<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus Dated November 28, 1994)
U.S.$1,126,900,000(LOGO)
FLEET FINANCIAL GROUP, INC.
SENIOR MEDIUM-TERM NOTES, SERIES H
SUBORDINATED MEDIUM-TERM NOTES, SERIES I
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
Fleet Financial Group, Inc. ("Fleet") may offer from time to time up to
U.S.$1,126,900,000 aggregate initial offering price of its Senior Medium-Term
Notes, Series H (the "Senior Notes") and its Subordinated Medium-Term Notes,
Series I (the "Subordinated Notes", and together with the Senior Notes,
collectively the "Notes") or its equivalent in foreign currencies or currency
units, subject to reduction from time to time after the date hereof at the
option of Fleet including as a result of the sale of other Securities of Fleet
under the accompanying Prospectus (the "Basic Prospectus") to which this
Prospectus Supplement relates. Each Note will mature on any day nine months or
more from the date of issue, as selected by the purchaser and agreed to by Fleet
and may be subject to redemption or repayment prior to maturity. In addition to
the Notes being offered hereby (the "Registered Notes"), Fleet may offer Notes
in bearer form (the "Bearer Notes") in a concurrent non-United States offering.
A separate Prospectus Supplement will be used for any such offering of Bearer
Notes. Any Bearer Notes so offered and sold will reduce correspondingly the
principal amount of Registered Notes which may be offered by this Prospectus
Supplement and the Basic Prospectus. The Registered Notes will be denominated in
a currency (the "Specified Currency") which may be U.S. dollars or such foreign
currency or currency unit as may be designated by Fleet. Unless otherwise
specified, the Registered Notes will be issued in denominations of U.S.$1,000
and any larger amount that is an integral multiple of U.S.$1,000 or, if
denominated in a Specified Currency other than U.S. dollars, as set forth in the
applicable pricing supplement (the "Pricing Supplement"). Each Registered Note
will bear interest at a fixed rate (a "Fixed Rate Note") or at a floating rate
(a "Floating Rate Note"). The redemption and repayment provisions, if any, for
any Registered Note will be set forth in a Pricing Supplement.
The Subordinated Notes are subordinated as set forth in the Basic Prospectus
under "Description of Debt Securities -- Subordinated Debt Securities". Payment
of principal of the Subordinated Notes may be accelerated only in the case of
the bankruptcy or reorganization of Fleet. There is no right of acceleration in
the case of a default in the payment of interest on the Subordinated Notes or in
the performance of any other covenant of Fleet. See "Subordinated Debt
Securities" in the Basic Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes is payable each May 1 and November 1 and at maturity or upon
earlier redemption or repayment. Interest on Floating Rate Notes is payable on
the dates specified therein and in the applicable Pricing Supplement. The
interest rate or interest rate formula, initial interest rate, as applicable,
and redemption provisions, if any, on each Note will be established by Fleet at
the date of issuance of such Note and will be set forth thereon and specified in
a Pricing Supplement to this Prospectus Supplement. Interest rates and interest
rate formulas are subject to change by Fleet, but no change will affect any
Notes already issued or as to which an offer to purchase has been accepted by
Fleet. Each Floating Rate Note will bear interest at a rate determined by
reference to one or more interest rate bases (each, a "Base Rate") which will be
determined by reference to the CD Rate, the CMT Rate, the Commercial Paper Rate,
the Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate or the 11th
District Cost of Funds Rate, in each case, as adjusted by the Spread and/or
Spread Multiplier, if any, applicable to such Floating Rate Note. See
"Description of Registered Notes".
Unless otherwise specified in the Pricing Supplement, each Registered Note will
be issued only in book-entry form, subject to certain limitations listed herein,
and will be represented by a global security (a "Global Security") registered in
the name of a nominee of The Depository Trust Company, New York, New York, as
depository (the "Depository"), or other depository (a "Book-Entry Note").
Beneficial interests in Book-Entry Notes will be shown on, and transfer thereof
will be effected only through, records maintained by the Depository or its
nominee and its participants.
THE REGISTERED NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION (THE "FDIC"), BANK INSURANCE FUND OR ANY
GOVERNMENT AGENCY.
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, THE PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PRICE TO AGENTS' DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) FLEET(2)(3)
<S> <C> <C> <C>
Per Note................. 100.000% .125%-.750% 99.875%-99.250%
Total(4)................. $1,126,900,000 $1,408,625-$8,451,750 $1,125,491,375-$1,118,448,250
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will be issued at 100% of their principal amount.
(2) Fleet will pay a commission to Fleet Bank of Massachusetts, National Association, Goldman, Sachs & Co., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. or Salomon Brothers Inc, (the "Agents"),
depending upon maturity of the Registered Notes, ranging from .125% to .750% of the principal amount of any Registered Note sold
through the Agents. Fleet may also sell Registered Notes to the Agents (other than Fleet Bank of Massachusetts, National
Association), acting as principal, at a discount for resale to one or more investors and other purchasers at varying prices
related to prevailing market prices at the time of resale, to be determined by such Agents, or, if so agreed, at a fixed public
offering price. With respect to Registered Notes with a Maturity Date that is longer than 30 years from the date of issue sold
through any Agent, the rate of commission (or discount) will be negotiated at the time of sale and will be specified in the
applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, any Registered Note purchased
by an Agent as principal will be purchased at 100% of the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Registered Note of identical maturity. No commission will be payable on any sales made
directly by Fleet. See "Plan of Distribution."
(3) Before deducting other expenses payable by Fleet estimated at up to $150,000, including reimbursement of the Agents' expenses.
(4) Or the equivalent thereof in Specified Currencies other than U.S. dollars.
</TABLE>
The Registered Notes are being offered on a continuing basis by Fleet through
the Agents, each of which has agreed to use its reasonable efforts to solicit
offers to purchase the Registered Notes. Fleet may also sell Registered Notes to
any Agent (other than Fleet Bank of Massachusetts, National Association) acting
as principal for resale to one or more investors and other purchasers. Fleet
also may sell Notes directly to investors in those jurisdictions where it is
authorized to do so. No commission will be payable nor will a discount be
allowed on any direct sales by Fleet. The Registered Notes will not be listed on
any securities exchange, and there can be no assurance that the Registered Notes
offered by this Prospectus Supplement will be sold or that there will be a
secondary market for the Registered Notes. Fleet reserves the right to withdraw,
cancel or modify the offer made hereby without notice. Fleet or any Agent may
reject any offer to purchase Registered Notes, in whole or in part. See "Plan of
Distribution".
FLEET BANK OF MASSACHUSETTS, N.A.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
The date of this Prospectus Supplement is November 28, 1994.
<PAGE> 2
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Registered Notes in the Specified
Currency. Currently, there are limited facilities in the United States for
conversion of U.S. dollars into foreign currencies and vice versa. Upon request,
an Agent may arrange for the conversion of U.S. dollars into the Specified
Currency set forth in the applicable Pricing Supplement to enable purchasers to
pay for the Registered Notes. Such request must be made on the trade date. Each
such conversion will be made by the relevant Agent on such terms and subject to
such conditions, limitations and charges as such Agent may from time to time
establish in accordance with their regular foreign exchange practice. All costs
of exchange will be borne by the purchasers of Registered Notes.
Banks do not generally offer non-U.S. dollar denominated checking or
savings account facilities in the United States. Accordingly, payments of
principal of, and interest on, Registered Notes denominated and payable in a
Specified Currency other than U.S. dollars will be made from an account at a
bank outside of the United States, unless alternative arrangements are made. See
"Description of Registered Notes".
Reference herein to "U.S. dollars" or "U.S. $" or "$" are to the currency
of the United States of America.
DESCRIPTION OF REGISTERED NOTES
The following description of the particular terms of the Registered Notes
offered hereby (referred to in the Basic Prospectus as the "Debt Securities",
the "Senior Debt Securities" or the "Subordinated Debt Securities") supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Debt Securities, Senior Debt Securities and
Subordinated Debt Securities set forth in the Basic Prospectus, to which
description reference is hereby made. The terms and conditions set forth herein
will apply to each Registered Note unless otherwise specified in the applicable
Pricing Supplement and the related Registered Note. Fleet may from time to time
sell additional Securities and additional series of Debt Securities, including
additional series of medium-term notes.
GENERAL
The Senior Notes will constitute a single series of Debt Securities to be
issued under an Indenture dated as of October 1, 1992, (the "Senior Indenture")
between Fleet and The First National Bank of Chicago, as trustee (the
"Trustee"). The Subordinated Notes will constitute a single series of Debt
Securities to be issued under an Indenture dated as of October 1, 1992, between
Fleet and the Trustee, as amended by a First Supplemental Indenture dated as of
November 30, 1992, between the Company and the Trustee (such indenture, as
amended, the "Subordinated Indenture" and, collectively with the Senior
Indenture, the "Indentures").
The Senior Notes will be unsecured and unsubordinated obligations of the
Company and will rank pari passu with all other senior indebtedness of Fleet
("Senior Indebtedness"). The Subordinated Notes will be unsecured and will be
subordinate and junior in the right of payment, to the extent and in the manner
set forth in the Subordinated Indenture, to all Senior Indebtedness and Other
Financial Obligations (each as defined in the Subordinated Indenture) of Fleet.
There is no limitation on the issuance of additional Senior Indebtedness or
Other Financial Obligations of Fleet. See "Subordinated Debt Securities" in the
Basic Prospectus. As of September 30, 1994, the aggregate principal amount of
Fleet's Senior Indebtedness was $2.3 billion and the interest payable amount
relating to Other Financial Obligations was $75 million, respectively. The
Registered Notes may be issued in an aggregate principal amount of up to
U.S.$1,126,900,000, or its equivalent in foreign currencies or currency units.
The aggregate principal amount of Registered Notes that may be issued and sold
may be reduced as a result of the sale by Fleet of other Debt Securities
including Bearer Notes. See "Plan of Distribution". The statements herein
concerning the Notes and the Indentures do not purport to be complete. They are
qualified in their entirety by reference to the provisions of the Indentures,
including the definitions of certain terms used herein without definition.
The Registered Notes will be offered on a continuing basis and will mature
on any day nine months or more from the date of issue, as selected by the
purchaser and agreed to by Fleet, and may be subject to
S-2
<PAGE> 3
redemption at the option of Fleet or repayment at the option of the Holder prior
to maturity at a price or prices, as specified in the applicable Pricing
Supplement, plus accrued interest to the date of redemption or repayment. The
Registered Notes will not be subject to any sinking fund. Each Registered Note
will bear interest at either (a) a fixed rate or (b) a rate or rates determined
by reference to a Base Rate which may be adjusted by a Spread and/or Spread
Multiplier, if any (each as defined below).
The Registered Notes will be issued in fully registered form only without
coupons. Registered Notes may not be exchanged for Bearer Notes. Unless
otherwise specified, the Registered Notes denominated in U.S. dollars will be
issued in denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000. The authorized denominations of Registered Notes
denominated in a Specified Currency other than U.S. dollars will be specified in
the applicable Pricing Supplement. Interest rates offered by the Company with
respect to the Notes may differ depending upon, among other things, the
aggregate principal amount of the Notes purchased in any single transaction.
Unless otherwise provided in the applicable Pricing Supplement, each
Registered Note will be issued as a Book-Entry Note registered in the name of
the nominee of the Depository. So long as the Depository or its nominee is the
registered owner of such Book-Entry Notes, the Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Registered
Notes for all purposes under the Indentures. Except as set forth under
"Description of Registered Notes -- Book-Entry System", Book-Entry Notes will
not be issuable in certificated form.
The Registered Notes may be issued as "Original Issue Discount Notes" which
will be offered at a discount from the principal amount thereof due at the
stated maturity of such Notes. There may not be any periodic payments of
interest on Original Issue Discount Notes. In the event of an acceleration of
the maturity of any Original Issue Discount Note, the amount payable to the
holder of such Original Issue Discount Note upon such acceleration will be
determined in accordance with the Pricing Supplement and the terms of such
security, but will be an amount less than the amount payable at the maturity of
the principal of such Original Issue Discount Note. For federal income tax
considerations with respect to Original Issue Discount Notes, see "Certain
United States Federal Income Tax Consequences" herein.
"Business Day" means (i) with respect to Registered Notes which are not
denominated in European Currency Units ("ECUs"), any day other than a Saturday
or Sunday, that is neither a legal holiday nor a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close in either The City of New York or (1) with respect to Registered Notes
denominated in a Specified Currency other than U.S. dollars, in the city as
specified by Fleet pursuant to the applicable Indenture and (2) with respect to
Registered Notes which will bear interest based on a specified percentage of
London interbank offered rate quotations ("LIBOR"), is also a "London Business
Day" or (ii) with respect to Registered Notes which are denominated in ECUs, any
day other than a Saturday or Sunday, that is neither a legal holiday nor a day
on which banking institutions are authorized or obligated by law, regulation or
executive order to close in either the City of New York or any day that is not
designated as an ECU Non-Settlement Day by the ECU Banking Association on
otherwise generally regarded in the ECU interbank market as a day on which
payments in ECUs shall be made. "London Business Day" means any day (i) if the
Index Currency (as defined below) is other than ECU, on which dealings in such
Index Currency are transacted in the London interbank market or (ii) if the
Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by
the ECU Banking Association or otherwise generally regarded in the ECU interbank
market as a day on which payments in ECUs shall not be made.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest one hundred-thousandth
of a percent (.0000001), with five one-millionths of a percentage point rounded
upward, and all dollar amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest cent (with one-half cent
being rounded upward).
The Pricing Supplement relating to each Registered Note will describe the
following terms: (1) the currency or currency unit in which such Note is
denominated (and, if such currency is other than U.S. dollars, certain other
terms relating to such Note); (2) whether such Note is a Fixed Rate Note or a
Floating Rate Note; (3) whether such Note is a Senior Note or a Subordinated
Note; (4) if other than 100%, the price
S-3
<PAGE> 4
(expressed as a percentage of the aggregate principal amount thereof) at which
such Note will be issued (the "Issue Price") and Original Issue Discount, if
any; (5) the trade date; (6) the date on which such Note will be issued (the
"Issue Date"); (7) the date on which such Note will mature (the "Maturity
Date"); (8) if such Note is a Fixed Rate Note, the rate per annum at which such
Note will bear interest, if any (the "Interest Rate"); (9) if such Note is a
Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest
Determination Dates, the Interest Reset Dates, the Interest Payment Dates, the
Index Maturity, the Maximum Interest Rate and the Minimum Interest Rate, if any,
and the Spread and/or Spread Multiplier, if any (all as defined herein), and any
other terms relating to the particular method of calculating the Interest Rate
for such Note; (10) whether such Note may be redeemed or repaid prior to
maturity, and if so, the provisions relating to such redemption; and (11) any
other terms of such Note not inconsistent with the provisions of the applicable
Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Principal and interest, if any, will be paid by Fleet in U.S. dollars, even
if a Registered Note is denominated in a Specified Currency other than U.S.
dollars; provided, however, that if so specified in the applicable Pricing
Supplement, a Holder of a Registered Note denominated in a Specified Currency
other than U.S. dollars may elect to have payments of principal and interest in
respect of such Note paid in the Specified Currency. Under such circumstances,
Fleet would be required to tender payment in the Specified Currency and any
costs associated with such conversion would be borne by such Holder through
deduction from such payments. A Holder may elect to receive payments in the
Specified Currency by delivering a written request to the Trustee not later than
the Record Date (as defined below) or the fifteenth day preceding the Maturity
Date or any date fixed for redemption or repayment, as the case may be. Such
election will remain in effect until revoked by written notice to the Trustee,
but written notice of any such revocation must be received by the Trustee not
later than the Record Date or the fifteenth day preceding the Maturity Date or
date of redemption or repayment, as the case may be. Upon request, the Trustee
will mail a copy of a form of request to any Holder.
In the case of a Registered Note denominated in a Specified Currency other
than U.S. dollars, the amount of U.S. dollar payments in respect of such
Registered Note will be determined by a New York clearing house bank designated
by Fleet (the "Exchange Rate Agent") based on the quotation for such Specified
Currency appearing at approximately 11:00 a.m., New York City time, on the
second Business Day preceding the applicable date of payment, on the bank
composite or multi-contributor pages of the Reuters Monitor Foreign Exchange
Service (or, if such service is not then available to the Exchange Rate Agent,
the Telerate Monitor Foreign Exchange Service or, if neither is available, on a
comparable display or in a comparable manner as Fleet and the Exchange Rate
Agent shall agree), bid by one of at least three banks (one of which may be the
Exchange Rate Agent) agreed to by Fleet and the Exchange Rate Agent, which will
yield the largest number of U.S. dollars upon conversion from such Specified
Currency. If fewer than three bids are available, then such conversion will be
based on the Market Exchange Rate (as defined below) as of the second Business
Day preceding the applicable payment date or, if the Market Exchange Rate for
such date is not available, as of the most recent date on which the Market
Exchange Rate is available.
If the principal of, or interest on, any Registered Note is payable in a
Specified Currency other than U.S. dollars (whether by reason of the
unavailability of such quotations or through an election by a Holder) and such
Specified Currency is not available to Fleet for making payments thereof due to
the imposition of exchange controls or other circumstances beyond the control of
Fleet, Fleet will be entitled to satisfy its obligations to Holders of the
Registered Notes by making such payment in U.S. dollars on the basis of the
Market Exchange Rate on the second Business Day prior to such payment date, if
available, and if not so available, the exchange rate determined in the
following order: first, by the most recently available Market Exchange Rate;
second by the quotations of three (or, if three are not available, then two)
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) in The City of New York or in the foreign country of issue of such
currency selected by the Exchange Rate Agent and Fleet; and third, by such other
quotations as Fleet deems appropriate. If the Specified Currency is a composite
currency, payments will be an amount determined by the Exchange Rate Agent by
adding the results obtained by multiplying the number of units of each component
currency of such composite currency, as of the most recent day on which such
S-4
<PAGE> 5
composite currency was used, by the most recently available Market Exchange Rate
for such component currency. Any payment made under the circumstances described
above, where the required payment is in a Specified Currency other than U.S.
dollars or any payment made in the Specified Currency, will not constitute an
Event of Default under the Indentures.
"Market Exchange Rate" means the noon buying rate for cable transfers in
New York City as determined by the Federal Reserve Bank of New York for such
Specified Currency.
Unless otherwise specified in the applicable Pricing Supplement, interest
on the Registered Notes (other than interest paid on the Maturity Date or any
date fixed for redemption or repayment) will be paid on each interest payment
date (an "Interest Payment Date") by mailing a check in the Specified Currency
(from an account at a bank outside the United States if such check is payable in
a currency other than U.S. dollars) to the Holder at the address of such Holder
appearing on the Security Register on the regular Record Date; provided,
however, that in the case of a Registered Note originally issued between a
Record Date and the Interest Payment Date or on an Interest Payment Date
relating to such Record Date, interest for the period beginning on the Issue
Date and ending on such Interest Payment Date shall be paid on the next
succeeding Interest Payment Date to the Holder on the Record Date with respect
to such succeeding Interest Payment Date. Payments of principal and interest at
maturity or upon earlier redemption or repayment will be made in immediately
available funds upon surrender of the Registered Notes (other than with respect
to a Registered Note as to which appropriate arrangements have not been made).
See "Important Currency Exchange Information". Unless otherwise specified in the
applicable Pricing Supplement, if any Interest Payment Date or the Maturity Date
(or the date of redemption or repayment) of a Fixed Rate Note falls on a day
that is not a Business Day, the payment will be made on the next Business Day as
if it were made on the date such payment was due, and no interest will accrue on
the amount so payable for the period from and after such Interest Payment Date
or the Maturity Date (or the date of redemption or repayment), as the case may
be. If any Interest Payment Date (other than at the Maturity Date or date of
redemption or repayment) for any Floating Rate Note would fall on a day that is
not a Business Day with respect to such Note, such Interest Payment Date will be
postponed to the following day that is a Business Day with respect to such Note,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding day that is a Business Day with respect to such LIBOR Note. If the
Maturity Date (or the date of redemption or repayment) of any Floating Rate Note
would fall on a day that is not a Business Day, the payment of interest and
principal (and premium, if any) may be made on the next succeeding Business Day,
and no interest on such payment will accrue for the period from and after the
Maturity Date (or the date of redemption or repayment). In the case of Global
Securities representing Book-Entry Notes, such payments of principal and
interest, if any, will be made to the Depository or its nominee. Payments to
beneficial owners of Book-Entry Notes will be made through the Depository and
its participants. See "Description of Debt Securities -- Global Securities" in
the Basic Prospectus.
The "Record Date" with respect to any Interest Payment Date for Floating
Rate Notes shall be the date 15 calendar days immediately preceding such
Interest Payment Date, and with respect to any Interest Payment Date for Fixed
Rate Notes shall be the April 15 or October 15 next preceding such Interest
Payment Date, whether or not such date shall be a Business Day.
Interest payments in respect of the Notes will equal the amount of interest
accrued from and including the immediately preceding Interest Payment Date in
respect of which interest has been paid or duly made available for payment to
(or from and including the date of issue, if no interest has been paid with
respect to the applicable Note) but excluding the related Interest Payment Date,
Maturity Date, or date of redemption or repayment as the case may be (an
"Interest Period").
FIXED RATE NOTES
Fixed Rate Notes will bear interest from their Issue Date, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, at the annual interest rate or rates specified on the face thereof and in
the applicable Pricing Supplement. Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes will be payable semi-annually
on May 1 and November 1 of each year, and at maturity or upon redemption to the
persons to whom principal is payable (which, in the case of
S-5
<PAGE> 6
Global Securities representing Book-Entry Notes, will be the Depository or the
nominee of the Depository). Interest on Fixed Rate Notes will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Each payment of
interest shall include interest accrued through the day preceding the Interest
Payment Date.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a rate determined by
reference to the Base Rate which may be adjusted by a Spread and/or Spread
Multiplier, if any (each as defined below). The applicable Pricing Supplement
will designate one of the following Base Rates as applicable to each Floating
Rate Note: (a) the CD Rate (a "CD Rate Note"), (b) the CMT Rate (a "CMT Rate
Note"), (c) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (d) the
Federal Funds Rate (a "Federal Funds Rate Note"), (e) LIBOR (a "LIBOR Note"),
(f) the Prime Rate (a "Prime Rate Note"), (g) the Treasury Rate (a "Treasury
Rate Note"), (h) the 11th District Cost of Funds Rate (an "11th District Cost of
Funds Rate Note") or (i) such other Base Rate or interest rate formula as is set
forth in such Pricing Supplement and in such Floating Rate Note. The "Index
Maturity" for any Floating Rate Note is the period until maturity (as specified
in the applicable Pricing Supplement) of the instrument or obligation from which
the Base Rate is calculated.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or ceiling,
on the rate of interest which may accrue during any Interest Period (as defined
below) ("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on
the rate of interest which may accrue during any Interest Period ("Minimum
Interest Rate"). In addition to any Maximum Interest Rate which may be
applicable to any Floating Rate Note pursuant to the above provisions, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Registered Notes will be governed by the
law of the State of New York and, under present New York law, the maximum rate
of interest, with certain exceptions, for any loan in an amount less than
$250,000 is 16% and for any loan in an amount of $250,000 or more but less than
$2,500,000 is 25% per annum on a simple interest basis. These limits do not
apply to loans of $2,500,000 or more.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (each day on which the
rate of interest is reset being herein referred to as an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Reset Dates will be, in the case
of Floating Rate Notes that reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) that reset weekly,
Wednesday of each week; in the case of Treasury Rate Notes that reset weekly,
Tuesday of each week (except as provided below); in the case of Floating Rate
Notes that reset monthly, the third Wednesday of each month; in the case of
Floating Rate Notes that reset quarterly, the third Wednesday of March, June,
September and December of each year; in the case of Floating Rate Notes that
reset semi-annually, the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notes that reset annually, the third Wednesday of the month of each year
specified in the applicable Pricing Supplement. If any Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding Business Day,
except that in the case of a LIBOR Note, if such Business Day would fall in the
next succeeding calendar month, such Interest Reset Date shall be the next
preceding Business Day. If an auction for Treasury bills falls on a day that is
an Interest Reset Date for Treasury Rate Notes, the Interest Reset Date shall be
the next succeeding Business Day.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semi-annually, or annually as specified in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, the date or dates on which interest will be payable (each an
"Interest Payment Date") will be, in the case of Floating Rate Notes with a
daily, weekly or monthly Interest Period, the third Wednesday of each month; in
the case of Floating Rate Notes with a quarterly Interest Period, the third
Wednesday of March, June, September, and December of each year; in the case of
Floating
S-6
<PAGE> 7
Rate Notes with a semi-annual Interest Period, the third Wednesday of each of
two months of each year specified in the applicable Pricing Supplement; and in
the case of Floating Rate Notes with an annual Interest Period, the third
Wednesday of the month of each year specified in the applicable Pricing
Supplement; and, in each case, on the Maturity Date (or date of redemption or
repayment). Unless otherwise specified in the applicable Pricing Supplement, if
an Interest Payment Date with respect to any Floating Rate Note would otherwise
be a day that is not a Business Day with respect to such Floating Rate Note,
such Interest Payment Date shall be postponed to the next succeeding Business
Day with respect to such Floating Rate Note, except in the case of LIBOR Notes,
if such day would fall in the next succeeding calendar month, such Interest
Payment Date with respect to such LIBOR Note will be the immediately preceding
Business Day. Any payment of principal (and premium, if any) and interest
required to be made on a Floating Rate Note on a Maturity Date that is not a
Business Day will be made on the next succeeding Business Day with respect to
such Floating Rate Note (with the same force and effect as if made on such
Maturity Date, and no additional interest shall accrue as a result of any such
delayed payment).
The "Spread" is the number of basis points (one basis point equals
one-hundredth of a percentage point) specified in the applicable Pricing
Supplement as being applicable to the interest rate for such Floating Rate Note,
and the "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as being applicable to the interest rate for such Floating
Rate Note. A Spread and/or a Spread Multiplier may be applicable to the Interest
Rate for a particular Floating Rate Note, as set forth in the applicable Pricing
Supplement.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the Interest Period or from the last
date from which accrued interest is being calculated. The interest factor for
each such day is computed by dividing the interest rate applicable to such day
by 360, in the cases of CD Rate Notes, Commercial Paper Rate Notes, Federal
Funds Rate Notes, LIBOR Notes, Prime Rate Notes and 11th District Cost of Funds
Notes or by the number of days in the year, in the case of Treasury Rate Notes
and CMT Rate Notes. Unless otherwise specified in the applicable Pricing
Supplement, the interest rate applicable to any day that is an Interest Reset
Date will be the interest rate effective on such Interest Reset Date. The
interest rate applicable to any other day will be the interest rate for the
immediately preceding Interest Reset Date (or, if none, the Initial Interest
Rate, as described below).
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day and (ii) the Business Day preceding the applicable
Interest Payment Date or the Maturity Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, The First
National Bank of Chicago shall be the calculation agent (the "Calculation
Agent") with respect to the Floating Rate Notes. Upon the request of the Holder
of any Floating Rate Note, the Calculation Agent will provide the interest rate
then in effect and, if determined, the interest rate which will become effective
on the next Interest Reset Date with respect to such Floating Rate Note.
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date will be determined by the Calculation Agent as
follows:
CD Rate Notes
CD Rate Notes will bear interest at the interest rates (calculated by
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in the CD Rate Notes and in the applicable Pricing Supplement.
S-7
<PAGE> 8
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" relating to a CD Rate Note or any Floating Rate Note for which the
interest rate is determined with respect to the CD Rate with respect to each
Interest Reset Date will be determined by the Calculation Agent as of the second
Business Day prior to such Interest Reset Date (a "CD Interest Determination
Date") and shall be the rate on such date for negotiable certificates of deposit
having the Index Maturity designated in the applicable Pricing Supplement as
published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("H.15(519)") under the heading "CDs (Secondary Market)" or, if not
so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such CD Interest Determination Date, then the CD Rate shall be the
rate on such CD Interest Determination Date for negotiable certificates of
deposit having the specified Index Maturity as published by the Federal Reserve
Bank of New York in its daily statistical release, "Composite 3:30 P.M.
Quotations for U.S. Government Securities" or any successor publication
("Composite Quotations") under the heading "Certificates of Deposit". If such
rate is not so published by 3:00 P.M., New York City time, on such Calculation
Date, then the CD Rate on such CD Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Interest
Determination Date, of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money center
banks of the highest credit standing (in the market for negotiable certificates
of deposit) with a remaining maturity closest to the specified Index Maturity in
a denomination of U.S. $5,000,000; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate will be the CD Rate in effect on such CD Interest
Determination Date.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
The interest rate on CD Rate Notes for each Interest Reset Date shall be
the CD Rate applicable to such Interest Reset Date, plus or minus the Spread, if
any, and/or multiplied by the Spread Multiplier, if any, as specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect from the Issue Date to the first Interest Reset Date will be the Initial
Interest Rate.
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rates (calculated by
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CMT
Rate" means, with respect to any Interest Determination Date relating to a CMT
Rate Note or any Floating Rate Note for which the interest rate is determined
with reference to the CMT Rate (a "CMT Interest Determination Date"), the rate
displayed on the Designated CMT Telerate Page under the caption ". . . Treasury
Constant Maturities . . . Federal Reserve Board Release H. 15 . . . Mondays
Approximately 3:45 P.M.", under the column for the Designated CMT Maturity Index
for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT
Interest Determination Date and (ii) if the Designated CMT Telerate Page is
7052, the week, or the month, as applicable, ended immediately preceding the
week in which the related CMT Interest Determination Date occurs. If such rate
is no longer displayed on the relevant page, or if not displayed by 3:00 p.m.,
New York City time, on the related Calculation Date, then the CMT Rate for such
CMT Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519). If
such rate is no longer published, or if not published by 3:00 p.m., New York
City time, on the related Calculation Date, then the CMT Rate for such CMT
Interest Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If
S-8
<PAGE> 9
such information is not provided by 3:00 p.m., New York City time, on the
related Calculation Date, then the CMT Rate for the CMT Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity, based on the arithmetic mean of the secondary market closing offer
side prices as of approximately 3:30 p.m. (New York City time) on the CMT
Interest Determination Date reported, according to their written records, by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York selected by the Calculation Agent
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent cannot obtain three such Treasury Note quotations, the CMT
Rate for such CMT Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 p.m. (New
York City time) on the CMT Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate will be the CMT Rate in effect on such
CMT Interest Determination Date. If two Treasury Notes with an original maturity
as described in the third preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purposes of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.
The interest rate on CMT Notes for each Interest Reset Date shall be the
CMT Rate applicable to such Interest Reset Date, plus or minus the Spread, if
any, and/or multiplied by the Spread Multiplier, if any, as specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect from the Issue Date to the first Interest Reset Date will be the Initial
Interest Rate.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated by reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" relating to a Commercial Paper Rate Note or any Floating
Rate Note for which the interest rate is determined with respect to the
Commercial Paper Rate for each Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a "Commercial Paper Interest Determination Date") and shall be the Money
Market Yield (as defined below) on such date of the rate for
S-9
<PAGE> 10
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement, as such rate shall be published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published prior to 9:00
A.M., New York City time, on the Calculation Date, then the Commercial Paper
Rate shall be the Money Market Yield on such Commercial Paper Interest
Determination Date of the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper". If by 3:00 P.M. New York City time on such Calculation Date such rate is
not yet published in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 A.M., New York City time, on that Commercial Paper
Interest Determination Date, of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper having
the specified Index Maturity placed for an industrial issuer whose bond rating
is "AA", or the equivalent, from a nationally recognized rating agency;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting offered rates as mentioned in this sentence, the
Commercial Paper Rate will be the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ---------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
The interest rate on Commercial Paper Rate Notes for each Interest Reset
Date shall be the Commercial Paper Rate applicable to such Interest Reset Date
plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if
any, as specified in the applicable Pricing Supplement; provided, however, that
the interest rate in effect for the period from the Issue Date to the first
Interest Reset Date will be the Initial Interest Rate.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rates
(calculated by reference to the Federal Funds Rate and the Spread and/or Spread
Multiplier, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" relating to a Federal Funds Rate Note or any Floating Rate
Note for which the interest rate is determined with respect to the Federal Funds
Rate with respect to each Interest Reset Date will be determined by the
Calculation Agent as of the second Business Day prior to such Interest Reset
Date (a "Federal Funds Interest Determination Date"), and shall be the rate on
that date for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not so published by 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Federal Funds Interest Determination
Date, the Federal Funds Rate will be the rate on such Federal Funds Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate". If such rate is not so published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Federal Funds
Interest Determination Date, the Federal Funds Rate for such Federal Funds Reset
Date will be calculated by the Calculation Agent and will be the arithmetic mean
of the rates for the last transaction in overnight Federal Funds arranged by
three leading brokers of Federal Funds transactions in The City of New York
selected by the Calculation Agent as of 9:00 A.M., New York City time, on such
Federal Funds Interest Determination Date; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate will be the Federal Funds
Rate in effect on such Federal Funds Interest Determination Date.
The interest rate on Federal Funds Rate Notes for each Interest Reset Date
shall be the Federal Funds Rate applicable to such Interest Reset Date, plus or
minus the Spread, if any, and/or multiplied by the Spread
S-10
<PAGE> 11
Multiplier, if any, as specified in the applicable Pricing Supplement; provided,
however, that the interest rate in effect from the original issuance date to the
effective date of the interest rate determined on the first Interest Reset Date
shall be the Initial Interest Rate.
LIBOR Notes
LIBOR Notes will bear interest at the interest rates (calculated by
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR" Interest Determination Date"), LIBOR
will be either: (a) if "LIBOR Reuters" is specified in the applicable
Pricing Supplement, the arithmetic mean of the offered rates (unless the
specified Designated LIBOR Page by its terms provides only for a single
rate, in which case such single rate shall be used) for deposits in the
Index Currency having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following such LIBOR Interest Determination Date, that appear
on the Designated LIBOR Page specified in the applicable Pricing Supplement
as of 11:00 A.M. London time, on such LIBOR Interest Determination Date, if
at least two such offered rates appear (unless, as aforesaid, only a single
rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or if neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified as the method for calculating
LIBOR, the rate for deposits in the Index Currency having the Index
Maturity designated in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date that appears on the Designated LIBOR Page specified in
the applicable Pricing Supplement as of 11:00 A.M., London time, on such
LIBOR Interest Determination Date. If fewer than two such offered rates
appear, or if no such rate appears, as applicable, LIBOR in respect of the
related LIBOR Interest Determination Date will be determined in accordance
with provisions described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may
be, on the applicable Designated LIBOR Page as specified in clause (i)
above, the Calculation Agent will request the principal London offices of
each of four major reference banks in the London interbank market, as
selected by the Calculation Agent, to provide the Calculation Agent with
its offered quotation for deposits in the Index Currency for the period of
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time. If
at least two such quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 A.M., in the applicable Principal Financial Center,
on such LIBOR Interest Determination Date by three major banks in such
Principal Financial Center selected by the Calculation Agent for loans in
the Index Currency to leading European banks, having the Index Maturity
designated in the applicable Pricing Supplement and in a principal amount
that is representative for a single transaction in such Index Currency in
such market at such time; provided, however, that if the banks so selected
by the Calculation Agent are not quoting as mentioned in this sentence,
LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR
in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
S-11
<PAGE> 12
"Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in
the applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified
in the applicable Pricing Supplement or neither "LIBOR Reuters" nor "'LIBOR
Telerate" is specified as the method for calculating LIBOR, the display on the
Dow Jones Telerate Service for the purpose of displaying the London interbank
rates of major banks for the applicable Index Currency.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to United
States dollars, Deutsche Marks, Dutch Guilders, Italian Lire, Swiss Francs and
ECUs, the Principal Financial Center shall be The City of New York, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
The interest rate on LIBOR Notes for each Interest Reset Date shall be
LIBOR plus or minus the Spread, if any, and/or multiplied by the Spread
Multiplier, if any, as specified in the applicable Pricing Supplement; provided,
however, that the interest rate in effect for the period from the Issue Date to
the first Interest Reset Date will be the Initial Interest Rate.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated by
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Prime
Rate" relating to a Prime Rate Note or any Floating Rate Note for which the
interest rate is determined with respect to the Prime Rate with respect to each
Interest Reset Date will be determined by the Calculation Agent as of the second
Business Day prior to such Interest Reset Date (a "Prime Interest Determination
Date") and shall be the rate set forth on such date in H.15(519) under the
heading "Bank Prime Loan," or if not so published prior to 9:00 A.M., New York
City time, on the Calculation Date pertaining to such Prime Interest
Determination Date, then the Prime Rate will be determined by the Calculation
Agent and will be the arithmetic mean of the rates of interest publicly
announced by each bank that appears on the Reuters Screen NYMF Page (as defined
below) as such bank's prime rate or base lending rates as in effect for that
Prime Interest Determination Date. If fewer than four such rates but more than
one such rate appear on the Reuters Screen NYMF Page for the Prime Interest
Determination Date, the Prime Rate will be determined by the Calculation Agent
and will be the arithmetic mean of the prime rate quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Interest Determination Date by four major money center
banks in The City of New York selected by the Calculation Agent from a list
approved by Fleet. If fewer than two such rates appear on the Reuters Screen
NYMF Page, the Prime Rate will be determined by the Calculation Agent on the
basis of the rates furnished in The City of New York by the appropriate number
of substitute banks or trust companies organized and doing business under the
laws of the United States, or any state thereof, having total equity capital of
at least U.S. $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent from a list
approved by Fleet to provide such rate or rates; provided, however, that if the
banks selected as aforesaid are not quoting as mentioned in this sentence, the
Prime Rate will be the Prime Rate in effect on such Prime Interest Determination
Date. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on
the Reuters Monitor Money Rates Service (or such other page as may replace the
NYMF page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks).
The interest rate on Prime Rate Notes for each Interest Reset Date shall be
the Prime Rate applicable to such Interest Reset Date, plus or minus the Spread,
if any, and/or multiplied by the Spread Multiplier, if any, as specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect for the period from the Issue Date to the first Interest Reset Date will
be the Initial Interest Rate.
S-12
<PAGE> 13
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rates (calculated by
reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any)
specified in the Treasury Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" relating to a Treasury Rate Note or any Floating Rate Note for
which the interest rate is determined with respect to the Treasury Rate means,
with respect to any Interest Reset Date, the rate for the auction held on the
Treasury Rate Determination Date (as hereinafter defined) of direct obligations
of the United States ("Treasury bills") having the Index Maturity specified in
the applicable Pricing Supplement as published in H.15(519) under the heading,
"U.S. Government Securities -- Treasury bills -- auction average (investment)"
or, if not so published by 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Treasury Rate Determination Date, the auction average
rate (expressed as a bond equivalent yield, rounded to the nearest one
one-hundredth of a percent, with five one-thousandths of a percent rounded
upward, on the basis of a year of 365 or 366 days, as applicable, and applied on
a daily basis) as announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury bills having the Index
Maturity designated in the applicable Pricing Supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such Calculation
Date or if no such auction is held on such Treasury Rate Determination Date,
then the Treasury Rate shall be calculated by the Calculation Agent and shall be
a yield to maturity (expressed as a bond equivalent yield, rounded to the
nearest one one-hundredth of a percent, with five one-thousandths of a percent
rounded upward, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government securities
dealers selected by the Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the specified Index Maturity; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Treasury Rate for such Interest Reset
Date will be the Treasury Rate in effect on such Treasury Rate Determination
Date.
The "Treasury Rate Determination Date" for any Interest Reset Date will be
the day of the week in which such Interest Reset Date falls on which Treasury
bills would normally be auctioned, but in no event shall the Treasury Rate
Determination Date be after the related Interest Reset Date. Treasury bills are
normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except such auction may be held on the preceding Friday. If, as the result of a
legal holiday, an auction is so held on the preceding Friday, such Friday will
be the Treasury Rate Determination Date pertaining to the Interest Reset Date
occurring in the next succeeding week. If no auction is held in any week (or on
the preceding Friday), the Treasury Rate Determination Date shall be the Monday
of the week in which the Interest Reset Date falls.
The interest rate on Treasury Rate Notes for each Interest Reset Date shall
be the Treasury Rate plus or minus the Spread, if any, and/or multiplied by the
Spread Multiplier, if any, as specified in the applicable Pricing Supplement;
provided, however, that the interest rate in effect for the period from the
Issue Date to the first Interest Reset Date will be the Initial Interest Rate.
11th District Cost of Funds Rate Notes
11th District Cost of Funds Rate Notes will bear interest at the interest
rates (calculated with reference to the 11th District Cost of Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the 11th District Cost of
Funds Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "11th
District Cost of Funds Rate" relating to an 11th District Cost of Funds Rate
Note or any Floating Rate Note for which the interest rate is determined with
respect to the 11th District Cost of Funds Rate means, with respect to any
Interest Determination Date relating to an 11th District Cost of Funds Rate
Note, the rate equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which such Interest
Determination Date falls, as set forth under the caption "11th District" on
Telerate Page 7058 as of 11:00 a.m., San Francisco time, on such Interest
Determination Date. If such rate does not appear on Telerate
S-13
<PAGE> 14
Page 7058 on any related Interest Determination Date, the 11th District Cost of
Funds Rate for such Interest Determination Date shall be the monthly weighted
average cost of funds paid by member institutions of the 11th Federal Home Loan
Bank District that was most recently announced (the "11th District Cost of Funds
Index") by the Federal Home Loan Bank of San Francisco (the "FHLB of San
Francisco") as such cost of funds for the calendar month immediately preceding
the date of such announcement. If the FHLB of San Francisco fails to announce
such rate for the calendar month immediately preceding such Interest
Determination Date, then the 11th District Cost of Funds Rate determined as of
such Interest Determination Date will be the 11th District Cost of Funds Rate in
effect on such Interest Determination Date.
The interest rate on 11th District Cost of Funds Notes for each Interest
Reset Date shall be the 11th District Cost of Funds Rate applicable to such
Interest Reset Date, plus or minus the Spread, if any, and/or multiplied by the
Spread Multiplier, if any, as specified in the applicable Pricing Supplement;
provided, however, that the interest rate in effect from the Issue Date to the
first Interest Reset Date will be the Initial Interest Rate.
INDEXED NOTES
The Notes may be issued with the amount of principal, premium, if any, or
interest payable in respect thereof to be determined with reference to the price
or prices of specified commodities or stocks, the exchange rate of one or more
specified currencies (including a composite currency such as the ECU) relative
to any indexed currency or such other price, exchange rate or interest index
("Indexed Notes"), as set forth in the applicable Pricing Supplement. In certain
cases, holders of Indexed Notes may receive a principal amount on the Maturity
Date or the date of earlier redemption or repayment that is greater than or less
than the face amount of the Notes depending upon the relative value on the
Maturity Date or the date of earlier redemption or repayment of the specified
indexed item. Information as to the method for determining the amount of
principal, premium, if any, or interest payable in respect of Indexed Notes,
certain historical information with respect to the specified indexed item and
tax considerations associated with an investment in such Indexed Notes will be
set forth in the applicable Pricing Supplement.
An investment in Notes indexed, as to principal, premium, if any, or
interest, to one or more values of currencies (including exchange rates between
currencies), commodities or interest rate indices entails significant risks that
are not associated with similar investments in a conventional fixed-rate debt
security. If the interest rate of an Indexed Note is so indexed, it may result
in an interest rate that is less than that payable on a conventional fixed-rate
debt security issued at the same time, including the possibility that no
interest will be paid, and, if the principal of and/or premium, if any, on an
Indexed Note is so indexed, the amount of principal payable in respect thereof
may be less than the original purchase price of such Indexed Note if allowed
pursuant to the terms thereof, including the possibility that no such amount
will be paid. The secondary market for Indexed Notes will be affected by a
number of factors, independent of the creditworthiness of Fleet and the value of
the applicable currency, commodity or interest rate index, including the
volatility of the applicable currency, commodity or interest rate index, the
time remaining to the maturity of such Indexed Notes, the amount outstanding of
such Indexed Notes and market interest rates. The value of the applicable
currency, commodity or interest rate index depends on a number of interrelated
factors, including economic, financial and political events, over which Fleet
has no control. Additionally, if the formula used to determine the amount of
principal, premium, if any, or interest payable with respect to Indexed Notes
contains a multiple or leverage factor, the effect of any change in the
applicable currency, commodity or interest rate index will be increased. The
historical experience of the relevant currencies, commodities or interest rate
indices should not be taken as an indication of future performance of such
currencies, commodities or interest rate indices during the term of any Indexed
Note. Accordingly, prospective investors should consult their own financial and
legal advisors as to the risks entailed by an investment in Indexed Notes and
the suitability of Indexed Notes in light of their particular circumstances.
REDEMPTION
Although Registered Notes will not generally be redeemable prior to
maturity, Fleet in the applicable Pricing Supplement relating to a Registered
Note may specify that such Registered Note will be redeemable at Fleet's option
on a date or dates specified prior to maturity at a price or prices, set forth
in the applicable
S-14
<PAGE> 15
Pricing Supplement, together with accrued interest to the date of redemption.
The Registered Notes will not be subject to any sinking fund. Fleet may redeem
any of the Registered Notes which are redeemable and remain outstanding either
in whole or from time to time in part, upon not less than 30, nor more than 60,
days' notice. If less than all of the Registered Notes with like tenor and terms
are to be redeemed, the Notes to be redeemed shall be selected by the applicable
Note Registrar by such method as such Note Registrar shall deem fair and
appropriate.
REPAYMENT AND REPURCHASE
Although Registered Notes will not generally be repayable at the option of
the Holder prior to maturity, Fleet, in the Pricing Supplement relating to a
Registered Note, may specify that such Registered Note will be repayable at the
option of the Holder on a date or dates specified prior to maturity at a price
or prices set forth in the applicable Pricing Supplement, together with accrued
interest to the date of repayment.
In order for a Registered Note to be repaid, the Paying Agent must receive
at least 30, but not more than 45, days, prior to the repayment date (i) the
Registered Note with the form entitled "Option to Elect Repayment" on the
reverse of the Registered Note duly completed of (ii) a telegram, telex,
facsimile transmission or a letter from a member of a national securities
exchange of the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States of America setting forth the name of
the Holder of the Registered Note, the principal amount of the Registered Note,
the principal amount of the Registered Note to be repaid, the certificate number
or a description of the tenor and terms of the Registered Note, a statement that
the option to elect repayment is being exercised thereby and a guarantee that
the Registered Note to be repaid with the form entitled "Option to Elect
Repayment" on the reverse of the Registered Note duly completed will be received
by the Paying Agent not later than five Business Days after the date of such
telegram, telex, facsimile transmission or letter and such Registered Note and
form duly completed are received by the Paying Agent by such fifth Business Day.
Exercise of the repayment option by the Holder of a Registered Note shall be
irrevocable. The repayment option may be exercised by the Holder of a Registered
Note for less than the entire principal amount of the Registered Note provided
that the principal amount of the Registered Note remaining outstanding after
repayment is an authorized denomination.
During the period that the Book-Entry Notes are represented by the Global
Notes (as hereinafter defined) held by or on behalf of the Depository (as
hereinafter defined), and registered in the name of the Depository or the
Depository's nominee, the option for repayment may be exercised by the
applicable Participant (as hereinafter defined) that has an account with the
Depository, on behalf of the beneficial owners of the Global Note or Notes
representing such Book-Entry Notes, by delivering a written notice substantially
similar to the above mentioned form to the Trustee at its corporate trust office
(or such other address of which Fleet shall from time to time notify the
holders), not more than 60 nor less than 30 days prior to the date of repayment.
Notice of elections from Participants on behalf of beneficial owners of the
Global Note or Notes representing such Book-Entry Notes to exercise their option
to have such Book-Entry Notes repaid must be received by the Trustee by 5:00
P.M., New York City time, on the last day for giving such notice. In order to
ensure that a notice is received by the Trustee on a particular day, the
beneficial owner of the Global Note or Notes representing such Book-Entry Notes
must so direct the applicable Participant before such participant's deadline for
accepting instructions for that day. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
beneficial owners of the Global Note or Notes representing Book-Entry Notes
should consult the Participants through which they own their interest therein
for the respective deadlines for such Participants. All notices shall be
executed by a duly authorized officer of such Participant (with signature
guaranteed) and shall be irrevocable. In addition, beneficial owners of the
Global Note or Notes representing Book-Entry Notes shall effect delivery at the
time such notices of election are given to the Depository by causing the
applicable Participant to transfer such beneficial owner's interest in the
Global Note or Notes representing such Book-Entry Notes, on the Depository's
records, to the Trustee. See "Book-Entry System".
If applicable, Fleet will comply with the requirements of Rule 14e-1 under
the Securities Exchange Act of 1934, as amended, and any other securities laws
or regulations in connection with any such repayment.
S-15
<PAGE> 16
Fleet may at any time purchase Registered Notes at any price in the open
market or otherwise. Registered Notes so purchased by Fleet may be held or
resold or, at the discretion of Fleet, may be surrendered to the Trustee for
cancellation.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the Notes, including the determination of
Base Rate, the calculation of the interest rate applicable to a Floating Rate
Note, and the specification of one or more Base Rates, the Interest Payment
Date, the Maturity Date or any other term relating thereto, may be modified as
specified under "Other Provisions" on the face of such Note or in an Addendum
relating thereto, if so specified on the face of such Note and in the applicable
Pricing Supplement.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes denominated in the same currency and
having the same issue date, rank (senior or subordinated), original issue
discount provisions, if any, Maturity Date, redemption provisions, if any,
repayment provisions, if any, Interest Payment Dates, Interest Period, Record
Dates and, in the case of Fixed Rate Notes, interest rate or, in the case of
Floating Rate Notes, the Base Rate, Initial Interest Rate, Index Maturity,
Interest Reset Dates, Spread or Spread Multiplier, if any, Minimum Interest
Rate, if any, and Maximum Interest Rate, if any, will be represented by a single
Global Security. Each Global Security representing Book-Entry Notes will be
deposited with, or on behalf of, the Depository or such other depositary as is
specified in the Pricing Supplement, and registered in the name of a nominee of
the Depository. Book-Entry Notes will not be exchangeable for certificated
Registered Notes and, except under the circumstances described below, will not
otherwise be issuable in definitive form.
The Registered Notes will be issued in the form of one or more fully
registered global securities (collectively, the "Global Note") which will be
deposited with, or on behalf of, the Depository and registered in the name of
the Depository's nominee. Except as set forth below, the Global Note may be
transferred, in whole or in part, only by the Depository to a nominee of the
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any nominee to a successor
depository or any nominee of such successor.
The Depository has advised as follows: The Depository 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 Exchange Act. The Depository holds securities that its
participants ("Participants") deposit with the Depository. The Depository 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. Direct Participants
include securities brokers and dealers (including the Agents, other than
Fleet-MA), banks, trust companies, clearing corporations and certain other
organizations. The Depository is owned by a number of its direct Participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the Depository's
system is also available to Fleet-MA and others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("indirect participants"). Persons
who are not Participants may own beneficial interests in securities held by the
Depository only through Participants or indirect participants. The Rules
applicable to the Depository and its Participants are on file with the
Commission.
The Depository has advised that pursuant to procedures established by it
(i) upon issuance of the Global Note by Fleet, the Depository will credit the
accounts of the Participants designated by the Agents with the principal amount
of the Registered Notes purchased by the Agents and (ii) ownership of beneficial
interests in the Global Note will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depository
(with respect to Participants' interests), the Participants and the indirect
participants (with respect to the owners of beneficial interests in such Global
Note). The laws of some states
S-16
<PAGE> 17
may require that certain persons take physical delivery in definitive form of
securities which they own. Consequently, such persons may be prohibited from
purchasing beneficial interests in the Global Note from any beneficial owner or
otherwise.
So long as the Depository's nominee is the registered owner of the Global
Note, such nominee for all purposes will be considered the sole owner or holder
of the Registered Notes represented by such Global Note for all purposes under
the applicable Indenture. Except as provided below, owners of beneficial
interests in the Global Note will not be entitled to have any of the Registered
Notes represented by such Global Note registered in their names, will not
receive or be entitled to receive physical delivery of the Registered Notes in
definitive form and will not be considered the owners or holders thereof under
the applicable Indenture. Accordingly, each person owning a beneficial interest
in the Global Note must rely on the procedures of the Depository and, if such
person is not a Participant, on the procedures of the Participant and, if
applicable, the indirect participant, through which such person owns its
interest, to exercise any rights of a holder under the applicable Indenture.
Fleet understands that under existing practice, in the event that Fleet requests
any action of the holders or a beneficial owner desires to take any action a
holder is entitled to take, the Depository would act upon the instructions of,
or authorize, the Participant to take such action.
Principal and interest payments on the Global Note registered in the name
of the Depository's nominee will be made to the Depository's nominee as the
registered owner of such Global Note. Fleet and the Trustee will treat the
person in whose name the Global Note is registered as the owner of such Global
Note for the purpose of receiving payment of principal and interest on the
Registered Notes and for all other purposes whatsoever. None of Fleet, the
Trustee, the Paying Agent or the Security Registrar has any responsibility or
liability for the payment of principal or interest on the Registered Notes to
owners of beneficial interests in the Global Note. The Depository has advised
that upon receipt of any payment of principal or interest in respect of the
Global Note, it will immediately credit the accounts of the Participants with
such payment in amounts proportionate to their respective beneficial interests
in such Global Note as shown on the records of the Depository. Payments by
Participants and indirect participants to owners of beneficial interests in the
Global Note will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of the
Participants or indirect participants.
None of Fleet, the Trustee, the Paying Agent or the Security Registrar will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Global
Note, of for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Global Note representing all but not part of the Registered Notes being
offered hereby is exchangeable for Registered Notes in definitive form of like
tenor and terms if (i) the Depository notifies Fleet that it is unwilling or
unable to continue as depository for such Global Note or if at any time the
Depository ceases to be a clearing agency registered under the Exchange Act,
and, in either case, a successor depository is not appointed by Fleet within 90
days of receipt by Fleet of such notice or of Fleet becoming aware of such
ineligibility, (ii) Fleet in its discretion at any time determines not to have
all of the Registered Notes represented by the Global Note and notifies the
Trustee thereof, or (iii) an Event of Default has occurred and is continuing
with respect to the Registered Notes. The Global Note exchangeable pursuant to
the preceding sentence shall be exchangeable for Registered Notes issuable in
authorized denominations and registered in such names as the Depository holding
such Global Note shall direct. Subject to the foregoing, a Global Note is not
exchangeable, except for a Registered Note or Notes of the same aggregate
denomination to be registered in the name of the depository or its nominee or in
the name of a successor or the Depository or a nominee of such successor.
A further description of the Depository's procedures with respect to Global
Notes representing Book-Entry Notes is set forth in the Basic Prospectus under
"Description of Debt Securities -- Global Securities". The Depository has
confirmed that it intends to follow such procedures.
S-17
<PAGE> 18
FOREIGN CURRENCY RISKS
Judgments. In the event an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a court of the
United States, it is unlikely that such court would grant judgment relating to
such Notes in any currency other than U.S. dollars. The Judiciary Law of the
State of New York provides, however, that a judgment or decree in an action
based upon an obligation denominated in a currency other than U.S. dollars will
be rendered in the foreign currency of the underlying obligation and converted
into U.S. dollars at the rate of exchange prevailing on the date of the entry of
the judgment or decree. Holders of Notes denominated in a Specified Currency
other than U.S. dollars would bear the risk of exchange rate fluctuations
between the time the amount of the judgment is calculated and the time the
Trustee converts U.S. dollars to the Specified Currency for payment of the
judgment.
Exchange Rates and Exchange Controls. An investment in Registered Notes
that are denominated in a foreign currency or currency units entails significant
risks that are not associated with a similar investment in a security
denominated in U.S. dollars. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the U.S. dollar
and the various foreign currencies and the possibility of the imposition or
modification of foreign exchange controls by either the U.S. or foreign
governments. Such risks generally depend on economic and political events and on
the supply of and demand for the relevant currencies, factors over which Fleet
has no control. In recent years, rates of exchange between the U.S. dollar and
certain foreign currencies have been highly volatile and such volatility may be
expected in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations in
the exchange rate that may occur during the term of any Registered Note.
Depreciation of the currency specified in a Registered Note against the U.S.
dollar would result in a decrease in the effective yield of such Note below its
coupon rate, and in certain circumstances could result in a loss to the investor
on a U.S. dollar basis.
THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE BASIC
PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN REGISTERED NOTES
DENOMINATED IN CURRENCIES OTHER THAN U.S. DOLLARS. FLEET BELIEVES THAT THESE
RISKS ARE POTENTIALLY TOO VARIABLE TO ASCERTAIN AND DESCRIBE WITH ANY REASONABLE
DEGREE OF CERTAINTY AND THAT PREPARATION OF A LIST OF EVERY POTENTIAL MATERIAL
RISK INCORPORATING EVERY ECONOMIC, FINANCIAL, POLITICAL AND MILITARY
CIRCUMSTANCE, AMONG OTHER THINGS, WOULD BE IMPRACTICAL. PROSPECTIVE INVESTORS
SHOULD THEREFORE CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN CURRENCIES OTHER
THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS
WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise specified in the applicable Pricing Supplement, Registered
Notes denominated in foreign currencies will not be sold in, or to residents of,
the country of the Specified Currency in which particular Registered Notes are
denominated.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and Fleet disclaims any
responsibility to advise prospective purchasers who are residents of countries
other than the United States with respect to any matters that may affect the
purchase, holding or receipt of payments of principal of, or interest on, the
Registered Notes. Such persons should consult their own counsel with regard to
such matters.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a Specified Currency other than U.S. dollars at a Registered Note's interest
payment date or maturity or upon earlier redemption or repayment. There can be
no assurances that exchange controls will not restrict or prohibit payments of
principal or interest in any such foreign currency or currency unit. Even if
there are no actual exchange controls, it is possible that at an interest
payment date or maturity or upon earlier redemption or repayment of any
particular Registered Note, the Specified Currency for such Note would not be
available to Fleet due to circumstances beyond the control
S-18
<PAGE> 19
of Fleet. In that event, Fleet will make required payments in U.S. dollars on
the basis of the Market Exchange Rate. See "Description of Registered Notes".
Information concerning exchange rates for the Specified Currency, if other
than U.S. dollars, in which principal of, or interest on, the Registered Notes
is payable, as against the U.S. dollar at selected times during the last five
years, as well as current foreign exchange controls affecting such Specified
Currency will be set forth in the applicable Pricing Supplement.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Registered Notes
is based upon laws, regulations, rulings and decisions now in effect, all of
which are subject to change (including changes in effective dates) or possible
differing interpretations. It deals only with Registered Notes held as capital
assets and does not purport to deal with persons in special tax situations, such
as financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, persons holding Registered Notes as a hedge
against currency risks or as a position in a "straddle" for tax purposes, or
persons whose functional currency is not the United States dollar. It also does
not deal with holders other than original purchasers (except where otherwise
specifically noted). Persons considering the purchase of the Registered Notes
should consult their own tax advisors concerning the application of United
States Federal income tax laws to their particular situations as well as any
consequences of the purchase, ownership and disposition of the Registered Notes
arising under the laws of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a
Registered Note that is for United States Federal income tax purposes (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) an estate or trust the income of
which is subject to United States Federal income taxation regardless of its
source, or (iv) any other person whose income or gain in respect of a Registered
Note is effectively connected with the conduct of a United States trade or
business. As used herein, the term "non-U.S. Holder" means a holder of a
Registered Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest. Payments of interest on a Registered Note generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
Original Issue Discount. The following summary is a general discussion of
the United States Federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of Registered Notes issued with original
issue discount ("Discount Notes"). The following summary is based upon final
Treasury regulations (the "OID Regulations") issued by the Internal Revenue
Service ("IRS") on January 27, 1994 under the original issue discount provisions
of the Internal Revenue Code of 1986, as amended (the "Code"). The OID
Regulations, which replaced certain proposed original issue discount regulations
that were issued on December 21, 1992, generally apply to debt instruments
issued on or after April 4, 1994. In addition, taxpayers may rely on the OID
Regulations for debt instruments issued after December 21, 1992.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Registered Note over
its issue price, if such excess equals or exceeds a de minimis amount (generally
1/4 of 1% of the Registered Note's stated redemption price at maturity
multiplied by the number of complete years to its maturity from its issue date).
The issue price of an issue of Registered Notes equals the first price at which
a substantial amount of such Registered Notes has been sold other than to
underwriters, placement agents or wholesalers. The stated redemption price at
maturity of a Registered Note is the sum of all payments provided by the
Registered Note other than "qualified stated interest" payments. The term
"qualified stated interest" generally means stated interest that is
unconditionally payable
S-19
<PAGE> 20
in cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate or at certain floating rates. In addition, under
the OID Regulations, if a Registered Note bears interest for one or more accrual
periods at a rate below the rate applicable for the remaining term of such
Registered Note (e.g., Registered Notes with teaser rates or interest holidays),
and if the greater of either the resulting foregone interest on such Registered
Note or any "true" discount on such Registered Note (i.e., the excess of the
Registered Note's stated principal amount over its issue price) equals or
exceeds a specified de minimis amount, then the stated interest on the
Registered Note would be treated as original issue discount rather than
qualified stated interest.
Payments of qualified stated interest on a Registered Note are taxable to a
U.S. Holder as ordinary interest income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to such
Discount Note for each day during the taxable year (or portion of the taxable
year) on which such U.S. Holder held such Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (i) the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and
(ii) the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of any accrual period is the sum of the issue price of the Discount Note plus
the amount of original issue discount allocable to all prior accrual periods
minus the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
If a portion of the initial purchase price of a Registered Note is
attributable to interest that accrued prior to the Registered Note's issue date,
the first stated interest payment on the Registered Note is to be made within
one year of the Registered Note's issue date and such payment will equal or
exceed the amount of pre-issuance accrued interest, then the issue price will be
decreased by the amount of pre-issuance accrued interest, in which case a
portion of the first stated interest payment will be treated as a return of the
excluded pre-issuance accrued interest and not as an amount payable on the
Registered Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Discount Note (other
than any payment of qualified stated interest) over the Discount Note's adjusted
issue price as of the beginning of such final accrual period. In addition, if an
interval between payments of qualified stated interest on a Discount Note
contains more than one accrual period, then the amount of qualified stated
interest payable at the end of such interval is allocated pro rata (on the basis
of their relative lengths) between the accrual periods contained in the
interval.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
its stated redemption price at maturity will be considered to have purchased the
Discount Notes at an "acquisition premium." Under the acquisition premium rules,
the amount of original issue discount which such U.S. Holder must include in its
gross income with respect to such Discount Note for any taxable year (or portion
thereof in which the U.S. Holder holds the Discount
S-20
<PAGE> 21
Note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and single
objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable Note's
issue date) will be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a qualified
floating rate but which is subject to one or more restrictions such as a maximum
numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a
floor) may, under certain circumstances, fail to be treated as a qualified
floating rate under the OID Regulations. An "objective rate" is a rate that is
not itself a qualified floating rate but which is determined using a single
fixed formula and which is based upon (i) one or more qualified floating rates,
(ii) one or more rates where each rate would be a qualified floating rate for a
debt instrument denominated in a currency other than the currency in which the
Variable Note is denominated, (iii) either the yield or changes in the price of
one or more items of actively traded personal property or (iv) a combination of
objective rates. The OID Regulations also provide that other variable interest
rates may be treated as objective rates if so designated by the IRS in the
future. Despite the foregoing, a variable rate of interest on a Variable Note
will not constitute an objective rate if it is reasonably expected that the
average value of such rate during the first half of the Variable Note's term
will be either significantly less than or significantly greater than the average
value of the rate during the final half of the Variable Note's term. A
"qualified inverse floating rate" is any objective rate where such rate is equal
to a fixed rate minus a qualified floating rate, as long as variations in the
rate can reasonably be expected to inversely reflect contemporaneous variations
in the cost of newly borrowed funds. The OID Regulations also provide that if a
Variable Note provides for stated interest at a fixed rate for an initial period
of less than one year followed by a variable rate that is either a qualified
floating rate or an objective rate and if the variable rate on the Variable
Note's issue date is intended to approximate the fixed rate (e.g., the value of
the variable rate on the issue date does not differ from the value of the fixed
rate by more than 25 basis points), then the fixed rate and the variable rate
together will constitute either a single qualified floating rate or objective
rate, as the case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above.
S-21
<PAGE> 22
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified floating rate, as the case may be, as of the Variable Note's issue
date. Any objective rate (other than a qualified inverse floating rate) provided
for under the terms of the Variable Note is converted into a fixed rate that
reflects the yield that is reasonably expected for the Variable Note. In the
case of a Variable Note that qualifies as a "variable rate debt instrument" and
provides for stated interest at a fixed rate in addition to either one or more
qualified floating rates or a qualified inverse floating rate, the fixed rate is
initially converted into a qualified floating rate (or a qualified inverse
floating rate, if the Variable Note provides for a qualified inverse floating
rate). Under such circumstances, the qualified floating rate or qualified
inverse floating rate that replaces the fixed rate must be such that the fair
market value of the Variable Note as of the Variable Note's issue date is
approximately the same as the fair market value of an otherwise identical debt
instrument that provides for either the qualified floating rate or qualified
inverse floating rate rather than the fixed rate. Subsequent to converting the
fixed rate into either a qualified floating rate or a qualified inverse floating
rate, the Variable Note is then converted into an "equivalent" fixed rate debt
instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. It is not entirely clear under current law
how a Variable Note would be taxed if such Variable Note were treated as a
contingent payment debt obligation. The proper United States Federal income tax
treatment of Variable Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable Pricing Supplement.
Certain of the Registered Notes (i) may be redeemable at the option of the
Company prior to their stated maturity (a "call option") and/or (ii) may be
repayable at the option of the holder prior to their stated maturity (a "put
option"). Registered Notes containing such features may be subject to rules that
differ from the general rules discussed above. Investors intending to purchase
Registered Notes with such features should consult their own tax advisors, since
the original issue discount consequences will depend, in part, on the particular
terms and features of the purchased Registered Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions. This election is only available for debt instruments
issued on or after April 4, 1994. In applying the constant yield method to a
Registered Note with respect to which this election has been made, the issue
price of the Registered Note will equal the electing U.S. Holder's adjusted
basis in the Registered Note immediately after its acquisition, the issue date
of the Registered Note will be the date of its acquisition by the electing U.S.
Holder, and no payments on the Registered Note will be treated as payments of
qualified stated interest. This election is generally applicable only to the
Registered Note with respect to which it is made and may not be revoked without
the consent of the IRS. If this election is made with respect to a Registered
Note with amortizable bond premium, the electing U.S. Holder will be deemed to
have elected to apply amortizable bond premium against interest with respect to
all debt
S-22
<PAGE> 23
instruments with amortizable bond premium (other than debt instruments the
interest on which is excludible from gross income) held by such electing U.S.
Holder as of the beginning of the taxable year in which the election is made or
any debt instruments acquired thereafter. The deemed election with respect to
amortizable bond premium may not be revoked without the consent of the IRS.
If the election described above to apply the constant yield method to all
interest on a Registered Note is made with respect to a Market Discount Note, as
defined above, then the electing U.S. Holder will be treated as having made the
election discussed above under "Notes Purchased at a Market Discount" to include
market discount in income currently over the life of all debt instruments held
or thereafter acquired by such U.S. Holder.
Short-Term Notes. Registered Notes that have a fixed maturity of one year
or less ("Short-Term Notes") will be treated as having been issued with original
issue discount. In general, an individual or other cash method U.S. Holder is
not required to accrue such original issue discount unless the U.S. Holder
elects to do so. If such an election is not made, any gain recognized by the
U.S. Holder on the sale, exchange or maturity of the Short-Term Note will be
ordinary income to the extent of the original issue discount accrued on a
straight-line basis, or upon election under the constant yield method (based on
daily compounding), through the date of sale or maturity, and a portion of the
deductions otherwise allowable to the U.S. Holder for interest on borrowings
allocable to the Short-Term Note will be deferred until a corresponding amount
of income is realized. U.S. Holders who report income for United States Federal
income tax purposes under the accrual method, and certain other holders
including banks and dealers in securities, are required to accrue original issue
discount on a Short-Term Note on a straight-line basis unless an election is
made to accrue the original issue discount under a constant yield method (based
on daily compounding).
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of "acquisition discount", if
any, with respect to the Short-Term Note (rather than the OID with respect to
such Short-Term Note). Acquisition discount is the excess of the stated
redemption price at maturity of the Short-Term Note over the U.S. Holder's
purchase price therefor. Acquisition discount will be treated as accruing on a
ratable basis or, at the election of the U.S. Holder, on a constant-yield basis.
For purposes of determining the amount of OID subject to these rules, the
OID Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Note's stated redemption price at maturity.
Market Discount. If a U.S. Holder purchases a Registered Note, other than
a Discount Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of a Discount Note, for an amount that is less than its adjusted issue
price as of the purchase date, the amount of the difference will be treated as
"market discount," unless such difference is less than a specified de minimis
amount. The market discount rules do not apply to Short-Term Notes.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a Registered Note as
ordinary income to the extent of the lesser of (i) the amount of such payment or
realized gain or (ii) the market discount which has not previously been included
in income and is treated as having accrued on such Registered Note at the time
of such payment or disposition. Market discount will be considered to accrue
ratably during the period from the date of acquisition to the maturity date of
the Registered Note, unless the U.S. Holder elects to accrue market discount on
the basis of semiannual compounding. Such an election is applicable only to the
Market Discount Note with respect to which it is made and is irrevocable.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Registered Note with market discount until the maturity of
the Registered Note or its earlier disposition in a taxable transaction, because
a current deduction is only allowed to the extent the interest expense exceeds
an allocable portion of market discount. A U.S. Holder may elect to include
market discount in income currently as it accrues (on either a ratable or
semiannual compounding basis), in which case the rules described above regarding
the treatment as ordinary
S-23
<PAGE> 24
income of gain upon the disposition of the Registered Note and upon the receipt
of certain cash payments and regarding the deferral of interest deductions will
not apply. Generally, such currently included market discount is treated as
ordinary interest for United States Federal income tax purposes. Such an
election applies to all debt instruments with market discount acquired by the
electing U.S. Holder on or after the first day of the first taxable year to
which the election applies and may not be revoked without the consent of the
IRS.
Premium. If a U.S. Holder purchases a Registered Note for an amount that
is greater than its stated redemption price at maturity, such U.S. Holder will
be considered to have purchased the Registered Note with "amortizable bond
premium" equal in amount to such excess. A U.S. Holder may elect to amortize
such premium using a constant yield method over the remaining term of the
Registered Note and may offset interest otherwise required to be included in
respect of the Registered Note during any taxable year by the amortized amount
of such excess for the taxable year. However, if the Registered Note may be
optionally redeemed after the U.S. Holder acquires it at a price in excess of
its stated redemption price at maturity, special rules would apply which could
result in a deferral of the amortization of some bond premium until later in the
term of the Registered Note. Any election to amortize bond premium is applicable
to all bonds (other than bonds the interest on which is excludible from gross
income) held by the U.S. Holder at the beginning of the first taxable year to
which the election applies or thereafter acquired by the U.S. Holder, and may
not be revoked without the consent of the IRS. See also "Original Issue Discount
- -- Election to Treat All Interest as Original Issue Discount".
Disposition of a Registered Note. Except as discussed above, upon the
sale, exchange or retirement of a Registered Note, a U.S. Holder generally will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such U.S. Holder's adjusted tax
basis in the Registered Note. A U.S. Holder's adjusted tax basis in a Registered
Note generally will equal such U.S. Holder's initial investment in the
Registered Note increased by any original issue discount included in income (and
accrued market discount (or acquisition discount, in the case of a Short-Term
Note), if any, if the U.S. Holder has included such market discount in income)
and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such Registered Note. Such gain or loss generally will be long-term capital gain
or loss if the Registered Note were held for more than one year.
REGISTERED NOTES DENOMINATED OR ON WHICH INTEREST IS PAYABLE IN A FOREIGN
CURRENCY
As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
Payments of Interest in a Foreign Currency.
Cash Method. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Registered Note (other than original issue discount or market discount)
will be required to include in income the U.S. dollar value of the Foreign
Currency payment (determined on the date such payment is received) regardless of
whether the payment is in fact converted to U.S. dollars at that time, and such
U.S. dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
Accrual Method. A U.S. Holder who uses the accrual method of accounting
for United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or market discount and reduced by amortizable bond premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Registered Note during an accrual period. The U.S. dollar
value of such accrued income will be determined by translating such income at
the average rate of exchange for the accrual period or, with respect to an
accrual period that spans two taxable years, at the average rate for the partial
period within the taxable year. A U.S. Holder may elect, however, to translate
such accrued interest income using the rate of exchange on the last day of the
accrual period or, with respect to an accrual period that spans two taxable
years, using the rate of exchange on the last day of the taxable year. If the
last day of an accrual period is within five business days of the date of
receipt of the accrued interest, a U.S. Holder may translate such interest using
the rate of exchange on the date of receipt. The above election will apply to
other debt obligations held by the U.S. Holder and may not be changed without
the consent of
S-24
<PAGE> 25
the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
Purchase, Sale and Retirement of Registered Notes. A U.S. Holder who
purchases a Registered Note with previously owned Foreign Currency will
recognize ordinary income or loss in an amount equal to the difference, if any,
between such U.S. Holder's tax basis in the Foreign Currency and the U.S. dollar
fair market value of the Foreign Currency used to purchase the Registered Note,
determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Registered Note, a U.S. Holder will recognize
taxable gain or loss equal to the difference between the amount realized on the
sale, exchange or retirement and such U.S. Holder's adjusted tax basis in the
Registered Note. Such gain or loss generally will be capital gain or loss
(except to the extent of any accrued market discount not previously included in
the U.S. Holder's income) and will be long-term capital gain or loss if at the
time of sale, exchange or retirement the Registered Note has been held by such
U.S. Holder for more than one year. To the extent the amount realized represents
accrued but unpaid interest, however, such amounts must be taken into account as
interest income, with exchange gain or loss computed as described in "Payments
of Interest in a Foreign Currency" above. If a U.S. Holder receives Foreign
Currency on such a sale, exchange or retirement the amount realized will be
based on the U.S. dollar value of the Foreign Currency on (i) the date of
receipt of such Foreign Currency in the case of a cash basis U.S. Holder and
(ii) the date of disposition in the case of an accrual basis U.S. Holder. In the
case of a Registered Note that is denominated in Foreign Currency and is traded
on an established securities market, a cash basis U.S. Holder (or, upon
election, an accrual basis U.S. Holder) will determine the U.S. dollar value of
the amount realized by translating the Foreign Currency payment at the spot rate
of exchange on the settlement date of the sale. A U.S. Holder's adjusted tax
basis in a Registered Note will equal the cost of the Registered Note to such
holder, increased by the amounts of any market discount or original issue
discount previously included in income by the holder with respect to such
Registered Note and reduced by any amortized acquisition or other premium and
any principal payments received by the holder. A U.S. Holder's tax basis in a
Registered Note, and the amount of any subsequent adjustments to such holder's
tax basis, will be the U.S. dollar value of the Foreign Currency amount paid for
such Registered Note, or of the Foreign Currency amount of the adjustment,
determined on the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Registered
Note that is attributable to fluctuations in currency exchange rates will be
ordinary income or loss which will not be treated as interest income or expense.
Gain or loss attributable to fluctuations in exchange rates will equal the
difference between the U.S. dollar value of the Foreign Currency principal
amount of the Registered Note, determined on the date such payment is received
or the Registered Note is disposed of, and the U.S. dollar value of the Foreign
Currency principal amount of the Registered Note, determined on the date the
U.S. Holder acquired the Registered Note. Such Foreign Currency gain or loss
will be recognized only to the extent of the total gain or loss realized by the
U.S. Holder on the sale, exchange or retirement of the Registered Note.
Original Issue Discount. In the case of a Discount Note or Short-Term
Note, (i) original issue discount is determined in units of the Foreign
Currency, (ii) accrued original issue discount is translated into U.S. dollars
as described in "Payments of Interest in a Foreign Currency -- Accrual Method"
above, and (iii) the amount of Foreign Currency gain or loss on the accrued
original issue discount is determined by comparing the amount of income received
attributable to the discount (either upon payment, maturity or an earlier
disposition), as translated into U.S. dollars at the rate of exchange on the
date of such receipt, with the amount of original issue discount accrued, as
translated above.
Premium and Market Discount. In the case of a Registered Note with market
discount, (i) market discount is determined in units of the Foreign Currency,
(ii) accrued market discount taken into account upon
S-25
<PAGE> 26
the receipt of any partial principal payment or upon the sale, exchange,
retirement or other disposition of the Registered Note (other than accrued
market discount required to be taken into account currently) is translated into
U.S. dollars at the exchange rate on such disposition date (and no part of such
accrued market discount is treated as exchange gain or loss), and (iii) accrued
market discount currently includible in income by a U.S. Holder for any accrual
period is translated into U.S. dollars on the basis of the average exchange rate
in effect during such accrual period, and the exchange gain or loss is
determined upon the receipt of any partial principal payment or upon the sale,
exchange, retirement or other disposition of the Registered Note in the manner
described in "Payments of Interest in a Foreign Currency -- Accrual Method"
above with respect to computation of exchange gain or loss on accrued interest.
With respect to a Registered Note issued with amortizable bond premium,
such premium is determined in the relevant Foreign Currency and reduces interest
income in units of the Foreign Currency. Although not entirely clear, a U.S.
Holder should recognize exchange gain or loss equal to the difference between
the U.S. dollar value of the bond premium amortized with respect to a period,
determined on the date the interest attributable to such period is received, and
the U.S. dollar value of the bond premium determined on the date of the
acquisition of the Registered Note.
Exchange of Foreign Currencies. A U.S. Holder will have a tax basis in any
Foreign Currency received as interest or on the sale, exchange or retirement of
a Registered Note equal to the U.S. dollar value of such Foreign Currency,
determined at the time the interest is received or at the time of the sale,
exchange or retirement. Any gain or loss realized by a U.S. Holder on a sale or
other disposition of Foreign Currency (including its exchange for U.S. dollars
or its use to purchase Registered Notes) will be ordinary income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Registered Note, unless such non-U.S. Holder is a direct
or indirect 10% or greater shareholder of the Company, a controlled foreign
corporation related to the Company or a bank receiving interest described in
section 881(c)(3)(A) of the Code. To qualify for the exemption from taxation,
the last United States payor in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received in the year in
which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that (i) is signed by the beneficial owner
of the Registered Note under penalties of perjury, (ii) certifies that such
owner is not a U.S. Holder, and (iii) provides the name and address of the
beneficial owner. The statement may be made on an IRS Form W-8 or a
substantially similar form, and the beneficial owner must inform the Withholding
Agent of any change in the information on the statement within 30 days of such
change. If a Registered Note is held through a securities clearing organization
or certain other financial institutions, the organization or institution may
provide a signed statement to the Withholding Agent. However, in such case, the
signed statement must be accompanied by a copy of the IRS Form W-8 or the
substitute form provided by the beneficial owner to the organization or
institution. The Treasury Department is considering implementation of further
certification requirements aimed at determining whether the issuer of a debt
obligation is related to holders thereof.
If a non-U.S. Holder is engaged in a trade or business in the United States
and interest (including OID) on the Registered Note is effectively connected
with the conduct of such trade or business, the non-U.S. Holder, although exempt
from the withholding tax discussed in the preceding paragraph (provided that
such holder furnishes a properly executed IRS Form 4224 on or before any payment
date to claim such exemption), may be subject to U.S. Federal income tax on such
interest (or OID) in the same manner as if it were a U.S. Holder. In addition,
if the non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its effectively connected earnings and profits for
the taxable year, subject to certain adjustments. For purposes of the branch
profits tax, interest (including OID) on a Registered Note will be included in
the earnings and profits of such holder if such interest (or OID) is effectively
connected with the conduct by such holder of a trade or business in the United
States. In lieu of the certificate described in the
S-26
<PAGE> 27
preceding paragraph, such a holder must provide the payor with a properly
executed IRS Form 4224 to claim an exemption from U.S. Federal withholding tax.
Any capital gain, market discount or exchange gain realized on the sale,
exchange, retirement or other disposition of a Registered Note by a non-U.S.
Holder will not be subject to U.S. Federal income or withholding taxes if (i)
such gain is not effectively connected with a U.S. trade or business of the
non-U.S. Holder and (ii) in the case of an individual, such non-U.S. Holder (A)
is not present in the United States for 183 days or more in the taxable year of
the sale, exchange, retirement or other disposition or (B) does not have a tax
home (as defined in Section 911(d)(3) of the Code) in the United States in the
taxable year of the sale, exchange, retirement or other disposition and the gain
is not attributable to an office or other fixed place of business maintained by
such individual in the United States.
PURCHASERS OF REGISTERED NOTES THAT ARE NON-U.S. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED
STATES WITHHOLDING AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE
REGISTERED NOTES.
The Registered Notes will not be includible in the estate of a non-U.S.
Holder unless the individual is a direct or indirect 10% or greater shareholder
of the Company or, at the time of such individual's death, payments in respect
of the Registered Notes would have been effectively connected with the conduct
by such individual of a trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Registered Notes to registered owners
who are not "exempt recipients" and who fail to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients.
Payments made in respect of the Registered Notes to a U.S. Holder must be
reported to the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a Registered Note to (or through) a broker,
the broker must withhold 31% of the entire purchase price, unless either (i) the
broker determines that the seller is a corporation or other exempt recipient or
(ii) the seller provides, in the required manner, certain identifying
information and, in the case of a non-U.S. Holder, certifies that such seller is
a non-U.S. Holder (and certain other conditions are met). Such a sale must also
be reported by the broker to the IRS, unless either (i) the broker determines
that the seller is an exempt recipient or (ii) the seller certifies its non-U.S.
status (and certain other conditions are met). Certification of the registered
owner's non-U.S. status would be made normally on an IRS Form W-8 under
penalties of perjury, although in certain cases it may be possible to submit
other documentary evidence.
Payment of the proceeds from the sale of a Registered Note to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50 percent or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment was effectively connected with a U.S. trade or business, information
reporting may apply to such payments. Payment of the proceeds from a sale of a
Registered Note to or through the U.S. office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies as to its taxpayer identification number or otherwise
establishes an exemption from information reporting and backup withholding.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-27
<PAGE> 28
PLAN OF DISTRIBUTION
The Registered Notes are offered on a continuing basis by Fleet through the
Agents, each of which has agreed to use reasonable efforts to solicit purchases
of the Registered Notes. Fleet will pay each Agent a commission in the form of a
discount ranging from .125% to .750% of the principal amount of each Registered
Note, depending on its Maturity Date, sold through such Agent. Fleet will have
the sole right to accept offers to purchase Registered Notes and may reject any
such offer, in whole or in part. Each Agent shall have the right, in its
discretion reasonably exercised, without notice to Fleet, to reject any offer to
purchase Registered Notes, in whole or in part. Fleet also may sell Registered
Notes to any Agent (other than Fleet-MA), acting as principal, at a discount to
be agreed upon at the time of sale, for resale to one or more investors at
varying prices related to prevailing market prices at the time of such resale,
as determined by such Agent. With respect to Registered Notes with a Maturity
Date that is longer than 30 years from the date of issue sold through any Agent,
the rate of commission (or discount) will be negotiated at the time of sale and
will be specified in the applicable Pricing Supplement.
In addition to offering the Notes through the Agents as described herein,
Fleet may from time to time sell other Debt Securities. In such case, the sale
of any such Debt Securities may reduce correspondingly the maximum aggregate
amount of Notes that may be offered under this Prospectus Supplement.
In addition, the Agents may offer the Registered Notes they have purchased
as principal to other dealers. The Agents may sell Registered Notes to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of 66 2/3%
of the discount to be received by such Agent from the Company. Unless otherwise
indicated in the applicable Pricing Supplement, any Registered Note sold to an
Agent as principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a percentage equal to the commission
applicable to any agency sale of a Registered Note of identical maturity, and
may be resold by the Agent to investors and other purchasers from time to time
in one or more transactions, including negotiated transactions, at varying
prices determined at the time of sale or, if so agreed and set forth in the
applicable Pricing Supplement, at a fixed public offering price. After the
initial public offering of Registered Notes to be resold to investors and other
purchasers, the public offering price (in the case of a fixed price public
offering), concession and discount may be changed.
Fleet-MA, as an Agent of Fleet, will solicit purchases of the Registered
Notes only in minimum amounts of U.S. $150,000, or the equivalent in the
applicable foreign currency or currency unit and will solicit offers only from
customers of Fleet-MA or of other Fleet banking affiliates which it has reason
to believe are sophisticated institutional investors. Fleet-MA will have no
obligation to purchase Registered Notes from Fleet and will bear no credit risk
with respect to the Registered Notes.
Fleet also may sell Notes directly to investors in those jurisdictions
where it is authorized to do so. No commission will be payable nor will a
discount be allowed on any direct sales by Fleet.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Registered Notes will be required to be made in funds
immediately available in The City of New York on the date of settlement.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"). Fleet has agreed to indemnify
the Agents against and contribute toward certain liabilities, including
liabilities under the Act. Fleet has agreed to reimburse the Agents for certain
expenses.
Each of the Agents (other than Fleet-MA) and certain of its affiliates
engage from time to time in transactions (which may include commercial lending)
with and perform services for Fleet and its subsidiaries in the ordinary course
of their businesses. Fleet-MA is a wholly-owned subsidiary of Fleet and engages
in transactions with and performs services for Fleet and its other subsidiaries
in the ordinary course of business.
Fleet shall have the right to appoint additional agents from time to time.
If additional agents are named, the applicable Pricing Supplement will set forth
the name of such agent and other information as may be required.
S-28
<PAGE> 29
The Registered Notes will not be listed on any securities exchange, and
there can be no assurance that the Registered Notes offered by this Prospectus
Supplement will be sold or that there will be a secondary market for the
Registered Notes or liquidity in the secondary market if one develops. Each of
the Agents may from time to time purchase and sell Registered Notes in the
secondary market, but is not obligated to do so.
S-29
<PAGE> 30
PROSPECTUS
COMMON STOCK, COMMON STOCK WARRANTS, PREFERRED STOCK, DEPOSITARY SHARES,
PREFERRED STOCK WARRANTS, DEBT SECURITIES AND DEBT WARRANTS
FLEET FINANCIAL GROUP, INC.
Fleet Financial Group, Inc., a Rhode Island corporation ("Fleet") may offer
from time to time (a) shares of Common Stock, par value $1.00 per share,
including the associated Preferred Share Purchase Rights (the "Common Stock"),
(b) shares of preferred stock, par value $1.00 per share (the "Preferred
Stock"), including, at its option, depositary shares (the "Depositary Shares")
evidenced by depositary receipts (the "Depositary Receipts") each representing a
fractional interest in such Preferred Stock, (c) warrants to purchase Common
Stock (the "Common Stock Warrants") or Preferred Stock (the "Preferred Stock
Warrants"), (d) debt securities (the "Debt Securities"), which may be either
senior (the "Senior Debt Securities") or subordinated (the "Subordinated Debt
Securities") in priority of payment, and (e) warrants to purchase Debt
Securities (the "Debt Warrants", together with the Common Stock Warrants and the
Preferred Stock Warrants, the "Warrants"), having a public offering price of up
to an aggregate of $1,126,900,000 (or the equivalent thereof if any of the
Securities are denominated in a foreign currency or a foreign currency unit,
such as European Currency Units ("ECU")). If Debt Securities are issued at
original issue discount, Fleet may issue such higher principal amount as may be
sold for an initial public offering price of up to $1,126,900,000 (less the
dollar amount of any securities previously issued hereunder), or the equivalent
thereof in one or more foreign currencies, foreign currency units, or composite
currencies. The Common Stock, Preferred Stock, Depositary Shares, Debt
Securities and Warrants (collectively, the "Securities") may be offered
separately or as units with other Securities, in separate series, in amounts and
at prices and terms to be set forth in an accompanying Prospectus Supplement (a
"Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the accompanying Prospectus
Supplement, together with the terms of the offering of the Securities and the
initial price and net proceeds to Fleet from the sale thereof. The Prospectus
Supplement will include, with regard to the particular Offered Securities, the
following information: (i) in the case of Debt Securities, the specific
designation, priority, aggregate principal amount, denominations, currency or
currency unit for which Debt Securities may be purchased, currency or currency
unit in which the principal and any interest on Debt Securities is payable,
location of the offering, maturity, rate (which may be fixed or variable) and
time of payment of interest, if any, terms for redemption, if any, at the option
of Fleet or the holder, terms for sinking or purchase fund payments, if any,
whether any Debt Securities which are Subordinated Debt Securities will be
subordinated to other indebtedness of Fleet, the initial public offering price,
if any, of the Debt Securities, terms relating to temporary or permanent global
securities, special provisions relating to Debt Securities in bearer form,
provisions regarding registration of transfer or exchange, provisions relating
to the payment of any additional amounts, any conversion or exchange provisions
and provisions regarding original issue discount securities; (ii) in the case of
Preferred Stock, the specific number of shares, title, stated value and
liquidation preference of each share, issuance price, dividend rate (or method
of calculation), dividend payment dates, any redemption or sinking fund
provisions, any conversion or exchange provisions and whether fractional
interests in shares of Preferred Stock will be represented by Depositary Shares;
(iii) in the case of Common Stock, the specific number of shares and issuance
price for such shares; (iv) in the case of Warrants, the duration, offering
price, exercise price and detachability of any such warrants; and (v) in the
case of all Securities, whether such Securities will be offered separately or as
a unit with other Securities. The Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Securities covered by the Prospectus Supplement.
Fleet may sell Securities to or through underwriters or dealers, and also
may sell Securities directly to other purchasers or through agents. See "Plan of
Distribution". If any agents or underwriters are involved in the sale of any of
the Securities, their names, any applicable fee, commission, purchase price or
discount arrangements with them will be set forth, or will be calculable from
the information set forth, in the Prospectus Supplement. Fleet may also issue
delayed delivery contracts under which the counterparty may be required to
purchase Debt Securities, Preferred Stock, Depositary Shares or Warrants. Such
contracts would be issued with the Debt Securities, Preferred Stock, Depositary
Shares and/or Warrants in amounts, at prices and on terms to be set forth in the
Prospectus Supplement. Fleet may sell Securities in an offering within the
United States ("United States Offering") or outside the United States
("International Offering").
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALE OF OFFERED SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
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 date of this Prospectus is November 28, 1994.
<PAGE> 31
AVAILABLE INFORMATION
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 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. The Common
Stock is listed on the New York Stock Exchange. Reports, proxy material and
other information concerning Fleet also may be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005. This
Prospectus does 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
The following documents filed with the Commission by Fleet are incorporated
in this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1993.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1994, June 30, 1994 (as amended by a Form 10-Q/A dated October 26, 1994)
and September 30, 1994.
3. Current Reports on Form 8-K dated March 10, 1994, May 9, 1994,
August 15, 1994, September 7, 1994, October 19, 1994 and October 21, 1994.
4. The description of the Common Stock contained in a Registration
Statement filed by Industrial National Corporation (predecessor to Fleet)
on Form 8-B dated May 29, 1970, and any amendment or report filed for the
purpose of updating such description.
5. The description of the Preferred Share Purchase Rights contained in
Fleet's Registration Statement on Form 8-A dated November 29, 1990, and any
amendment or report filed for the purpose of updating such description.
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,
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 Securities offered hereby 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 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 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.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN (OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS). WRITTEN REQUESTS
SHOULD BE MAILED TO CORPORATE COMMUNICATIONS DEPARTMENT, FLEET FINANCIAL GROUP,
INC., 50 KENNEDY PLAZA, PROVIDENCE, RHODE ISLAND 02903. TELEPHONE REQUESTS MAY
BE DIRECTED TO (401) 278-5879.
2
<PAGE> 32
FLEET FINANCIAL GROUP, INC.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At September 30, 1994, Fleet was the 17th largest
banking institution in the United States in terms of total assets, with total
assets of $47.0 billion, total deposits of $33.6 billion and stockholders'
equity of $3.4 billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of New York, Rhode Island, Connecticut, Massachusetts,
Maine and New Hampshire through its banking subsidiaries, Fleet Bank
("Fleet-NY"); Fleet National Bank ("Fleet-RI"); Fleet Bank, National Association
("Fleet-CT"); Fleet Bank of Massachusetts, National Association ("Fleet-MA");
Fleet Bank of Maine and Fleet Bank-NH.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing, credit-related life and accident/health
insurance, securities brokerage services, investment banking, investment advice
and management, data processing and student loan servicing.
The principal office of Fleet is located at 50 Kennedy Plaza, Providence,
Rhode Island 02903, telephone number (401) 278-5800.
REGULATORY MATTERS
General. 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
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 consistent 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 September 30, 1994, Fleet's banking subsidiaries could have
declared additional dividends of approximately $618 million, of which $295
million could have been declared by Fleet-MA and Fleet-CT. Holders of Fleet's
dual convertible preferred stock are entitled to dividends equal to one-half of
the total dividends declared (after the first $15 million in dividends) to
Fleet, if any, by Fleet Banking Group, Inc. ("Fleet Banking Group"), a
wholly-owned subsidiary of Fleet and the holder of all of the outstanding common
stock of each of Fleet-MA and Fleet-CT. As of the date of the Prospectus
Supplement, Fleet Banking Group has not paid any dividends on its common stock
to Fleet. 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 System
(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
provides that in the event of the bankruptcy of Fleet, any commitment by Fleet
to its regulators to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
FIRREA.
As a result of the enactment of the Financial Institutions Reform, Recovery
and Enforcement Act ("FIRREA") on August 9, 1989, any or all of Fleet's
subsidiary banks can be held liable for any loss incurred
3
<PAGE> 33
by, or reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (a) the default of any other of Fleet's subsidiary banks or (b)
any assistance provided by the FDIC to any other of Fleet's subsidiary banks in
danger of default. "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a "default" is likely to occur
without regulatory assistance.
FDICIA.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA"), which was enacted on December 19, 1991, provides for, among other
things, increased funding for the Bank Insurance Fund (the "BIF") of the FDIC
and expanded regulation of depository institutions and their affiliates,
including parent holding companies. A summary of certain provisions of FDICIA
and its implementing regulations is provided below.
Risk Based Deposit Insurance Assessments. A significant portion of the
additional funding to BIF is in the form of borrowings to be repaid by insurance
premiums assessed on BIF members. In addition, the FDICIA provides for an
increase in the ratio of the reserves to insured deposits of the BIF to 1.25% by
the end of the 15-year period that began with the semi-annual assessment period
ending December 31, 1991, also to be financed by insurance premiums. Insurance
premiums for a BIF-Insured institution are based on whether the institution is
within the definition of "well capitalized", "adequately capitalized" or
"undercapitalized". For purposes of the risk-based assessment system, a
well-capitalized institution is one that has a total risk-based capital ratio of
10% or more, a Tier 1 risk-based capital of 6% or more, and a leverage ratio of
5% or more. An adequately capitalized institution has a total risk-based capital
ratio of 8% or more, a Tier 1 risk-based capital ratio of 4% or more, and a
leverage ratio of 4% or more. An undercapitalized institution is one that does
not meet either of the foregoing definitions. The actual assessment rate
applicable to a particular institution, therefore, depends in part upon the risk
assessment classification so assigned to the institution by the FDIC. At
September 30, 1994, each of Fleet's banking subsidiaries was classified as
"well-capitalized" under these provisions.
Prompt Corrective Action. The FDICIA also provides the federal banking
agencies with broad powers to take prompt corrective action to resolve problems
of insured depository institutions, depending upon a particular institution's
level of capital. The FDICIA establishes five tiers of capital measurement
ranging from "well-capitalized" to "critically undercapitalized." A depository
institution may be deemed to be in a capitalization category that is lower than
is indicated by its actual capital position under certain circumstances. At
September 30, 1994, each of Fleet's subsidiary depository subsidiary depository
institutions was classified as "well-capitalized" under the prompt corrective
actions regulations described above.
Any depository institution that is undercapitalized and which fails to meet
regulatory capital requirements specified in the FDICIA must submit a capital
restoration plan guaranteed by the bank holding company controlling such
institution, and the regulatory agencies may place limits on the asset growth
and restrict activities of the institution (including transactions with
affiliates), require the institution to raise additional capital, dispose of
subsidiaries or assets or to be acquired and, ultimately, require the
appointment of a receiver. In addition to the requirement of mandatory
submission of a capital restoration plan, under the FDICIA, an undercapitalized
institution may not pay management fees to any person having control of the
institution nor may an institution, except under certain circumstances and with
prior regulatory approval, make any capital distribution if, after making such
payment or distribution, the institution would be undercapitalized. Further,
undercapitalized depository institutions are subject to restrictions on
borrowing from the Federal Reserve System.
Undercapitalized and significantly undercapitalized depository institutions
may be subject to a number of requirements and restrictions, including orders to
sell sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cessation of receipt of deposits from correspondent
banks. In addition, significantly undercapitalized depository institutions also
are prohibited from awarding bonuses or increasing compensation of senior
executive officers until approval of a capital restoration plan. Critically
undercapitalized depository institutions are subject to appointment of a
receiver or conservator.
4
<PAGE> 34
Brokered Deposits and Pass-Through Deposit Insurance Limitation. Under the
FDICA, a depository institution that is well-capitalized may accept brokered
deposits and offer interest rates on deposits "significantly higher" than the
prevailing rate in its market. A depository institution that is adequately
capitalized may accept brokered deposits if it obtains the prior approval of the
FDIC. An undercapitalized depository institution may not accept brokered
deposits. In Fleet's opinion, these limitations do not have a material effect on
Fleet.
Safety and Soundness Standards. The FDICIA directs each federal banking
agency to prescribe safety and soundness standards for depository institutions
and depository institution holding companies relating to internal controls,
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation, a maximum
ratio of classified assets to capital, minimum earnings sufficient to absorb
losses without impairing capital and, to the extent feasible, a minimum ratio of
market value to book value for publicly traded shares. Proposed regulations to
implement the safety and soundness standards were issued in November 1993. The
ultimate cumulative effect of these standards cannot currently be forecast.
The FDICIA also contains a variety of other provisions that may affect
Fleet's operations, including new reporting requirements, regulatory standards
for real estate lending, "truth in savings" provisions, and the requirement that
a depository institution give 90 days' prior notice to customers and regulatory
authorities before closing any branch.
Capital Guidelines. Under the capital guidelines adopted by the Federal
Reserve Board, the minimum ratio of total capital to risk-adjusted assets
(including certain off-balance sheet items, such as standby letters of credit)
is 8%. At least half of the total capital is to be comprised of common equity,
retained earnings, minority interests in the equity accounts of consolidated
subsidiaries and a limited amount of perpetual preferred stock, less goodwill
("Tier 1 capital"). The remainder may consist of perpetual debt, mandatory
convertible debt securities, a limited amount of subordinated debt, other
preferred stock and a limited amount of loan loss reserves ("Tier 2 capital").
In addition, the Federal Reserve Board requires a leverage ratio (Tier 1 capital
to total assets, net of goodwill) of 3% for bank holding companies that meet
certain specified criteria, including that they have the highest regulatory
rating. Such rule indicates that the minimum leverage ratio should be 1% to 2%
higher for holding companies undertaking major expansion programs or that do not
have the highest regulatory rating. Fleet's national banking subsidiaries are
subject to similar capital requirements adopted by the OCC.
The federal banking agencies continue to indicate their desire to raise
capital requirements applicable to banking organizations, and recently proposed
amendments to their risk-based capital regulations to provide for the
consideration of interest rate risk in the determination of a bank's minimum
capital requirements. The proposed amendments are intended to require that banks
effectively measure and monitor their interest rate risk and that they maintain
capital adequate for that risk. Under the proposed amendments, banks with
interest rate risk in excess of a defined supervisory threshold would be
required to maintain additional capital beyond that generally required. In
addition, the federal banking agencies recently proposed amendments to their
risk-based capital standards to provide for the concentration of credit risk and
certain risks arising from nontraditional activities, as well as a bank's
ability to manage these risks, as important factors in assessing a bank's
overall capital adequacy.
As of September 30, 1994, Fleet's capital ratios exceeded all minimum
regulatory capital requirements.
Under FIRREA and the FDICIA, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including the termination
of deposit insurance by the FDIC and seizure of the institution.
On September 29, 1994, President Clinton signed into law the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Act").
The Interstate Act generally authorizes bank holding companies to acquire banks
located in any state commencing one year after its enactment. In addition, it
generally authorizes national and state chartered banks to merge across state
lines (and to thereby create interstate branches) commencing June 1, 1997. Under
the provisions of the Interstate Act, states are
5
<PAGE> 35
permitted to "opt out" of this latter interstate branching authority by taking
action prior to the commencement date. States may also "opt in" early (i.e.,
prior to June 1, 1997) to the interstate merger provisions. Further, the
Interstate Act provides that states may act affirmatively to permit de novo
branching by banking institutions across state lines. Fleet does not currently
have any plans to consolidate its banking subsidiaries or to take any other
actions as a result of this new statute. However, Fleet is considering the
potential benefits in cost savings and convenience to its customers that might
be achieved through combinations of two or more of its existing banking
subsidiaries.
6
<PAGE> 36
<TABLE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
FIXED CHARGES AND DIVIDENDS ON PREFERRED STOCK
Fleet's consolidated ratios of earnings to fixed charges and earnings to
fixed charges and dividends on preferred stock were as follows for the years and
periods indicated:
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
1994 1993 1992 1991 1990 1989
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits.............. 2.73x 2.81x 2.22x 1.32x * 1.93x
Including Interest on Deposits.............. 1.76 1.68 1.34 1.08 * 1.29
Ratio of Earnings to Fixed Charges and Dividends
on Preferred Stock:
Excluding interest on deposits.............. 2.68x 2.67x 2.09x 1.31x * 1.91x
Including interest on deposits.............. 1.74 1.66 1.33 1.08 * 1.29
<FN>
- ---------------
* Fixed charges exceeded earnings by $164 million (excluding interest on
deposits) and by $164 million (including interest on deposits) for the year
ended December 31, 1990. The sum of fixed charges and dividends on preferred
stock exceeded earnings by $164 million (excluding interest on deposits) and
by $164 million (including interest on deposits) for the year ended December
31, 1990.
</TABLE>
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest)
and, where indicated, the pretax equivalents of dividends on preferred stock.
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
Unless otherwise indicated in the applicable Prospectus Supplement, Fleet
intends to use the net proceeds from the sale of the Securities 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.
7
<PAGE> 37
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either Senior Debt Securities or
Subordinated Debt Securities of Fleet. The Senior Debt Securities will be issued
under an indenture dated as of October 1, 1992 (the "Senior Indenture"), between
Fleet and The First National Bank of Chicago as Senior Trustee (the "Senior
Trustee"). The Subordinated Debt Securities will be issued under an indenture
dated as of October 1, 1992 (as supplemented by a First Supplemental Indenture
dated November 30, 1992, the "Subordinated Indenture"), between Fleet and The
First National Bank of Chicago as Subordinated Trustee (the "Subordinated
Trustee"). The Senior Indenture and Subordinated Indenture are collectively
referred to herein as the "Indentures". A copy of each of the Indentures are
exhibits to the Registration Statement of which this Prospectus forms a part.
The following description of Debt Securities relates to Debt Securities to be
issued in connection with either a United States Offering or an International
Offering, except, in the case of an International Offering, as otherwise
specified in the Prospectus Supplement relating thereto.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indentures, including the definitions
therein of certain terms. Wherever particular Sections or defined terms of the
Indentures are referred to, it is intended that such Sections or definitions
shall be incorporated herein by reference. The following sets forth certain
general terms and provisions of the Debt Securities to which any Prospectus
Supplement may relate. The particular terms of the Debt Securities offered by
any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered, will be described in the
Prospectus Supplement relating to such Offered Securities.
Because Fleet is a holding company, its rights and the rights of its
creditors, including the Holders of the Debt Securities offered hereby, to
participate in the assets of any subsidiary upon the latter's liquidation or
reorganization will be subject to the prior claims of the subsidiary's creditors
except to the extent that Fleet may itself be a creditor with recognized claims
against the subsidiary.
GENERAL
The Debt Securities to be offered by this Prospectus are limited to the
amounts described on the cover of this Prospectus. Fleet expects from time to
time to incur additional indebtedness constituting Senior Indebtedness and Other
Financial Obligations (each as defined in the Subordinated Indenture). The
Indentures, however, do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities may
be issued from time to time in one or more series. The Debt Securities will be
unsecured obligations of Fleet. Neither the Indentures nor the Debt Securities
will limit or otherwise restrict the amount of other indebtedness (including
Other Financial Obligations) which may be incurred or other securities which may
be issued by Fleet or any of its subsidiaries. The Senior Debt Securities will
rank on a parity with all other unsecured unsubordinated indebtedness of Fleet
while the indebtedness represented by the Subordinated Debt Securities will be
subordinated as described below under "Subordinated Debt Securities".
As used herein, Debt Securities shall include securities denominated in
U.S. dollars or, at the option of Fleet if so specified in the applicable
Prospectus Supplement, in any other currency, including composite currencies
such as the ECU. Debt Securities of a series may be issuable in individual
registered form without coupons, in the form of one or more global securities,
or, in bearer form with or without coupons. Such bearer securities will be
offered only to non-United States persons and to offices located outside of the
United States of certain United States financial institutions.
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered thereby for the following terms, where
applicable, of the Debt Securities in respect of which this Prospectus is being
delivered: (1) the title of the Debt Securities; (2) the limit, if any, on the
aggregate principal amount or initial public offering price of the Debt
Securities; (3) the priority of payment of such Debt Securities; (4) the price
or prices (which may be expressed as a percentage of the aggregate principal
amount thereof) at which the Debt Securities will be issued; (5) the date or
dates on which the Debt Securities will mature; (6) the rate or rates (which may
be fixed or variable) per annum at which the Debt
8
<PAGE> 38
Securities will bear interest, if any, or the method of determining the same;
(7) the date from which such interest, if any, on the Debt Securities will
accrue, the date or dates on which such interest, if any, will be payable, the
date on which payment of such interest, if any, will commence and the Regular
Record Dates for such Interest Payment Dates, if any; (8) the extent to which
any of the Debt Securities will be issuable in temporary or permanent global
form and, if so, the identity of the depositary for such global Debt Security,
or the manner in which any interest payable on a temporary or permanent global
Debt Security will be paid; (9) the dates, if any, on which, and the price or
prices at which, the Debt Securities will, pursuant to any mandatory sinking
fund provisions, or may, pursuant to any optional sinking fund or to any
purchase fund provisions, be redeemed by Fleet, and the other detailed terms and
provisions of such sinking and/or purchase funds; (10) the date, if any, after
which, and the price or prices at which, the Debt Securities may, pursuant to
any optional redemption provisions, be redeemed at the option of Fleet or of the
Holder thereof and the other detailed terms and provisions of such optional
redemption; (11) the denomination or denominations in which such Debt Securities
are authorized to be issued; (12) the currency, currencies or units (including
ECU) in which the Debt Securities are denominated, which may be in United States
dollars, a foreign currency or units of two or more foreign currencies; (13) the
currency, currencies or units (including ECU) for which the Debt Securities may
be purchased and in which principal, premium, if any, and interest may be
payable; (14) whether any of the Debt Securities will be issued in bearer form
and, if so, any limitations on issuance of such bearer Debt Securities
(including exchange for registered Debt Securities of the same series); (15)
information with respect to book-entry procedures; (16) whether any of the Debt
Securities will be issued as Original Issue Discount Securities; (17) any index
used to determine the amount of payments of principal of, premium, if any, and
interest on such Debt Securities; (18) each office or agency where, subject to
the terms of the applicable Indenture, such Debt Securities may be presented for
registration of transfer or exchange; (19) whether any of the Debt Securities
will be subject to defeasance in advance of the Redemption Date or Stated
Maturity thereof; (20) whether the subordination provisions summarized below or
different subordination provisions, including a different definition of "Senior
Indebtedness", "Entitled Persons", "Existing Subordinated Indebtedness", or
"Other Financial Obligations", shall apply to the Debt Securities; (21) whether
any of the Debt Securities will be convertible or exchangeable into other
securities of Fleet and the terms of such conversion or exchange; and (22) any
other terms of the series (which will not be inconsistent with the provisions of
the applicable Indenture).
Special federal income tax and other considerations relating to Debt
Securities denominated in foreign currencies or units of two or more foreign
currencies will be described in the applicable Prospectus Supplement. In the
event Fleet offers Debt Securities denominated in foreign currencies or units of
two or more foreign currencies, an opinion with respect to tax matters and
consent of counsel will be filed in a Form 8-K or as an amendment to the
Registration Statement of which this Prospectus forms a part.
Debt Securities may be issued as Original Issue Discount Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their principal
amount. In the event of an acceleration of the maturity of any Original Issue
Discount Security, the amount payable to the Holder of such Original Issue
Discount Security upon such acceleration will be determined in accordance with
the applicable Prospectus Supplement, the terms of such security and the
relevant Indenture, but will be an amount less than the amount payable at the
maturity of the principal of such Original Issue Discount Security. Special
federal income tax and other considerations relating thereto will be described
in the applicable Prospectus Supplement.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement, each
series of Debt Securities will be issued in registered form only, without
coupons. The Indentures, however, provide that Fleet may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Debt
Securities issued in bearer form shall have interest coupons attached, unless
issued as zero coupon securities. Debt Securities in bearer form shall not be
offered, sold, resold or delivered in connection with their original issuance in
the United States or to any United States person (as defined below) other than
offices located outside the United States of certain United States financial
institutions. As used above, "United States person" means any citizen or
9
<PAGE> 39
resident of the United States, any corporation, partnership or other entity
created or organized in or under the laws of the United States, or any estate or
trust, the income of which is subject to United States federal income taxation
regardless of its source, and "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction. Purchasers of Debt
Securities in bearer form will be subject to certification procedures and may be
affected by certain limitations under United States tax laws. Such procedures
and limitations will be described in the Prospectus Supplement relating to the
offering of the Debt Securities in bearer form.
Debt Securities in registered form may be presented for transfer or
exchange (with form of transfer duly endorsed thereon) for other Debt Securities
of the same series at the offices of the Trustee according to the terms of the
applicable Indenture. In no event, however, will Debt Securities in registered
form be exchangeable for Debt Securities in bearer form. Fleet may designate the
main office of Fleet-RI, 111 Westminster Street, Providence, Rhode Island 02903,
as an office where the transfer of the Debt Securities may be registered.
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities issued in bearer form will be issued in denominations of $10,000 and
$50,000.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities issued in fully registered form will be issued without coupons
and in denominations of $1,000 or integral multiples thereof.
No service charge will be made for any transfer or exchange of the Debt
Securities but Fleet may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
PAYMENT AND PLACE OF PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on, Debt Securities in
registered form will be made at the office of the Trustee, except that at the
option of Fleet, interest may be paid by mailing a check to the address of the
person entitled thereto as it appears on the Security Register (Sections 301,
305 and 1002 in the Senior Indenture; Sections 3.01, 3.05 and 5.02 in the
Subordinated Indenture). Fleet may designate the main office of Fleet-RI, 111
Westminster Street, Providence, Rhode Island 02903, as an office where
principal, premium, if any, and interest, if any, may be paid.
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest, if any, on Debt Securities in
bearer form will be made, subject to any applicable laws and regulations, at
such office outside the United States as specified in the applicable Prospectus
Supplement and as Fleet may designate from time to time, at the option of the
Holder, by check or by transfer to an account maintained by the payee with a
bank located outside the United States. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of interest on Debt Securities in
bearer form will be made only against surrender of the coupon relating to such
Interest Payment Date. No payment with respect to any Debt Security in bearer
form will be made at any office or agency of Fleet in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depository (the "Depository") identified in
the Prospectus Supplement relating to such series. Global Securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing Debt Securities in definitive form represented thereby,
a Global Security may not be transferred except as a whole by the Depository for
such Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor of such Depository or a nominee of
such successor.
10
<PAGE> 40
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series.
MODIFICATION AND WAIVER
Each Indenture provides that modifications and amendments thereof may be
made by Fleet and the Trustees with the consent of the Holders of 66 2/3% in
aggregate principal amount of the Outstanding Securities of each series under
such Indenture affected by such modification or amendment; provided, however,
that no such modification or amendment may, without the consent of the Holder of
each Outstanding Security affected thereby, (a) change the stated maturity date
of the principal of, or any installment of principal or interest on, any
Outstanding Security, (b) reduce the principal amount of, the rate of interest
thereon, or any premium payable upon the redemption thereof, (c) reduce the
amount of principal of an Original Issue Discount Security payable upon
acceleration of the maturity thereof, (d) change the place or currency of
payment of principal of, or any premium or interest on, any Outstanding
Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Outstanding Security, or (f) reduce the
percentage in principal amount of Outstanding Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults.
The Holders of 50% in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by Fleet
with certain restrictive provisions of the applicable Indenture. The Holders of
a majority in aggregate principal amount of the Outstanding Securities of each
series may, on behalf of all Holders of Debt Securities of that series, waive
any past default under the applicable Indenture with respect to Debt Securities
of that series, except a default in the payment of principal or any premium or
any interest or in respect of a provision which under the applicable Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of that series affected.
Modification and amendment of the Indentures may be made by Fleet and the
Trustee without the consent of any Holder for any of the following purposes: (i)
to evidence the succession of another Person to Fleet; (ii) to add to the
covenants of Fleet for the benefit of the Holders of all or any series of
Securities; (iii) to add Events of Default; (iv) to add or change any provisions
of any of the Indentures to facilitate the issuance of bearer securities; (v) to
change or eliminate any of the provisions of the applicable Indenture, provided
that any such change or elimination shall become effective only when there is no
Outstanding Security of any series which is entitled to the benefit of such
provision; (vi) to establish the form or terms of Securities of any series;
(vii) to evidence and provide for the acceptance of appointment by a successor
Trustee; (viii) to cure any ambiguity, to correct or supplement any provision in
the applicable Indenture, or to make any other provisions with respect to
matters or questions arising under such Indenture, provided such action shall
not adversely affect the interests of Holders of Debt Securities of any series
in any material respect under such Indenture; (ix) to convey, transfer, assign,
mortgage or pledge any property to or with the Trustee or (x) to provide for
conversion rights of the Holders of the Securities of any series to enable such
Holders to convert such Securities into other securities of Fleet.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Unless otherwise set forth in the applicable Prospectus Supplement, each
Indenture provides that Fleet may consolidate or merge with or into, or transfer
its assets substantially as an entirety to, any corporation organized under the
laws of any domestic jurisdiction, provided that the successor corporation
assumes Fleet's obligations on the Debt Securities under such Indenture, and
that after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing, and that certain other conditions are met.
Neither Indenture provides for any right of acceleration in the event of a
consolidation, merger, sale of all or substantially all of the assets,
recapitalization or change in stock ownership of Fleet. In addition, the
Indentures do not contain any provision which would protect the Holders of Debt
Securities against a sudden and dramatic decline in credit quality resulting
from takeovers, recapitalizations or similar restructurings.
11
<PAGE> 41
REGARDING THE TRUSTEE
Fleet maintains banking relations with the Trustee. In addition, Fleet's
banking subsidiaries maintain deposit accounts and correspondent banking
relations with the Trustee.
INTERNATIONAL OFFERING
If specified in the applicable Prospectus Supplement, Fleet may issue Debt
Securities in an International Offering. Such Debt Securities may be issued in
bearer form and will be described in the applicable Prospectus Supplement. If
such Debt Securities are Senior Debt Securities, such Debt Securities will be
issued pursuant to a supplement to the Senior Indenture. If Debt Securities are
issued in bearer form, the applicable Prospectus Supplement will contain the
relevant provisions.
In connection with any such International Offering, Fleet will designate
paying agents, registrars or other agents with respect to the Debt Securities,
as specified in the applicable Prospectus Supplement.
Debt Securities issued in an International Offering may be subject to
certain selling restrictions which will be described in the applicable
Prospectus Supplement. Such Debt Securities may be listed on one or more foreign
stock exchanges as described in the applicable Prospectus Supplement. Special
United States tax and other considerations, if any, applicable to an
International Offering will be described in the applicable Prospectus
Supplement.
SENIOR DEBT SECURITIES
The Senior Debt Securities will be direct, unsecured obligations of Fleet
and will rank pari passu with all outstanding senior indebtedness of Fleet.
EVENTS OF DEFAULT
The following are Events of Default under the Senior Indenture with respect
to Senior Debt Securities of any series: (a) failure to pay principal of or any
premium on any Senior Debt Security of that series when due; (b) failure to pay
any interest on any Senior Debt Security of that series when due, continued for
30 days; (c) failure to deposit any sinking fund payment, when due, in respect
of any Senior Debt Security of that series; (d) failure to perform any other
covenant of Fleet in the Senior Indenture (other than any covenant included in
the Indenture solely for the benefit of a Series of Debt Securities other than
that Series), continued for 60 days after written notice as provided in the
Senior Indenture; (e) certain events in bankruptcy, insolvency or
reorganization; and (f) any other Event of Default provided with respect to
Senior Debt Securities of that series. (Section 501) If an Event of Default with
respect to Senior Debt Securities of any series at the time outstanding occurs
and is continuing, either the Senior Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series may
declare the principal amount (or, if the Senior Debt Securities of that series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of all the Senior Debt Securities
of that series to be due and payable immediately. At any time after a
declaration of acceleration with respect to Senior Debt Securities of any series
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority in aggregate principal amount of Outstanding
Securities of that series may, on behalf of all Holders of that series, under
certain circumstances, rescind and annul such acceleration. (Section 502)
The Senior Indenture provides that, subject to the duty of the Senior
Trustee during default to act with the required standard of care, the Senior
Trustee will be under no obligation to exercise any of its rights or powers
under the Senior Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Senior Trustee reasonable
indemnity. (Section 603) Subject to such provisions for the indemnification of
the Senior Trustee, the Holders of a majority in aggregate principal amount of
the Outstanding Senior Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceedings for any remedy
available to the Senior Trustee, or exercising any trust or power conferred on
the Senior Trustee, with respect to the Senior Debt Securities of that series.
(Section 512)
12
<PAGE> 42
No Holder of any Senior Debt Security of any series will have any right to
institute any proceeding with respect to the Senior Indenture or for any remedy
thereunder, unless (a) such Holder shall have previously given to the Senior
Trustee written notice of a continuing Event of Default with respect to Senior
Debt Securities of that series, (b) the Holders of not less than 25% in
aggregate principal amount of the Outstanding Senior Debt Securities of that
series also shall have made written request and offered reasonable indemnity to
the Senior Trustee to institute such proceeding as trustee, (c) the Senior
Trustee shall not have received from the Holders of a majority in principal
amount of the Outstanding Senior Debt Securities of that series a direction
inconsistent with such request and (d) the Senior Trustee shall have failed to
institute such proceeding within 60 days. (Section 507) However, the Holder of
any Senior Debt Security will have an absolute right to receive payment of the
principal of (and premium, if any) and interest, if any, on such Senior Debt
Security on or after the due dates expressed in such Senior Debt Security and to
institute suit for the enforcement of any such payment. (Section 508)
Fleet is required to furnish to the Senior Trustee annually a statement as
to performance by Fleet of certain of its obligations under the Indenture and as
to any default in such performance. (Section 1009)
RESTRICTIVE COVENANTS
Disposition of Voting Stock of Certain Subsidiaries. The Senior Indenture
contains a covenant that Fleet will not, and will not permit any Subsidiary (as
defined in the Senior Indenture) to sell, assign, pledge, transfer or otherwise
dispose of, or permit the issuance of any shares of Voting Stock (as defined in
the Senior Indenture) of, or any securities convertible into, or options,
warrants or rights to subscribe for or purchase shares of Voting Stock of, a
Principal Constituent Bank (as defined below) or any Subsidiary which owns
shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of Voting Stock of a Principal Constituent
Bank, provided that dispositions made by Fleet or any Subsidiary (i) acting in a
fiduciary capacity for any person other than Fleet or any Subsidiary or (ii) to
Fleet or any of its wholly-owned (except for directors' qualifying shares)
Subsidiaries, shall not be prohibited. Notwithstanding the limitations described
above, the Senior Indenture provides that Fleet may, and may permit its
Subsidiaries to, sell, assign, pledge, transfer or otherwise dispose of, or
issue such shares or securities (1) if required by law for the qualification of
Directors, (2) for purposes of compliance with an order of a court or regulatory
authority, (3) if in connection with a merger of, or consolidation of, a
Principal Constituent Bank with or into a wholly-owned Subsidiary or a
Constituent Bank (as defined below), provided that Fleet holds, directly or
indirectly, in the entity surviving such merger or consolidation, not less than
the percentage of Voting Stock it held in the Principal Constituent Bank prior
to such action, (4) if such disposition or issuance is for fair market value
(determined by the Board of Directors of Fleet) and, if after giving effect to
such disposition or issuance (and any potential dilution), Fleet and its
wholly-owned Subsidiaries will own directly not less than 80% of the Voting
Stock of such Principal Constituent Bank or Subsidiary, (5) if a Principal
Constituent Bank sells additional shares of Voting Stock to its stockholders at
any price, if, after such sale, Fleet holds directly or indirectly not less than
the percentage of Voting Stock of such Principal Constituent Bank it owned prior
to such sale or (6) if Fleet or a Subsidiary pledges or creates a lien on the
Voting Stock of a Principal Constituent Bank to secure a loan or other extension
of credit by a Constituent Bank subject to Section 23A of the Federal Reserve
Act. A "Constituent Bank" is a Bank which is a Subsidiary. A "Principal
Constituent Bank" is Fleet-RI and any other Constituent Bank designated as a
Principal Constituent Bank. Any designation of a Constituent Bank as a Principal
Constituent Bank with respect to Debt Securities of any series shall remain
effective until the Debt Securities of such series are no longer outstanding. As
of the date of this Prospectus, no Constituent Banks (other than Fleet-RI) have
been designated as Principal Constituent Banks with respect to any series of
Debt Securities.
Limitation Upon Liens on Certain Capital Stock. The Senior Indenture
contains a covenant that Fleet will not at any time, directly or indirectly,
create, assume, incur or suffer to be created, assumed or incurred or to exist
any mortgage, pledge, encumbrance or lien or charge of any kind upon (1) any
shares of capital stock of any Principal Constituent Bank (other than directors'
qualifying shares), or (2) any shares of capital stock of a Subsidiary which
owns capital stock of any Principal Constituent Bank; provided, however, that,
notwithstanding the foregoing, Fleet may incur or suffer to be incurred or to
exist upon such capital stock
13
<PAGE> 43
(a) liens for taxes, assessments or other governmental charges or levies which
are not yet due or are payable without penalty or of which the amount,
applicability or validity is being contested by Fleet in good faith by
appropriate proceedings and Fleet shall have set aside on its books adequate
reserves with respect thereto or (b) the lien of any judgement, if such judgment
shall not have remained undischarged, or unstayed on appeal or otherwise, for
more than 60 days.
DEFEASANCE
Fleet may terminate certain of its obligations under the Senior Indenture
with respect to the Senior Debt Securities of any series on the terms and
subject to the conditions contained in the Senior Indenture, by (a) depositing
irrevocably with the Senior Trustee as trust funds in trust (i) in the case of
Senior Debt Securities denominated in a foreign currency, money in such foreign
currency or Foreign Government Obligations (as defined below) of the foreign
government or governments issuing such foreign currency, or (ii) in the case of
Senior Debt Securities denominated in U.S. dollars, U.S. dollars or U.S.
Government Obligations (as defined below), in each case in an amount which
through the payment of interest, principal or premium, if any, in respect
thereof in accordance with their terms will provide (without any reinvestment of
such interest, principal or premium), not later than one business day before the
due date of any payment, money or (iii) a combination of money and U.S.
Government Obligations or Foreign Government Obligations, as applicable,
sufficient to pay the principal of or premium, if any, and interest on, the
Senior Debt Securities of such series as such are due and (b) satisfying certain
other conditions precedent specified in the Senior Indenture. Such deposit and
termination is conditioned among other things upon Fleet's delivery of (a) an
opinion of independent counsel that the Holders of the Senior Debt Securities of
such series will have no federal income tax consequences as a result of such
deposit and termination and (b) if the Senior Debt Securities of such series are
then listed on the New York Stock Exchange, an opinion of counsel that the
Senior Debt Securities of such series will not be delisted as a result of the
exercise of this option. Such termination will not relieve Fleet of its
obligation to pay when due the principal of, and interest on, the Senior Debt
Securities of such series if the Senior Debt Securities of such series are not
paid from the money, Foreign Government Obligations or U.S. Government
Obligations held by the Senior Trustee for payment thereof. (Section 403)
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof. "Foreign Government Obligations" means securities denominated in a
Foreign Currency that are (i) direct obligations of a foreign government for the
payment of which its full faith and credit is pledged or (ii) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
a foreign government the payment of which is unconditionally guaranteed as a
full faith and credit obligation by such foreign government, which, in either
case, under clauses (i) or (ii) are not callable or redeemable at the option of
the issuer thereof.
SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be direct, unsecured obligations of
Fleet and, unless otherwise specified in the applicable Prospectus Supplement,
will rank pari passu with all outstanding subordinated indebtedness of Fleet.
SUBORDINATION
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Subordinated Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined in the Subordinated Indenture). In certain events of
insolvency, the payment of the principal of and interest on the Subordinated
Debt Securities will, to the extent set forth in the Subordinated Indenture,
also be effectively subordinated in right of payment to the prior payment in
full of all Other Financial Obligations (as defined in the Subordinated
Indenture). Upon any payment or distribution of
14
<PAGE> 44
assets 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 the Company, the holders
of all Senior Indebtedness will first be entitled to receive payment in full of
all amounts due or to become due thereon before the Holders of the Subordinated
Debt Securities will be entitled to receive any payment in respect of the
principal of or interest on the Subordinated Debt Securities. If upon any such
payment or distribution of assets to creditors, there remain, after giving
effect to such subordination provisions in favor of the holders of Senior
Indebtedness, any amounts of cash, property or securities available for payment
or distribution in respect of Subordinated Debt Securities (as defined in the
Subordinated Indenture, "Excess Proceeds") and if, at such time, any Entitled
Persons (as defined in the Subordinated Indenture) in respect of Other Financial
Obligations have not received payment in full of all amounts due or to become
due on or in respect of such Other Financial Obligations, then such Excess
Proceeds shall first be applied to pay or provide for the payment in full of
such Other Financial Obligations before any payment or distribution may be made
in respect of the Subordinated Debt Securities. In the event of the acceleration
of the maturity of any Debt Securities, the holders of all Senior Indebtedness
will first be entitled to receive payment in full of all amounts due thereon
before the Holders of the Subordinated Debt Securities will be entitled to
receive any payment upon the principal of or interest on the Subordinated Debt
Securities.
In addition, no payment may be made of the principal of, premium, if any,
or interest on the Subordinated Debt Securities, or in respect of any
redemption, retirement, purchase or other acquisition of any of the Subordinated
Debt Securities, 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 Subordinated Debt Securities or any redemption,
retirement, purchase or other acquisition of any of the Subordinated Debt
Securities, permitting the Holders of such Senior Indebtedness (or a trustee on
behalf of the Holders thereof) to accelerate the maturity thereof.
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of Fleet who are not holders
of Senior Indebtedness or of the Subordinated Debt Securities may recover less,
ratably, than Holders of Senior Indebtedness and may recover more, ratably, than
the Holders of the Subordinated Debt Securities. By reason of the obligation of
the Holders of Subordinated Debt Securities to pay over any Excess Proceeds to
Entitled Persons in respect of Other Financial Obligations, in the event of
insolvency, holders of Existing Subordinated Indebtedness (as defined in the
Subordinated Indenture) may recover more, ratably, than the Holders of
Subordinated Debt Securities.
Unless otherwise specified in the Prospectus Supplement relating to the
particular series of Subordinated Debt Securities offered thereby, Senior
Indebtedness is defined in the Subordinated Indenture as (a) the principal of,
premium, if any, and interest on all of Fleet's indebtedness for money borrowed,
whether outstanding on the date of execution of the Subordinated Indenture or
thereafter created, assumed or incurred, except (i) the Existing Subordinated
Indebtedness and other Subordinated Debt Securities issued under the
Subordinated Indenture, (ii) such indebtedness as is by its terms expressly
stated to be junior in right of payment to the Subordinated Debt Securities and
(iii) such indebtedness as is by its terms expressly stated to rank pari passu
with the Subordinated Debt Securities and (b) any deferrals, renewals or
extensions of any such Senior Indebtedness. (Section 1.01). The Term
"indebtedness for money borrowed" when used with respect to Fleet is defined to
include, without limitation, any obligation of, or any obligation guaranteed by,
Fleet for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, and any deferred obligation of,
or any such obligation guaranteed by, Fleet for the payment of the purchase
price of property or assets. (Section 1.01).
Existing Subordinated Indebtedness means Fleet's Subordinated Notes Due
1997, Floating Rate Subordinated Capital Notes Due 1998, 9.90% Subordinated
Notes Due 2001, 9% Subordinated Notes Due 2001, 8 1/8% Subordinated Notes Due
2004 and 8 5/8% Subordinated Notes Due 2007. As of the date of this Prospectus,
Fleet also had issued its 7 5/8% Subordinated Notes Due 1999 and 6 7/8%
Subordinated Notes Due 2003, each of which was issued under the Subordinated
Indenture and is junior in right of payment to all of Fleet's Senior
Indebtedness and Other Financial Obligations.
15
<PAGE> 45
Unless otherwise specified in the Prospectus Supplement relating to the
particular series of Subordinated Debt Securities offered thereby, 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 Subordinated Debt Securities.
Unless otherwise specified in the Prospectus Supplement relating to the
particular series of Subordinated Debt Securities offered thereby, Entitled
Persons means any person who is entitled to payment pursuant to the terms of
Other Financial Obligations.
Any Prospectus Supplement relating to a particular series of Subordinated
Debt Securities will set forth the aggregate amount of indebtedness of Fleet
senior to the Subordinated Debt Securities as of a recent practicable date.
Fleet's obligations under the Subordinated Debt Securities shall rank pari
passu in right of payment with each other and with the Existing Subordinated
Indebtedness, subject to the obligations of the Holders of Subordinated Debt
Securities to pay over any Excess Proceeds to Entitled Persons in respect of
Other Financial Obligations as provided in the Subordinated Indenture.
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Indebtedness or Other Financial Obligations, which may include
indebtedness that is senior to the Subordinated Debt Securities, but subordinate
to other obligations of Fleet.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
Except as described above or in the Subordinated Indenture, the obligation
of Fleet to make payment of the principal of, premium, if any, or interest on
the Subordinated Debt Securities will not be affected by reason of such
subordination. In the event of a distribution of assets upon any dissolution,
winding up, liquidation or reorganization, certain general creditors of Fleet
may recover more, ratably, than Holders of the Subordinated Debt Securities.
Subject to payment in full of all Senior Indebtedness, the rights of the Holders
of Subordinated Debt Securities will be subrogated to the rights of the Holders
of Senior Indebtedness to receive payments or distribution of cash, property or
securities of Fleet applicable to Senior Indebtedness. Subject to the payment in
full of all Other Financial Obligations, the rights of the Holders of
Subordinated Debt Securities will be subrogated to the rights of Entitled
Persons to receive payments or distributions of cash, property or securities of
Fleet applicable to Other Financial Obligations. (Sections 14.02 and 14.10)
LIMITED RIGHTS OF ACCELERATION
Unless otherwise specified in the Prospectus Supplement relating to any
series of Subordinated Debt Securities, payment of principal of the Subordinated
Debt Securities may be accelerated only in case of certain events involving the
bankruptcy, insolvency or reorganization of Fleet which constitutes an Event of
Default (as defined below). There is no right of acceleration in the case of a
default in the payment of principal of, premium, if any, or interest on the
Subordinated Debt Securities or the performance of any other covenant of Fleet
in the Subordinated Indenture.
RESTRICTIVE COVENANTS
The Prospectus Supplement relating to a series of Subordinated Debt
Securities may describe certain restrictive covenants, if any, to which Fleet
may be bound under the Subordinated Indenture.
EVENTS OF DEFAULT, DEFAULTS, WAIVERS
An "Event of Default" with respect to Subordinated Debt Securities of any
series is defined in the Subordinated Indenture as certain events involving the
bankruptcy or reorganization of Fleet and any other
16
<PAGE> 46
Event of Default provided with respect to Subordinated Debt Securities of such
series. (Section 7.01) A "Default" with respect to Subordinated Debt Securities
of any series is defined in the Subordinated Indenture as (a) an Event of
Default with respect to such series; (b) failure to pay the principal of, or
premium, if any, on any Subordinated Security of such series at its Maturity;
(c) failure to pay interest upon any Subordinated Security of such series when
due and payable and the continuance of such Default for a period of 30 days; (d)
failure to perform any other covenant or agreement of Fleet in the Subordinated
Indenture with respect to Subordinated Debt Securities of such series and
continuance of such Default for 60 days after written notice of such failure,
requiring Fleet to remedy the same; and (e) any other Default provided with
respect to Subordinated Debt Securities of such series. (Section 7.07) If an
Event of Default with respect to any series of Subordinated Debt Securities for
which there are Subordinated Debt Securities outstanding under the Subordinated
Indenture occurs and is continuing, either the Subordinated Trustee or the
Holders of not less than 25% in aggregate principal amount of the Subordinated
Debt Securities of such series may declare the principal amount (or if such
Subordinated Debt Securities are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all Subordinated Debt Securities of that series to be immediately due and
payable. The Holders of a majority in aggregate principal amount of the
Subordinated Debt Securities of any series outstanding under the Subordinated
Indenture may waive, on behalf of all Holders of such series, an Event of
Default resulting in acceleration of such Subordinated Debt Securities, but only
if all Defaults have been remedied and all payments due (other than those due as
a result of acceleration) have been made. (Section 7.02) If a Default occurs and
is continuing, the Subordinated Trustee may in its discretion, and at the
written request of Holders of not less than a majority in aggregate principal
amount of the Subordinated Debt Securities of any series outstanding under the
Subordinated Indenture and upon reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such request and subject to
certain other conditions set forth in the Subordinated Indenture shall, proceed
to protect the rights of the Holders of all the Subordinated Debt Securities of
such series. (Section 7.03) Prior to acceleration of maturity of the
Subordinated Debt Securities of any series outstanding under the Subordinated
Indenture, the Holders of a majority in aggregate principal amount of such
Subordinated Debt Securities may waive any past Default under the Subordinated
Indenture except a Default in the payment of principal of, premium, if any, or
interest on the Subordinated Debt Securities of such series or in respect of a
covenant which cannot be modified or amended without the consent of the Holder
of each Outstanding Security of such series affected. (Section 7.13)
The Subordinated Indenture provides that in the event of a Default
specified in clauses (b) or (c) of the immediately preceding paragraph in
payment of principal of, premium, if any, or interest on any Subordinated Debt
Security of any series, Fleet will, upon demand of the Subordinated Trustee, pay
to it, for the benefit of the holder of any such Subordinated Debt Security, the
whole amount then due and payable on such Subordinated Debt Security for
principal, premium, if any, and interest. The Subordinated Indenture further
provides that if Fleet fails to pay such amount forthwith upon such demand, the
Subordinated Trustee may, among other things, institute a judicial proceeding
for the collection thereof. (Section 7.03)
The Subordinated Indenture also provides that notwithstanding any other
provision of the Subordinated Indenture, the holder of any Subordinated Debt
Security of any series shall have the right to institute suit for the
enforcement of any payment of principal of, premium, if any, and interest on
such Subordinated Debt Security on the respective Stated Maturities (as defined
in the Subordinated Indenture) expressed in such Subordinated Debt Security and
that such right shall not be impaired without the consent of such holder.
(Section 7.08)
Fleet is required to furnish to the Subordinated Trustee annually a
statement as to performance by Fleet of certain of its obligations under the
Subordinated Indenture and as to any Default in such performance. (Section 5.10)
17
<PAGE> 47
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Stock. If so
indicated in the applicable Prospectus Supplement, the terms of any such series
may differ from the terms set forth below. The description of the provisions of
the Preferred Stock set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Certificate of Designation relating to the applicable series of
the Preferred Stock.
GENERAL
Under Fleet's Restated Articles of Incorporation (the "Articles"), the
Board of Directors of Fleet is authorized, without further shareholder action,
to provide for the issuance of up to 16,000,000 shares of preferred stock, $1
par value ("Fleet $1 Par Preferred Stock"), in one or more series, with such
voting powers, dividends, designations, preferences, rights, qualifications,
limitations and restrictions as shall be set forth in the resolutions providing
for the issuance thereof adopted by the Board of Directors. As of September 30,
1994, Fleet had outstanding three series of Fleet $1 Par Preferred Stock as
follows: (i) 1,100,000 shares of Series III 10.12% Perpetual Preferred Stock
(the "Series III Preferred"), having a liquidation value of $100 per share, plus
accrued and unpaid dividends, were designated and 519,758 shares were issued and
outstanding, (ii) 1,000,000 shares of Series IV 9.375% Perpetual Preferred Stock
(the "Series IV Preferred"), having a liquidation value of $100 per share, plus
accrued and unpaid dividends, were designated and 478,838 shares were issued and
outstanding and (iii) 1,415,000 shares of Dual Convertible Preferred Stock (the
"Dual Convertible Preferred Stock"), having a liquidation preference of $200 per
share, plus accrued and unpaid dividends, were designated and 1,415,000 shares
were issued and outstanding. In addition, as of September 30, 1994, the Board of
Directors of Fleet had established a series of 1,500,000 shares of Cumulative
Participating Junior Preferred Stock, par value $1 per share (the "Junior
Preferred Stock") issuable upon exercise of the preferred share purchase rights
described below, of which no shares were issued and outstanding as of such date.
Each such outstanding series and class is described below under "Description of
Existing Preferred Stock".
Under regulations adopted by the Federal Reserve Board, if the holders of
any series of the Preferred Stock are or become entitled to vote for the
election of directors because dividends on such series are in arrears, such
series may then be deemed a "class of voting securities" and a holder of 25% or
more of such series (or a holder of 5% or more if it otherwise exercises a
"controlling influence" over Fleet) may then be subject to regulation as a bank
holding company in accordance with the Bank Holding Company Act of 1956, as
amended. In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
approval of the Federal Reserve Board to acquire or retain 5% or more of such
series and (ii) any person other than a bank holding company may be required to
obtain the approval of the Federal Reserve Board to acquire or retain 10% or
more of such series.
The Preferred Stock shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including: (i) the
title, stated value and liquidation preference of such Preferred Stock and the
number of shares offered; (ii) the initial public offering price at which such
Preferred Stock will be issued; (iii) the dividend rate or rates (or method of
calculation), the dividend periods, the dates on which dividends shall be
payable and whether such dividends shall be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to accumulate; (iv)
any redemption or sinking fund provisions; (v) any conversion provisions; (vi)
whether Fleet has elected to offer Depositary Shares as described under
"Description of Depositary Shares"; and (vii) any other rights, preferences,
privileges, limitations and restrictions on such Preferred Stock.
18
<PAGE> 48
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity in all respects with the outstanding preferred stock of Fleet and each
other series of the Preferred Stock (except for the Junior Preferred Stock) and
will rank senior in all respects to any outstanding shares of Junior Preferred
Stock and the Common Stock. See "Description of Existing Preferred Stock". The
Preferred Stock will have no preemptive rights to subscribe for any additional
securities which may be issued by Fleet.
Unless otherwise specified in the applicable Prospectus Supplement, the
depositary, transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of the Preferred Stock will be Fleet-RI.
As described under "Description of Depositary Shares", Fleet may, at its
option, with respect to any series of the Preferred Stock, elect to offer
fractional interests in shares of Preferred Stock, and provide for the issuance
by a Depositary (as defined below) of depositary receipts ("Depositary
Receipts") representing depositary shares ("Depositary Shares"), each of which
will represent a fractional interest (to be specified in the applicable
Prospectus Supplement relating to a particular series of the Preferred Stock) in
a share of such series of the Preferred Stock.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of Fleet, out of any funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Such rates may be fixed or adjustable or both. If adjustable,
the formula or other method used for determining the applicable dividend rate
for each dividend period will be set forth in the applicable Prospectus
Supplement. Dividends will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If the Board
of Directors of Fleet fails to declare a dividend payable on a dividend payment
date on any series of the Preferred Stock for which dividends are noncumulative
("Noncumulative Preferred Stock"), then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and Fleet will have no
obligation to pay the dividend accrued for such period, whether or not dividends
on such series are declared payable on any future dividend payment dates.
When dividends are not paid in full upon any series of the Preferred Stock
and any other series of Fleet's preferred stock ranking on a parity as to
dividends with such series of Preferred Stock, all dividends declared upon
shares of such series of Preferred Stock and any other series of Fleet's
preferred stock ranking on a parity as to dividends shall be declared pro rata
so that the amount of dividends declared per share on such series of Preferred
Stock and such other preferred stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the shares of such series of
Preferred Stock (which shall not, if such Preferred Stock is Noncumulative
Preferred Stock, include any accumulation in respect of unpaid dividends for
prior dividend periods) and such other preferred stock bear to each other.
Except as provided in the preceding sentence, unless (i) with respect to any
series of Preferred Stock for which dividends are cumulative ("Cumulative
Preferred Stock"), full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on such Preferred Stock for all dividend periods
terminating on or prior to the date of payment of any such dividends on such
other series of preferred shares of Fleet or (ii) with respect to any series of
Noncumulative Preferred Stock, full dividends for the then-current dividend
period on such Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment, no dividends (other than in Common Stock or another stock ranking
junior to such series of Preferred Stock as to dividends and upon liquidation)
shall be declared or paid or set aside for payment, nor shall any other
distribution be made on the Common Stock or on any other stock of Fleet ranking
junior to or on a parity with such series of Preferred Stock as to dividends or
upon liquidation. Unless full dividends on the Cumulative Preferred Stock of any
series have been paid for the then-current and all past dividend periods and
full dividends for the then-
19
<PAGE> 49
current dividend period on the Noncumulative Preferred Stock of any series have
been declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment, no Common Stock or any other stock of Fleet ranking
junior to or on a parity with such series of Preferred Stock as to dividends or
upon liquidation may be redeemed, purchased or otherwise acquired for any
consideration (or any moneys paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by Fleet (except by conversion
into or exchange for stock of Fleet ranking junior to such series of Preferred
Stock as to dividends and upon liquidation).
See "Fleet Financial Group, Inc." with respect to certain limitations on
the ability of Fleet and its banking subsidiaries to pay dividends.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of Fleet, the holders of each series of the Preferred Stock will be
entitled to receive and to be paid out of assets of Fleet available for
distribution to its stockholders, before any payment or distribution is made to
holders of Common Stock or any other class of stock ranking junior to such
series of the Preferred Stock upon liquidation, liquidating distributions in an
amount per share as set forth in the Prospectus Supplement relating to such
series of the Preferred Stock, plus accrued and unpaid dividends (whether or not
earned or declared) for the then-current dividend period and, if such series of
the Preferred Stock is Cumulative Preferred Stock, for all dividend periods
prior thereto. If, upon any voluntary or involuntary dissolution, liquidation or
winding up of Fleet, the amounts payable with respect to the Preferred Stock of
any series and any other shares of stock of Fleet ranking as to any such
distribution on a parity with the Preferred Stock of such series are not paid in
full, the holders of the Preferred Stock of such series and of such other shares
will share ratably in any such distribution of assets of Fleet in proportion to
the full respective distributable amounts to which they are entitled. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of shares of such series of the Preferred Stock will not
be entitled to any further participation in any distribution of assets by Fleet.
Neither the sale of all or substantially all the property or business of Fleet,
nor the merger or consolidation of Fleet into or with any other corporation
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, of Fleet.
REDEMPTION
Any series of the Preferred Stock may be redeemable, in whole or in part,
at the option of Fleet, and may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, in each case upon the terms, at the times and at the
redemption prices set forth in the Prospectus Supplement relating to such series
and subject to the rights of holders of other securities of Fleet. Preferred
Stock redeemed by Fleet will be restored to the status of authorized but
unissued preferred shares.
The Prospectus Supplement relating to a series of the Preferred Stock which
is subject to mandatory redemption will specify the number of shares of such
series of the Preferred Stock which shall be redeemed by Fleet in each year
commencing after a date to be specified, at a redemption price per share and on
one or more dates to be specified, together with an amount equal to all accrued
and unpaid dividends thereon (which shall not, if such Preferred Stock is
Noncumulative Preferred Stock, include any accumulation in respect of unpaid
dividends for prior dividend periods) to the date of redemption. The redemption
price may be payable in cash or other property, as specified in the Prospectus
Supplement relating to such series of Preferred Stock.
If fewer than all of the outstanding shares of any series of the Preferred
Stock are to be redeemed, the number of shares to be redeemed will be determined
by the Board of Directors of Fleet and such shares shall be redeemed pro rata
from the holders of record of such shares in proportion to the number of such
shares held by such holders (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by the Board of Directors of Fleet.
Notwithstanding the foregoing, if any dividends, including any accumulation
on shares of Cumulative Preferred Stock, of any series are in arrears, no shares
of Preferred Stock of such series shall be redeemed unless all outstanding
shares of Preferred Stock of such series are simultaneously redeemed, and Fleet
shall
20
<PAGE> 50
not purchase or otherwise acquire any shares of Preferred Stock of such series;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Preferred Stock of such series pursuant to a purchase
or exchange offer made on the same terms to all holders of such series of the
Preferred Stock.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear on the stock books of Fleet. Each such
notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Stock to be redeemed; (iii) the redemption price; (iv)
the place or places where certificates for such shares of Preferred Stock are to
be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue or accumulate on such redemption
date; and (vi) the date upon which the holders' conversion rights, if any, as to
such shares, shall terminate. If fewer than all shares of any series of the
Preferred Stock held by any holder are to be redeemed, the notice mailed to such
holder shall also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, dividends on the shares of
Preferred Stock so called for redemption shall cease to accrue or accumulate
from and after the redemption date for the shares of the series of the Preferred
Stock called for redemption (unless default shall be made by Fleet in providing
money for the payment of the redemption price of the shares so called for
redemption), and such shares shall no longer be deemed to be outstanding, and
all rights of the holders thereof as stockholders of Fleet (except the right to
receive the redemption price) shall cease. Upon surrender in accordance with
such notice of the certificates representing any shares of the Preferred Stock
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of Fleet shall so require and the notice shall so state), the
redemption price set forth above shall be paid out of funds provided by Fleet.
If fewer than all of the shares of the Preferred Stock represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will not be entitled to vote.
In the event Fleet issues shares of a series of the Preferred Stock, each share
will be entitled to one vote on matters on which holders of such series of the
Preferred Stock are entitled to vote. However, as more fully described below
under "Description of Depositary Shares", if Fleet elects to provide for the
issuance of Depositary Shares representing interests in a fraction of a share of
a series of the Preferred Stock, the holders of each such Depositary Share will,
in effect, be entitled through the Depositary to such fraction of a vote, rather
than a full vote. Since each full share of any series of the Preferred Stock
shall be entitled to one vote, the voting power of such series, on matters on
which holders of such series and holders of any other series of the Preferred
Stock or another series of preferred stock of Fleet are entitled to vote as a
single class, will depend on the number of shares in such series, not the
aggregate stated value, liquidation preference or initial offering price of the
shares of such series of the Preferred Stock.
If the equivalent of six quarterly dividends payable on any series of the
Preferred Stock or any other class or series of preferred stock are in default,
the number of directors of Fleet will be increased by two (without duplication
of any increase made pursuant to the terms of any other series of preferred
stock of Fleet), and the holders of all outstanding series of preferred stock,
including holders of any series of the Preferred Stock, voting as a single class
without regard to series, will be entitled at Fleet's next annual meeting of
stockholders (and at each subsequent annual meeting of stockholders) to elect
such additional two directors until full cumulative dividends for all
then-current and past dividend periods on all preferred shares of Fleet so
entitled to vote, including any shares of the Preferred Stock, have been paid or
declared and set apart for payment. Any such elected directors shall serve until
Fleet's next annual meeting of stockholders or until their respective successors
shall be elected and qualify. If a vacancy in the office of such director shall
occur during the continuance of a default in dividends on preferred shares of
Fleet so entitled to vote prior to the end of the term of such director, such
vacancy shall be filled for the unexpired term of such director by the remaining
director elected by the preferred shares so entitled to vote.
21
<PAGE> 51
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Preferred Stock of any series at the time outstanding,
voting as a class, will be required for any amendment of the Articles (or any
certificate supplemental thereto) which will adversely affect the powers,
preferences, privileges or rights of such series of Preferred Stock. The
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of any series of Preferred Stock and any other series of
preferred stock of Fleet ranking on a parity with any series of Preferred Stock
as to dividends or upon liquidation, voting as a single class without regard to
series, will be required to issue, authorize or increase the authorized amount
of, or issue or authorize any obligation or security convertible into or
evidencing a right to purchase, any additional class or series of stock ranking
prior to any series of Preferred Stock as to dividends or upon liquidation, but
such vote will not be required to take any such actions with respect to any
stock ranking on a parity with or junior to the Preferred Stock of such series.
Subject to such affirmative vote or consent of the holders of the
outstanding shares of the Preferred Stock of any series, Fleet may, by
resolution of its Board of Directors or as otherwise permitted by law, from time
to time alter or change the preferences, rights or powers of the Preferred Stock
of such series. The holders of the Preferred Stock of such series shall not be
entitled to participate in any such vote if, at or prior to the time when any
such alteration or change is to take effect, provision is made for the
redemption of all the Preferred Stock of such series at the time outstanding.
Nothing in this section shall be taken to require a class vote or consent in
connection with the authorization, designation, increase or issuance of any
shares of any class or series (including additional Preferred Stock of any
series) ranking junior to or on a parity with the Preferred Stock of such series
as to dividends and liquidation rights or in connection with the authorization,
designation, increase or issuance of any bonds, mortgages, debentures or other
obligations of Fleet.
CONVERSION RIGHTS
The Prospectus Supplement relating to any series of the Preferred Stock
that is convertible will state the terms on which shares of such series are
convertible into Common Stock of Fleet or another series of Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject to
and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to the applicable series of the Preferred Stock,
forms of which will be filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
GENERAL
Fleet may, at its option, elect to offer fractional interests in shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, Fleet will provide for the issuance by a Depositary of
Depositary Receipts evidencing Depositary Shares, each of which will represent a
fractional interest (to be set forth in the Prospectus Supplement relating to a
particular series of the Preferred Stock) in a share of a particular series of
the Preferred Stock as described below.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between Fleet and a bank or trust company selected by Fleet (which
may be affiliated with Fleet) having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000 (the
"Depositary"). The Prospectus Supplement relating to a series of Depositary
Shares will set forth the name and address of the Depositary. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositary for shares of
the Preferred Stock will be Fleet-RI. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in a share of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights).
22
<PAGE> 52
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Pending the preparation of definitive
engraved Depositary Receipts, the Depositary may, upon the written order of
Fleet, issue temporary Depositary Receipts substantially identical to, and
entitling the holders thereof to all the rights pertaining to, the definitive
Depositary Receipts but not in definitive form. Definitive Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at Fleet's
expense.
Upon surrender of Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption) and upon payment of the charges provided in the Deposit Agreement
and subject to the terms thereof, a holder of Depositary Shares is entitled to
have the Depositary deliver to, or upon the order of, such holder the whole
shares of Preferred Stock underlying, and any money or other property
represented by, the Depositary Shares evidenced by the surrendered Depositary
Receipts.
Partial shares of Preferred Stock will not be issued. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of Preferred Stock to be withdrawn, the Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. Holders of shares of Preferred Stock thus withdrawn will
not thereafter be entitled to deposit such shares under the Deposit Agreement or
to receive Depositary Shares therefor. Fleet does not expect that there will be
any public trading market for the Preferred Stock except as represented by the
Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction of
one cent, and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash (including, without
limitation, distributions resulting from stock dividends, splits or plans of
reorganization), the Depositary will distribute property received by it to the
record holders of Depositary Shares entitled thereto, unless the Depositary
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of Fleet, sell such property and distribute
the net proceeds from such sale to such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by Fleet to holders of the
Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If any Preferred Stock deposited under a Deposit Agreement is subject to
redemption, the related Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever Fleet redeems shares of Preferred Stock held by
the Depositary, the Depositary will redeem as of the same redemption date the
number of Depositary Shares relating to shares of Preferred Stock so redeemed.
If less than all the Depositary Shares are to be redeemed, the Depositary Shares
to be redeemed will be selected pro rata or by lot as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to
23
<PAGE> 53
receive the moneys payable upon such redemption and any money or other property
to which the holders of such Depositary Shares were entitled upon such
redemption upon surrender to the Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and
Fleet will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock.
TAXATION
Owners of Depositary Shares will be treated for Federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares and, accordingly, will be entitled to take into account for Federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Stock. In addition, (i) no gain or loss will
be recognized for Federal income tax purposes upon the withdrawal of Preferred
Stock in exchange for Depositary Shares as provided in the Deposit Agreement,
(ii) the tax basis of each share of Preferred Stock to an exchanging owner of
Depositary Shares will, upon such exchange, be the same as the aggregate tax
basis of the Depositary Shares exchanged therefor and (iii) the holding period
for shares of the Preferred Stock in the hands of an exchanging owner of
Depositary Shares who held such Depositary Shares as a capital asset at the time
of the exchange thereof for Preferred Stock will include the period during which
such person owned such Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between Fleet and the Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Depositary Shares then outstanding. A Deposit
Agreement may be terminated by Fleet or the Depositary only if (i) all
outstanding Depositary Shares relating thereto have been redeemed or (ii) there
has been a final distribution in respect of the Preferred Stock of the relevant
series in connection with any liquidation, dissolution or winding up of Fleet
and such distribution has been distributed to the holders of the related
Depositary Shares.
CHARGES OF DEPOSITARY
Fleet will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. Fleet will pay
charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary
Shares will pay other transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all
notices, reports and other communications (including proxy solicitation
materials) from Fleet which are delivered to the Depositary and which Fleet is
required to furnish to the holders of the Preferred Stock.
24
<PAGE> 54
Neither the Depositary nor Fleet will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Fleet and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, on information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
Any record holder of Depositary Shares who has been a holder for at least
six months or who holds at least five percent of the outstanding shares of
capital stock of Fleet will be entitled to inspect the transfer books relating
to the Depositary Shares and the list of record holders of Depositary Shares
upon certification to the Depositary that such holder is acting in good faith
and that such inspection is for a proper purpose.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Fleet notice of the
Depositary's election to do so, and Fleet may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
DESCRIPTION OF EXISTING PREFERRED STOCK
GENERAL
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island Business Corporation
Act (the "RIBCA") and the Articles and By-laws of Fleet.
FLEET $1 PAR PREFERRED STOCK
Fleet $1 Par Preferred Stock (which includes the Preferred Stock), is
issuable in series, with such relative rights, preferences and limitations of
each series (including dividend rights, dividend rate, liquidation preference,
voting rights, conversion rights and terms of redemption (including sinking fund
provisions), redemption price or prices and the number of shares constituting
any series) as may be fixed by the Board of Directors.
Series III Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series III Preferred
are entitled to receive a distribution of $100 per share, plus accrued and
unpaid dividends, if any.
The holders of Series III Preferred are entitled to receive dividends at
the rate of 10.12% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Common Stock or the Junior Preferred Stock. The dividends on Series III
Preferred are cumulative. The Series III Preferred is redeemable, in whole or in
part, at Fleet's option, on and after June 1, 1996, commencing at $105.06 per
share and declining ratably on June 1 of each year to $100 per share on or after
June 1, 2001, plus, in each case, accrued and unpaid dividends, if any.
Except as indicated below or except as expressly required by applicable
law, the holders of the Series III Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series III Preferred or any
other class or series of preferred stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) are in default, the number of directors of Fleet will be
increased by two (without duplication of any increase made pursuant to the terms
of any other series of preferred stock of Fleet), and the holders of the Series
III Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
25
<PAGE> 55
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series III Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect two directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
III Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series III Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series III
Preferred. The affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of the Series III Preferred and any other series of Fleet
$1 Par Preferred Stock ranking on a parity with the Series III Preferred either
as to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a
right to purchase, any additional class or series of stock ranking prior to the
Series III Preferred as to dividends or upon liquidation, or to reclassify any
authorized stock of Fleet into such prior shares.
Series IV Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series IV Preferred
are entitled to receive a distribution of $100 per share, plus accrued and
unpaid dividends, if any.
The holders of Series IV Preferred are entitled to receive dividends at the
rate of 9.375% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Common Stock or the Junior Preferred Stock. The dividends on Series IV
Preferred are cumulative. The Series IV Preferred is redeemable, in whole or in
part, at Fleet's option, on and after December 1, 1996, at $100 per share, plus
accrued and unpaid dividends, if any.
Except as indicated below or except as expressly required by applicable
law, the holders of the Series IV Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series IV Preferred or any
other class or series of preferred stock are in default (other than any other
class of preferred stock expressly entitled to elect additional directors by a
separate and distinct vote), the number of directors of Fleet will be increased
by two (without duplication of any increase made pursuant to the terms of any
other series of preferred stock of Fleet), and the holders of the Series IV
Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series IV Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect such directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
IV Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series IV Preferred.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred and any other series of Fleet $1
Par Preferred Stock ranking on a parity with the Series IV Preferred either as
to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the
26
<PAGE> 56
authorized amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of stock ranking prior to the Series IV Preferred as to dividends or upon
liquidation, or to reclassify any authorized stock of Fleet into such prior
shares.
Dual Convertible Preferred Stock. The Dual Convertible Preferred Stock has
no voting rights except as provided by Rhode Island law or as indicated below.
The Dual Convertible Preferred Stock is not entitled to vote for the election of
directors in any circumstances, including dividend arrearages, and the holders
thereof have agreed to vote the Dual Convertible Preferred Stock as directed by
Fleet's board of directors on any matters upon which the shares are entitled to
vote under Rhode Island law, except on those matters adversely affecting the
rights of holders of Dual Convertible Preferred Stock. The affirmative vote or
consent of the holders of at least 66 2/3% of the outstanding shares of Dual
Convertible Preferred Stock, voting as a class, given in person or by proxy,
either in writing or by resolution adopted at a special meeting called for the
purpose, is required to authorize any new class of equity securities of Fleet to
which the Dual Convertible Preferred Stock ranks junior, whether with respect to
dividends or upon liquidation, dissolution, winding up or otherwise. In
addition, the affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of Dual Convertible Preferred Stock, voting as a class,
given in person or by proxy, either in writing or by resolution adopted at a
special meeting called for the purpose, shall be required for any amendment of
Fleet's Articles (or the certificate of designation of the Dual Convertible
Preferred Stock), which would affect materially and adversely the specified
rights, preferences, privileges or voting rights of shares of Dual Convertible
Preferred Stock.
The holders of Dual Convertible Preferred Stock are entitled to dividends
equal to one-half of the total dividends declared (after the first $15 million
in dividends), if any, by Fleet Banking Group on its common stock. Such
dividends, if accrued and unpaid, will be cumulative. In the event of the
liquidation, dissolution or winding up of Fleet, the holders of the outstanding
Dual Convertible Preferred Stock are entitled to receive a distribution of $200
per share, plus accrued and unpaid dividends, if any.
On July 31, 1991, the date of issuance of the Dual Convertible Preferred
Stock, Fleet granted to the partnerships which purchased the Dual Convertible
Preferred Stock (the "Partnerships") rights (the "DCP Rights") to purchase
6,500,000 shares of Common Stock at $17.65 per share.
The Dual Convertible Preferred Stock is convertible into Common Stock at a
conversion price of $17.65 per share at any time. The total number of shares
issuable upon such conversion is 16,033,994 shares, subject to customary
anti-dilution adjustments. If any of such stock is converted prior to July 12,
2001, all of such stock must be converted. After July 12, 2001, any holder of
Dual Convertible Preferred Stock may convert its stock into Common Stock
independently of any other holder.
The Dual Convertible Preferred Stock is also convertible into 50% of the
common stock of Fleet Banking Group at any time after the later of (i) July 12,
1995 and (ii) the date on which the Partnerships distribute all the shares of
Dual Convertible Preferred Stock then held by them to the partners therein
(which distribution date will be July 12, 1997 unless the Federal Reserve Board
consents to an alternative distribution date, but in no event earlier than July
12, 1995). The Dual Convertible Preferred Stock is also convertible into Fleet
Banking Group common stock on an earlier date in the event that the quotient of
(i) Fleet's Tier 1 capital as of the date of determination (adjusted to include
goodwill of Fleet as of July 12, 1991) divided by (ii) total assets, falls below
3%. The Dual Convertible Preferred Stock is not convertible into Fleet Banking
Group common stock after July 12, 2001 or at any time while it is held by the
Partnerships. After the Dual Convertible Preferred Stock becomes convertible
into Fleet Banking Group common stock, the holders of the Dual Convertible
Preferred Stock will have the right to obtain an appraisal of the fair value of
the common stock of Fleet Banking Group (the "Appraisal") as if all such shares
were to be sold to a third party in a transaction reflecting a control premium.
If such Appraisal is acceptable to the holders of the Dual Convertible Preferred
Stock, the Dual Convertible Preferred Stock may be converted into 50% of the
common stock of Fleet Banking Group on or after the date that is six months
after such acceptance or, in the case of the earlier date due to the capital
deficiency described above, on or after the date that is 60 days after the
notice of such deficiency. During the period after acceptance but prior to the
date on which such shares become convertible, Fleet will have the option to
redeem the Dual Convertible Preferred Stock at a redemption price
27
<PAGE> 57
equal to 50% of the Appraisal price less the sum of (i) the market value of the
shares of Common Stock into which the Dual Convertible Preferred Stock is then
convertible (and such shares of Common Stock shall be distributed to the holders
of Dual Convertible Preferred Stock) and (ii) the value of the DCP Rights. Fleet
has the option to pay such redemption price in cash or in any combination of
Fleet securities having a realizable market value equal to such redemption
price. If Fleet does not exercise this option, the holders of the Dual
Convertible Preferred Stock may convert their shares into 50% of the common
stock of Fleet Banking Group. Any such conversion must be for all of the Dual
Convertible Preferred Stock.
Junior Preferred Stock. The Junior Preferred Stock will be issued upon the
exercise of a Right (as hereinafter defined) issued to holders of the Common
Stock. As of the date of this Prospectus, there were 1,500,000 shares of Fleet
$1 Par Preferred Stock reserved for issuance upon the exercise of the Rights.
See "-- Description of Common Stock -- Preferred Share Purchase Rights". Shares
of Junior Preferred Stock purchasable upon exercise of the Rights will rank
junior to the Fleet $1 Par Preferred Stock and the Fleet $20 Par Adjustable Rate
Preferred Stock and will not be redeemable. Each share of Junior Preferred Stock
will, subject to the rights of such senior securities of Fleet, be entitled to a
preferential cumulative quarterly dividend payment equal to the greater of $1.00
per share or, subject to certain adjustments, 100 times the dividend declared
per share of Common Stock. Upon the liquidation, dissolution or winding up of
Fleet, the holders of the Junior Preferred Stock will, subject to the rights of
such senior securities, be entitled to a preferential liquidation payment equal
to the greater of $1.00 per share plus all accrued and unpaid dividends or 100
times the payment made per share of Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Junior Preferred Stock will, subject to the rights of
such senior securities, be entitled to receive 100 times the amount received per
share of Common Stock. Each share of Junior Preferred Stock will have 100 votes,
voting together with the Common Stock. The rights of the Junior Preferred Stock
are protected by customary antidilution provisions.
28
<PAGE> 58
DESCRIPTION OF COMMON STOCK
GENERAL
Holders of the Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of any funds legally available
therefor, and are entitled upon liquidation, after claims of creditors and
preferences of the Preferred Stock, and any other class or series of preferred
stock at the time outstanding, to receive pro rata the net assets of Fleet.
Dividends are paid on the Common Stock only if all dividends on the outstanding
series of Preferred Stock, and any other class or series of preferred stock at
the time outstanding, for the then-current period and, in the case of Cumulative
Preferred Stock, all prior periods have been paid or provided for.
Fleet $1 Par Preferred Stock and any other class of preferred stock have,
or upon issuance will have, preference over the Common Stock with respect to the
payment of dividends and the distribution of assets in the event of liquidation
or dissolution of Fleet and such other preferences as may be fixed by the Board
of Directors.
The holders of the Common Stock are entitled to one vote for each share
held and are vested with all of the voting power except as the Board of
Directors has provided with respect to outstanding preferred stock or may
provide, in the future, with respect to Preferred Stock or any other class or
series of preferred stock which it may hereafter authorize. See "Description of
Existing Preferred Stock". Shares of Common Stock are not redeemable and have no
subscription, conversion or preemptive rights.
The affirmative vote of not less than 80% of Fleet's outstanding voting
stock, voting separately as a class, is required for certain Business
Combinations between Fleet and/or its subsidiaries and persons owning 10% or
more of its voting stock. See "Selected Provisions in the Articles of Fleet;
Business Combinations with Related Persons".
The Common Stock is listed on the New York Stock Exchange. The outstanding
shares of Common Stock are, and the shares to be issued in connection with any
offering hereunder will be, validly issued, fully paid and non-assessable and
the holders thereof are not, and will not be, subject to any liability as
stockholders.
TRANSFER AGENT AND REGISTRAR.
The Transfer Agent and Registrar for the Fleet Common Stock is Fleet-RI.
RESTRICTIONS ON OWNERSHIP.
The Bank Holding Company Act (the "BHCA") requires any "bank holding
company", as such term is defined therein, to obtain the approval of the Federal
Reserve Board prior to the acquisition of 5% or more of the Common Stock. Any
person other than a bank holding company is required to obtain prior approval of
the Federal Reserve Board to acquire 10% or more of the Common Stock under the
Change in Bank Control Act (the "CBCA"). The Partnerships which purchased the
Dual Convertible Preferred Stock made a filing under the CBCA because of their
acquisition of such stock. Any holder of 25% or more of the Common Stock (or a
holder of 5% or more if such holder otherwise exercises a "controlling
influence" over Fleet) is subject to regulation as a bank holding company under
the BHCA.
PREFERRED SHARE PURCHASE RIGHTS
On November 21, 1990, the Board of Directors of Fleet declared a dividend
of one Preferred Share Purchase Right (a "Right") for each outstanding share of
Common Stock of Fleet. The dividend was paid on December 4, 1990 to the
shareholders of record on that date. Each Right, when exercisable, will entitle
the registered holder to purchase from Fleet one one-hundredth of a share of
Junior Preferred Stock at an exercise price of $50 per one one-hundredth of a
share of Junior Preferred Stock (the "Purchase Price"), subject to certain
adjustments. Until the Distribution Date (as hereinafter defined), Fleet will
issue one Right with each share of Common Stock. The following summary does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the Rights Agreement dated as of November
21,
29
<PAGE> 59
1990 between Fleet and Fleet-RI, as Rights Agent, as amended by a First
Amendment to Rights Agreement dated March 28, 1991 and a Second Amendment to
Rights Agreement dated July 12, 1991 (as amended, the "Rights Agreement"), a
copy of which was filed as an exhibit to the Registration Statement on Form 8-A
filed with the Commission on December 4, 1990 and as exhibits to Fleet's
Amendment to Application or Report on Form 8 dated September 6, 1991.
The Rights are not represented by separate certificates and are not
exercisable or transferable apart from the Common Stock until the earlier to
occur of (i) the tenth day after a public announcement by Fleet (x) that a
person or group of affiliated or associated persons has acquired, or obtained
the right to acquire, beneficial ownership (as defined in the Rights Agreement)
of 10% or more (or, in the case of an institutional investor, acting in the
ordinary course of business and not with the purpose of changing or influencing
control of Fleet (a "Qualifying Investor"), 15% or more) of the outstanding
shares of Common Stock, (y) that any person or group of affiliated or associated
persons, which beneficially owned 10% or more (or, in the case of a Qualifying
Investor, 15% or more) of the outstanding shares on the Declaration Date, or
which acquired beneficial ownership of 10% or more (or, in the case of a
Qualifying Investor, 15% or more) of the outstanding shares as a result of any
repurchase of shares by Fleet, thereafter acquired beneficial ownership of
additional shares constituting 1% or more of the outstanding shares, or (z) that
any person who was a Qualifying Investor owning 10% or more of the outstanding
shares of Common Stock ceased to qualify as a Qualifying Investor and thereafter
acquired beneficial ownership of additional shares constituting 1% or more of
the outstanding shares (any person described in clause (x), (y) or (z) being an
"Acquiring Person"); and (ii) the tenth day (or such later day as may be
determined by action of the Board of Directors of Fleet prior to such time as
any person becomes an Acquiring Person) after the date of the commencement of a
tender or exchange offer by any person (other than Fleet) to acquire (when added
to any shares as to which such person is the beneficial owner immediately prior
to such commencement) beneficial ownership of 10% or more of the issued and
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"). On March 28, 1991 and July 12, 1991 the Rights Agreement
was amended to change the definition of an "Acquiring Person" (i) to permit the
sale of the Dual Convertible Preferred Stock and issuance of rights to purchase
Common Stock to the Partnerships and (ii) to permit the Board of Directors of
Fleet to determine that a person who would otherwise be an "Acquiring Person"
had become such inadvertently and therefore allow divestiture of a sufficient
number of shares to avoid such designation.
The Rights will first become exercisable on the Distribution Date and could
then begin trading separately from the Common Stock. The Rights will expire on
November 21, 2000 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed by Fleet.
In the event any person becomes an Acquiring Person, the Rights would give
holders (other than such Acquiring Person and its transferees) the right to buy,
for the Purchase Price, Common Stock (or, under certain circumstances, cash,
property or other debt or equity securities ("Common Stock equivalents")) with a
market value of twice the Purchase Price. In addition, at any time after any
person becomes an Acquiring Person, the Board may, at its option and in lieu of
any transaction described in the preceding sentence, exchange the outstanding
and exercisable Rights (other than Rights held by such Acquiring Person and its
transferees) for shares of Common Stock or Common Stock equivalents at an
exchange ratio of one share of Common Stock per Right, subject to certain
adjustments.
In any merger or consolidation involving Fleet after the Rights become
exercisable, each Right will be converted into the right to purchase, for the
Purchase Price, common stock of the surviving corporation (which may be Fleet)
with a market value of twice the Purchase Price. The Board of Directors of Fleet
may amend the Rights Agreement or redeem the Rights for $.01 each at any time
until there is an Acquiring Person. Thereafter, the Board of Directors can amend
the Rights Agreement only to eliminate ambiguities or to provide additional
benefits to the holders of the Rights (other than the Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of Fleet, including, without limitation, the right to
vote or to receive dividends.
30
<PAGE> 60
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights, and
the number of outstanding Rights, are subject to customary antidilution
adjustments.
The Rights have certain "anti-takeover" effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Fleet on
terms not approved by the Board of Directors of Fleet, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors prior to the time that there is an Acquiring Person (at
which time holders of the Rights become entitled to exercise their Rights for
shares of Common Stock at one-half the market price), since until such time the
Rights generally may be redeemed by the Board of Directors of Fleet at $.01 per
Right.
SELECTED PROVISIONS IN THE ARTICLES OF FLEET
BUSINESS COMBINATIONS WITH RELATED PERSONS
The Articles require that neither Fleet nor any of its subsidiaries may
engage in a Business Combination with a Related Person unless such Business
Combination (a) was approved by an 80% vote of the Board of Directors prior to
the time the Related Person became such; (b) is approved by a vote of 80% of the
Continuing Directors and a majority of the entire Board and certain conditions
as to price and procedure are complied with; or (c) is approved by a vote of 80%
of Fleet's outstanding shares of Fleet capital stock entitled to vote generally
in the election of directors, voting as a single class. Under the Articles, a
"Business Combination" includes any merger or consolidation of Fleet or any of
its subsidiaries into or with a Related Person or any of its affiliates or
associates; any sale, exchange, lease, transfer or other disposition to or with
a Related Person of all, substantially all or any Substantial Part (defined as
assets having a value of more than 5% of the total consolidated assets of Fleet)
of the assets of Fleet or any of its subsidiaries; any purchase, exchange, lease
or other acquisition by Fleet or any of its subsidiaries of all or any
Substantial Part of the assets or business of a Related Person or any of its
affiliates or associates; any reclassification of securities, recapitalization
or other transaction which has the effect, directly or indirectly, of increasing
the proportionate amount of voting shares of Fleet or any subsidiary which are
beneficially owned by a Related Person; and the acquisition by a Related Person
of beneficial ownership of voting securities, securities convertible into voting
securities or any rights, warrants or options to acquire voting securities of a
subsidiary of Fleet; a "Related Person" includes any person who is the
beneficial owner of 10% or more of Fleet's voting shares prior to the
consummation of a Business Combination or any person who is an affiliate of
Fleet and was the beneficial owner of 10% or more of Fleet's voting shares at
any time within the five years preceding the date on which a binding agreement
providing for a Business Combination is authorized by the Board of Directors;
and the "Continuing Directors" are those individuals who were members of the
Fleet Board of Directors prior to the time a Related Person became the
beneficial owner of 10% or more of Fleet's voting stock or those individuals
designated as Continuing Directors (prior to their initial election as
directors) by a majority of the then Continuing Directors. To amend these
provisions, a super majority vote (80%) of the Board of Directors, a majority
vote of the Continuing Directors and a super majority vote (80%) of the
stockholders is required unless the amendment is recommended to the stockholders
by a majority of the Board of Directors and not less than 80% of the Continuing
Directors, in which event only the vote provided under Rhode Island law is
required.
DIRECTORS
The Articles contain a number of additional provisions which are intended
to delay an insurgent's ability to take control of Fleet's Board of Directors,
even after an insurgent has obtained majority ownership of the Fleet Common
Stock. The Articles provide for a classified Board of Directors, consisting of
three classes of directors serving staggered three-year terms. Directors of
Fleet may only be removed for cause and only (a) by a vote of the holders of 80%
of the outstanding shares of Fleet stock entitled to vote thereon voting
separately as a class at a meeting called for that purpose or (b) by a vote of a
majority of the Continuing Directors and a majority of the Board of Directors as
constituted at that time. Vacancies on the Board of Directors, whether
31
<PAGE> 61
due to resignation, death, incapacity or an increase in the number of directors,
may only be filled by the Board, acting by a vote of 80% of the directors then
in office. The Articles provide that the number of directors of Fleet (exclusive
of directors to be elected by the holders of any one or more series of the
Preferred Stock voting separately as a class or classes) that shall constitute
the Board of Directors shall be 13, unless otherwise determined by resolution
adopted by a super majority vote (80%) of the Board of Directors and a majority
of the Continuing Directors. Pursuant to such an adopted resolution, the number
of directors that may serve is currently fixed at twenty-two, except in the
event that quarterly dividends are not paid on non-voting Preferred Stock as
described above, and may only be increased by the affirmative vote of 80% of the
Board of Directors and a majority of the Continuing Directors. A super majority
vote (80%) of the Board of Directors, a majority vote of the Continuing
Directors and a super majority vote (80%) of the outstanding shares of Fleet
stock entitled to vote thereon voting separately as a class are required to
amend any of these provisions.
DESCRIPTION OF WARRANTS
Fleet may issue Warrants for the purchase of Debt Securities, Preferred
Stock, or Common Stock. Warrants may be issued independently or together with
Debt Securities, Preferred Stock, or Common Stock offered by any Prospectus
Supplement and may be attached to or separate from any such Securities. Each
series of Warrants will be issued under a separate warrant agreement (a "Warrant
Agreement") to be entered into between Fleet and a bank or trust company, as
warrant agent (the "Warrant Agent"). The Warrant Agent will act solely as an
agent of the Company in connection with the Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Warrants. The following summary of certain provisions of
the Warrants does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the provisions of the Warrant Agreement that will
be filed with the Commission in connection with the offering of such Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to a particular issue of Debt Warrants
will describe the terms of such Debt Warrants, including the following: (a) the
title of such Debt Warrants; (b) the offering price for such Debt Warrants, if
any; (c) the aggregate number of such Debt Warrants; (d) the designation and
terms of the Debt Securities purchasable upon exercise of such Debt Warrants;
(e) if applicable, the designation and terms of the Debt Securities with which
such Debt Warrants are issued and the number of such Debt Warrants issued with
each such Debt Security; (f) if applicable, the date from and after which such
Debt Warrants and any Debt Securities issued therewith will be separately
transferable; (g) the principal amount of Debt Securities purchasable upon
exercise of a Debt Warrant and the price at which such principal amount of Debt
Securities may be purchased upon exercise (which price may be payable in cash,
securities, or other property); (h) the date on which the right to exercise such
Debt Warrants shall commence and the date on which such right shall expire; (i)
if applicable, the minimum or maximum amount of such Debt Warrants that may be
exercised at any one time; (j) whether the Debt Warrants represented by the Debt
Warrant certificates or Debt Securities that may be issued upon exercise of the
Debt Warrants will be issued in registered or bearer form; (k) information with
respect to book-entry procedures, if any; (l) the currency or currency units in
which the offering price, if any, and the exercise price are payable; (m) if
applicable, a discussion of material United States Federal income tax
considerations; (n) the antidilution provisions of such Debt Warrants, if any;
(o) the redemption or call provisions, if any, applicable to such Debt Warrants;
and (p) any additional terms of the Debt Warrants, including terms, procedures,
and limitations relating to the exchange and exercise of such Debt Warrants.
STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Preferred
Stock Warrants or Common Stock Warrants will describe the terms of such
Warrants, including the following: (a) the title of such Warrants; (b) the
offering price for such Warrants, if any; (c) the aggregate number of such
Warrants; (d) the designation and terms of the Common Stock or Preferred Stock
purchasable upon exercise of such Warrants; (e) if applicable, the designation
and terms of the Securities with which such Warrants are issued
32
<PAGE> 62
and the number of such Warrants issued with each such Security; (f) if
applicable, the date from and after which such Warrants and any Securities
issued therewith will be separately transferable; (g) the number of shares of
Common Stock or Preferred Stock purchasable upon exercise of a Warrant and the
price at which such shares may be purchased upon exercise; (h) the date on which
the right to exercise such Warrants shall commence and the date on which such
right shall expire; (i) if applicable, the minimum or maximum amount of such
Warrants that may be exercised at any one time; (j) the currency or currency
units in which the offering price, if any, and the exercise price are payable;
(k) if applicable, a discussion of material United States federal income tax
considerations; (l) the antidilution provisions of such Warrants, if any; (m)
the redemption or call provisions, if any, applicable to such Warrants; and (n)
any additional terms of the Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of such Warrants.
33
<PAGE> 63
PLAN OF DISTRIBUTION
Fleet may sell Securities to or through underwriters, and also may sell
Securities through agents (which are registered broker-dealers or banks) which
may be affiliates.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities. Certain
restrictions relating to the distribution of Securities in connection with an
International Offering will be set forth in the applicable Prospectus
Supplement.
In connection with the sale of Securities, underwriters or agents acting on
Fleet's behalf may receive compensation from Fleet or from purchasers of
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers and agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Act and any discounts or commissions received by them and any profits
on the resale of Securities by them may be deemed to be underwriting discounts
and commissions under the Act. Any such underwriter will be identified and any
such compensation will be described in the applicable Prospectus Supplement.
Under agreements which may be entered into by Fleet, underwriters, dealers
and agents who participate in the distribution of Securities may be entitled to
indemnification by Fleet against certain liabilities, including liabilities
under the Act, and to certain rights of contribution from Fleet.
If so indicated in the applicable Prospectus Supplement, Fleet will
authorize underwriters or other persons acting as Fleet's agents to solicit
offers by certain institutions to purchase Debt Securities, Preferred Stock,
Depositary Shares or Debt Warrants from Fleet pursuant to delayed delivery
contracts providing for payment and delivery on a future date or dates stated in
the applicable Prospectus Supplement. Each such contract will be for an amount
not less than, and the aggregate amount of such securities sold pursuant to such
contracts shall not be less nor more than, the respective amounts stated in the
applicable Prospectus Supplement. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases such institutions must be approved by Fleet. The obligations of any
purchaser under any such contract will not be subject to any condition except
that (1) the purchase of the Debt Securities, Preferred Stock, Depositary Shares
or Debt Warrants shall not at the time of delivery be prohibited under the laws
of the jurisdiction to which such purchaser is subject, and (2) if the Debt
Securities, Preferred Stock, Depositary Shares or Debt Warrants are also being
sold to underwriters acting as principals for their own account, the
underwriters shall have purchased such Debt Securities, Preferred Stock,
Depositary Shares or Debt Warrants not sold for delayed delivery. The
underwriters and such other persons will not have any responsibility in respect
of the validity or performance of such contracts.
Certain of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services, for, Fleet
or one or more of its affiliates in the ordinary course of business.
EXPERTS
The consolidated financial statements of Fleet appearing in Fleet's 1993
Annual Report to Stockholders and incorporated by reference in Fleet's 1993
Annual Report on Form 10-K for the year ended December 31, 1993, 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.
34
<PAGE> 64
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for Fleet by
Edwards & Angell, One Hospital Trust Plaza, Providence, Rhode Island 02903, and
for the Underwriters by Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019. V. Duncan Johnson, a partner of Edwards & Angell, is a director
of Fleet-RI, Fleet-MA and Fleet-CT and beneficially owns 4,052 shares of Common
Stock.
35
<PAGE> 65
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
OR THE BASIC PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE BASIC PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY FLEET OR BY THE AGENTS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE BASIC 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 SINCE THE
DATE HEREOF OR THEREOF. THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND
THE BASIC 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>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Important Currency Exchange
Information............................. S-2
Description of Registered Notes........... S-2
Foreign Currency Risks.................... S-18
Certain United States Federal Income
Tax Consequences........................ S-19
Plan of Distribution...................... S-28
BASIC PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Fleet Financial Group, Inc................ 3
Consolidated Ratios of Earnings to
Fixed Charges and Earnings to Fixed
Charges and Preferred Stock Divi-
dends................................... 7
Use of Proceeds........................... 7
Description of Debt Securities............ 8
Senior Debt Securities.................... 12
Subordinated Debt Securities.............. 14
Description of Preferred Stock............ 18
Description of Depositary Shares.......... 22
Description of Existing Preferred Stock... 25
Description of Common Stock............... 29
Selected Provisions in the Articles of
Fleet................................... 31
Description of Warrants................... 32
Plan of Distribution...................... 34
Experts................................... 34
Legal Opinions............................ 35
</TABLE>
U.S.$1,126,900,000
FLEET FINANCIAL
GROUP, INC.
SENIOR MEDIUM-TERM
NOTES, SERIES H
SUBORDINATED MEDIUM-TERM NOTES, SERIES I
DUE NINE MONTHS
OR MORE FROM
DATE OF ISSUE
(LOGO)
FLEET BANK OF MASSACHUSETTS, N.A.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
PROSPECTUS SUPPLEMENT
DATED NOVEMBER 28, 1994
