<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-48043
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 2, 1998)
[LOGO]
6,000,000 PREFERRED SECURITIES
FLEET CAPITAL TRUST IV
7.17% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM-")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
FLEET FINANCIAL GROUP, INC.
---------------
The 7.17% Trust Originated Preferred Securities-SM- (the "TOPrS-SM-" or
"Preferred Securities") offered hereby constitute a series of preferred
securities of, and represent undivided preferred beneficial interests in the
assets of, Fleet Capital Trust IV, a statutory business trust formed under the
laws of the State of Delaware ("Fleet Capital" or the "Trust"). Fleet Financial
Group, Inc., a Rhode Island corporation ("Fleet"), will own all of the common
securities (the "Common Securities", and together with the Preferred Securities,
the "Trust Securities"), representing undivided beneficial interests in the
assets of Fleet Capital. Fleet Capital exists for the sole purpose of issuing
the Trust Securities and investing the proceeds thereof in an equivalent amount
of 7.17% Junior Subordinated Deferrable Interest Debentures due 2028 (the
"Junior Subordinated Debentures") of Fleet. The Junior Subordinated Debentures
will mature on March 31, 2028 (the "Stated Maturity").
(CONTINUED ON NEXT PAGE)
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-5 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF
DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
Application will be made to list the Preferred Securities on the New York
Stock Exchange (the "NYSE"). Trading of the Preferred Securities on the NYSE is
expected to commence within a 30-day period after the initial delivery of the
Preferred Securities. See "Underwriting."
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO THE
PRICE TO PUBLIC(1) COMMISSION(2) TRUST(3)(4)
<S> <C> <C> <C>
Per Preferred Security................................... $25.00 (3) $25.00
Total.................................................... $150,000,000 (3) $150,000,000
</TABLE>
(1) Plus accrued distributions, if any, from April 28, 1998.
(2) Fleet Capital and Fleet have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures, Fleet has
agreed to pay to the Underwriters as compensation (the "Underwriters'
Compensation") for their arranging the investment therein of such proceeds
$.7875 per Preferred Security (or $4,725,000 in the aggregate). See
"Underwriting."
(4) Before deducting expenses of the offering which are payable by Fleet
estimated at $175,000.
------------------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about April 28,
1998.
--------------------------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
FLEET SECURITIES, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
TUCKER ANTHONY INCORPORATED
--------------------------
The date of this Prospectus Supplement is April 23, 1998.
-SM- "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
The Junior Subordinated Debentures when issued will be unsecured obligations
of Fleet and will be subordinate and junior in right of payment to certain other
indebtedness of Fleet, as described herein. Upon an event of default under the
Declaration (as defined herein), the holders of Preferred Securities will have a
preference over the holders of the Common Securities with respect to payments of
distributions and payments upon redemption, liquidation and otherwise.
The Preferred Securities will be represented by global Preferred Securities
registered in the name of the nominee of The Depository Trust Company (the
"DTC"). Interests in the global Preferred Securities will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Except as provided herein, Preferred Securities in definitive
form will not be issued. Settlement for the Preferred Securities will be made in
immediately available funds. The Preferred Securities will trade in DTC's
Same-Day Funds Settlement System, and secondary market trading activity for the
Preferred Securities will therefore settle in immediately available funds. See
"Description of the Preferred Securities--Book-Entry Only Issuance--The
Depository Trust Company."
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of 7.17% of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing June 30, 1998 ("distributions"). The payment of distributions
out of moneys held by Fleet Capital and payments on liquidation of Fleet Capital
or the redemption of Preferred Securities, as set forth below, are guaranteed by
Fleet (the "Guarantee") to the extent described herein and under "Description of
the Preferred Securities Guarantees" in the accompanying Prospectus. The
Guarantee covers payments of distributions and other payments on the Preferred
Securities if and to the extent that Fleet Capital has funds available therefor,
which will not be the case unless Fleet has made a payment of interest or
principal or other payments on the Junior Subordinated Debentures held by Fleet
Capital as its sole asset. The Guarantee, when taken together with Fleet's
obligations under the Junior Subordinated Debentures and the Indenture (as
defined herein) and its obligations under the Declaration (as defined herein),
including its liabilities to pay costs, expenses, debts and obligations of Fleet
Capital (other than with respect to the Trust Securities), provide a full and
unconditional guarantee of amounts due on the Preferred Securities. See "Risk
Factors-- Rights Under the Guarantee" herein. The obligations of Fleet under the
Guarantee are subordinate and junior in right of payment to all other
liabilities of Fleet and rank pari passu with the most senior preferred stock
issued, from time to time, if any, by Fleet. The obligations of Fleet under the
Junior Subordinated Debentures are subordinate and junior in right of payment to
all present and future Senior Indebtedness and Other Financial Obligations (each
as defined herein) of Fleet, which aggregated approximately $4.6 billion
(holding company only) at March 31, 1998, and rank pari passu with Fleet's other
general unsecured creditors. In addition, because Fleet is a holding company,
the Junior Subordinated Debentures are effectively subordinated to all existing
and future liabilities of Fleet's subsidiaries, including depositors. The Junior
Subordinated Debentures purchased by Fleet Capital may be subsequently
distributed pro rata to holders of the Preferred Securities and Common
Securities in connection with the dissolution of Fleet Capital.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment date and other payment dates on the Junior Subordinated
Debentures, which will be the sole assets of Fleet Capital. As a result, if
principal or interest is not paid on the Junior Subordinated Debentures, no
amounts will be paid on the Preferred Securities. If Fleet does not make
principal or interest payments on the Junior Subordinated Debentures, Fleet
Capital will not have sufficient funds to make distributions on the Preferred
Securities. In such event, the Guarantee will not apply to such distributions
until Fleet Capital has sufficient funds available therefor.
So long as Fleet shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Fleet has the right to defer payments of
interest on the Junior Subordinated Debentures by
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<PAGE>
extending the interest payment period on the Junior Subordinated Debentures at
any time for up to 20 consecutive quarters (each, an "Extension Period"),
provided that an Extension Period may not extend beyond the Stated Maturity of
the Junior Subordinated Debentures. If interest payments are so deferred,
distributions on the Preferred Securities will also be deferred. During such
Extension Period, distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at an annual rate of 7.17% percent
per annum compounded quarterly, and during any Extension Period, holders of
Preferred Securities will be required to include such deferred interest in their
gross income for United States federal income tax purposes in advance of receipt
of the cash distributions with respect to such deferred interest. There could be
multiple Extension Periods of varying lengths throughout the term of the Junior
Subordinated Debentures. See "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period;" "Risk Factors--Option to
Extend Interest Payment Period" and "United States Federal Income Taxation--
Interest Income and Original Issue Discount."
The Trust Securities will be subject to mandatory redemption (i) in whole
but not in part, on the Stated Maturity upon repayment of the Junior
Subordinated Debentures, (ii) in whole or in part, on or after March 31, 2003,
contemporaneously with the optional prepayment by Fleet of the Junior
Subordinated Debentures and (iii) in whole but not in part, at any time prior to
March 31, 2003, contemporaneously with the optional prepayment of the Junior
Subordinated Debentures, upon the occurrence and continuation of a Special Event
(as defined herein), in each case at a redemption price of $25 per Trust
Security, plus accrued and unpaid distributions thereon. The Junior Subordinated
Debentures will be prepayable prior to the Stated Maturity at the option of
Fleet (i) in whole or in part, from time to time, on or after March 31, 2003 or
(ii) at any time prior to March 31, 2003, in whole but not in part, upon the
occurrence and continuation of a Special Event (as defined herein), in either
case at a prepayment price (the "Prepayment Price") equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of prepayment. See "Description of the Junior Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment."
Fleet will have the right at any time to liquidate Fleet Capital and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Fleet has no present intention to take such action, principally
because the Junior Subordinated Debentures, unlike the Preferred Securities,
would not be considered "Tier 1 capital" for purposes of the Federal Reserve
Board's capital guidelines for bank holding companies. If the Junior
Subordinated Debentures are distributed to the holders of the Preferred
Securities, Fleet will use its best efforts to have the Junior Subordinated
Debentures listed on the NYSE or on such other exchange as the Preferred
Securities are then listed. See "Description of the Preferred
Securities--Distribution of the Junior Subordinated Debentures" and "Description
of the Junior Subordinated Debentures."
Any such redemption or distribution of the Junior Subordinated Debentures
may require the prior approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), if such approval is then required under
applicable law, rules, guidelines or policies.
In the event of the involuntary or voluntary dissolution, winding-up or
termination of Fleet Capital, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Debentures are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution."
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS, THE PURCHASE
OF PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-3
<PAGE>
AVAILABLE INFORMATION
THIS SECTION SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH, REPLACES
THE SECTION ENTITLED "AVAILABLE INFORMATION" IN THE ACCOMPANYING PROSPECTUS.
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning Fleet can be inspected and copied at the
Commission's office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's Regional Offices in New York (Suite
1300, Seven World Trade Center, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates or by accessing the Commission's World Wide Web site
at http://www.sec.gov. The common stock $.01 par value, of Fleet (the "Common
Stock") is listed on the NYSE. Reports, proxy material, and other information
concerning Fleet also may be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005. This Prospectus Supplement and the
accompanying Prospectus do not contain all the information set forth in the
Registration Statement and Exhibits thereto which Fleet has filed with the
Commission under the Securities Act of 1933, as amended (the "Act"), which may
be obtained from the Public Reference Section of the Commission at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the
prescribed fees, and to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS SECTION REPLACES THE SECTION ENTITLED "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE" IN THE ACCOMPANYING PROSPECTUS.
The following documents filed with the Commission by Fleet are incorporated
by reference in this Prospectus:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
(b) Current Reports on Form 8-K dated January 15, 1998, January 15, 1998,
January 26, 1998, February 2, 1998, March 4, 1998, March 6, 1998, March 30, 1998
and April 15, 1998.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
Supplement and prior to this termination of this offering are incorporated
herein by reference and such documents shall be deemed to be a part hereof from
the date of filing of such documents. Any statement contained in this Prospectus
Supplement and accompanying Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus Supplement and accompanying
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus Supplement and accompanying Prospectus.
FLEET WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS
PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS HAS BEEN DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS
REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE HEREIN
(OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN REQUESTS SHOULD BE MAILED
TO INVESTOR RELATIONS DEPARTMENT, FLEET FINANCIAL GROUP, INC., ONE FEDERAL
STREET, BOSTON, MASSACHUSETTS 02110. TELEPHONE REQUESTS MAY BE DIRECTED TO (617)
346-4000.
S-4
<PAGE>
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND JUNIOR SUBORDINATED
DEBENTURES
Fleet's obligations under the Guarantee are unsecured and rank subordinate
and junior in right of payment to all liabilities of Fleet and rank pari passu
with the most senior preferred stock issued, if any, from time to time by Fleet.
The obligations of Fleet under the Junior Subordinated Debentures are
subordinate and junior in right of payment to all present and future Senior
Indebtedness and Other Financial Obligations of Fleet and rank pari passu with
obligations to or rights of Fleet's other general unsecured creditors. No
payment may be made of the principal of, premium, if any, or interest on the
Junior Subordinated Debentures, or in respect of any redemption, retirement,
purchase or other acquisition of any of the Junior Subordinated Debentures, at
any time when (i) there is a default in the payment of the principal of,
premium, if any, interest on or otherwise in respect of any Senior Indebtedness,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise, or (ii) any event of default with respect to any Senior Indebtedness
has occurred and is continuing, or would occur as a result of such payment on
the Junior Subordinated Debentures or any redemption, retirement, purchase or
other acquisition of any of the Junior Subordinated Debentures, permitting the
holders of such Senior Indebtedness (or a trustee on behalf of the holders
thereof) to accelerate the maturity thereof. As of March 31, 1998, Senior
Indebtedness and Other Financial Obligations of Fleet aggregated approximately
$4.6 billion (holding company only). In addition, because Fleet is a holding
company, the Junior Subordinated Debentures are effectively subordinated to all
existing and future liabilities of Fleet's subsidiaries, including depositors.
There are no terms in the Preferred Securities, the Junior Subordinated
Debentures or the Guarantee that limit Fleet's ability to incur additional
indebtedness, including indebtedness which ranks senior to the Junior
Subordinated Debentures and the Guarantee. See "Description of the Preferred
Securities Guarantees--Status of the Preferred Securities Guarantees" and
"Description of the Junior Subordinated Debentures" in the accompanying
Prospectus, and "Description of the Junior Subordinated
Debentures--Subordination" herein.
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The First National Bank of Chicago will act as indenture trustee under the
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent Fleet Capital has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by
Fleet Capital, to the extent Fleet Capital has funds available therefor, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
Fleet Capital (other than in connection with the distribution of Junior
Subordinated Debentures to the holders of Preferred Securities or a redemption
of all the Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of the payment, to the extent Fleet Capital has funds
available therefor, and (b) the amount of assets of Fleet Capital remaining
available for distribution to holders of the Preferred Securities in liquidation
of Fleet Capital. The holders of a majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. Notwithstanding the foregoing, any holder of
Preferred Securities may institute a legal proceeding directly against Fleet to
enforce such holders' rights under the Guarantee
S-5
<PAGE>
without first instituting a legal proceeding against Fleet Capital, the
Guarantee Trustee or any other person or entity. If Fleet were to default on its
obligation to pay amounts payable on the Junior Subordinated Debentures or
otherwise, Fleet Capital would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, holders of
the Preferred Securities would rely on the enforcement (1) by the Institutional
Trustee (as defined in "Fleet Capital" herein) of its rights as registered
holder of the Junior Subordinated Debentures against Fleet pursuant to the terms
of the Junior Subordinated Debentures or (2) by such holder of its right against
Fleet to enforce payments on the Junior Subordinated Debentures. See
"Description of the Preferred Securities Guarantees" and "Description of the
Junior Subordinated Debentures" in the accompanying Prospectus. The Declaration
provides that each holder of Preferred Securities, by acceptance thereof, agrees
to the provisions of the Guarantee, including the subordination provisions
thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debentures against Fleet. In addition, the holders of a majority in
liquidation amount of the Preferred Securities will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Junior Subordinated Debentures. If the Institutional
Trustee fails to enforce its rights under the Junior Subordinated Debentures, a
holder of Preferred Securities may institute a legal proceeding directly against
Fleet to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing, and
such event is attributable to the failure of Fleet to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Junior Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Direct
Action") on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Direct Action, the rights of
Fleet, as holder of the Common Securities, will be subrogated to the rights of
such holder of Preferred Securities under the Declaration to the extent of any
payment made by Fleet to such holder of Preferred Securities in such Direct
Action. The holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Junior Subordinated
Debentures. See "Description of the Preferred Securities--Declaration Events of
Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Fleet shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Fleet has the right under the Indenture (as such
term is defined in "Description of the Junior Subordinated Debentures" herein)
to defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period at any time, and from time to time, on the Junior
Subordinated Debentures. As a consequence of such an extension, quarterly
distributions on the Preferred Securities would be deferred (but would continue
to accrue, despite such deferral, with interest thereon at an annual rate of
7.17% per annum compounded quarterly) by Fleet Capital during any such Extension
Period. Such right to extend the interest payment period for the Junior
Subordinated Debentures is limited to a period not exceeding 20 consecutive
quarters, but no such Extension Period may extend beyond the Stated Maturity of
the Junior Subordinated Debentures. During any Extension Period, (i) Fleet shall
not declare or pay any dividend on, make any distribution with respect to, or
redeem, purchase or acquire, or make a
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<PAGE>
liquidation payment with respect to, any of its capital stock (other than (a)
purchases or acquisitions of shares of the common stock, par value $0.01 per
share, of Fleet (the "Fleet Common Stock") in connection with the satisfaction
by Fleet of its obligations under any employee benefit plans or any other
contractual obligation of Fleet (other than a contractual obligation ranking
pari passu with or junior to the Junior Subordinated Debentures), (b) as a
result of a reclassification of Fleet's capital stock or the exchange or
conversion of one class or series of Fleet's capital stock for another class or
series of Fleet capital stock or (c) the purchase of fractional interests in
shares of Fleet's capital stock pursuant to the conversion or exchange
provisions of such Fleet capital stock or the security being converted or
exchanged), (ii) Fleet shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
Fleet that rank pari passu with or junior to the Junior Subordinated Debentures
and (iii) Fleet shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Guarantee). Prior to the termination of
any such Extension Period, Fleet may further extend the interest payment period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarters or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due,
Fleet may commence a new Extension Period, subject to the above requirements.
See "Description of the Preferred Securities--Distributions" and "Description of
the Junior Subordinated Debentures--Option to Extend Interest Payment Period."
Should Fleet exercise its right to defer payments of interest by extending
the interest payment period, each holder of Preferred Securities will be
required to accrue income (as original issue discount ("OID")) in respect of the
deferred stated interest allocable to its Preferred Securities for United States
federal income tax purposes, which will be allocated but not distributed to
holders of record of Preferred Securities. As a result, each such holder of
Preferred Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash from
Fleet Capital related to such income if such holder disposes of its Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. Fleet has no current intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Debentures. However, should Fleet determine to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of Fleet's right to defer interest payments, the market
price of the Preferred Securities (which represent an undivided beneficial
interest in the Junior Subordinated Debentures) may be more volatile than other
securities on which OID accrues that do not have such rights. See "United States
Federal Income Taxation--Sales of Preferred Securities."
REDEMPTION OR DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
Fleet will have the right at any time to terminate Fleet Capital and, after
satisfaction of claims of creditors as provided by applicable law, to cause the
Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. In certain circumstances, Fleet shall have the right to redeem the
Junior Subordinated Debentures, in whole or in part, in which event Fleet
Capital will redeem the Trust Securities on a pro rata basis to the same extent
as the Junior Subordinated Debentures are redeemed by Fleet. Any such
distribution or redemption may require prior approval of the Federal Reserve
Board if then required under applicable law, rules, guidelines or policies. See
"Description of the Preferred Securities--Mandatory Redemption."
Under current United States federal income tax law, a distribution of Junior
Subordinated Debentures upon the dissolution of Fleet Capital would not be a
taxable event to holders of the Preferred Securities. If, however, Fleet Capital
is characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of dissolution of Fleet Capital, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Preferred Securities. Moreover, upon occurrence of a Special
Event, a dissolution of Fleet Capital in which holders of the
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<PAGE>
Preferred Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation--Receipt of Junior Subordinated
Debentures or Cash Upon Liquidation of Fleet Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of Fleet
Capital were to occur. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby. Because holders of
Preferred Securities may receive Junior Subordinated Debentures, prospective
purchasers of Preferred Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein and in
the accompanying Prospectus. See "Description of the Preferred
Securities--Mandatory Redemption," "--Distribution of the Junior Subordinated
Debentures" and "Description of the Junior Subordinated Debentures."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, Fleet Capital Trustees (as defined herein), which voting rights
are vested exclusively in the holder of the Common Securities. See "Description
of the Preferred Securities--Voting Rights."
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are treated as issued with OID) and who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., interest or,
possibly, OID), and to add such amount to his adjusted tax basis in his pro rata
share of the underlying Junior Subordinated Debentures deemed disposed of. To
the extent the selling price is less than the holder's adjusted tax basis (which
will include all accrued but unpaid interest), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"United States Federal Income Taxation--Interest Income and Original Issue
Discount" and "--Sales of Preferred Securities."
LACK OF ESTABLISHED TRADING MARKET FOR PREFERRED SECURITIES
The Preferred Securities constitute a new issue of securities of Fleet
Capital with no established trading market. Application will be made to list the
Preferred Securities on the NYSE. Trading of the Preferred Securities on the
NYSE is expected to commence within a 30-day period after the initial delivery
of the Preferred Securities. There can be no assurance that an active market for
the Preferred Securities will develop or be sustained in the future on such
exchange. Although the Underwriters have indicated to Fleet and Fleet Capital
that they intend to make a market in the Preferred Securities, as permitted by
applicable laws and regulations prior to the commencement of trading on the
NYSE, they are not obligated to do so and may discontinue any such market-making
at any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Preferred Securities.
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving Fleet that may adversely affect such holders. See "Description of the
Junior Subordinated Debentures--General."
S-8
<PAGE>
FLEET FINANCIAL GROUP, INC.
THIS SECTION REPLACES THE SECTION ENTITLED "FLEET FINANCIAL GROUP, INC." IN
THE ACCOMPANYING PROSPECTUS.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At March 31, 1998, Fleet was among the eleven
largest bank holding companies in the United States, with total assets of $97.7
billion, total deposits of $68.2 billion and stockholders' equity of $8.6
billion.
Fleet is engaged in a general consumer and commercial banking and investment
management business throughout the states of Connecticut, Massachusetts, New
Jersey, New York, Rhode Island, Maine, New Hampshire and Florida through its
banking subsidiaries, and also provides, through its other subsidiaries, a
variety of financial services, including mortgage banking, asset-based lending,
consumer finance, real estate financing, securities brokerage services, capital
markets services and investment banking, investment advice and management, data
processing and student loan servicing.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 346-4000.
HOLDING COMPANY
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including the holders
of the securities offered hereby, to benefit from the distribution of assets of
any subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to prior claims of creditors of the subsidiary (including depositors
in the case of banking subsidiaries) except to the extent that a claim of Fleet
as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions with safe and
sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at December 31, 1997, Fleet's banking subsidiaries could have
declared additional dividends of approximately $361 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
Under the policy of the Board of Govenors of the Federal Reserve Systems
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary would be assumed by the bankruptcy trustee and
entitled to a priority of payment.
S-9
<PAGE>
RECENT TRANSACTIONS
Consistent with Fleet's strategy to combine the strengths of a leading
regional bank with the national distribution capabilities of a diversified
financial services company, Fleet has made three acquisitions which will expand
its investment advisory, discount brokerage and credit card business lines, as
well as expand the number and geographic diversity of its customer base. As a
result of these acquisitions, Fleet expects to double the number of customers
served to approximately 13 million and revenue from outside New England is
expected to increase to over 50% of Fleet's total revenue.
COLUMBIA MANAGEMENT COMPANY
On December 10, 1997, Fleet consummated its acquisition of Columbia
Management Company ("Columbia"), a Portland, Oregon-based asset manager. The
premium paid for the purchase of Columbia was $466 million. The agreement
stipulates potential earnout and management retention incentives to be paid over
six years. The acquisition of Columbia increases Fleet's investment advisory
assets under management by approximately 40% and broadens its institutional
product and mutual fund offerings and both retail and institutional national
client base. Columbia will be managed as an independent business unit of Fleet,
with senior members of Columbia's management committed to remain with Fleet.
Fleet accounted for this acquisition under the purchase method of accounting.
THE QUICK & REILLY GROUP, INC.
On February 1, 1998, Fleet consummated its acquisition of The Quick & Reilly
Group, Inc. ("Quick & Reilly") at an exchange ratio of 0.578 shares of Fleet
Common Stock for each share of Quick & Reilly common stock. Approximately 22
million shares of Fleet Common Stock were issued in the merger. The acquisition
was accounted for as a pooling of interests.
The Quick & Reilly transaction will give Fleet the opportunity to
significantly expand its distribution channels for its consumer banking,
investment management services, discount brokerage services and sales of its
mutual fund and annuity products. The transaction will also allow Fleet to
expand its retail customer base and provide its existing customers with
additional investment and securities products. Quick & Reilly will be operated
as an independent operation within Fleet's investment management services
division. As part of the transaction, the top six members of Quick & Reilly's
management have entered into five-year employment agreements to continue with
Fleet following the closing. The agreement also provides for management
retention and performance-based incentives to be paid to Quick & Reilly's senior
managers over three years.
ADVANTA CORPORATION
On Februry 20, 1998, Fleet acquired the consumer credit card operations of
Advanta Corporation ("Advanta"), recording goodwill of approximately $500
million and purchased credit card intangibles of approximately $150 million,
with an aggregate potential earnout of $100 million to be paid over five years.
The transaction was accounted for under the purchase method of accounting.
Advanta's credit card operations added approximately $11.5 billion in managed
credit card receivables. Following consummation of this transaction and the
combination of Fleet's credit card operations with those of Advanta's, Fleet
believes that it will be among the top ten issuers of credit cards in the United
States, with approximately $14 billion in managed receivables and over 8 million
customers.
The acquisition of Advanta's consumer credit card operations allows Fleet to
compete on a larger scale in a competitive environment of credit card business
consolidations in order to retain and grow Fleet's customer base. Fleet believes
that this acquisition will enhance Fleet's credit card operations by providing
the opportunity to combine Fleet's risk management practices with Advanta's
state of the art database technology, direct marketing and product testing
capabilities in the credit card business.
S-10
<PAGE>
FIRST QUARTER RESULTS
Fleet reported operating earnings of $367 million, or $1.21 per diluted
share, for the first quarter of 1998, a 10% increase compared with $334 million,
or $1.10 per diluted share, earned in the first quarter of 1997. Return on
assets and return on common equity for the first quarter of 1998 were 1.62% and
18.27%, respectively.
During the quarter, Fleet completed the acquisitions of Quick & Reilly and
the consumer credit card operations of Advanta. Financial data for all prior
periods has been restated to reflect the pooling of Fleet and Quick & Reilly.
Financial results of Advanta, accounted for as a purchase, are included
subsequent to the closing date of February 20, 1998. Net income for the first
quarter of 1998, including the impact of merger-related charges relating to
these acquisitions, was $323 million, or $1.06 per diluted share.
Asset quality continued to improve in all aspects of Fleet's loan portfolio
as nonperforming assets decreased nearly 50% in the past year to $373 million at
the end of the first quarter. Net charge-offs and the provision for credit
losses were both $92 million in the first quarter. The reserve for loan losses
was $1.55 billion at March 31, 1998 and represented 2.39% of total loans and
441% of nonperforming loans.
Net interest income totaled $938 million during the first quarter of 1998,
an increase of $20 million from the first quarter of 1997. The increase is
principally attributable to strong growth in Fleet's earning assets and
increased loan fees. Fleet reported a net interest margin of 4.75% which
reflected the impact of lower-yielding assets acquired with both Advanta and
Quick & Reilly.
Noninterest income in the first quarter totaled $695 million, an increase of
$82 million, or 13%, from the same period in 1997. Investment services revenue
has increased 18% to $201 million in the first quarter driven by a strong equity
market, a $33 billion growth in assets under management, partially attributable
to the acquisition of Columbia late in 1997, and increased sales of mutual fund
and annuity products. Capital markets revenue, excluding securities gains,
climbed 50% to $87 million in comparison to the first quarter of 1997 as
market-making revenue derived from Fleet's discount brokerage firm has nearly
doubled, while venture capital revenue increased 67% to $30 million. Credit card
revenue increased $42 million over the prior year's first quarter which is
attributable to the Advanta acquisition.
As a result of the sharply decreasing interest-rate environment, Fleet's
mortgage banking business experienced a strong acceleration in mortgage
prepayments this quarter. To recognize this, Fleet established a $75 million
charge against the value of the investment in this business. Because of the
anticipated volatility of this asset, Fleet protects itself against a decrease
to net income through various hedging strategies. As a result of these
strategies, Fleet was able to fully offset the impact of this charge through the
recognition of $50 million in gains from the securities portfolio, which had a
substantial increase in value in this interest rate environment, and $25 million
of gains from the sales of mortgage servicing.
Noninterest expense in the first quarter of 1998, excluding merger-related
charges, totaled $924 million, an increase of only $20 million, or 2.2%, from
the first quarter of 1997, despite the additions of Advanta and Columbia.
Notable declines were realized in several categories, including employee
compensation and occupancy expenses as Fleet continues to tightly manage its
expense levels.
Total assets at March 31, 1998 were $97.7 billion, including total loans of
$65.0 billion, compared with $91.0 billion of total assets and $62.6 billion of
loans at December 31, 1997. Stockholders' equity amounted to $8.6 billion at
March 31, 1998.
S-11
<PAGE>
FLEET CAPITAL
THIS SECTION SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH, REPLACES
THE SECTION ENTITLED "THE TRUSTS" IN THE ACCOMPANYING PROSPECTUS.
Fleet Capital is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of November 1, 1996, executed
by Fleet, as sponsor (the "Sponsor"), and the trustees of Fleet Capital (the
"Fleet Capital Trustees") and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on November 1, 1996. Such
declaration will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities--Book-Entry Only Issuance--The Depository Trust Company."
Fleet will directly or indirectly acquire Common Securities in an aggregate
liquidation amount equal to at least 3 percent of the total capital of Fleet
Capital. Fleet Capital exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
Fleet Capital, (ii) investing the gross proceeds of the Trust Securities in the
Junior Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto.
Pursuant to the Declaration, the number of Fleet Capital Trustees will
initially be five. Three of the Fleet Capital Trustees (the "Regular Trustees")
will be persons who are employees or officers of, or who are affiliated with,
Fleet. The fourth trustee will be a financial institution that is unaffiliated
with Fleet, which trustee will serve as institutional trustee under the
Declaration and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Institutional Trustee"). Initially,
The First National Bank of Chicago will be the Institutional Trustee until
removed or replaced by the holder of the Common Securities. For purposes of
compliance with the provisions of the Trust Indenture Act, The First National
Bank of Chicago will act as trustee (the "Guarantee Trustee") under the
Guarantee and as Debt Trustee (as defined herein) under the Indenture (as
defined herein). The fifth trustee will be an entity that maintains its
principal place of business in the state of Delaware (the "Delaware Trustee").
Initially, First Chicago Delaware Inc., an affiliate of the Institutional
Trustee, will act as Delaware Trustee. See "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus and "Description of the
Preferred Securities--Voting Rights" herein.
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and will have
the power to exercise all rights, powers and privileges under the Indenture as
the holder of the Junior Subordinated Debentures. In addition, the Institutional
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Institutional Account") to hold all payments made in respect
of the Junior Subordinated Debentures for the benefit of the holders of the
Trust Securities. The Institutional Trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
Trust Securities out of funds from the Institutional Account. The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the Preferred
Securities. Fleet, as the direct or indirect holder of all the Common
Securities, will have the right to appoint, remove or replace any Fleet Capital
Trustee and to increase or decrease the number of Fleet Capital Trustees. Fleet
will pay all fees and expenses related to Fleet Capital and the offering of the
Trust Securities. See "Description of the Junior Subordinated
Debentures--Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Business Trust Act") and the
Trust Indenture Act. See "Description of the Preferred Securities."
S-12
<PAGE>
SELECTED RESTATED CONSOLIDATED UNAUDITED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected restated
financial data for Fleet and its subsidiaries for each of the years in the
five-year period ending December 31, 1997. The following summary should be read
in conjunction with the financial information incorporated herein by reference
to other documents. See "Incorporation of Certain Documents by Reference." All
data has been restated to reflect the Quick & Reilly acquisition, accounted for
as a pooling of interests. Certain amounts in prior periods have been
reclassified to conform to current-year presentation.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------- ---------------- ----------------- ---------------- ----------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY
OF OPERATIONS:
Interest income
(fully taxable
equivalent)...... $ 6,130 $ 6,064 $ 6,257 $ 5,389 $ 5,154
Interest expense... 2,391 2,566 3,139 2,245 1,956
Net interest income
(fully taxable
equivalent)...... 3,739 3,498 3,118 3,144 3,198
Provision for
credit losses.... 322 213 101 65 327
Net interest income
after provision
for credit
losses........... 3,417 3,285 3,017 3,079 2,871
Noninterest
income........... 2,631 2,333 1,939 1,654 1,833
Noninterest
expense.......... 3,715 3,512 3,755 3,221 3,479
Net income......... 1,367 1,221 679(a) 890 859(b)
EARNINGS PER COMMON
SHARE:
Basic.............. $ 4.73 $ 4.04 $ 1.83(a) $ 3.25 $ 3.18(b)
Diluted............ 4.59 3.96 1.70(a) 3.00 2.95(b)
Weighted average
basic shares
outstanding...... 275,978,241 284,448,131 265,459,028 264,692,874 258,040,862
Weighted average
diluted shares
outstanding...... 284,302,405 290,012,987 285,995,539 285,973,026 278,419,490
Book value per
common share..... $ 27.36 $ 24.08 $ 22.03 $ 19.87 $ 20.74
Cash dividends
declared per
common share..... 1.84 1.74 1.63 1.40 1.03
Common dividend
payout ratios.... 36.32% 40.73% 79.38% 35.86% 23.97%
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest
on deposits...... 3.90x 3.38x 1.79x 2.30x 2.39x
Including interest
on deposits...... 1.94 1.79 1.36 1.64 1.58
RATIO OF EARNINGS TO
FIXED CHARGES AND
DIVIDENDS ON
PREFERRED STOCK:
Excluding interest
on deposits...... 3.57 3.10 1.76 2.24 2.31
Including interest
on deposits...... 1.90 1.76 1.36 1.62 1.57
CONSOLIDATED BALANCE
SHEET--
AVERAGE BALANCES:
Total assets....... $ 86,660 $ 86,738 $ 86,241 $ 82,143 $ 77,763
Securities held to
maturity(c)...... 1,167 1,045 7,736 8,787 7,735
Securities
available for
sale(c).......... 7,507 10,287 12,779 16,923 14,140
Loans and leases,
net of unearned
income........... 60,076 57,046 52,164 44,754 43,917
Interest-bearing
deposits......... 47,514 47,334 43,120 40,113 39,766
Short-term
borrowings....... 5,266 6,351 14,807 15,807 13,268
Long-term
debt/subordinated
notes
and debentures... 4,608 5,486 6,581 5,383 5,039
Stockholders'
equity........... 7,589 7,369 6,863 6,019 5,516
CONSOLIDATED RATIOS:
Net interest margin
(fully taxable
equivalent)...... 5.01% 4.68% 4.03% 4.23% 4.52%
Return on average
assets........... 1.58 1.40 0.79(a) 1.08 1.11(b)
Return on average
common
stockholders'
equity........... 19.30 17.68 9.93(a) 15.74 17.26(b)
Average
stockholders'
equity to average
assets........... 8.76 8.50 7.96 7.33 7.09
Tier 1 risk-based
capital ratio.... 7.26 7.70 7.60 9.15 10.35
Total risk-based
capital ratio.... 10.71 11.27 11.16 12.82 14.65
Period-end reserve
for credit losses
to period-end
loans and
leases, net of
unearned
income........... 2.29% 2.49% 2.51% 3.20% 3.76%
Net charge-offs to
average loans and
leases, net of
unearned
income........... 0.63 0.65 0.58 0.53 1.33
Period-end
nonperforming
assets to
period-end loans
and leases, net
of unearned
income, and other
real estate
owned............ 0.66(d) 1.21(d) 0.95(d) 1.63 2.33
</TABLE>
S-13
<PAGE>
- ------------------------
(a) Includes impact of the loss on assets held for sale or accelerated
disposition ($175 million pre-tax) and merger-related charges ($490 million
pre-tax) recorded in 1995. Excluding these special charges, return on
average common stockholders' equity and return on average assets would have
been 16.55% and 1.29%, respectively, while net income and earnings per share
would have been $1,108 million and $3.90, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53
million in 1993.
(c) Effective January 1, 1994, Fleet adopted FASB Statement No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." The standard
requires that securities available for sale be reported at fair value, with
unrealized gains or losses reflected as a separate component of
stockholders' equity. In connection with the adoption of FASB Statement No.
115, Fleet transferred securities netting to $345 million from the held to
maturity portfolio to the available for sale portfolio. During the fourth
quarter of 1995, Fleet reclassified substantially all of its securities held
to maturity to securities available for sale as the FASB permitted a
one-time opportunity for institutions to reassess the appropriateness of the
designations of all securities.
(d) Excludes $214 million, $265 million and $317 million of nonperforming assets
reclassified to held for sale or accelerated disposition at December 31,
1997, December 31, 1996 and December 31, 1995, respectively. Including such
amounts, the ratios would have been 1.01%, 1.65% and 1.55% at December 31,
1997, December 31, 1996 and December 31, 1995, respectively.
S-14
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected historical
financial data for Fleet and its subsidiaries for each of the years in the
five-year period ending December 31, 1997. The following summary should be read
in conjunction with the financial information incorporated herein by reference
to other documents. See "Incorporation of Certain Documents by Reference."
Certain amounts in prior periods have been reclassified to conform to
current-year presentation.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------- ---------------- ----------------- ---------------- ----------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED SUMMARY
OF OPERATIONS:
Interest income
(fully taxable
equivalent)...... $ 5,888 $ 5,878 $ 6,069 $ 5,260 $ 5,086
Interest expense... 2,221 2,439 3,005 2,161 1,917
Net interest income
(fully taxable
equivalent)...... 3,667 3,439 3,064 3,099 3,169
Provision for
credit losses.... 322 213 101 65 327
Net interest income
after provision
for credit
losses........... 3,345 3,226 2,963 3,034 2,842
Noninterest
income........... 2,247 2,013 1,665 1,468 1,636
Noninterest
expense.......... 3,381 3,272 3,550 3,070 3,332
Net income......... 1,303 1,139 610(a) 849 817(b)
EARNINGS PER COMMON
SHARE:
Basic.............. $ 4.89 $ 4.06 $ 1.71(a) $ 3.37 $ 3.30(b)
Diluted............ 4.74 3.98 1.58(a) 3.10 3.04(b)
Weighted average
basic shares
outstanding...... 253,661,066 262,619,983 243,796,880 243,027,593 236,177,416
Weighted average
diluted shares
outstanding...... 261,782,974 268,149,940 264,300,713 264,148,882 256,571,288
Book value per
common share..... $ 28.10 $ 24.66 $ 22.71 $ 20.68 $ 21.76
Cash dividends
declared per
common share..... 1.84 1.74 1.63 1.40 1.025
Common dividend
payout ratios.... 37.6% 42.8% 90.4% 36.8% 24.6%
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest
on deposits...... 4.53x 3.62x 1.78x 2.33x 2.36x
Including interest
on deposits...... 1.96 1.78 1.34 1.62 1.56
RATIO OF EARNINGS TO
FIXED CHARGES AND
DIVIDENDS ON
PREFERRED STOCK:
Excluding interest
on deposits...... 4.02 3.26 1.74 2.27 2.27
Including interest
on deposits...... 1.92 1.74 1.33 1.61 1.54
CONSOLIDATED BALANCE
SHEET--
AVERAGE BALANCES:
Total assets....... $ 82,070 $ 83,124 $ 82,727 $ 79,561 $ 75,286
Securities held to
maturity(c)...... 1,167 1,045 7,736 8,787 7,735
Securities
available for
sale(c).......... 7,507 10,287 12,779 16,923 14,140
Loans and leases,
net of unearned
income........... 58,920 56,074 51,043 44,102 43,283
Interest-bearing
deposits......... 47,514 47,334 43,120 40,113 39,766
Short-term
borrowings....... 4,682 5,844 14,046 15,355 12,807
Long-term
debt/subordinated
notes
and debentures... 4,608 5,486 6,581 5,383 5,039
Stockholders'
equity........... 7,178 7,021 6,545 5,782 5,311
CONSOLIDATED RATIOS:
Net interest margin
(fully taxable
equivalent)...... 5.21% 4.81% 4.12% 4.30% 4.63%
Return on average
assets........... 1.59 1.37 .74(a) 1.07 1.09(b)
Return on average
common
stockholders'
equity........... 19.53 17.43 9.32(a) 15.66 17.11(b)
Average
stockholders'
equity to average
assets........... 8.75 8.45 7.91 7.27 7.05
Tier 1 risk-based
capital ratio.... 7.30 7.67 7.61 9.14 10.44
Total risk-based
capital ratio.... 10.89 11.36 11.29 12.92 14.89
Period-end reserve
for credit losses
to period-end
loans and
leases, net of
unearned
income........... 2.34% 2.53% 2.56% 3.25% 3.82%
Net charge-offs to
average loans and
leases, net of
unearned
income........... .65 .66 .59 .54 1.35
Period-end
nonperforming
assets to
period-end loans
and leases, net
of unearned
income, and other
real estate
owned............ (.68d) 1.23(d) .97(d) 1.65 2.35
</TABLE>
S-15
<PAGE>
- ------------------------
(a) Includes impact of the loss on assets held for sale or accelerated
disposition ($175 million pre-tax) and merger-related charges ($490 million
pre-tax) recorded in 1995. Excluding these special charges, return on
average common stockholders' equity and return on average assets would have
been 16.29% and 1.26%, respectively, while net income and earnings per share
would have been $1,039 million and $3.78, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53
million in 1993.
(c) Effective January 1, 1994, Fleet adopted FASB Statement No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." The standard
requires that securities available for sale be reported at fair value, with
unrealized gains or losses reflected as a separate component of
stockholders' equity. In connection with the adoption of FASB Statement No.
115, Fleet transferred securities netting to $345 million from the held to
maturity portfolio to the available for sale portfolio. During the fourth
quarter of 1995, Fleet reclassified substantially all of its securities held
to maturity to securities available for sale as the FASB permitted a
one-time opportunity for institutions to reassess the appropriateness of the
designations of all securities.
(d) Excludes $214 million, $265 million and $317 million of nonperforming assets
reclassified to held for sale or accelerated disposition at December 31,
1997, December 31, 1996 and December 31, 1995, respectively. Including such
amounts, the ratios would have been 1.03%, 1.68% and 1.58% at December 31,
1997, December 31, 1996 and December 31, 1995, respectively.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth the actual consolidated capitalization of
Fleet and its subsidiaries at December 31, 1997, and Fleet's capitalization as
of such date as adjusted to reflect (i) the sale of the Preferred Securities
offered hereby, (ii) the issuance by Fleet on January 15, 1998 of $500 million
principal amount of 6 7/8% Subordinated Notes Due 2028, (iii) the issuance by
Fleet Capital Trust III on January 29, 1998 of 4,800,000 7.05% Trust Originated
Preferred Securities and (iv) the issuance by Fleet on March 9, 1998 of $250
million principal amount of 6.50% Subordinated Notes Due 2008. The table should
be read in conjunction with Fleet's consolidated financial statements and notes
thereto included in the documents incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
ACTUAL(1) AS ADJUSTED(1)
---------- --------------
<S> <C> <C>
AT DECEMBER 31, 1997
--------------------------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C>
Senior and subordinated debt.......................................................... $ 4,166 $ 4,916
Company-obligated mandatorily redeemable preferred securities
of Fleet Capital Trust I(2).......................................................... 84 84
Company-obligated mandatorily redeemable capital securities
of Fleet Capital Trust II(3)......................................................... 250 250
Company-obligated mandatorily redeemable preferred securities
of Fleet Capital Trust III(4)........................................................ -- 120
Company-obligated mandatorily redeemable preferred securities
of Fleet Capital Trust IV(5)......................................................... -- 150
---------- --------------
Total long-term debt.................................................................. 4,500 5,520
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value...................................................... 691 691
Common stock, $.01 par value.......................................................... 3 3
Common surplus........................................................................ 3,329 3,329
Retained earnings..................................................................... 4,437 4,437
Net unrealized gain on securities..................................................... 97 97
Treasury stock........................................................................ (105) (105)
---------- --------------
Total stockholders' equity............................................................ 8,452 8,452
---------- --------------
Total long-term debt and stockholders' equity......................................... 12,952 13,972
---------- --------------
---------- --------------
</TABLE>
- ------------------------
(1) Restated to reflect the Quick & Reilly acquisition, accounted for as a
pooling of interests.
(2) Issued on February 4, 1997. The sole assets of Fleet Capital Trust I are
8.00% Junior Subordinated Deferrable Interest Debentures due 2027 with a
principal amount of approximately $86.3 million. Such debentures mature on
February 15, 2027, which may be (i) shortened to a date not earlier than
April 15, 2001 or (ii) extended to a date not later than February 15, 2046.
Fleet owns all of the common securities of such trust. Upon redemption of
such debentures, the preferred securities are mandatorily redeemable.
(3) Issued on December 11, 1996. The sole assets of Fleet Capital Trust II are
7.92% Junior Subordinated Deferrable Interest Debentures due 2026 with a
principal amount of approximately $257.7 million. Such debentures mature on
December 11, 2026. Fleet owns all of the common securities of such trust.
Upon redemption of such debentures, the capital securities are mandatorily
redeemable.
(4) Issued on January 29, 1998. The sole assets of Fleet Capital Trust III are
7.05% Junior Subordinated Deferrable Interest Debentures due 2028 with a
principal amount of approximately $123.7 million. Such debentures mature on
March 31, 2028. Fleet owns all of the common securities of such trust. Upon
redemption of such debentures, the preferred securities are mandatorily
redeemable.
(5) As described herein, the sole assets of Fleet Capital will be the Junior
Subordinated Debentures with a principal amount of approximately $154.6
million. The Junior Subordinated Debentures will bear interest at the rate
of 7.17% per annum and will mature on March 31, 2028. Fleet owns all of the
Common Securities of Fleet Capital. Upon redemption of the Junior
Subordinated Debentures, the Preferred Securities will be mandatorily
redeemable.
S-17
<PAGE>
ACCOUNTING TREATMENT
The financial statements of Fleet Capital will be consolidated into Fleet's
consolidated financial statements, with the Preferred Securities classified as a
component of long-term debt of Fleet. The financial statement footnotes of Fleet
will reflect that the sole asset of Fleet Capital will be $154.6 million
principal amount of the Junior Subordinated Debentures, bearing interest at
7.17% and maturing on March 31, 2028. All future reports filed by Fleet under
the Exchange Act will present information regarding Fleet Capital and other
similar Fleet trusts in the manner described above. In addition, a footnote to
Fleet's audited financial statements will be added to reflect that (i) Fleet
Capital and such other trusts are wholly-owned by Fleet; (ii) the sole assets of
Fleet Capital are the Junior Subordinated Debentures and the sole assets of such
other trusts will be junior subordinated debentures, in each case specifying as
to each trust the principal amount, interest rate and maturity date of the
junior subordinated debentures held; and (iii) the Guarantee, when taken
together with Fleet's obligations under the Junior Subordinated Debenture and
the Indenture and its obligations under the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of Fleet Capital
(other than with respect to the Trust Securities), and the corresponding
obligations of Fleet with respect to such other trusts, provide a full and
unconditional guarantee of amounts on the Preferred Securities and the preferred
securities issued by such other trusts. See "Capitalization."
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Fleet's consolidated ratios of earnings to fixed charges were as follows for
the years indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits............................................ 3.90x 3.38x 1.79x 2.30x 2.39x
Including Interest on Deposits............................................ 1.94 1.79 1.36 1.64 1.58
</TABLE>
- ------------------------
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
USE OF PROCEEDS
THIS SECTION SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH, REPLACES
THE SECTION ENTITLED "USE OF PROCEEDS" IN THE ACCOMPANYING PROSPECTUS.
Fleet Capital will use all proceeds received from the sale of the Preferred
Securities to purchase Junior Subordinated Debentures from Fleet. Fleet intends
to use the net proceeds from the sale of the Junior Subordinated Debentures for
general corporate purposes, principally to extend credit to, or fund investments
in, its subsidiaries. The precise amounts and timing of extensions of credit to,
and investments in, such subsidiaries will depend upon the subsidiaries' funding
requirements and the availability of other funds. Pending such applications, the
net proceeds may be temporarily invested in marketable securities or applied to
the reduction of Fleet's short-term indebtedness. Based upon the historic and
anticipated future growth of Fleet and the financial needs of its subsidiaries,
Fleet may engage in additional financings of a character and amount to be
determined as the need arises.
S-18
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The First National Bank of Chicago,
will act as indenture trustee for the Preferred Securities under the Declaration
for purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Declaration
and those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Preferred Securities, which
supplements, and to the extent inconsistent, replaces, the description set forth
under the caption "Description of the Capital Securities" in the accompanying
Prospectus. Such summary, which describes the material provisions thereof, does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part, the
Business Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of Fleet
Capital the Trust Securities, which represent undivided beneficial interests in
the assets of Fleet Capital. All of the Common Securities will be owned,
directly or indirectly, by Fleet. The Common Securities rank pari passu, and
payments will be made thereon on a pro rata basis, with the Preferred
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Declaration does not permit the issuance by Fleet
Capital of any securities other than the Trust Securities or the incurrence of
any indebtedness by Fleet Capital. Pursuant to the Declaration, the
Institutional Trustee will own the Junior Subordinated Debentures purchased by
Fleet Capital for the benefit of the holders of the Trust Securities. The
payment of distributions out of money held by Fleet Capital, and payments upon
redemption of the Preferred Securities or liquidation of Fleet Capital, are
guaranteed by Fleet to the extent described under "Description of the Capital
Securities Guarantees" in the accompanying Prospectus. The Guarantee will be
held by The First National Bank of Chicago, as Guarantee Trustee, for the
benefit of the holders of the Preferred Securities. The Guarantee does not cover
payment of distributions when Fleet Capital does not have sufficient available
funds to pay such distributions. In such event, the remedy of a holder of
Preferred Securities is to vote to direct the Institutional Trustee to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
except in the circumstances in which there is a default in the payment of
distributions, including when Fleet Capital does not have sufficient available
funds to pay such distribution, in which case the holder may take Direct Action.
See "Voting Rights" and "Declaration Events of Default" below.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of 7.17% of the stated liquidation amount of $25 per Preferred Security
(equivalent to $1.7925 per annum). Distributions in arrears for more than one
quarter will bear interest thereon at such rate, compounded quarterly. The term
"distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from April 28, 1998, and, except as otherwise described below, will be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing June 30, 1998, when, as and if available for payment. The
initial distribution will be $.3087 per Preferred Security and will be payable
on June 30, 1998.
So long as Fleet shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Fleet has the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures by extending the
interest payment period from time to time on the Junior
S-19
<PAGE>
Subordinated Debentures, which, if exercised, would defer quarterly
distributions on the Preferred Securities (though such distributions would
continue to accrue with interest thereon at an annual rate of 7.17% percent per
annum compounded quarterly, since interest would continue to accrue on the
Junior Subordinated Debentures) during any such Extension Period. Such right to
extend the interest payment period for the Junior Subordinated Debentures is
limited to a period not exceeding 20 consecutive quarters, and such period may
not extend beyond the Stated Maturity of the Junior Subordinated Debentures. In
the event that Fleet exercises this right, then (i) Fleet shall not declare or
pay any dividend on, make any distribution with respect to, or redeem, purchase
or acquire, or make a liquidation payment with respect to, any of its capital
stock (other than (a) purchases or acquisitions of shares of Fleet Common Stock
in connection with the satisfaction by Fleet of its obligations under any
employee benefit plans or any other contractual obligation of Fleet (other than
a contractual obligation ranking pari passu with or junior to the Junior
Subordinated Debentures), (b) as a result of a reclassification of Fleet capital
stock or the exchange or conversion of one class or series of Fleet's capital
stock for another class or series of Fleet capital stock or (c) the purchase of
fractional interests in shares of Fleet's capital stock pursuant to the
conversion or exchange provisions of such Fleet capital stock or the security
being converted or exchanged), (ii) Fleet shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Fleet that rank pari passu with or junior to such
Junior Subordinated Debentures and (iii) Fleet shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee).
Prior to the termination of any such Extension Period, Fleet may further extend
the interest payment period; provided, that such Extension Period, together with
all such previous and further extensions thereof, may not exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, Fleet may select a new Extension Period, subject to the above
requirements. See "Description of the Junior Subordinated Debentures--Interest"
and "--Option to Extend Interest Payment Period." If distributions are deferred,
the deferred distributions and accrued but unpaid interest thereon shall be paid
to holders of record of the Preferred Securities as they appear on the books and
records of the Trust on the record date next following the termination of such
Extension Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that Fleet Capital has funds available for the payment of such
distributions in the Property Account. Fleet Capital's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from Fleet on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by Fleet Capital is guaranteed by Fleet to the
extent set forth under "Description of the Preferred Securities Guarantees" in
the accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of Fleet Capital on the relevant
record dates, which will be, as long as the Preferred Securities remain in
book-entry form, one Business Day prior to the relevant payment date and, in the
event the Preferred Securities are not in book-entry form, the 15th day of the
month in which the relevant payment date occurs. The Declaration provides that
the payment dates or record dates for the Preferred Securities shall be the same
as the payment dates and record dates for the Junior Subordinated Debentures.
Distributions payable on any Preferred Securities that are not punctually paid
on any distribution date as a result of Fleet having failed to make the
corresponding interest payment on the Junior Subordinated Debentures will
forthwith cease to be payable to the person in whose name such Preferred
Security is registered on the relevant record date, and such defaulted
distribution will instead be payable to the person in whose name such Preferred
Security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that distributions shall not be considered payable on any distribution payment
date falling within an Extension Period unless Fleet has elected to make a full
or partial payment of interest accrued on the Junior Subordinated Debentures on
such distribution payment date. Distributions on the Preferred Securities will
be paid through the
S-20
<PAGE>
Institutional Trustee, who will hold amounts received in respect of the Junior
Subordinated Debentures in the Institutional Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "Book-Entry Only Issuance--The Depository Trust Company" below.
In the event that any date on which distributions are to be made on the
Preferred Securities is not a Business Day, then payment of the distributions
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such record date. A "Business Day"
shall mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) or Chicago, Illinois
are permitted or required by any applicable law to close.
REDEMPTION
The Stated Maturity of the Junior Subordinated Debentures is March 31, 2028.
Upon the repayment of the Junior Subordinated Debentures at maturity, the
proceeds from such repayment shall simultaneously be applied to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so repaid at a redemption
price of $25 per Trust Security, plus accrued and unpaid distributions thereon.
Moreover, the Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity at the option of Fleet (i) in whole or in part, from time to
time, on or after March 31, 2003 or (ii) at any time prior to March 31, 2003, in
whole but not in part, upon the occurrence and continuation of a Special Event,
in either case at the Prepayment Price equal to 100% of the principal amount
thereof, plus accrued interest thereon to the date of prepayment. See
"Description of the Junior Subordinated Debentures-Optional Prepayment." Upon
the repayment of the Junior Subordinated Debentures, whether at maturity or upon
redemption, the proceeds from such repayment or payment shall simultaneously be
applied to redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of the Junior Subordinated Debentures so
repaid or redeemed at the Redemption Price; provided, that holders of Trust
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption. See "Description of the Junior Subordinated Debentures--Optional
Prepayment." In the event that fewer than all of the outstanding Preferred
Securities are to be redeemed, the Preferred Securities will be redeemed pro
rata as described under "Book-Entry Only Issuance--The Depository Trust Company"
below. Any such distribution or redemption may require prior approval of the
Federal Reserve Board if such approval is then required under applicable law,
rules, guidelines or policies.
REDEMPTION PROCEDURES
Fleet Capital may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If Fleet Capital gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then immediately prior to the
close of business on the redemption date, provided that Fleet has paid to Fleet
Capital a sufficient amount of cash in connection with the related redemption or
maturity of the Junior Subordinated Debentures, distributions will cease to
accrue on the Preferred Securities called for redemption, such Preferred
Securities shall no longer be deemed to be outstanding and all rights of holders
of such Preferred Securities so called for redemption will cease, except the
right of the holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price. If any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If Fleet fails to
S-21
<PAGE>
repay Junior Subordinated Debentures on maturity or on the date fixed for a
redemption or if payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid by Fleet Capital or by
Fleet pursuant to the Guarantee described under "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus, distributions on such
Preferred Securities will continue to accrue to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
Fleet Capital shall not be required to (i) issue, or register the transfer
or exchange of, any Trust Securities during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of Trust
Securities and ending at the close of business on the day of the mailing of the
relevant notice of redemption and (ii) register the transfer or exchange of any
Trust Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any Trust Securities being redeemed in part.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed pro rata as described
below under "Book-Entry Only Issuance--The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws and the regulations of the Federal Reserve
Board), Fleet or its subsidiaries may at any time, and from time to time,
purchase outstanding Preferred Securities by tender, in the open market or by
private agreement.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
Fleet will have the right at any time to liquidate Fleet Capital and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities, subject to the prior approval of the Federal Reserve Board if such
approval is then required under applicable law, rules, guidelines or policies.
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, Fleet will use its best efforts to cause the Junior
Subordinated Debentures to be listed on the NYSE or on such other exchanges as
the Preferred Securities are then listed.
On the date for any distribution of Junior Subordinated Debentures upon
dissolution of Fleet Capital, (i) the Trust Securities will no longer be deemed
to be outstanding, (ii) the Depositary (as defined herein) or its nominee, as
the record holder of the Trust Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution, and (iii) any certificates representing
Trust Securities not held by the Depositary or its nominee will be deemed to
represent Junior Subordinated Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, such Trust Securities until such
certificates are presented to Fleet or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of Fleet
Capital were to occur. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any other voluntary or involuntary liquidation, dissolution,
winding-up or termination of Fleet Capital (each a "Liquidation"), the then
holders of the Preferred Securities will be entitled to receive out of the
assets of Fleet Capital, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Junior Subordinated Debentures in an aggregate
stated principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the
S-22
<PAGE>
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Preferred Securities have been distributed on a pro
rata basis to the holders of the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because Fleet Capital has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
Fleet Capital on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such dissolution pro rata with the holders of the Preferred Securities,
except that if a Declaration Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the Common Securities with
regard to such distributions.
Pursuant to the Declaration, Fleet Capital shall terminate (i) on April 28,
2052, the expiration of the term of Fleet Capital, (ii) upon the bankruptcy of
Fleet or Fleet Capital, (iii) upon the filing of a certificate of dissolution or
its equivalent with respect to Fleet, the filing of a certificate of
cancellation with respect to Fleet Capital after obtaining the consent of the
holders of at least a majority in liquidation amount of the Trust Securities,
voting together as a single class to file such certificate of cancellation, or
the revocation of the charter of Fleet and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) upon the distribution
of Junior Subordinated Debentures to the holders of the Trust Securities, (v)
upon the entry of a decree of a judicial dissolution of Fleet or Fleet Capital
or (vi) upon the redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the holders of the Preferred Securities and only the holders of the
Preferred Securities will have the right to direct the Institutional Trustee
with respect to certain matters under the Declaration, and therefore the
Indenture. If a Declaration Event of Default with respect to the Preferred
Securities is waived by holders of Preferred Securities, such waiver will also
constitute the waiver of such Declaration Event of Default with respect to the
Common Securities for all purposes under the Declaration, without any further
act, vote or consent of the holders of the Common Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debentures after a holder of Preferred Securities has made a written request,
such holder of record of Preferred Securities may institute a legal proceeding
against Fleet to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Fleet to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, the redemption date), then a
holder of Preferred Securities may institute a Direct Action for enforcement of
payment to such holder of the principal of, or interest on, Junior Subordinated
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debentures. In connection with such Direct
Action, the rights of Fleet, as holder of the Common Securities, will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by Fleet to such holder of
Preferred Securities in such Direct Action. The holders of Preferred Securities
will not be able to exercise directly any other remedy available to the holders
of the Junior Subordinated Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. Fleet and Fleet
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<PAGE>
Capital are each required to file annually with the Institutional Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.
VOTING RIGHTS
Except as described herein, under the Business Trust Act, the Trust
Indenture Act and under "Description of the Preferred Securities
Guarantees--Modification of the Preferred Securities Guarantees; Assignment" in
the accompanying Prospectus, and as otherwise required by law and the
Declaration, the holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities, voting separately as a class, have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee, or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Junior Subordinated
Debentures, to (i) exercise the remedies available to it under the Indenture as
a holder of the Junior Subordinated Debentures, (ii) waive any past Indenture
Event of Default that is waivable under the Indenture, (iii) exercise any right
to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the consent or
act of holders of more than a majority in principal amount of the Junior
Subordinated Debentures (a "Super-Majority") affected thereby, only the holders
of at least such Super-Majority in aggregate liquidation amount of the Preferred
Securities may direct the Institutional Trustee to give such consent or take
such action; and provided, further, that where a consent or action under the
Indenture is only effective against each holder of Junior Subordinated
Debentures who has consented thereto, such consent or action will only be
effective against a holder of Preferred Securities who directs the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debentures after a
holder of record of Preferred Securities has made a written request, such holder
of record of Preferred Securities may institute a legal proceeding directly
against Fleet to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Fleet to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may institute a Direct Action for enforcement of
payment to such holder of the principal of, or interest on, the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Junior Subordinated Debentures. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Debt Trustee with respect to the Junior
Subordinated Debentures. Such notice shall state that such Indenture Event of
Default also constitutes a Declaration Event of Default. Except with respect to
directing the time, method and place of conducting a proceeding for a remedy,
the Institutional Trustee shall not take any of the actions described in clauses
(i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of a nationally recognized tax counsel experienced in such matters to
the effect that, as a result of such action, Fleet Capital will not fail to be
classified as a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Indenture
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would require the consent of a Super-Majority, the Institutional Trustee may
only give such consent at the direction of the holders of at least the
proportion in liquidation amount of the Trust Securities which the relevant
Super-Majority represents of the aggregate principal amount of the Junior
Subordinated Debentures outstanding; and provided, further, that where a consent
or action under the Indenture is only effective against each holder of Junior
Subordinated Debentures who has consented thereto, such consent or action will
only be effective against a holder of Preferred Securities who directs the
Institutional Trustee to give such consent or take such action. The
Institutional Trustee shall not take any such action in accordance with the
directions of the holders of the Trust Securities unless the Institutional
Trustee has obtained an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that for the purposes of United States
federal income tax Fleet Capital will not be classified as other than a grantor
trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for Fleet Capital to
redeem and cancel Preferred Securities or distribute Junior Subordinated
Debentures in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Fleet or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Fleet, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "Book-Entry Only Issuance--The Depository
Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or remove
the Regular Trustees, who may be appointed, removed or replaced solely by Fleet
as the holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of Fleet Capital other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected thereby;
provided, that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of a majority in liquidation amount of such class of Trust Securities.
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Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause Fleet Capital
to be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause Fleet Capital to be deemed an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Fleet Capital may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. Fleet Capital may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Institutional
Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into, or
be replaced by a trust organized as such under the laws of any State of the
United States; provided, that (i) if Fleet Capital is not the survivor, such
successor entity either (a) expressly assumes all of the obligations of Fleet
Capital under the Trust Securities or (b) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so long as the Successor Securities rank the same
as the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) Fleet expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee as the holder of the Junior Subordinated Debentures, (iii)
the Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the Preferred
Securities are then listed or quoted, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), (vi) such successor entity has a purpose identical
to that of Fleet Capital, (vii) prior to such merger, consolidation,
amalgamation or replacement, Fleet has received an opinion of a nationally
recognized independent counsel to Fleet Capital experienced in such matters to
the effect that, (a) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the holders
of the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity) and (b) following such merger, consolidation, amalgamation or
replacement, neither Fleet Capital nor such successor entity will be required to
register as an investment company under the 1940 Act and (viii) Fleet guarantees
the obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee and the Common Securities Guarantee (as
described in the accompanying Prospectus). Notwithstanding the foregoing, Fleet
Capital shall not, except with the consent of holders of 100 percent in
liquidation amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause Fleet Capital or
the Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Preferred Securities. The Preferred Securities will be
issued only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Preferred Securities
certificates (each a "Global Certificate"), representing the total aggregate
number of Preferred Securities, will be issued and will be deposited with DTC.
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DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Participants in DTC include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Participants and by the
NYSE, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through, or maintain a direct or indirect custodial relationship
with, a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Participants, which will receive a credit for the Preferred Securities
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased Preferred
Securities. Transfers of ownership interests in the Preferred Securities are to
be accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Preferred Securities represented thereby for all
purposes under the Declaration and the Preferred Securities. No beneficial owner
of an interest in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Declaration.
DTC has advised Fleet that it will take any action permitted to be taken by
a holder of Preferred Securities (including the presentation of Preferred
Securities for exchange as described below) only at the direction of one or more
Participants to whose account the DTC interests in the Global Certificates are
credited and only in respect of such portion of the aggregate liquidation amount
of Preferred Securities as to which such Participant or Participants has or have
given such direction. However, if there is a Declaration Event of Default under
the Preferred Securities, DTC will exchange the Global Certificates for
Certificated Securities, which it will distribute to its Participants and which
will be legended to give notice of such Declaration Event of Default.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
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<PAGE>
Redemption notices in respect of the Preferred Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Preferred Securities are
being redeemed, DTC will determine the amount of the interest of each
Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Preferred Securities
are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Distributions on the Preferred Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, Fleet Capital or Fleet,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of distributions to DTC is the responsibility of Fleet
Capital, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither Fleet, Fleet Capital
nor the Trustees will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving notice to Fleet
Capital. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Security certificates are required to be
printed and delivered. Additionally, Fleet Capital (with the consent of Fleet)
may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor depositary). In that event, certificates for the Preferred
Securities will be printed and delivered. In each of the above circumstances,
Fleet will appoint a paying agent with respect to the Preferred Securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Preferred Securities
as represented by a Global Certificate.
PAYMENT
Payments in respect of the Preferred Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution dates or, in the case of certificated
securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the records of Fleet's
registrar and transfer agent.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
First Chicago Trust Company of New York will act as registrar, transfer
agent and paying agent (the "Paying Agent") for the Preferred Securities. The
Paying Agent shall be permitted to resign as Paying
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Agent upon 30 days' written notice to the Regular Trustees. In the event that
First Chicago Trust Company of New York shall no longer be the Paying Agent, the
Regular Trustees shall appoint a successor bank or trust company to act as
Paying Agent.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of Fleet Capital, but upon payment (with the giving of
such indemnity as Fleet Capital or Fleet may require) in respect of any tax or
other government charges which may be imposed in relation to it.
Fleet Capital will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Preferred Securities will not be required to offer such
indemnity in the event such holders, by exercising their voting rights, direct
the Institutional Trustee to take any action it is empowered to take under the
Declaration following a Declaration Event of Default. The Institutional Trustee
also serves as trustee under the Guarantee and the Indenture. Fleet and certain
of its subsidiaries conduct certain banking transactions with the Institutional
Trustee in the ordinary course of their business.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate Fleet Capital in
such a way so that Fleet Capital will not be required to register as an
"investment company" under the 1940 Act or characterized as other than a grantor
trust for United States federal income tax purposes. Fleet is authorized and
directed to conduct its affairs so that the Junior Subordinated Debentures will
be treated as indebtedness of Fleet for United States federal income tax
purposes. In this connection, Fleet and the Regular Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of Fleet Capital or the articles of incorporation of Fleet, that each of Fleet
and the Regular Trustees determine in their discretion to be necessary or
desirable to achieve such end, as long as such action does not adversely affect
the interests of the holders of the Preferred Securities or vary the terms
thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Pursuant to the Guarantee, Fleet will agree, to the extent set forth
therein, to pay in full to the holders of the Preferred Securities issued by
Fleet Capital, the Guarantee Payments (as defined in the accompanying
Prospectus) (except to the extent paid by Fleet Capital), as and when due,
regardless of any defense, right of setoff or counterclaim which Fleet Capital
may have or assert. Fleet's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by Fleet to the holders of
Preferred Securities or by causing Fleet Capital to pay such amounts to such
holders. The Guarantee, when taken together with Fleet's obligations under the
Junior Subordinated Debentures and the Indenture
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<PAGE>
and its obligations under the Declaration, including its obligations to pay
costs, expenses, debts and liabilities of Fleet Capital (other than with respect
to the Trust Securities) provides a full and unconditional guarantee on a
subordinated basis by Fleet of payments due on the Preferred Securities. The
Guarantee will be qualified as an indenture under the Trust Indenture Act. The
First National Bank of Chicago will act as Guarantee Trustee. The terms of the
Guarantee will be those set forth in such Guarantee and those made part of such
Guarantee by the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Preferred Securities. A
summary description of the Guarantee appears in the accompanying Prospectus
under the caption "Description of the Preferred Securities Guarantees."
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which Fleet Capital will invest the proceeds from the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated
Debentures set forth in the accompanying Prospectus under the caption
"Description of the Junior Subordinated Debentures." While the following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the description in the accompanying Prospectus
and the Indenture, dated as of December 11, 1996 (the "Base Indenture"), between
Fleet and The First National Bank of Chicago as Trustee (the "Debt Trustee"), as
supplemented by a Fourth Supplemental Indenture, dated as of April 28, 1998 (the
Base Indenture, as so supplemented, is hereinafter referred to as the
"Indenture"), the forms of which are filed as Exhibits to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part, all material terms of the Junior Subordinated Debentures are set
forth herein and in the accompanying Prospectus. Certain capitalized terms used
herein are defined in the Indenture.
GENERAL
The Junior Subordinated Debentures will be issued as unsecured indebtedness
of Fleet under the Indenture. The Junior Subordinated Debentures will be limited
in aggregate principal amount to $154,639,200, such amount being the sum of the
aggregate stated liquidation value of the Trust Securities.
The Junior Subordinated Debentures are not subject to any sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, March 31, 2028.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in Fleet Capital, such
Junior Subordinated Debentures will initially be issued as a Global Security (as
defined herein). As described herein, Junior Subordinated Debentures may be
issued in certificated form in exchange for a Global Security. See "Book-Entry
and Settlement" below. In the event that Junior Subordinated Debentures are
issued in certificated form, such Junior Subordinated Debentures will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated
Debentures issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no depositary is used, to a Paying Agent for
the Junior Subordinated Debentures. In the event Junior Subordinated Debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the Junior Subordinated Debentures will be registrable and Junior
Subordinated Debentures will be exchangeable for Junior Subordinated Debentures
of other denominations of a like aggregate principal amount, at the corporate
trust office of the Institutional Trustee in New York, New York; provided, that
payment of interest may be made at the option of Fleet by check mailed to the
address of the holder entitled thereto or by wire transfer to an account
appropriately designated by the holder entitled thereto. Notwithstanding the
foregoing, so long as the holder of any Junior Subordinated Debentures is the
Institutional Trustee, the payment of principal
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and interest on the Junior Subordinated Debentures held by the Institutional
Trustee will be made at such place and to such account as may be designated by
the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving Fleet that may adversely
affect such holders.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all present and future Senior
Indebtedness and Other Financial Obligations of Fleet (each as defined herein)
and rank pari passu with and are equivalent to creditor obligations of those
holding general unsecured claims not entitled to statutory priority under the
United States Bankruptcy Code or otherwise. In addition, no payment may be made
of the principal of, premium, if any, or interest on the Junior Subordinated
Debentures, or in respect of any redemption, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures, at any time when (i)
there is a default in the payment of the principal of, premium, if any, interest
on or otherwise in respect of any Senior Indebtedness, whether at maturity or at
a date fixed for prepayment or by declaration or otherwise or (ii) any event of
default with respect to any Senior Indebtedness has occurred and is continuing,
or would occur as a result of such payment on the Junior Subordinated Debentures
or any redemption, retirement, purchase or other acquisition of any of the
Junior Subordinated Debentures, permitting the holders of such Senior
Indebtedness (or a trustee on behalf of the holders thereof) to accelerate the
maturity thereof. Upon any distribution of assets of Fleet to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
the payment of the principal of, and interest on, the Junior Subordinated
Debentures will, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness and
Other Financial Obligations of Fleet. Upon any payment or distribution of assets
of Fleet to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors, marshalling of assets
or any bankruptcy, insolvency or similar proceedings of Fleet, the holders of
all Senior Indebtedness and the holders of Other Financial Obligations will
first be entitled to receive payment in full of all amounts due or to become due
thereon before the holders of the Junior Subordinated Debentures will be
entitled to receive and retain any payment in respect of the principal of, or
interest on, the Junior Subordinated Debentures.
The term "Senior Indebtedness" means, with respect to Fleet, (i) the
principal, premium, if any, and interest in respect of (a) indebtedness of Fleet
for money borrowed and (b) indebtedness evidenced by securities, debentures,
bonds or other similar instruments issued by Fleet, (ii) all capital lease
obligations of Fleet, (iii) all obligations of Fleet issued or assumed as the
deferred purchased price of property, all conditional sale obligations of Fleet
and all obligations of Fleet under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business), (iv) all
obligations of Fleet for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction, (v) all
obligations of the type referred to in clauses (i) through (iv) above of other
persons for the payment of which Fleet is responsible or liable as obligor,
guarantor or otherwise and (vi) all obligations of the type referred to in
clauses (i) through (v) above of other persons secured by any lien on any
property or asset of Fleet (whether or not such obligation is assumed by Fleet),
except that Senior Indebtedness shall not include (i) any such indebtedness that
is by its terms subordinated to or ranks pari passu with the Junior Subordinated
Debentures and (ii) any indebtedness between and among Fleet or its affiliates,
including all other debt securities and guarantees in respect to those debt
securities, issued to (a) any other Fleet Capital Trust (as defined in the
accompanying Prospectus) or a trustee of such Fleet Capital Trust and (b) any
other trust, or a trustee of such trust, partnership or other entity affiliated
with Fleet that is a financing vehicle of Fleet (a "financing entity") in
connection with the issuance by such
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financing entity of preferred securities or other securities that rank pari
passu with, or junior to, the Preferred Securities.
The term "Other Financial Obligations" means all obligations of Fleet to
make payment pursuant to the terms of financial instruments, such as (i)
securities contracts and foreign currency exchange contracts, (ii) derivative
instruments, such as swap agreements (including interest rate and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange rate agreements, options,
commodity futures contracts, commodity option contracts and (iii) in the case of
both (i) and (ii) above, similar financial instruments, other than (a)
obligations on account of Senior Indebtedness and (b) obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
Junior Subordinated Debentures.
Upon satisfaction of all claims of all Senior Indebtedness and Other
Financial Obligations then outstanding, the rights of the holders of the Junior
Subordinated Debentures will be subrogated to the rights of the holders of
Senior Indebtedness and Other Financial Obligations of Fleet to receive payments
or distributions applicable to Senior Indebtedness and Other Financial
Obligations until all amounts owing on the Junior Subordinated Debentures are
paid in full. Such Senior Indebtedness and Other Financial Obligations shall
continue to be Senior Indebtedness and Other Financial Obligations and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness or
Other Financial Obligations.
The Indenture does not limit the aggregate amount of Senior Indebtedness or
Other Financial Obligations that may be issued or entered into by Fleet. As of
March 31, 1998, Senior Indebtedness and Other Financial Obligations of Fleet
aggregated approximately $4.6 billion (holding company only). In addition,
because Fleet is a holding company, the Junior Subordinated Debentures are
effectively subordinated to all existing and future liabilities of Fleet's
subsidiaries, including depositors.
OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable prior to the Stated
Maturity at the option of Fleet (i) in whole or in part, from time to time, on
or after March 31, 2003 or (ii) at any time prior to March 31, 2003, in whole
but not in part, upon the occurrence and continuation of a Special Event (as
defined herein), in either case, upon not less than 30 nor more than 60 days'
notice, at a prepayment price (the "Prepayment Price") equal to 100% of the
principal amount thereof, plus accrued interest thereon to the date of
prepayment. Such prepayment may require prior approval of the Federal Reserve
Board if such approval is then required under applicable law, rules, guidelines
or policies.
Following such prepayment, Trust Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Junior Subordinated
Debentures so repaid shall be redeemed by Fleet Capital at a redemption price
equal to the Prepayment Price (the "Redemption Price") plus accrued and unpaid
distributions through the redemption date.
A "Special Event" means a Tax Event or a Regulatory Capital Event (each as
defined herein), as the case may be.
A "Tax Event" means that the Regular Trustees shall have received an opinion
of nationally recognized independent tax counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws or any regulations thereunder of the
United States or any political subdivision or taxing authority thereof or
therein or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement or decision is announced on or after the date of
original issuance of the Junior Subordinated Debentures, there is more than an
insubstantial risk that (i) Fleet Capital is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Junior Subordinated Debentures, (ii)
interest payable by Fleet on the Junior Subordinated Debentures is not, or
within 90 days of the date of such opinion will not be, deductible by Fleet, in
whole or in part, for United States federal income tax purposes or (iii) Fleet
Capital is, or will be within 90 days of the date of such opinion, subject to
more than a DE MINIMIS amount of other taxes, duties or other governmental
charges.
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A "Regulatory Capital Event" means that Fleet shall have received an opinion
of independent bank regulatory counsel experienced in such matters to the effect
that, as a result of (a) any amendment to or change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States or any rules, guidelines or policies of the Federal Reserve Board or (b)
any official amendment or change is effective or such pronouncement or decision
is announced on or after the date of original issuance of the Preferred
Securities, the Preferred Securities do not constitute, or within 90 days of the
date thereof, will not constitute, Tier 1 capital (or its then equivalent);
provided, however, that the distribution of the Junior Subordinated Debentures
in connection with the liquidation of Fleet Capital by Fleet and the treatment
thereafter of the Junior Subordinated Debentures as other than Tier 1 capital
shall not in and of itself constitute a Regulatory Capital Event unless such
liquidation shall have occurred in connection with a Tax Event.
INTEREST
The Junior Subordinated Debentures shall bear interest at the rate of 7.17%
per annum from the original date of issuance, payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (each an "Interest
Payment Date"), commencing June 30, 1998, to the person in whose name such
Junior Subordinated Debentures is registered on the relevant record date. The
record dates for the Junior Subordinated Debentures will be, for so long as the
Junior Subordinated Debentures remain in book-entry form, one Business Day prior
to the relevant Interest Payment Date and, in the event the Junior Subordinated
Debentures are not in book-entry form, the 15th day of the month in which the
relevant Interest Payment Date occurs.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Fleet shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Fleet shall have the right at any time, and from
time to time, during the term of the Junior Subordinated Debentures to defer
payments of interest by extending the interest payment period for a period not
exceeding 20 consecutive quarters or extending beyond the Stated Maturity, at
the end of which Extension Period, Fleet shall pay all interest then accrued and
unpaid (including any Additional Interest, as defined herein) together with
interest thereon compounded quarterly at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, (i) Fleet shall not
declare or pay any dividend on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock (other than (a) purchases or acquisitions of shares of Fleet
Common Stock in connection with the satisfaction by Fleet of its obligations
under any employee benefit plans or any other contractual obligation of Fleet
(other than a contractual obligation ranking pari passu with or junior to the
Junior Subordinated Debentures), (b) as a result of a reclassification of Fleet
capital stock or the exchange or conversion of one class or series of Fleet's
capital stock for another class or series of Fleet capital stock or (c) the
purchase of fractional interests in shares of Fleet's capital stock pursuant to
the conversion or exchange provisions of such Fleet capital stock or the
security being converted or exchanged), (ii) Fleet shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem
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any debt securities issued by Fleet that rank pari passu with or junior to the
Junior Subordinated Debentures and (iii) Fleet shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee).
Prior to the termination of any such Extension Period, Fleet may further defer
payments of interest by extending the interest payment period; provided,
however, that, such Extension Period, including all such previous and further
extensions, may not exceed 20 consecutive quarters or extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, Fleet may commence a
new Extension Period, subject to the terms set forth in this section. No
interest during an Extension Period, except at the end thereof, shall be due and
payable. Fleet has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. If the Institutional Trustee shall be the sole holder
of the Junior Subordinated Debentures, Fleet shall give the Regular Trustees,
the Institutional Trustee and the Debt Trustee notice of its selection of such
Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Preferred Securities are payable or (ii) if the Junior
Subordinated Debentures are then listed, the date the Regular Trustees are
required to give notice to the NYSE (or other applicable self-regulatory
organization) or to holders of the Preferred Securities of the record date or
the date such distribution is payable. The Institutional Trustee shall give
notice of Fleet's selection of such Extension Period to the holders of the
Preferred Securities. If the Institutional Trustee shall not be the sole holder
of the Junior Subordinated Debentures, Fleet shall give the holders of the
Junior Subordinated Debentures notice of its selection of such Extension Period
at least ten Business Days prior to the earlier of (i) the Interest Payment Date
or (ii) if the Junior Subordinated Debentures are then listed, the date upon
which Fleet is required to give notice to the NYSE (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated
Debentures of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If, at any time while the Institutional Trustee is the holder of any Junior
Subordinated Debentures, Fleet Capital or the Institutional Trustee shall be
required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States, or
any other taxing authority, then, in any such case, Fleet will pay as additional
interest ("Additional Interest") on the Junior Subordinated Debentures held by
the Institutional Trustee, such additional amounts as shall be required so that
the net amounts received and retained by Fleet Capital and by the Institutional
Trustee after paying any such taxes, duties, assessments or other governmental
charges will be equal to the amounts Fleet Capital and the Institutional Trustee
would have received had no such taxes, duties, assessments or other governmental
charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "Description of the Junior
Subordinated Debentures--Events of Default, Waiver and Notice" in the
accompanying Prospectus for a description of Indenture Events of Default. An
Indenture Event of Default also constitutes a Declaration Event of Default. The
holders of Preferred Securities in certain circumstances have the right to
direct the Institutional Trustee to exercise its rights as the holder of the
Junior Subordinated Debentures. See "Description of the Preferred Securities--
Declaration Events of Default" and "--Voting Rights." If the Institutional
Trustee fails to enforce its rights under the Junior Subordinated Debentures
after a holder of record of Preferred Securities has made a written request,
such holder of record of Preferred Securities may institute a legal proceeding
directly against Fleet to enforce the Institutional Trustee's rights under the
Junior Subordinated Debentures without first instituting any legal
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proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Fleet to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may institute a Direct
Action for enforcement of payment to such holder of the principal of, or
interest on, the Junior Subordinated Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such holder
on or after the respective due date specified in the Junior Subordinated
Debentures. Notwithstanding any payments made to such holder of Preferred
Securities by Fleet in connection with a Direct Action, Fleet shall remain
obligated to pay the principal of or interest on the Junior Subordinated
Debentures held by Fleet Capital or the Institutional Trustee, and Fleet shall
be subrogated to the rights of the holder of such Preferred Securities with
respect to payments on the Preferred Securities to the extent of any payments
made by Fleet to such holder in any Direct Action. Except as provided in the
preceding sentence and in the Guarantee, the holders of Preferred Securities
will not be able to exercise directly any other remedy available to the holders
of the Junior Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Fleet
Capital, the Junior Subordinated Debentures will be issued in the form of one or
more global certificates (each a "Global Security") registered in the name of
the depositary or its nominee (the "Depositary"). Except under the limited
circumstances described below, Junior Subordinated Debentures represented by the
Global Security will not be exchangeable for, and will not otherwise be issuable
as, Junior Subordinated Debentures in definitive form. The Global Securities
described above may not be transferred except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or to a successor Depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in Fleet Capital, DTC will
act as the Depositary for the Junior Subordinated Debentures. For a description
of DTC and the specific terms of the depositary arrangements, see "Description
of the Preferred Securities--Book-Entry Only Issuance--The Depository Trust
Company." As of the date of this Prospectus Supplement, the description therein
of DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the Preferred Securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by Fleet. Fleet may appoint a successor to DTC or any
successor Depositary in the event DTC or such successor Depositary is unable or
unwilling to continue as a depositary for the Global Securities.
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None of Fleet, Fleet Capital, the Institutional Trustee, any paying agent
and any other agent of Fleet, or the Debt Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies Fleet that it is unwilling or unable to continue
as a depositary for such Global Security and no successor depositary shall have
been appointed, (ii) the Depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the Depositary is required to be
so registered to act as such depositary and no successor depositary shall have
been appointed, (iii) Fleet, in its sole discretion, determines that such Global
Security shall be so exchangeable or (iv) there shall have occurred an Indenture
Event of Default with respect to such Junior Subordinated Debentures. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Junior Subordinated Debentures registered in such names as the
Depositary shall direct. It is expected that such instructions will be based
upon directions received by the Depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Indenture will provide that Fleet will pay all fees and expenses related
to (i) the offering of the Trust Securities and the Junior Subordinated
Debentures, (ii) the organization, maintenance and dissolution of Fleet Capital,
(iii) the retention of the Regular Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the Preferred Securities.
Fleet will have the right at all times to assign any of its respective
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of Fleet; provided that, in the event of any such assignment, Fleet
will remain liable for all of their respective obligations. Subject to the
foregoing, the Indenture will be binding upon and inure to the benefit of the
parties thereto and their respective successors and assigns. The Indenture
provides that it may not otherwise be assigned by the parties thereto.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Fleet Capital is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of Fleet Capital, and to invest the proceeds from such issuance and sale
in the Junior Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) Fleet
shall pay all, and Fleet Capital shall not be obligated to pay, directly or
indirectly, all costs, expenses, debt, and obligations of Fleet Capital (other
than with respect to the Trust Securities); and
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(iv) the Declaration further provides that the Regular Trustees shall not take
or cause or permit Fleet Capital to, among other things, engage in any activity
that is not consistent with the purposes of Fleet Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by Fleet as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If Fleet does not make interest payments on the Junior Subordinated
Debentures purchased by Fleet Capital, Fleet Capital will not have sufficient
funds to pay distributions on the Preferred Securities. The Guarantee does not
apply to any payment of distributions unless and until the Trust has sufficient
funds for the payment of such distributions. The Guarantee covers the payment of
distributions and other payments on the Preferred Securities if and to the
extent that Fleet has made a payment of interest or principal on the Junior
Subordinated Debentures held by Fleet Capital as its sole asset. The Guarantee,
when taken together with Fleet's obligations under the Junior Subordinated
Debentures and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of Fleet
Capital (other than with respect to the Trust Securities), provide a full and
unconditional guarantee of amounts on the Preferred Securities.
If Fleet fails to make interest or other payments on the Junior Subordinated
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities-- Book-Entry
Only Issuance--The Depository Trust Company" and "--Voting Rights," may direct
the Institutional Trustee to enforce its rights under the Junior Subordinated
Debentures. If the Institutional Trustee fails to enforce its rights under the
Junior Subordinated Debentures, a holder of Preferred Securities may institute a
legal proceeding against Fleet to enforce the Institutional Trustee's rights
under the Junior Subordinated Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Fleet to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may institute a Direct
Action for payment on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Direct Action, Fleet will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by Fleet to such holder of
Preferred Securities in such Direct Action. Fleet, under the Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf of
the holders of the Preferred Securities. If Fleet fails to make payments under
the Guarantee, any holder of Preferred Securities may institute a Direct Action
against Fleet to enforce the Guarantee Trustee's rights under the Guarantee
without first instituting a legal proceeding against Fleet Capital, the
Guarantee Trustee, or any other person or entity.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Edwards & Angell, counsel to Fleet and Fleet Capital ("Tax
Counsel"), the following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and disposition of
Preferred Securities held as capital assets by a holder who purchases such
Preferred Securities upon initial issuance. It does not deal with special
classes of holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, or persons that will hold the Preferred
Securities as a position in a "straddle," as part of a "synthetic security" or
"hedge," as part of a "conversion transaction" or other integrated investment,
or as other than a capital asset. This summary also does not address the tax
consequences to persons that have a functional currency other than the U.S.
Dollar or the tax consequences to shareholders, partners or beneficiaries of a
holder of Preferred Securities. Further, it does not
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include any description of any alternative minimum tax consequences or the tax
laws of any state or local government or of any foreign government that may be
applicable to the Preferred Securities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations thereunder
and administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures, Tax
Counsel will render its opinion generally to the effect that under then current
law and assuming full compliance with the terms of the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the Junior Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of Fleet.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Tax Counsel
will render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, Fleet Capital will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures, and each holder will
be required to include in its gross income any interest (or OID accrued) with
respect to its allocable share of those Junior Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury regulations (the "Regulations") promulgated under the OID
provisions of the Code, a "remote" contingency that stated interest will not be
timely paid will be ignored in determining whether a debt instrument is issued
with OID. Fleet believes that the likelihood of its exercising its option to
defer payments of interest is "remote" since exercising that option would
prevent Fleet from declaring dividends on any class of its equity securities.
Accordingly, Fleet intends to take the position, based on the advice of Tax
Counsel, that the Junior Subordinated Debentures will not be considered to be
issued with OID and, accordingly, stated interest on the Junior Subordinated
Debentures generally will be taxable to a holder as ordinary income at the time
it is paid or accrued in accordance with such holder's method of accounting.
Under the Regulations, if Fleet were to exercise its option to defer
payments of interest, the Junior Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Debentures would thereafter be treated as OID as long as the Junior Subordinated
Debentures remain outstanding. In such event, all of a holder's taxable interest
income with respect to the Junior Subordinated Debentures would thereafter be
accounted for on an economic accrual basis regardless of such holder's method of
tax accounting, and actual distributions of stated interest would not be
reported as taxable income. Consequently, a holder of Preferred Securities would
be required to include in gross income OID even though Fleet would not make
actual cash payments during an Extension Period.
The Regulations have not yet been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is possible
that the IRS could take a position contrary to Tax Counsel's interpretation
herein.
Because income on the Preferred Securities will constitute interest or OID,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
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RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF FLEET
CAPITAL
Fleet will have the right at any time to liquidate Fleet Capital and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Under current law, such a distribution, for United States federal
income tax purposes, would be treated as a nontaxable event to each holder, and
each holder would receive an aggregate tax basis in the Junior Subordinated
Debentures equal to such holder's aggregate tax basis in its Preferred
Securities. A holder's holding period in the Junior Subordinated Debentures so
received in liquidation of Fleet Capital would include the period during which
the Preferred Securities were held by such holder. If, however, Fleet Capital is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of its dissolution, the distribution of the
Junior Subordinate Debentures may constitute a taxable event to holders of
Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder could recognize gain or loss as
if it sold such redeemed Preferred Securities for cash. See "Sales of Preferred
Securities" below.
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities (including a redemption of
Preferred Securities) will recognize gain or loss equal to the difference
between its adjusted tax basis in the Preferred Securities and the amount
realized on the sale of such Preferred Securities (other than with respect to
accrued and unpaid interest which has not yet been included in income, which
will be treated as ordinary income). A holder's adjusted tax basis in the
Preferred Securities generally will be its initial purchase price increased by
OID (if any) previously includable in such holder's gross income to the date of
disposition and decreased by payments received on the Preferred Securities in
respect of OID (if any). Such gain or loss generally will be a capital gain or
loss and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year. In the case of individuals,
long-term capital gains are taxed at a lower rate if the holder held the
Preferred Securities for more than 18 months.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) and who
disposes of his Preferred Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest on
the Junior Subordinated Debentures through the date of disposition in income as
ordinary income (i.e., interest or, possibly, OID), and to add such amount to
his adjusted tax basis in his pro rata share of the underlying Junior
Subordinated Debentures deemed disposed of. To the extent the selling price is
less than the holder's adjusted tax basis (which will include all accrued but
unpaid interest) a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a beneficial owner of Preferred Securities who or which
is (i) a citizen or individual resident (or is treated as a citizen or
individual resident) of the United States for federal income tax purposes, (ii)
a corporation or partnership created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includible in its gross income for
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federal income tax purposes without regard to its source or (iv) a trust if, and
only if, (x) a court within the United States is able to exercise primary
supervision over the administration of the trust and (y) one or more United
States trustees have the authority to control all substantial decisions of the
trust.
Under present United States federal income tax law: (i) payments by Fleet
Capital or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10 percent or more of
the total combined voting power of all classes of stock of Fleet entitled to
vote, (b) the beneficial owner of the Preferred Security is not a controlled
foreign corporation that is related to Fleet through stock ownership and (c)
either (A) the beneficial owner of the Preferred Security certifies to Fleet
Capital or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Security in such capacity, certifies to
Fleet Capital or its agent, under penalties of perjury, that such statement has
been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and furnishes Fleet Capital or its agent
with a copy thereof; and (ii) a United States Alien Holder of a Preferred
Security will not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
S-40
<PAGE>
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Preferred Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan, and whether such investment would involve a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
Fleet, the obligor with respect to the Junior Subordinated Debentures held by
the Trust, and its affiliates and the Institutional Trustee may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified person"
(within the meaning of Section 4975 of the Code) with respect to many Plans that
are subject to ERISA. The purchase and/or holding of Preferred Securities by a
Plan that is subject to the fiduciary responsibility provisions of ERISA or the
prohibited transaction provisions of Section 4975 of the Code (including
individual retirement arrangements and other plans described in Section
4975(e)(1) of the Code) and with respect to which Fleet, the Institutional
Trustee or any affiliate is a service provider (or otherwise is a party in
interest or a disqualified person) may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Preferred
Securities are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), PTCE 95-60
(an exemption for transactions involving certain insurance company general
accounts) or PTE 96-23 (an exemption for plan asset transactions managed by
in-house asset managers).
Any purchaser proposing to acquire Preferred Securities with assets of any
Plan should consult with its ERISA counsel.
S-41
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Fleet Capital has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., Fleet
Securities, Inc., PaineWebber Incorporated, Prudential Securities Incorporated
and Tucker Anthony Incorporated are acting as Representatives (the
"Representatives"), has severally agreed to purchase the number of Preferred
Securities set forth opposite its name below. In the Underwriting Agreement, the
several Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the Preferred Securities offered hereby if any of the
Preferred Securities are purchased. In the event of default by an Underwriter,
the Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................... 900,000
A.G. Edwards & Sons, Inc......................................................... 880,000
Fleet Securities, Inc. .......................................................... 880,000
PaineWebber Incorporated......................................................... 880,000
Prudential Securities Incorporated............................................... 880,000
Tucker Anthony Incorporated...................................................... 880,000
BT Alex. Brown Incorporated...................................................... 50,000
Robert W. Baird & Co. Incorporated............................................... 50,000
Bear, Stearns & Co., Inc......................................................... 50,000
CIBC Oppenheimer Corp............................................................ 50,000
Cowen & Company.................................................................. 50,000
Dain Rauscher Wessels............................................................ 50,000
EVEREN Securities, Inc........................................................... 50,000
First Albany Corporation......................................................... 50,000
Legg Mason Wood Walker, Incorporated............................................. 50,000
Piper Jaffray Inc................................................................ 50,000
Raymond James & Associates, Inc.................................................. 50,000
The Robinson-Humphrey Company, LLC............................................... 50,000
Stifel, Nicolaus & Company, Incorporated......................................... 50,000
Wheat First Securities, Inc...................................................... 50,000
----------
Total.................................................................. 6,000,000
----------
----------
</TABLE>
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and, in part, to certain securities
dealers at such price less a concession of $.50 per Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $.30 per Preferred Security to certain brokers and dealers. After the
Preferred Securities are released for sale to the public, the offering price and
other selling terms may be changed.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated
Debentures of Fleet, the Underwriting Agreement provides that Fleet will pay as
compensation ("Underwriters' Compensation") to the Underwriters arranging the
investment therein of such proceeds, an amount in immediately available funds of
$.7875 per Preferred Security (or $4,725,000 in the aggregate) for the accounts
of the several Underwriters.
S-42
<PAGE>
During a period of 7 days from the date of the Prospectus Supplement,
neither Fleet Capital nor Fleet will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
sale of, or otherwise dispose of, any Preferred Securities, any security
convertible into or exchangeable into or exercisable for Preferred Securities or
Junior Subordinated Debentures or any debt securities substantially similar to
the Junior Subordinated Debentures or equity securities substantially similar to
the Preferred Securities (except for the Junior Subordinated Debentures and the
Preferred Securities offered hereby).
The Preferred Securities constitute a new issue of securities of Fleet
Capital with no established trading market. Application will be made to list the
Preferred Securities on the NYSE. Trading of the Preferred Securities on the
NYSE is expected to commence within a 30-day period after the initial delivery
of the Preferred Securities. There can be no assurance that an active market for
the Preferred Securities will develop or be sustained in the future on such
exchange. Although the Representatives have indicated to Fleet and Fleet Capital
that they intend to make a market in the Preferred Securities, as permitted by
applicable laws and regulations prior to the commencement of trading on the
NYSE, they are not obligated to do so and may discontinue any such market-making
at any time without notice. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Preferred Securities.
Fleet Capital and Fleet have agreed to indemnify the Underwriters against,
or contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act
of 1933, as amended.
Until the distribution of the Preferred Securities is completed, rules of
the Commission may limit the ability of the Underwriters and any selling group
members to bid for and purchase the Preferred Securities. As an exception to
these rules, the Representatives are permitted to engage in certain transactions
that stabilize the price of the Preferred Securities. Such transactions consist
of bids or purchases for the purposes of pegging, fixing or maintaining the
price of the Preferred Securities.
If the Underwriters create a short position in the Preferred Securities in
connection with the offering, I.E., if they sell more Preferred Securities than
are set forth on the cover page of this Prospectus Supplement, the
Representatives may reduce the short position by purchasing Preferred Securities
in the open market.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
Preferred Securities in the open market to reduce the Underwriters' short
position or to stabilize the price of the Preferred Securities, they may reclaim
the amount of the selling concession from the Underwriters and selling group
members who sold those Preferred Securities as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
None of Fleet, Fleet Capital nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Preferred
Securities. In addition, none of Fleet, Fleet Capital nor any of the
Underwriters makes any representation that the Representatives will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Fleet and its subsidiaries in the ordinary
course of business.
S-43
<PAGE>
LEGAL MATTERS
THIS SECTION REPLACES THE SECTION ENTITLED "LEGAL MATTERS" IN THE
ACCOMPANYING PROSPECTUS.
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Trust by Skadden, Arps, Slate,
Meagher & Flom LLP, special Delaware counsel to the Trust. The validity of the
Junior Subordinated Debentures and the Preferred Securities Guarantee and
certain matters relating thereto and certain United States federal income
taxation matters will be passed upon for Fleet and the Trust by Edwards &
Angell, One Hospital Trust Plaza, Providence, Rhode Island 02903. V. Duncan
Johnson, a partner of Edwards & Angell, LLP, is a director of Fleet National
Bank and beneficially owns 4,052 shares of Fleet Common Stock. Certain legal
matters will be passed upon for the Underwriters by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.
EXPERTS
THIS SECTION REPLACES THE SECTION ENTITLED "EXPERTS" IN THE ACCOMPANYING
PROSPECTUS.
The consolidated financial statements of Fleet contained in Fleet's Current
Report on Form 8-K dated March 6, 1998, incorporated by reference herein (and
elsewhere in the Registration Statement) have been incorporated by reference
herein (and elsewhere in the Registration Statement) in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
S-44
<PAGE>
PROSPECTUS
FLEET FINANCIAL GROUP, INC.
JUNIOR SUBORDINATED DEBENTURES
FLEET CAPITAL TRUST IV
FLEET CAPITAL TRUST V
FLEET CAPITAL TRUST VI
FLEET CAPITAL TRUST VII
FLEET CAPITAL TRUST VIII
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
FLEET FINANCIAL GROUP, INC.
Fleet Financial Group, Inc. ("Fleet" or the "Company"), a Rhode Island
corporation, may from time to time offer its subordinated debentures, notes or
other evidence of indebtedness (the "Junior Subordinated Debentures") in one or
more series and in amounts, at prices and on terms to be determined at the time
of the offering. The Junior Subordinated Debentures when issued will be
unsecured obligations of the Company. The Company's obligations under the Junior
Subordinated Debentures will be subordinate and junior in right of payment to
certain other indebtedness of Fleet, as may be described in an accompanying
Prospectus Supplement (the "Prospectus Supplement").
Fleet Capital Trust IV, Fleet Capital Trust V, Fleet Capital Trust VI, Fleet
Capital Trust VII and Fleet Capital Trust VIII (each, a "Fleet Capital Trust"),
each a statutory business trust formed under the laws of the State of Delaware,
may offer, from time to time, preferred securities representing undivided
beneficial interests in the assets of the respective Fleet Capital Trust
("Preferred Securities"). The payment of periodic cash distributions
("distributions") with respect to Preferred Securities of each of the Fleet
Capital Trusts out of moneys held by each of the Fleet Capital Trusts, and
payment on liquidation, redemption or otherwise with respect to such Preferred
Securities, will be guaranteed by Fleet to the extent described herein (each a
"Preferred Securities Guarantee"). See "Description of the Preferred Securities
Guarantees" below. Fleet's obligations under the Preferred Securities Guarantees
will be subordinate and junior in right of payment to all other liabilities of
Fleet and will rank pari passu with the most senior preferred stock, if any,
issued from time to time by Fleet. Junior Subordinated Debentures may be issued
and sold from time to time in one or more series to a Fleet Capital Trust, or a
trustee of such Fleet Capital Trust, in connection with the investment of the
proceeds from the offering of Preferred Securities and Common Securities (as
defined herein, together the "Trust Securities") of such Fleet Capital Trust.
The Junior Subordinated Debentures purchased by a Fleet Capital Trust may be
subsequently distributed pro rata to holders of Preferred Securities and Common
Securities in connection with the dissolution of such Fleet Capital Trust upon
the occurrence of certain events as may be described in an accompanying
Prospectus Supplement. The Junior Subordinated Debentures and the Preferred
Securities and the related Preferred Securities Guarantees are sometimes
collectively referred to hereafter as the "Offered Securities."
Specific terms of the Junior Subordinated Debentures of any series or the
Preferred Securities of any Fleet Capital Trust, the terms of which will mirror
the terms of the Junior Subordinated Debentures held by the Fleet Capital Trust,
in respect of which this prospectus (the "Prospectus") is being delivered, will
be set forth in a Prospectus Supplement with respect to such securities, which
will describe, without limitation and where applicable, the following: (i) in
the case of Junior Subordinated Debentures, the specific designation, aggregate
principal amount, denomination, currency or currency unit for which Junior
Subordinated Debentures may be purchased, currency or currency unit in which the
principal and any interest on Junior Subordinated Debentures is payable,
maturity, the right of Fleet, if any, to extend or shorten the maturity after
issuance, premium, if any, any exchange, conversion or redemption provisions, if
any, interest rate (which may be fixed or variable), if any, the time and method
of calculating interest payments, if any, dates on which premium, if any, and
interest, if any, will be payable, the right of Fleet, if any, to defer payment
of interest on the Junior Subordinated Debentures and the maximum length of such
deferral period, the initial public offering price, subordination terms, and any
listing on a securities exchange and other specific terms of the offering; and
(ii) in the case of Preferred Securities, the designation, number of securities,
liquidation preference per security, initial public offering price, any listing
on a securities exchange, distribution rate (or method of calculation thereof),
dates on which distributions shall be payable and dates from which distributions
shall accrue, any voting rights, terms for any conversion or exchange into other
securities, any redemption, exchange or sinking fund provisions, any other
rights, preferences, privileges, limitations or restrictions relating to the
Preferred Securities and the terms upon which the proceeds of the sale of the
Preferred Securities shall be used to purchase a specific series of Junior
Subordinated Debentures of Fleet.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering. The Prospectus Supplement relating to any
series of Offered Securities will contain information concerning the United
States federal income tax considerations applicable to purchasers of the Offered
Securities.
Fleet and/or each of the Fleet Capital Trusts may sell the Offered
Securities directly, through agents designated from time to time, or through
underwriters or dealers. See "Plan of Distribution" below. If any agents of
Fleet and/or any Fleet Capital Trust or any underwriters or dealers are involved
in the sale of the Offered Securities, the names of such agents, underwriters or
dealers and any applicable commissions and discounts will be set forth in any
related Prospectus Supplement.
This Prospectus and related Prospectus Supplements may be used by direct or
indirect subsidiaries of Fleet in connection with offers and sales related to
secondary market transactions in the Offered Securities. Such subsidiaries may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF FLEET (OTHER THAN THE
FLEET CAPITAL TRUSTS) AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
The date of this Prospectus is April 2, 1998
<PAGE>
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by Fleet and the Fleet Capital Trusts with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Offered Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, although it does include a summary
of the material terms of the Indenture and the Declarations of Trust (each as
defined herein). Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to the Company,
the Fleet Capital Trusts and the Offered Securities. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission or incorporated by
reference herein are not necessarily complete, and, in each instance, reference
is made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith files reports, proxy statements and other information with the
Commission. Proxy statements, reports and other information concerning Fleet can
be inspected and copied at the Commission's office at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices in New York (Suite 1300, Seven World Trade Center, New York,
New York 10048) and Chicago (Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661), and copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates or by accessing the
Commission's World Wide Web site at http://www.sec.gov. The common stock, $.01
par value, of Fleet (the "Common Stock") is listed on the New York Stock
Exchange ("NYSE"). Reports, proxy material and other information concerning
Fleet also may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. This Prospectus and the accompanying Prospectus Supplement
do not contain all the information set forth in the Registration Statement and
Exhibits thereto which Fleet has filed with the Commission under the Securities
Act, which may be obtained from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the prescribed fees, and to which reference is hereby made.
No separate financial statements of any of the Fleet Capital Trusts have
been included herein. Fleet does not consider that such financial statements
would be material to holders of the Preferred Securities because (i) all of the
voting securities of each of the Fleet Capital Trusts will be owned, directly or
indirectly, by Fleet, a reporting company under the Exchange Act, (ii) each of
the Fleet Capital Trusts has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in the
assets of such Fleet Capital Trust and investing the proceeds thereof in Junior
Subordinated Debentures issued by Fleet, and (iii) Fleet's obligations described
herein and in any accompanying Prospectus Supplement to provide certain
indemnities in respect of, and be responsible for, certain costs, expenses,
debts and liabilities of each of the Fleet Capital Trusts under the Indenture
and any supplemental indenture thereto and pursuant to the Declarations of each
Trust, the Preferred Securities Guarantee issued with respect to Preferred
Securities issued by that Trust, the Junior Subordinated Debentures purchased by
that Trust and the related Indenture, taken together, constitute a full and
unconditional guarantee of payments due on the Preferred Securities. See
"Description of the Junior Subordinated Debentures" and "Description of the
Preferred Securities Guarantees."
The Fleet Capital Trusts are not currently subject to the information
reporting requirements of the Exchange Act. The Fleet Capital Trusts will become
subject to such requirements upon the effectiveness of the Registration
Statement, although they intend to seek and expect to receive exemptions
therefrom.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fleet are incorporated
by reference in this Prospectus:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
(b) Current Reports on Form 8-K dated January 15, 1998, January 15, 1998,
January 26, 1998, February 2, 1998, March 4, 1998 and March 6, 1998.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Offered Securities shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein or in any Prospectus Supplement shall be deemed to be modified
or superseded for purposes of this Prospectus or any Prospectus Supplement to
the extent that a statement contained herein or therein (or in any subsequently
filed document that also is or is deemed to be incorporated by reference herein
or therein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
FLEET WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS
PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON,
A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY
BE INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO SUCH DOCUMENTS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS). WRITTEN REQUESTS SHOULD BE MAILED TO INVESTOR RELATIONS DEPARTMENT,
FLEET FINANCIAL GROUP, INC., ONE FEDERAL STREET, BOSTON, MASSACHUSETTS 02110.
TELEPHONE REQUESTS MAY BE DIRECTED TO (617) 346-4000.
3
<PAGE>
FLEET FINANCIAL GROUP, INC.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At December 31, 1997, Fleet was among the twelve
largest bank holding companies in the United States, with total assets of $85.5
billion, total deposits of $63.7 billion and stockholders' equity of $8.0
billion.
Fleet is engaged in a general consumer and commercial banking and investment
management business throughout the states of Connecticut, Massachusetts, New
Jersey, New York, Rhode Island, Maine, New Hampshire and Florida through its
banking subsidiaries, and also provides, through its other subsidiaries, a
variety of financial services, including mortgage banking, asset-based lending,
consumer finance, real estate financing, securities brokerage services, capital
markets services and investment banking, investment advice and management, data
processing and student loan servicing.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 346-4000.
HOLDING COMPANY
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including the holders
of the securities offered hereby, to benefit from the distribution of assets of
any subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to prior claims of creditors of the subsidiary (including depositors
in the case of banking subsidiaries) except to the extent that a claim of Fleet
as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions with safe and
sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at December 31, 1997, Fleet's banking subsidiaries could have
declared additional dividends of approximately $361 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
Under the policy of the Board of Governors of the Federal Reserve Systems
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary would be assumed by the bankruptcy trustee and
entitled to a priority of payment.
4
<PAGE>
THE TRUSTS
Each of the Trusts is a statutory business trust formed under Delaware law
pursuant to (i) a separate declaration of trust (each a "Declaration") executed
by Fleet, as sponsor for such trust (the "Sponsor") and the Fleet Capital
Trustees (as defined herein) for such trust and (ii) the filing of a certificate
of trust with the Delaware Secretary of State. Each Fleet Capital Trust exists
for the exclusive purposes of (i) issuing the Preferred Securities and common
securities representing undivided beneficial interests in the assets of such
Trust (the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities"), (ii) investing the gross proceeds of the Trust Securities
in Junior Subordinated Debentures, and (iii) engaging in only those other
activities necessary or incidental thereto. All of the Common Securities will be
directly or indirectly owned by Fleet. The Common Securities of each Trust will
rank pari passu, and payments will be made thereon pro rata, with the Preferred
Securities of such Trust except that upon an event of default under the
Declaration with respect thereto, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Fleet will, directly or indirectly, acquire Common
Securities of each Trust in an aggregate liquidation amount equal to at least 3
percent of the total capital of each Fleet Capital Trust.
Each Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to such Declaration or otherwise or (ii) the dissolution, winding-up
or termination of the related Fleet Capital Trust other than pursuant to the
terms of such Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby; provided, that, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Securities.
Each Fleet Capital Trust has a term of approximately 55 years, but may
terminate earlier as provided in the applicable Declaration. Each Fleet Capital
Trust's business and affairs will be conducted by the trustees (the "Fleet
Capital Trustees") appointed by Fleet, as the direct or indirect holder of all
the Common Securities. The holder of the Common Securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
Fleet Capital Trustees of a Fleet Capital Trust. The duties and obligations of
the Fleet Capital Trustees shall be governed by the Declaration of such Fleet
Capital Trust. One or more of the Fleet Capital Trustees for each Trust will be
persons who are employees or officers of or affiliated with Fleet (the "Regular
Trustees"). One Fleet Capital Trustee of each Fleet Capital Trust will be a
financial institution which will be unaffiliated with Fleet and which shall act
as institutional trustee under the Declaration and as indenture trustee for
purposes of the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), pursuant to the terms set forth in a Prospectus Supplement (the
"Institutional Trustee"). In addition, unless the Institutional Trustee
maintains a principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law, one Fleet Capital Trustee of each
Fleet Capital Trust will have its principal place of business or reside in the
State of Delaware (the "Delaware Trustee"). Fleet will pay all fees and expenses
related to the Fleet Capital Trusts and the offering of Trust Securities. The
office of the Delaware Trustee for each Fleet Capital Trust in the State of
Delaware, and its principal place of business is, First Chicago Delaware Inc.,
300 King Street, Wilmington, Delaware 19801. The principal place of business of
each Fleet Capital Trust shall be c/o Fleet Financial Group, Inc., One Federal
Street, Boston, Massachusetts 02110, telephone number (617) 346-4000.
5
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Fleet's consolidated ratios of earnings to fixed charges were as follows for
the years indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits............................................ 4.53x 3.62x 1.78x 2.33x 2.36x
Including Interest on Deposits............................................ 1.96 1.78 1.34 1.62 1.56
</TABLE>
- ------------------------
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
REASON FOR TRANSACTION
On October 21, 1996, the Federal Reserve Board issued a press release (the
"Federal Reserve Press Release") announcing that it had approved the use of
certain cumulative preferred stock instruments, such as the Preferred
Securities, as "Tier 1 capital" for purposes of the Federal Reserve Board's
capital guidelines for bank holding companies. Because Fleet intends to treat
the Preferred Securities as Tier 1 capital and, under current United States
federal tax law, will receive a tax deduction for interest in respect of the
Junior Subordinated Debentures, the issuance of the Preferred Securities is a
cost effective method of raising capital on an after-tax basis.
USE OF PROCEEDS
Each Trust will use the proceeds of the sale of the Trust Securities to
acquire Junior Subordinated Debentures from Fleet. Unless otherwise indicated in
the applicable Prospectus Supplement, Fleet intends to use the net proceeds from
the sale of the Junior Subordinated Debentures for general corporate purpose,
principally to extend credit to, or fund investments in, its subsidiaries. The
precise amounts and timing of extensions of credit to, and investments in, such
subsidiaries will depend upon the subsidiaries' funding requirements and the
availability of other funds. Pending such applications, the net proceeds may be
temporarily invested in marketable securities or applied to the reduction of
Fleet's short-term indebtedness. Based upon the historic and anticipated future
growth of Fleet and the financial needs of its subsidiaries, Fleet may engage in
additional financings of a character and amount to be determined as the need
arises.
6
<PAGE>
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Junior Subordinated Debentures may be issued from time to time in one or
more series under an Indenture (the "Base Indenture"), between the Company and
The First National Bank of Chicago, as Trustee (the "Debt Trustee"), as
supplemented by a Supplemental Indenture or a resolution of the Company's Board
of Directors or a special committee appointed thereby (the "Supplemental
Indenture"; the Base Indenture, as so supplemented, is hereinafter referred to
as the "Indenture"). The terms of the Junior Subordinated Debentures will
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. While the following summary of the
material terms does not purport to be complete and is subject in all respects to
the provisions of, and is qualified in its entirety by reference to, the
Indenture, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Trust Indenture Act, all material terms of
the Junior Subordinated Debentures are set forth herein and in any Prospectus
Supplement relating to the particular Junior Subordinated Debentures being
offered thereby. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and Article references used herein are
references to provisions of the Indenture unless otherwise noted.
GENERAL
The Junior Subordinated Debentures will be unsecured, fully subordinated
obligations of the Company. The Indenture does not limit the aggregate principal
amount of Junior Subordinated Debentures which may be issued thereunder and
provides that the Junior Subordinated Debentures may be issued from time to time
in one or more series. (Section 2.03)
In the event Junior Subordinated Debentures are issued to a Fleet Capital
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such Fleet Capital Trust, such Junior Subordinated Debentures
subsequently may be distributed pro rata to the holders of such Trust Securities
in connection with the dissolution of such Fleet Capital Trust upon the
occurrence of certain events described in the Prospectus Supplement relating to
such Trust Securities. Only one series of Junior Subordinated Debentures will be
issued to a Fleet Capital Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Fleet Capital Trust.
Reference is made to the Prospectus Supplement relating to the particular
Junior Subordinated Debentures being offered thereby for the following terms:
(1) the designation of such Junior Subordinated Debentures; (2) the aggregate
principal amount of such Junior Subordinated Debentures; (3) the percentage of
their principal amount at which such Junior Subordinated Debentures will be
issued; (4) the date or dates on which such Junior Subordinated Debentures will
mature and the right, if any, to shorten or extend such date or dates; (5) the
rate or rates, if any, per annum, at which such Junior Subordinated Debentures
will bear interest, or the method of determination of such rate or rates; (6)
the date or dates from which such interest shall accrue, the interest payment
dates on which such interest will be payable or the manner of determination of
such interest payment dates and the record dates for the determination of
holders to whom interest is payable on any such interest payment dates; (7) the
right, if any, to extend the interest payment periods and the duration of such
extension; (8) provisions, if any, for a sinking purchase or other analogous
fund; (9) the period or periods, if any, within which, the price or prices of
which, and the terms and conditions upon which such Junior Subordinated
Debentures may be redeemed, in whole or in part, at the option of Fleet or the
holder; (10) the form of such Junior Subordinated Debentures; and (11) any other
specific terms of the Junior Subordinated Debentures. Principal, premium, if
any, and interest, if any, will be payable, and the Junior Subordinated
Debentures offered hereby will be transferable, at the corporate trust office of
the Debt Trustee in New York, New York, provided that payment of interest, if
any, may be made at the option of Fleet by check mailed to the address of the
person entitled thereto as it appears in the Security Register or by wire
transfer to an account appropriately designated by the person entitled thereto.
(Sections 3.01 and 3.02).
7
<PAGE>
ADDITIONAL INTEREST
If, at any time while the Institutional Trustee is the holder of any Junior
Subordinated Debentures issued by a Trust, such Trust or the Institutional
Trustee shall be required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any such case, Fleet will pay as
additional interest ("Additional Interest") on the Junior Subordinated
Debentures held by the Institutional Trustee, such additional amounts as shall
be required so that the net amounts received and retained by such Trust and by
the Institutional Trustee after paying any such taxes, duties, assessments or
other governmental charges will be equal to the amounts such Trust and the
Institutional Trustee would have received had no such taxes, duties, assessments
or other governmental charges been imposed.
If a Prospectus Supplement specifies that a series of Junior Subordinated
Debentures is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Junior Subordinated Debentures will be issued and the coin or
currency in which the principal, premium, if any, and interest, if any, on such
Junior Subordinated Debentures will be payable, which may be United States
dollars based upon the exchange rate for such other currency or currency unit
existing on or about the time a payment is due.
The covenants contained in the Indenture would not necessarily afford
protection to holders of the Junior Subordinated Debentures in the event of a
decline in credit quality resulting from takeovers, recapitalizations or similar
restructurings.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issued in fully registered form without
coupons and in denominations of $1,000 and multiples of $1,000. No service
charge will be made for any transfer or exchange of the Junior Subordinated
Debentures, but the Company or the Debt Trustee may require payment of a sum
sufficient to cover any tax or other government charge payable in connection
therewith. (Section 2.07)
Unless otherwise provided in the applicable Prospectus Supplement, principal
and premium, if any, or interest, if any, will be payable and the Junior
Subordinated Debentures may be surrendered for payment or transferred at the
offices of the Debt Trustee as paying and authenticating agent, provided that
payment of interest on registered securities that are not issued to a Fleet
Capital Trust may be made at the option of Fleet by check mailed to the address
of the person entitled thereto as it appears in the Security Register or by wire
transfer to an account appropriately designated by the person entitled thereto.
(Section 3.01)
BOOK-ENTRY JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Securities that will be deposited with,
or on behalf of, a depositary (the "Global Depositary"), or its nominee,
identified in the Prospectus Supplement relating to such series. In such a case,
one or more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
outstanding Junior Subordinated Debentures of the series to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole or
in part for Junior Subordinated Debentures in definitive registered form, a
Global Security may not be registered for transfer or exchange except as a whole
by the Global Depositary for such Global Security to a nominee for such Global
Depositary and except in the circumstances described in the applicable
Prospectus Supplement. (Section 2.11)
The specific terms of the depositary arrangement with respect to any portion
of a series of Junior Subordinated Debentures to be represented by a Global
Security and a description of the Global Depositary will be provided in the
applicable Prospectus Supplement.
8
<PAGE>
SUBORDINATION
The Junior Subordinated Debentures will be subordinated and junior in right
of payment to certain other indebtedness of Fleet to the extent set forth in the
applicable Prospectus Supplement.
CERTAIN COVENANTS OF FLEET
If Junior Subordinated Debentures are issued to a Fleet Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Fleet Capital Trust and (i) there shall have occurred any event that would
constitute an Indenture Event of Default (as defined herein) or (ii) Fleet shall
be in default with respect to its payment of any obligations under the related
Preferred Securities Guarantee or Common Securities Guarantee, or (iii) Fleet
shall have given notice of its election to defer payments of interest on such
Junior Subordinated Debentures by extending the interest payment period as
provided in the Supplemental Indenture and such period, or any extension
thereof, shall be continuing, then (a) Fleet shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (x) purchases or acquisitions of shares of common stock, par value
$0.01 per share, of Fleet (the "Fleet Common Stock") in connection with the
satisfaction by Fleet of its obligations under any employee benefit plans or any
other contractual obligation of Fleet (other than a contractual obligation
ranking pari passu with or junior to the Junior Subordinated Debentures), (y) as
a result of a reclassification of Fleet capital stock or the exchange or
conversion of one class or series of Fleet capital stock for another class or
series of Fleet capital stock or (z) the purchase of fractional interests in
shares of Fleet capital stock pursuant to the conversion or exchange provisions
of such Fleet capital stock or the security being converted or exchanged), (b)
Fleet shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by Fleet which rank
pari passu with or junior to such Junior Subordinated Debentures and (c) Fleet
shall not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee).
In the event Junior Subordinated Debentures are issued to a Fleet Capital
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such Fleet Capital Trust, for so long as such Trust Securities
remain outstanding, Fleet will covenant (i) to directly or indirectly maintain
100 percent ownership of the Common Securities of such Fleet Capital Trust;
provided, however, that any permitted successor of Fleet under the Indenture may
succeed to Fleet's ownership of such Common Securities, (ii) to use its
reasonable efforts to cause such Fleet Capital Trust (a) to remain a statutory
business trust, except in connection with the distribution of Junior
Subordinated Debentures to the holders of Trust Securities in liquidation of
such Fleet Capital Trust, the redemption of all of the Trust Securities of such
Fleet Capital Trust, or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Fleet Capital Trust, and (b) to
otherwise continue not to be treated as an association taxable as a corporation
or a partnership for United States federal income tax purposes and (iii) to use
its reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures.
(Section 3.08)
LIMITATION ON MERGERS AND SALES OF ASSETS
Fleet shall not consolidate with, or merge into, any corporation or convey
or transfer its properties and assets substantially as an entirety to any Person
unless (a) the successor entity shall be a corporation organized under the laws
of any domestic jurisdiction and shall expressly assume the obligations of Fleet
under the Indenture and (b) after giving effect thereto, no Default shall have
occurred and be continuing under the Indenture. (Section 10.01)
9
<PAGE>
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an "Indenture Event of
Default" with respect to each series of Junior Subordinated Debentures:
(a) default for 30 days in payment of any interest on the Junior
Subordinated Debentures of that series, including any Additional
Interest in respect thereof, when due; provided, however, that a
valid extension of the interest payment period by the Company
shall not constitute a default in the payment of interest for this
purpose; or
(b) default in payment of principal of, or premium, if any, on,
the Junior Subordinated Debentures of that series when due either
at maturity, upon redemption, by declaration or otherwise;
provided, however, that a valid extension of the maturity of such
Junior Subordinated Debentures shall not constitute a default for
this purpose; or
(c) default by the Company in the performance of any other of the
covenants or agreements in the Indenture which shall not have been
remedied for a period of 90 days after notice; or
(d) certain events of bankruptcy, insolvency or reorganization of
Fleet; or
(e) in the event Junior Subordinated Debentures are issued to a
Fleet Capital Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Fleet Capital Trust, the
voluntary or involuntary dissolution, winding-up or termination of
such Fleet Capital Trust, except in connection with the
distribution of Junior Subordinated Debentures to the holders of
Trust Securities in liquidation of such Fleet Capital Trust, the
redemption of all of the Trust Securities of such Fleet Capital
Trust, or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Fleet Capital Trust.
The Indenture provides that, if an Indenture Event of Default on any series
of Junior Subordinated Debentures shall have occurred and be continuing, either
the Debt Trustee or the holders of not less than 25 percent in aggregate
principal amount of the Junior Subordinated Debentures of such series then
outstanding may declare the principal of all such Junior Subordinated Debentures
of such series to be due and payable immediately. The holders of a majority in
aggregate outstanding principal amount of such series of Junior Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of such series of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by accleration has been deposited with the Debt
Trustee. (Section 5.01).
The holders of a majority in principal amount of the Junior Subordinated
Debentures of any or all series affected and then outstanding shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Debt Trustee under the Indenture, provided that the
holders of the Junior Subordinated Debentures shall have offered to the Debt
Trustee reasonable indemnity against expenses and liabilities. Notwithstanding
the foregoing, subject to the subordination provisions set forth in a Prospectus
Supplement, the right of any holder of Junior Subordinated Debentures to receive
payment of the principal of and interest on such Junior Subordinated Debentures
on or after the due dates therefor, as the same may be extended in accordance
with the terms of such Junior Subordinated Debentures, or to institute suit for
the enforcement of any such payment provisions, shall not be impaired or
affected without the consent of such holder. (Sections 5.04 and 5.07)
The Indenture requires the annual filing by Fleet with the Debt Trustee of a
certificate as to the absence of certain defaults under the Indenture. (Section
3.05)
10
<PAGE>
The Indenture provides that the Debt Trustee may withhold notice of an
Indenture Event of Default from the holders of a series of Junior Subordinated
Debentures (except an Indenture Event of Default in payment of principal of, or
of interest or premium on, the Junior Subordinated Debentures) if the Trustee
considers it in the interest of such holders to do so. (Section 5.08)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures of all series affected by
such modification at the time outstanding, and, in the case of Junior
Subordinated Debentures issued to a Trust, the holders of a majority in
aggregate liquidation amount of the related Preferred Securities, to modify the
Indenture or any supplemental indenture or the rights of the holders of the
Junior Subordinated Debentures; provided that no such modification shall,
without the consent of the holders of each Junior Subordinated Debenture (and
each Preferred Security, if applicable) affected thereby, (i) extend the fixed
maturity of any Junior Subordinated Debenture, or reduce the principal amount
thereof (including in the case of a discounted Junior Subordinated Debenture the
amount payable thereon in the event of acceleration or the amount provable in
bankruptcy) or any premium thereon, or reduce any amount payable on redemption
thereof, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or interest or premium on, the Junior Subordinated
Debentures payable in any coin or currency other than that provided in the
Junior Subordinated Debentures, or impair or affect the right of any holder of
Junior Subordinated Debentures to institute suit for the payment thereof or the
right of prepayment, if any, at the option of the holder, (ii) reduce the
aforesaid percentage of Junior Subordinated Debentures the consent of the
holders of which is required for any such modification or (iii) otherwise
materially adversely affect the interest of the holders of any series of Junior
Subordinated Debentures. (Section 9.02)
DEFEASANCE AND DISCHARGE
The Indenture provides that Fleet, at Fleet's option: (a) will be discharged
from any and all obligations in respect of the Junior Subordinated Debentures of
a series (except for certain obligations to register the transfer or exchange of
Junior Subordinated Debentures, replace stolen, lost or mutilated Junior
Subordinated Debentures, maintain paying agencies and hold moneys for payment in
trust) or (b) need not comply with certain restrictive covenants of the
Indenture (including those described herein under "Certain Covenants of Fleet"),
in each case if Fleet deposits, in trust with the Debt Trustee or the Defeasance
Agent, money or U.S. Government Obligations which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money, in an amount sufficient to pay all the principal (including any
mandatory sinking fund payments) of, and interest and premium, if any, on, the
Junior Subordinated Debentures of such series on the dates such payments are due
in accordance with the terms of such Junior Subordinated Debentures. To exercise
any such option, Fleet is required to deliver to the Debt Trustee and the
Defeasance Agent, if any, an opinion of counsel to the effect that (i) the
deposit and related defeasance would not cause the holders of the Junior
Subordinated Debentures of such series to recognize income, gain or loss for
U.S. federal income tax purposes and, in the case of a Discharge pursuant to
clause (a), such opinion shall be accompanied by a private letter ruling to that
effect received by Fleet from the United States Internal Revenue Service or a
revenue ruling pertaining to a comparable form of transaction to that effect
published by the United States Internal Revenue Service, and (ii) if listed on
any national securities exchange, such Junior Subordinated Debentures would not
be delisted from such exchange as a result of the exercise of such option.
(Section 11.05)
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
(Section 13.05)
11
<PAGE>
THE DEBT TRUSTEE
Fleet or its affiliates maintain certain accounts and other banking
relationships with the Debt Trustee and its affiliates in the ordinary course of
business.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Fleet Capital Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Fleet Capital Trust authorizes the
Regular Trustees of such Fleet Capital Trust to issue on behalf of such Fleet
Capital Trust one series of Preferred Securities. Each Declaration will be
qualified as an indenture under the Trust Indenture Act. The First National Bank
of Chicago will act as Indenture Trustee for purposes of the Trust Indenture
Act. The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act and which
will mirror the terms of the Junior Subordinated Debentures held by the Fleet
Capital Trust and described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of the Fleet Capital Trust for specific terms, including (i) the
distinctive designation of such Preferred Securities; (ii) the number of
Preferred Securities issuable by such Fleet Capital Trust; (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
issued by such Fleet Capital Trust and the date or dates upon which such
distributions shall be payable; (iv) whether distributions on Preferred
Securities issued by such Fleet Capital Trust shall be cumulative, and, in the
case of Preferred Securities having such cumulative distribution rights, the
date or dates or method of determining the date or dates from which
distributions on Preferred Securities issued by such Fleet Capital Trust shall
be cumulative; (v) the amount or amounts which shall be paid out of the assets
of such Fleet Capital Trust to the holders of Preferred Securities of such Fleet
Capital Trust upon voluntary or involuntary dissolution, winding-up or
termination of such Fleet Capital Trust; (vi) the obligation, if any, of such
Fleet Capital Trust to purchase or redeem Preferred Securities issued by such
Fleet Capital Trust and the price or prices at which, the period or periods
within which, and the terms and conditions upon which, Preferred Securities
issued by such Fleet Capital Trust shall be purchased or redeemed, in whole or
in part, pursuant to such obligation; (vii) the voting rights, if any, of
holders of Preferred Securities issued by such Fleet Capital Trust in addition
to those required by law, including the number of votes per Preferred Security
and any requirement for the approval by the holders of Preferred Securities, or
of Preferred Securities issued by one or more Fleet Capital Trusts, or of both,
as a condition to specified action or amendments to the Declaration of such
Fleet Capital Trust; (viii) the terms and conditions, if any, upon which the
Junior Subordinated Debentures owned by such Fleet Capital Trust may be
distributed to holders of Preferred Securities of such Trust; (ix) if
applicable, any securities exchange upon which the Preferred Securities shall be
listed; and (x) any other relevant rights, preferences, privileges, limitations
or restrictions of Preferred Securities issued by such Fleet Capital Trust not
inconsistent with the Declaration of such Fleet Capital Trust or with applicable
law. All Preferred Securities offered hereby will be guaranteed by Fleet to the
extent set forth below under "Description of the Preferred Securities
Guarantees." Certain United States federal income tax considerations applicable
to any offering of Preferred Securities will be described in the Prospectus
Supplement relating thereto.
Except as described herein, under the Business Trust Act, the Trust
Indenture Act, under "Description of the Preferred Securities
Guarantees--Modification of the Preferred Securities Guarantees; Assignment"
herein, and under any Prospectus Supplement relating to the issuance of a series
of Preferred Securities, and as otherwise required by law and the Declarations,
the holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declarations, including the right to direct the
12
<PAGE>
Institutional Trustee, as holder of the Junior Subordinated Debentures, to (i)
exercise the remedies available to it under the Indentures as a holder of the
related Junior Subordinated Debentures, (ii) waive any past Indenture Event of
Default that is waivable under the Indentures, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indentures or the Junior Subordinated
Debentures where such consent shall be required; provided, however, that, where
a consent or action under the Indentures would require the consent or act of
holders of more than a majority in principal amount of the Junior Subordinated
Debentures (a "Super-Majority") affected thereby, only the holders of at least
such Super-Majority in aggregate liquidation amount of the Preferred Securities
may direct the Institutional Trustee to give such consent or take such action;
and provided, further, that where a consent or action under the Indenture is
only effective against each holder of Junior Subordinated Debentures who has
consented thereto, such consent or action will only be effective against a
holder of Preferred Securities who directs the Institutional Trustee to give
such consent or take such action. If the Institutional Trustee fails to enforce
its rights under the Junior Subordinated Debentures after a holder of record of
Preferred Securities has made a written request, such holder of record of
Preferred Securities may institute a legal proceeding directly against Fleet to
enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an event of default under the related Declaration has occurred and
is continuing and such event is attributable to the failure of Fleet to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may institute a legal
proceeding directly against Fleet for enforcement of payment to such holder of
the principal of, or interest on, the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. The Institutional Trustee shall notify all
holders of the Preferred Securities of any notice of default received from the
Debt Trustee with respect to the Junior Subordinated Debentures. Such notice
shall state that such Indenture Event of Default also constitutes an event of
default under the related Declaration. Except with respect to directing the
time, method and place of conducting a proceeding for a remedy, the
Institutional Trustee shall not take any of the actions described in clauses
(i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of a nationally recognized tax counsel experienced in such matters to
the effect that, as a result of such action, the related Fleet Capital Trust
will not fail to be classified as a grantor trust for United States federal
income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indentures with respect to
any amendment, modification or termination of such Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under such Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Junior Subordinated
Debentures outstanding; and provided, further, that where a consent or action
under the Indenture is only effective against each holder of Junior Subordinated
Debentures who has consented thereto, such consent or action will only be
effective against a holder of Preferred Securities who directs the Institutional
Trustee to give such consent or take such action. The Institutional Trustee
shall not take any such action in accordance with the directions of the holders
of the Trust Securities unless the Institutional Trustee has obtained an opinion
of a nationally recognized tax counsel experienced in such matters to the effect
that for the purposes of United States federal income tax the related Fleet
Capital Trust will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding event of default under the Declaration.
13
<PAGE>
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Fleet Capital
Trusts to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the Declarations.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Fleet or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Fleet, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
Holders of the Preferred Securities will have no rights to appoint or remove
the Regular Trustees, who may be appointed, removed or replaced solely by Fleet
as the holder of all of the Common Securities.
In connection with the issuance of Preferred Securities, each Fleet Capital
Trust will issue one series of Common Securities. The Declaration of each Fleet
Capital Trust authorizes the Regular Trustees of such trust to issue on behalf
of such Fleet Capital Trust one series of Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. Except for voting rights, the terms
of the Common Securities issued by a Fleet Capital Trust will be substantially
identical to the terms of the Preferred Securities issued by such Trust and the
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities except that, upon an event of default under
the Declaration, the rights of the holders of the Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. Except in certain limited circumstances, the Common Securities of a
Fleet Capital Trust will also carry the right to vote to appoint, remove or
replace any of the Fleet Capital Trustees of such Trust. All of the Common
Securities of each Fleet Capital Trust will be directly or indirectly owned by
Fleet.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an Event of Default under the Declaration of a Fleet Capital Trust occurs
and is continuing, then the holders of Preferred Securities of such Fleet
Capital Trust would rely on the enforcement by the Institutional Trustee of its
rights as a holder of the applicable series of Junior Subordinated Debentures
against Fleet. In addition, the holders of a majority in liquidation amount of
the Preferred Securities of such Fleet Capital Trust will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Institutional Trustee or to direct the exercise of any trust or
power conferred upon the Institutional Trustee under the applicable Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it under the applicable Indenture as a holder of the Junior
Subordinated Debentures. If the Institutional Trustee fails to enforce its
rights under the applicable series of Junior Subordinated Debentures after a
holder of record of Preferred Securities of such Fleet Capital Trust has made a
written request, such holder of record of Preferred Securities may institute a
legal proceeding directly against Fleet to enforce the Institutional Trustee's
rights under the applicable series of Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
under the applicable Declaration has occurred and is continuing and such event
is attributable to the failure of Fleet to pay interest or principal on the
applicable series of Junior Subordinated Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Preferred Securities of such Fleet Capital Trust may
directly institute a proceeding
14
<PAGE>
for enforcement of payment to such holder of the principal of or interest on the
applicable series of Junior Subordinated Debentures having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
applicable series of Junior Subordinated Debentures. In connection with such
Direct Action, Fleet will be subrogated to the rights of such holder of
Preferred Securities under the applicable Declaration to the extent of any
payment made by Fleet to such holder of Preferred Securities in such Direct
Action.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by Fleet for the
benefit of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be qualified as an indenture under the Trust Indenture
Act. The First National Bank of Chicago will act as indenture trustee under each
Preferred Securities Guarantee for purposes of the Trust Indenture Act (the
"Preferred Guarantee Trustee"). The terms of each Preferred Securities Guarantee
will be those set forth in such Preferred Securities Guarantee and those made
part of such Preferred Securities Guarantee by the Trust Indenture Act. While
the summary of the material terms of the Preferred Securities Guarantees does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the form of Preferred
Securities Guarantee, which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part, and the Trust Indenture Act, all material
terms of the Preferred Securities Guarantee are set forth herein and in any
Prospectus Supplement relating to the particular Preferred Securities being
offered thereby. Each Preferred Securities Guarantee will be held by the
Preferred Guarantee Trustee for the benefit of the holders of the Preferred
Securities of the applicable Fleet Capital Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, Fleet will agree, to the
extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by a Fleet Capital Trust, the Guarantee Payments (as defined
herein) (except to the extent paid by such Fleet Capital Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which such
Fleet Capital Trust may have or assert. The following payments with respect to
Preferred Securities issued by a Fleet Capital Trust, to the extent not paid by
such Fleet Capital Trust (the "Guarantee Payments"), will be subject to the
Preferred Securities Guarantee thereon (without duplication): (i) any accrued
and unpaid distributions which are required to be paid on such Preferred
Securities, to the extent such Fleet Capital Trust shall have funds available
therefor; (ii) the redemption price, including all accrued and unpaid
distributions to the date of payment (the "Redemption Price"), to the extent
such Fleet Capital Trust has funds available therefor with respect to any
Preferred Securities called for redemption by such Fleet Capital Trust; and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
such Fleet Capital Trust (other than in connection with the distribution of
Junior Subordinated Debentures to the holders of Preferred Securities or the
redemption of all of the Preferred Securities), the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment, to the extent such Fleet Capital
Trust has funds available therefor and (b) the amount of assets of such Fleet
Capital Trust remaining available for distribution to holders of such Preferred
Securities in liquidation of such Fleet Capital Trust. The redemption price and
liquidation amount will be fixed at the time the Preferred Securities are
issued. Fleet's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by Fleet to the holders of Preferred
Securities or by causing the applicable Fleet Capital Trust to pay such amounts
to such holders.
15
<PAGE>
The Preferred Securities Guarantees will not apply to any payment of
distributions except to the extent a Fleet Capital Trust shall have funds
available therefor. If Fleet does not make interest payments on the Junior
Subordinated Debentures purchased by a Fleet Capital Trust, such Fleet Capital
Trust will not pay distributions on the Preferred Securities issued by such
Fleet Capital Trust and will not have funds available therefor.
The Preferred Securities Guarantees, when taken together with Fleet's
obligations under the Junior Subordinated Debentures, the Indentures, and the
Declarations, including its obligations to pay costs, expenses, debts and
liabilities of the Fleet Capital Trusts (other than with respect to the Trust
Securities), will provide a full and unconditional guarantee on a subordinated
basis by Fleet of payments due on the Preferred Securities.
Fleet has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Fleet Capital Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantees, except that upon an event of default under the
Indenture, holders of Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF FLEET
In each Preferred Securities Guarantee, Fleet will covenant that, so long as
any Preferred Securities issued by the applicable Fleet Capital Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Indenture of
such Fleet Capital Trust, or if Fleet has exercised its option to defer interest
payments on the Junior Subordinated Debentures by extending the interest payment
period and such period or extension thereof shall be continuing, then (a) Fleet
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares of
Fleet Common Stock in connection with the satisfaction by Fleet of its
obligations under any employee benefit plans or any other contractual obligation
of Fleet (other than a contractual obligation ranking pari passu with or junior
to the Junior Subordinated Debentures), (ii) as a result of a reclassification
of Fleet capital stock or the exchange or conversion of one class or series of
Fleet capital stock for another class or series of Fleet capital stock or, (iii)
the purchase of fractional interests in shares of Fleet capital stock pursuant
to the conversion or exchange provisions of such Fleet capital stock or the
security being converted or exchanged), (b) Fleet shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Fleet which rank pari passu with or junior to such
Junior Subordinated Debentures and (c) Fleet shall not make any guarantee
payments with respect to the foregoing (other than pursuant to such Preferred
Securities Guarantee).
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of at least a majority in liquidation amount of the outstanding
Preferred Securities issued by the applicable Fleet Capital Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of Fleet and shall
inure to the benefit of the holders of the Preferred Securities of the
applicable Fleet Capital Trust then outstanding. Except in connection with any
merger or consolidation of Fleet with or into another entity or any sale,
transfer or lease of Fleet's assets to another entity, each as permitted by the
Indenture, Fleet may not assign its rights or delegate its obligations under
such Preferred Securities Guarantee without the prior approval of the holders of
at least a majority in liquidation amount of the outstanding Preferred
Securities issued by the applicable Fleet Capital Trust.
16
<PAGE>
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable Fleet Capital Trust (a) upon full payment of
the Redemption Price of all Preferred Securities of such Fleet Capital Trust,
(b) upon distribution of the Junior Subordinated Debentures held by such Fleet
Capital Trust to the holders of the Trust Securities of such Fleet Capital Trust
or (c) upon full payment of the amounts payable in accordance with the
Declaration of such Fleet Capital Trust upon liquidation of such Fleet Capital
Trust. Notwithstanding the foregoing, each Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities issued by the applicable Fleet Capital
Trust must restore payment of any sums paid under such Preferred Securities or
such Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee
or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. Any holder of
Preferred Securities relating to such Preferred Securities Guarantee may
institute a legal proceeding directly against Fleet to enforce the Preferred
Guarantee Trustee's rights and the obligations of Fleet under such Preferred
Securities Guarantee, without first instituting a legal proceeding against the
relevant Fleet Capital Trust, the Preferred Guarantee Trustee or any other
person or entity.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations of
Fleet and will rank (i) subordinate and junior in right of payment to all other
liabilities of Fleet, except those made pari passu or subordinate by their
terms, (ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by Fleet and with any guarantee now or hereafter entered into
by Fleet in respect of any preferred or preference stock of any affiliate of
Fleet, and (iii) senior to Fleet Common Stock. The terms of the Preferred
Securities provide that each holder of Preferred Securities issued by the
applicable Fleet Capital Trust by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee relating
thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
Preferred Securities Guarantee without instituting a legal proceeding against
any other person or entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
Fleet or its affiliates maintain certain accounts and other banking
relationships with the Preferred Guarantee Trustee and its affiliates in the
ordinary course of business.
17
<PAGE>
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEES
As set forth in the Declaration, the sole purpose of each of the Fleet
Capital Trusts is to issue the Trust Securities evidencing undivided beneficial
interests in the assets of each of the Fleet Capital Trusts, and to invest the
proceeds from such issuance and sale in Junior Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures held by a Fleet Capital Trust, such payments will
be sufficient to cover distributions and payments due on the Trust Securities of
such Trust because of the following factors: (i) the aggregate principal amount
of such Junior Subordinated Debentures will be equal to the sum of the aggregate
stated liquidation amount of the Trust Securities; (ii) the interest rate and
the interest and other payment dates on such Junior Subordinated Debentures will
match the distribution rate and distribution and other payment dates for the
Preferred Securities; (iii) Fleet shall pay all, and the Fleet Capital Trust
shall not be obligated to pay, directly or indirectly, any costs, expenses, debt
and obligations of such Fleet Capital Trust (other than with respect to the
Trust Securities); and (iv) the Declaration further provides that the Fleet
Capital Trustees shall not take or cause or permit the Fleet Capital Trust to,
among other things, engage in any activity that is not consistent with the
purposes of such Fleet Capital Trust. Payments of distributions (to the extent
funds therefor are available) and other payments due on the Preferred Securities
(to the extent funds therefor are available) are guaranteed by Fleet as and to
the extent set forth under "Description of the Preferred Securities Guarantees."
If Fleet does not make interest payments on the Junior Subordinated Debentures
purchased by the applicable Fleet Capital Trust, the applicable Fleet Capital
Trust will not have sufficient funds to pay distributions on the Preferred
Securities. The Preferred Securities Guarantee does not apply to any payment of
distributions unless and until the applicable Fleet Capital Trust has sufficient
funds for the payment of such distributions. The Preferred Securities Guarantee
covers the payment of distributions and other payments on the Preferred
Securities only if and to the extent that Fleet has made a payment of interest
or principal on the Junior Subordinated Debentures held by the applicable Fleet
Capital Trust as its sole asset. The Preferred Securities Guarantee, when taken
together with Fleet's obligations under the Junior Subordinated Debentures and
the Indenture and its obligations under the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the applicable
Fleet Capital Trust (other than with respect to the Trust Securities), provide a
full and unconditional guarantee of amounts on the Preferred Securities.
If Fleet fails to make interest or other payments on a series of Junior
Subordinated Debentures when due (taking account of any Extension Period), the
Declarations provide a mechanism whereby the holders of the Preferred Securities
affected thereby, using the procedures described in any accompanying Prospectus
Supplement, may direct the Institutional Trustee to enforce its rights under the
Junior Subordinated Debentures. If the Institutional Trustee fails to enforce
its rights under the Junior Subordinated Debentures, a holder of Preferred
Securities of a Trust may institute a legal proceeding against Fleet to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
owned by such Trust without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Fleet to pay interest or principal
on Junior Subordinated Debentures on the date such interest of principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities of a Trust may institute a Direct Action for
payment on or after the respective due date specified in the Junior Subordinated
Debentures owned by such Trust. In connection with such Direct Action, Fleet
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by Fleet to such holder of
Preferred
18
<PAGE>
Securities in such Direct Action. Fleet, under the Preferred Securities
Guarantee, acknowledges that the Guarantee Trustee shall enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities. If
Fleet fails to make payments under the Preferred Securities Guarantee, the
Preferred Securities Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. Any holder of Preferred Securities may institute a legal proceeding
directly against Fleet to enforce the Guarantee Trustee's rights and the
obligations of Fleet under the Preferred Securities Guarantee without first
instituting a legal proceeding against the applicable Fleet Capital Trust, the
Guarantee Trustee, or any other person or entity.
Fleet and each of the Fleet Capital Trusts believe that the above mechanisms
and obligations, taken together, provide a full and unconditional guarantee by
Fleet of payments due on the Preferred Securities. See "Description of the
Preferred Securities Guarantees--General."
PLAN OF DISTRIBUTION
Fleet may sell the Junior Subordinated Debentures and any Fleet Capital
Trust may sell Preferred Securities in any of, or any combination of, the
following ways: (i) directly to purchasers, (ii) through agents and (iii)
through underwriters or dealers. Such underwriters, dealers or agents may be
affiliates of Fleet, and offers or sales of such securities may include
secondary market transactions by affiliates of Fleet.
Offers to purchase Offered Securities may be solicited directly by Fleet
and/or any Fleet Capital Trust, as the case may be, or by agents designated by
Fleet and/or any Fleet Capital Trust, as the case may be, from time to time. Any
such agent, who may be deemed to be an underwriter as that term is defined in
the Securities Act, involved in the offer or sale of the Offered Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by Fleet to such agent will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agency will be
acting on a best efforts basis for the period of its appointment (ordinarily
five business days or less). Agents, dealers and underwriters may be customers
of, engage in transactions with, or perform services for Fleet in the ordinary
course of business.
If an underwriter or underwriters are utilized in the sale, Fleet will
execute an underwriting agreement with such underwriters at the time of sale to
them and the names of the underwriters and the terms of the transaction will be
set forth in the Prospectus Supplement, which will be used by the underwriters
to make releases of the Offered Securities in respect of which this Prospectus
is delivered to the public.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, Fleet and/or any Fleet Capital Trust, as the
case may be, will sell such Offered Securities to the dealer, as principal. The
dealer may then resell such Offered Securities to the public at varying prices
to be determined by such dealer at the time of resale. The name of the dealer
and the terms of the transaction will be set forth in the Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under the relevant agreements
to indemnification by Fleet and/or any Fleet Capital Trust, as the case may be,
against certain liabilities, including liabilities under the Securities Act.
This Prospectus and related Prospectus Supplement may be used by direct or
indirect subsidiaries of Fleet in connection with offers and sales related to
secondary market transactions. Such subsidiaries may act as principal or agent
in such transactions. Such sales may be made at prices related to prevailing
market prices at the time of sale.
The participation of an affiliate or subsidiary of Fleet in the offer and
sale of the Offered Securities will comply with the requirements of Rule 2720 of
the By-laws of the National Association of Securities Dealers, Inc. (the "NASD")
regarding underwriting securities of the affiliate. No NASD member participating
in offers and sales will execute a transaction in the Securities in a
discretionary account without the prior written specific approval of the
member's customer.
19
<PAGE>
Underwriters, agents or their controlling persons may engage in transactions
with and perform services for Fleet in the ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of each of the Fleet Capital Trusts by
Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the Fleet
Capital Trusts. The validity of the Junior Subordinated Debentures and the
Preferred Securities Guarantee and certain matters relating thereto will be
passed upon for Fleet and certain United States federal income taxation matters
will be passed upon for Fleet and the Fleet Capital Trusts by Edwards & Angell,
One Hospital Trust Plaza, Providence, Rhode Island 02903. V. Duncan Johnson, a
partner of Edwards & Angell, is a director of Fleet National Bank and
beneficially owns 4,052 shares of Fleet Common Stock. Certain legal matters will
be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.
EXPERTS
The consolidated financial statements of Fleet contained in Fleet's Current
Report on Form 8-K dated March 6, 1998, incorporated by reference herein (and
elsewhere in the Registration Statement) have been incorporated by reference
herein (and elsewhere in the Registration Statement) in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
20
<PAGE>
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NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY FLEET FINANCIAL GROUP, INC., THE TRUSTS OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF FLEET FINANCIAL GROUP, INC. OR THE TRUSTS SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Available Information..................................................... S-4
Incorporation of Certain Documents by Reference........................... S-4
Risk Factors.............................................................. S-5
Fleet Financial Group, Inc................................................ S-9
Recent Transactions....................................................... S-10
First Quarter Results..................................................... S-11
Fleet Capital............................................................. S-12
Selected Restated Consolidated Unaudited Financial Data................... S-13
Selected Historical Consolidated Financial Data........................... S-15
Capitalization............................................................ S-17
Accounting Treatment...................................................... S-18
Consolidated Ratios of Earnings to Fixed Charges.......................... S-18
Use of Proceeds........................................................... S-18
Description of the Preferred Securities................................... S-19
Description of the Guarantee.............................................. S-29
Description of the Junior Subordinated
Debentures.............................................................. S-30
Effect of Obligations Under the Junior
Subordinated Debentures and the Guarantee............................... S-36
United States Federal Income Taxation..................................... S-37
ERISA Considerations...................................................... S-41
Underwriting.............................................................. S-42
Legal Matters............................................................. S-44
Experts................................................................... S-44
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 3
Fleet Financial Group, Inc................................................ 4
The Trusts................................................................ 5
Consolidated Ratios of Earnings to Fixed Charges.......................... 6
Reason for Transaction.................................................... 6
Use of Proceeds........................................................... 6
Description of the Junior Subordinated Debentures......................... 7
Description of the Preferred Securities................................... 12
Description of the Preferred Securities Guarantees........................ 15
Effect of Obligations Under the Junior Subordinated Debentures and the
Preferred Securities Guarantees......................................... 18
Plan of Distribution...................................................... 19
Legal Matters............................................................. 20
Experts................................................................... 20
</TABLE>
[LOGO]
6,000,000 PREFERRED SECURITIES
FLEET CAPITAL TRUST IV
7.17% TRUST ORIGINATED
PREFERRED SECURITIES-SM-
("TOPRS-SM-")
FULLY AND UNCONDITIONALLY
GUARANTEED BY
FLEET FINANCIAL GROUP, INC.
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
FLEET SECURITIES, INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
TUCKER ANTHONY INCORPORATED
APRIL 23, 1998
-SM- "TRUST ORIGINATED PREFERRED SECURITIES" AND
"TOPRS" ARE SERVICE MARKS OF MERRILL LYNCH & CO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
