATION
BY: _____/S/ WILLIAM C. MUTTERPERL____
William C. Mutterperl
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Form S-4 Registration Statement has been signed by the following
persons in the capacities indicated on January 19, 2001.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ TERRENCE MURRAY* Chairman, Chief Executive Officer and
-------------------------------------------- Director
Terrence Murray
/s/ CHARLES K. GIFFORD* President, Chief Operating Officer and
-------------------------------------------- Director
Charles K. Gifford
/s/ ROBERT J. HIGGINS* President of Consumer Banking and Investment
-------------------------------------------- Services and Director
Robert J. Higgins
/s/ HENRIQUE C. MEIRELLES* President of Corporate and Global Banking and
-------------------------------------------- Director
Henrique C. Meirelles
/s/ EUGENE M. MCQUADE* Vice Chairman and Chief Financial Officer
--------------------------------------------
Eugene M. McQuade
/s/ ERNEST L. PUSCHAVER Executive Vice President, Director of Finance
-------------------------------------------- and Chief Accounting Officer
Ernest L. Puschaver
/s/ JOEL B. ALVORD* Director
--------------------------------------------
Joel B. Alvord
/s/ WILLIAM BARNET, III* Director
--------------------------------------------
William Barnet, III
/s/ DANIEL P. BURNHAM* Director
--------------------------------------------
Daniel P. Burnham
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ PAUL J. CHOQUETTE, JR.* Director
--------------------------------------------
Paul J. Choquette, Jr.
/s/ JOHN T. COLLINS* Director
--------------------------------------------
John T. Collins
/s/ WILLIAM F. CONNELL* Director
--------------------------------------------
William F. Connell
/s/ GARY L. COUNTRYMAN* Director
--------------------------------------------
Gary L. Countryman
/s/ ALICE F. EMERSON* Director
--------------------------------------------
Alice F. Emerson
/s/ JAMES F. HARDYMON* Director
--------------------------------------------
James F. Hardymon
/s/ MARIAN L. HEARD* Director
--------------------------------------------
Marian L. Heard
/s/ ROBERT M. KAVNER* Director
--------------------------------------------
Robert M. Kavner
/s/ THOMAS J. MAY* Director
--------------------------------------------
Thomas J. May
/s/ DONALD F. MCHENRY* Director
--------------------------------------------
Donald F. McHenry
/s/ MICHAEL B. PICOTTE* Director
--------------------------------------------
Michael B. Picotte
/s/ THOMAS R. PIPER* Director
--------------------------------------------
Thomas R. Piper
/s/ THOMAS C. QUICK* Director
--------------------------------------------
Thomas C. Quick
/s/ FRANCENE S. RODGERS* Director
--------------------------------------------
Francene S. Rodgers
/s/ JOHN W. ROWE* Director
--------------------------------------------
John W. Rowe
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ THOMAS M. RYAN* Director
--------------------------------------------
Thomas M. Ryan
/s/ PAUL R. TREGURTHA* Director
--------------------------------------------
Paul R. Tregurtha
</TABLE>
By: __________________________/s/ WILLIAM C. MUTTERPERL_________________________
William C. Mutterperl
AS ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C> <C>
2 -- Agreement and Plan of Merger, dated as of October 1, 2000,
by and between FleetBoston Financial Corporation and Summit
Bancorp. (included in Part I as Appendix A to the proxy
statement-prospectus included in this Registration
Statement)
3(a ) -- Restated Articles of Incorporation of the Registrant, as
amended through November 5, 1999 (incorporated by reference
to Exhibit 3 of Registrant's Form 10-Q for the quarter ended
September 30, 1999)
3(b ) -- Amendment, dated April 18, 2000, to the Registrant's
Restated Articles of Incorporation (incorporated by
reference to Exhibit 3(b) of Registrant's Form 10-Q for the
quarter ended March 31, 2000)
3(ii ) -- By-laws of the Registrant, as amended (incorporated by
reference to Exhibit 4(l) of Registrant's Registration
Statement on Form S-3 (333-86829))
4(a ) -- Rights Agreement, dated as of August 16, 2000, between
FleetBoston Financial Corporation and EquiServe, LP, as
Rights Agent (incorporated by reference to Exhibit 4 of
FleetBoston's Registration Statement on Form 8-A dated
November 7, 2000)
4(b ) -- Instruments defining the rights of security holders,
including indentures (FleetBoston 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 FleetBoston and its subsidiaries
on a consolidated basis. FleetBoston hereby agrees to
furnish a copy of any such instrument to the Commission upon
request)
5 -- Opinion of Edwards & Angell, LLP as to legality
8(a ) -- Form of Opinion of Wachtell, Lipton, Rosen & Katz as to U.S.
federal income tax matters
8(b ) -- Form of Opinion of Weil, Gotshal & Manges LLP as to U.S.
federal income tax matters
10(a ) -- Employment Agreement, dated as of October 1, 2000, by and
between T. Joseph Semrod and the Registrant*
10(b ) -- Employment Agreement, dated as of October 1, 2000, by and
between John G. Collins and the Registrant*
23(a ) -- Consent of KPMG LLP
23(b ) -- Consent of PricewaterhouseCoopers LLP
23(c ) -- Consent of Edwards & Angell, LLP (included in Exhibit 5)
23(d ) -- Consent of Wachtell, Lipton, Rosen & Katz (included in
Exhibit 8(a))
23(e ) -- Consent of Weil, Gotshal & Manges LLP (included in Exhibit
8(b))
99(a ) -- Form of Proxy for Summit Special Meeting of Shareholders
99(b ) -- Stock Option Agreement dated October 1, 2000 between Summit
and FleetBoston (included in Part I as Exhibit B to the
proxy statement-prospectus)
99(c ) -- Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated
99(d ) -- Consent of Mr. T. Joseph Semrod to be named as a director*
99(e ) -- Consent of Mr. T. J. Dermot Dunphy to be named as a
director*
</TABLE>
------------------------
* Previously filed.
