<PAGE> 1
(LOGO)
January 30, 1995
To The Stockholders of NBB Bancorp, Inc.
The merger of NBB Bancorp, Inc. ("NBB") into Fleet Financial Group, Inc.
("Fleet") was consummated on January 27, 1995 (the "Merger").
In accordance with the Agreement and Plan of Merger (the "Merger
Agreement"), a copy of which was previously furnished to you in the Proxy
Statement-Prospectus dated October 26, 1994 (the "Proxy Statement-Prospectus"),
on the effective date of the Merger each share of NBB common stock, $0.10 par
value ("NBB Common Stock") held by each NBB stockholder, except for shares held
by dissenting stockholders or shares held by Fleet or its subsidiaries or by NBB
or its subsidiaries (other than in both cases shares held in a fiduciary
capacity or as a result of debts previously contracted), automatically converted
into the right to receive either 1.457 shares of Fleet common stock, $1.00 par
value, including the associated preferred share purchase rights ("Fleet Common
Stock"), or $48.50 in cash, and .280 warrants to purchase Fleet Common Stock
(the "Warrants").
The accompanying Election Form and Letter of Transmittal (hereinafter
referred to as the "Election Form") and the accompanying Prospectus Supplement
(the "Supplement") to the Proxy Statement-Prospectus are for your use in
determining whether you prefer to receive cash or Fleet Common Stock in exchange
for your shares of NBB Common Stock. Your choice will be subject, however, to
the allocation procedures described in the Supplement.
In considering the exchange of your NBB Common Stock and your election for
cash or Fleet Common Stock, you should read the accompanying Supplement and
Election Form and reread the Proxy Statement-Prospectus which described the
Merger and included a copy of the Merger Agreement. Reference is hereby made to
the Proxy Statement-Prospectus for a description of the Merger and the Merger
Agreement, the Fleet Common Stock, comparative per share data and market prices
of Fleet Common Stock, information incorporated by reference in the Proxy
Statement-Prospectus and other information concerning the Merger.
Tax considerations also may be important to you in making your election for
cash or Fleet Common Stock. The Supplement contains a brief description of
possible tax effects.
Please be sure to complete properly, sign and return your Election Form and
your stock certificates representing shares of NBB Common Stock to Fleet
National Bank, the Exchange Agent by February 21, 1995. If you do not do so by
that date, you will be deemed to have made no election and will receive either
cash or Fleet Common Stock as described in the accompanying Supplement.
If you need additional information, materials or assistance in connection
with the election procedure or exchange, please contact Fleet National Bank at
1-800-538-1516.
Sincerely,
Terrence Murray
Chairman and President
<PAGE> 2
PROSPECTUS SUPPLEMENT
TO
PROXY STATEMENT-PROSPECTUS
FLEET FINANCIAL GROUP, INC.
50 KENNEDY PLAZA
PROVIDENCE, RHODE ISLAND 02903
This Prospectus Supplement ("Supplement") is being furnished to holders of
NBB Bancorp, Inc. ("NBB") common stock, $0.10 par value ("NBB Common Stock"), as
a supplement to the Proxy Statement-Prospectus, dated October 26, 1994 (the
"Proxy Statement-Prospectus"), previously sent to NBB stockholders in connection
with the special meeting of shareholders of NBB held on December 15, 1994. This
Supplement updates certain information contained in the Proxy
Statement-Prospectus and is to be used by stockholders of NBB in electing to
receive either cash or shares of Common Stock, $1.00 par value, including the
associated preferred share purchase rights ("Fleet Common Stock") of Fleet
Financial Group, Inc. ("Fleet"), all in connection with the Merger (the
"Merger") of NBB into Fleet. The Merger was consummated on January 27, 1995 (the
"Effective Date").
As a result of the Merger, each NBB stockholder has the right to receive,
for each share of NBB Common Stock held by such stockholder, except for shares
held by dissenting shareholders or shares held by Fleet or its subsidiaries or
by NBB or its subsidiaries (other than in both cases shares held in a fiduciary
capacity or as a result of debts previously contracted), either 1.457 shares of
Fleet Common Stock or $48.50 in cash. In addition, each NBB stockholder has the
right to receive .280 warrants to purchase Fleet Common Stock (the "Warrants").
Please read this Supplement carefully. Failure of NBB stockholders to
properly complete and file the accompanying Election Form and Letter of
Transmittal (the "Election Form") by 5:00 p.m., Providence Time, on February 21,
1995 (the "Election Deadline"), and to comply with the procedures described in
this Supplement will affect the type of consideration received in the Merger.
The determination of whether an NBB stockholder will receive Fleet Common
Stock or cash, or a combination of both, will depend on (i) the stated
preference of the NBB stockholder as indicated on the Election Form and (ii)
allocation procedures to be followed by Fleet if the total number of shares of
NBB Common Stock held by NBB stockholders who have elected to receive Fleet
Common Stock does not equal 4,231,923, calculated by dividing the 6,165,912
shares of Fleet Common Stock issued in the Merger by 1.457. See "EXCHANGE OF
CERTIFICATES; ELECTION PROCEDURE; FRACTIONAL SHARES".
Each Warrant entitles the holder thereof to purchase Fleet Common Stock at
$43.875 per share at any time during the five-year period commencing on January
27, 1996 and ending on January 26, 2001.
Fleet has filed a Registration Statement on Form S-4 (File No. 33-55555)
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") covering the Warrants and shares of Fleet Common Stock,
representing shares to be issued in connection with the Merger and shares
issuable upon exercise of the Warrants (the "Warrant Shares").
Neither the Proxy Statement-Prospectus nor this Supplement covers any
resales of Fleet Common Stock or Warrants received by stockholders of NBB upon
consummation of the Merger or the Warrant Shares, and no person is authorized to
make use of the Proxy Statement-Prospectus or this Supplement in connection with
any such resale.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THE PROXY STATEMENT-PROSPECTUS
AND THIS SUPPLEMENT. THE MERGER AND THE ELECTION PROCEDURES ARE COMPLEX.
STOCKHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THE PROXY
STATEMENT-PROSPECTUS AND THIS SUPPLEMENT IN THEIR ENTIRETY.
<PAGE> 3
THE WARRANTS AND SHARES OF FLEET COMMON STOCK OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
THE SECURITIES OF FLEET OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE HEREIN
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS DOCUMENT DOES 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 ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS SUPPLEMENT NOR ANY DISTRIBUTION OF
THE SHARES OF FLEET COMMON STOCK OR WARRANTS HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF FLEET SINCE THE DATE HEREOF.
The date of this Supplement is January 30, 1995.
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
AVAILABLE INFORMATION................................................................ 4
INFORMATION INCORPORATED BY REFERENCE................................................ 4
SUMMARY.............................................................................. 6
SELECTED CONSOLIDATED FINANCIAL DATA................................................. 12
THE MERGER........................................................................... 15
CONVERSION OF NBB COMMON STOCK AND OTHER MATTERS..................................... 15
EXCHANGE OF CERTIFICATES; ELECTION PROCEDURE; FRACTIONAL SHARES...................... 16
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.............................................. 17
STOCK PRICES AND DIVIDENDS........................................................... 20
RECENT DEVELOPMENTS.................................................................. 20
ACCOUNTING TREATMENT................................................................. 21
RESALE OF FLEET COMMON STOCK, WARRANTS AND WARRANT SHARES............................ 21
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS.......................................... 22
CERTAIN REGULATORY CONSIDERATIONS.................................................... 22
RECENT LEGISLATION AND RELATED MATTERS............................................... 23
DESCRIPTION OF FLEET CAPITAL STOCK AND WARRANTS...................................... 27
EXPERTS.............................................................................. 35
LEGAL OPINIONS....................................................................... 35
</TABLE>
3
<PAGE> 5
AVAILABLE INFORMATION
Additional information concerning Fleet is available from several sources
described below. NBB stockholders who wish to obtain this additional information
should act promptly to ensure that the information can be received and
considered prior to the Election Deadline.
SEC FILINGS
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Proxy statements, reports and other information concerning Fleet can
be inspected and copied at the Commission's office at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices in New York (Suite 1300, Seven World Trade Center, New York,
New York 10048) and Chicago (Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661), and copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Fleet Common Stock
and the Warrants are listed on the New York Stock Exchange. Reports, proxy
materials and other information concerning Fleet also may be inspected at the
offices of the New York Stock Exchange, Inc. (the "Stock Exchange"), 20 Broad
Street, New York, New York 10005. This Supplement 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, 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.
THIS SUPPLEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN EXHIBITS
THERETO, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS SUPPLEMENT IS DELIVERED UPON WRITTEN OR ORAL REQUEST TO:
Robert W. Lougee, Jr.
Director of Investor Relations
Fleet Financial Group, Inc.
50 Kennedy Plaza
Providence, Rhode Island 02903
401-278-5879
ADDITIONAL COPIES
Additional copies of the Proxy Statement-Prospectus, the Election Form and
this Supplement are available by writing or calling the Exchange Agent, Fleet
National Bank, 111 Westminster Street, Providence, Rhode Island 02903 (telephone
1-800-538-1516).
INFORMATION INCORPORATED BY REFERENCE
The following documents are incorporated by reference herein:
(1) Fleet's Annual Report on Form 10-K for the year ended December 31,
1993;
(2) Fleet's 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) Fleet's Current Reports on Form 8-K dated March 10, 1994, May 9,
1994, August 15, 1994, September 7, 1994, October 19, 1994, October 21,
1994, November 28, 1994, December 28, 1994 and January 18, 1995;
4
<PAGE> 6
(4) The description of the Fleet 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 (as
amended by an Amendment to Application or Report on Form 8 dated September
6, 1991); and
(6) The description of the Warrants contained in Fleet's Registration
Statement on Form 8-A dated December 27, 1994, 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 Supplement 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 Supplement 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 Supplement 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 Supplement.
5
<PAGE> 7
SUMMARY
The following is a brief summary, which is necessarily incomplete, of
certain information contained elsewhere in this Supplement or in documents
incorporated herein by reference. Reference is made to, and this Summary is
qualified in its entirety by, the more detailed information contained in the
Proxy Statement-Prospectus, this Supplement and in the documents incorporated by
reference herein. Each stockholder is urged to read the Supplement with care.
FLEET FINANCIAL GROUP, INC.
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 Rhode Island, New York, 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, N.A. (the "Surviving Bank"), 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.
THE MERGER
The Merger was consummated on January 27, 1995 (the "Effective Date"). At
the effective time of the Merger (the "Effective Time") each then outstanding
share of NBB Common Stock (except for shares held by dissenting shareholders or
shares held by Fleet or its subsidiaries, or by NBB or its subsidiaries (other
than in both cases shares held in a fiduciary capacity or as a result of debts
previously contracted)) was automatically converted into the right to receive
(i) either 1.457 shares of Fleet Common Stock (the "Per Share Stock
Consideration") or $48.50 in cash (the "Per Share Cash Consideration") and (ii)
.280 Warrants.
The determination of the number of shares of Fleet Common Stock to be
received for each share of NBB Common Stock was based on the average of the
closing sales price (the "Average Closing Price") for Fleet Common Stock on the
Stock Exchange during the ten trading day period which ended on the fifth
business day preceding (but not including) the Effective Date. Whether an NBB
stockholder will receive Fleet Common Stock or cash, or a combination of both,
in the Merger will depend on (i) the stated preference of the NBB stockholder as
indicated on the Election Form and (ii) allocation procedures to be used by
Fleet if the total number of shares of NBB Common Stock held by NBB stockholders
who have elected to receive Fleet Common Stock does not equal 4,231,923
calculated by dividing the 6,165,912 shares of Fleet Common Stock issued in the
Merger by 1.457, the Per Share Stock Consideration.
Each Warrant will entitle the holder to purchase one share of Fleet Common
Stock at $43.875 per share at any time during the five-year period commencing on
January 27, 1996 and ending January 26, 2001.
No fractional shares of Fleet Common Stock will be issued. In lieu thereof,
each holder of NBB Common Stock who otherwise would have been entitled to a
fractional share of Fleet Common Stock will receive cash in an amount equal to
such fraction multiplied by the Average Closing Price of $33.29. Calculations
will be made to the nearest one-thousandth of a share of Fleet Common Stock and
to the nearest cent.
Each stock option to acquire NBB Common Stock granted under the NBB Stock
Option Plan which was outstanding at the Effective Time and not exercised or
cancelled was converted at the Effective Time into options to purchase Fleet
Common Stock plus .280 Warrants. Fleet has adopted the Fleet Financial Group,
Inc. 1995 New Bedford Acquisition Stock Option Plan (the "NBB Acquisition Option
Plan") under which such options will be granted. The rights to Fleet Common
Stock received by holders of NBB stock options in
6
<PAGE> 8
the Merger are the same as the rights such optionees had under the NBB Stock
Option Plan immediately prior to the Effective Time, except that the number of
shares of Fleet Common Stock subject to such options and the exercise price of
such options have been adjusted to give effect to the Per Share Stock
Consideration. Fleet has filed a Registration Statement on Form S-8 covering the
shares of Fleet Common Stock issuable upon exercise of the options which were
converted in the Merger.
Immediately following the consummation of the Merger, Fleet transferred the
ten branches of New Bedford Institution for Savings, a wholly-owned subsidiary
of NBB prior to the Merger (the "Bank"), located in the State of Rhode Island
and the loans associated therewith to Fleet-RI, a wholly-owned subsidiary of
Fleet, in exchange for Fleet-RI's assumption of deposit and other liabilities
related thereto and a cash payment equal to the net fair market value of the
transferred assets, and then caused the consummation of the merger of the Bank
with and into the Surviving Bank.
See "CONVERSION OF NBB COMMON STOCK AND OTHER MATTERS", and "EXCHANGE OF
CERTIFICATES; ELECTION PROCEDURE; FRACTIONAL SHARES".
ELECTION PROCEDURES
The conversion of NBB Common Stock into the right to receive Fleet Common
Stock and/or cash and Warrants occurred automatically at the Effective Time.
Accompanying this Supplement is the Election Form. The Election Form contains
instructions with respect to the surrender of certificates representing NBB
Common Stock. The Election Form will permit each NBB stockholder, with respect
to each share of NBB Common Stock, to elect to receive Fleet Common Stock, to
receive cash or to make no election. ANY SUCH ELECTION SHALL HAVE BEEN PROPERLY
MADE ONLY IF THE EXCHANGE AGENT SHALL HAVE ACTUALLY RECEIVED A PROPERLY
COMPLETED ELECTION FORM BY 5:00 P.M. ON FEBRUARY 21, 1995 (THE "ELECTION
DEADLINE"). AN ELECTION FORM SHALL BE DEEMED PROPERLY COMPLETED ONLY IF
ACCOMPANIED BY ONE OR MORE CERTIFICATES REPRESENTING ALL SHARES OF NBB COMMON
STOCK COVERED BY SUCH ELECTION FORM, TOGETHER WITH DULY EXECUTED TRANSMITTAL
MATERIALS INCLUDED WITH THE ELECTION FORM. ANY HOLDER OF NBB COMMON STOCK WHO
SHALL NOT HAVE SUBMITTED TO THE EXCHANGE AGENT AN EFFECTIVE, PROPERLY COMPLETED
ELECTION FORM ON OR BEFORE THE ELECTION DEADLINE WILL BE DEEMED TO HAVE MADE NO
ELECTION.
Any Election Form may be revoked or changed by the person submitting such
Election Form at or prior to the Election Deadline by written notice to the
Exchange Agent, which notice must be received by the Exchange Agent at or prior
to the Election Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of NBB Common Stock represented by such Election
Form shall be deemed to have made no election.
Notwithstanding the elections made, upon consummation of the Merger, shares
of Fleet Common Stock will be issued in exchange for 4,231,923 shares of NBB
Common Stock (the "Stock Conversion Number"), calculated by dividing the
6,165,912 shares of Fleet Common Stock issued in the Merger (the "Aggregate
Parent Stock Amount") by 1.457, the Per Share Stock Consideration. In the event
that the number of shares held by NBB stockholders that elect to receive Fleet
Common Stock is less than the Stock Conversion Number, then all shares electing
to receive Fleet Common Stock will be converted into the right to receive Fleet
Common Stock and the Exchange Agent will select on a pro rata basis, first from
the holders who made no election and then if necessary from those electing to
receive cash, a sufficient number of shares of NBB Common Stock such that the
number of such selected shares will, when added to the number of shares electing
to receive Fleet Common Stock, equal as closely as practicable the Stock
Conversion Number. Under such circumstances, such selected shares will be
converted into the right to receive Fleet Common Stock and any shares not so
selected will be converted into the right to receive cash.
On the other hand, in the event that the number of shares held by NBB
stockholders that elect to receive Fleet Common Stock is more than the Stock
Conversion Number, then all shares electing to receive cash will
7
<PAGE> 9
be converted into the right to receive cash, and the Exchange Agent will select
on a pro rata basis first from the holders who made no election and then if
necessary from those electing to receive Fleet Common Stock, a sufficient number
of shares of NBB Common Stock such that the number of such selected shares will,
when added to the number of shares electing to receive cash, equal the
difference between the number of shares of NBB Common Stock outstanding as of
the Effective Time which are being converted and the Stock Conversion Number.
Any shares which are not so selected will be converted into the right to receive
Fleet Common Stock.
FLEET MAKES NO RECOMMENDATION AS TO THE MANNER IN WHICH EACH INDIVIDUAL NBB
STOCKHOLDER'S ELECTION SHOULD BE MADE. EACH NBB STOCKHOLDER SHOULD CONSIDER,
AMONG OTHER THINGS, HIS OR HER DESIRE TO RECEIVE CASH, THE RISKS RELATED TO THE
FLEET COMMON STOCK, HIS OR HER DESIRE TO ASSUME THOSE RISKS AND THE RESPECTIVE
TAX CONSEQUENCES OF RECEIVING CASH OR FLEET COMMON STOCK. SEE "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES".
Until the certificates representing NBB Common Stock are surrendered for
exchange after the Effective Time of the Merger, holders of such certificates
will accrue but will not be paid dividends or other distributions on any shares
of Fleet Common Stock into which their shares have been converted. When such
certificates are surrendered, any unpaid dividends or other distributions will
be paid, without interest. No interest will be paid or accrued on the cash into
which their shares have been converted or the cash in lieu of fractional shares
payable to holders of such certificates. For all other purposes, however, each
certificate which represented outstanding shares of NBB Common Stock outstanding
at the Effective Time of the Merger will be deemed to evidence ownership of the
Warrants, shares of Fleet Common Stock and/or cash into which those shares have
been converted pursuant to the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Neither Fleet nor NBB requested an advance ruling from the Internal Revenue
Service as to the tax consequences of the Merger. On the Effective Date of the
Merger, NBB received an opinion from Goodwin, Procter and Hoar, its counsel,
dated as of such date, based upon certain customary representations and
assumptions set forth therein, substantially to the effect that for federal
income tax purposes the Merger constituted a reorganization within the meaning
of section 368(a) of the Code, and Fleet and NBB each were a party to the
reorganization within the meaning of section 368(b) of the Code (noting,
however, that the nontaxability of the stockholders of NBB resulting from such
reorganization does not extend to the Warrants and any cash received as Per
Share Cash Consideration, cash in lieu of a fractional share interest in Fleet
Common Stock or cash received by dissenting stockholders).
Based on such opinion, the material federal income tax results of the
Merger are as follows. No gain or loss will be recognized by NBB or by Fleet as
a result of the Merger. An NBB stockholder who receives solely cash and Warrants
in exchange for all of his shares of NBB Common Stock will recognize a gain or
loss for federal income tax purposes equal to the difference between (i) the sum
of the cash and the fair market value of the Warrants, as of the Effective Time,
and (ii) the stockholder's tax basis in the NBB Common Stock surrendered in
exchange therefor. Assuming such NBB stockholder, at the time of the exchange,
holds NBB Common Stock as a capital asset, such gain or loss will be capital
gain or loss, and will be long-term capital gain or loss if the stockholder's
holding period is more than one year. There are limitations on the extent to
which stockholders may deduct capital losses from ordinary income.
If the consideration received in the Merger by an NBB stockholder consists
in part of Fleet Common Stock, and such stockholder's adjusted basis in the
shares of NBB Common Stock surrendered in the transaction is less than the sum
of the fair market value, as of the Effective Time, of the Fleet Common Stock
and Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock), such stockholder will realize a gain on the
transaction (a "Realized Gain"). Such stockholder will recognize a gain equal to
the lesser of (i) such Realized Gain and (ii) the sum of the fair market value
of the Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock). Provided the exchange does not have the effect of
a dividend, the gain so recognized will be characterized as a capital gain
(assuming the NBB Common Stock exchanged was a capital asset in the hands of the
stockholder). If an NBB stockholder who receives part Fleet Common Stock in the
Merger realizes a loss,
8
<PAGE> 10
such loss will not be currently recognized for federal income tax purposes. Such
disallowed loss will be reflected in the adjusted tax basis of the shares of
Fleet Common Stock received in the Merger.
Stockholders should consult their own tax advisors as to the tax
consequences of the Merger to them under Federal, state, local or any other
applicable law.
See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES".
ACCOUNTING
The Merger is intended to be accounted for as a "purchase" transaction, as
more fully described under "ACCOUNTING TREATMENT".
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
Holders of NBB Common Stock who did not vote to approve and adopt the
Merger Agreement and who comply with the requirements of Section 262 of the
Delaware General Corporation Law will be entitled to appraisal rights. A copy of
Section 262 was attached to the Proxy Statement-Prospectus as Exhibit C.
See "APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS".
STOCK PRICES AND DIVIDENDS
The shares of Fleet Common Stock are listed and traded on the Stock
Exchange. The table below sets forth the high and low sales prices for Fleet
Common Stock as reported on the Stock Exchange and the cash dividends declared,
for the periods indicated:
<TABLE>
<CAPTION>
FLEET
---------------------------
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
1991............................................................... $26.250 $ 9.625 $ 0.800
1992............................................................... 33.875 24.250 0.825
1993............................................................... 37.875 28.250 1.025
1994............................................................... 41.375 29.875 1.400
1995 (through January 27, 1995).................................... 35.125 29.875 N/A
</TABLE>
On May 6, 1994, the business day immediately preceding the public
announcement of the proposed Merger, the closing sales price for Fleet Common
Stock as reported on the Stock Exchange Composite Tape was $36.875 per share. On
January 27, 1995, the Effective Date of the Merger, the closing sales price for
Fleet Common Stock as so reported was $31.875 per share.
See "STOCK PRICES AND DIVIDENDS".
9
<PAGE> 11
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA
The following unaudited information reflects certain per common share data
related to income per share, cash dividends declared per share, book value per
share, and market value per share (i) on an historical basis for Fleet; and (ii)
on a pro forma combined basis per share of Fleet Common Stock to give effect to
the consummation of the Merger and the use of repurchased Fleet Common Stock to
pay the Per Share Stock Consideration. Such pro forma calculations do not
include the effect of the Warrants. The Warrants would not have a dilutive
effect on Fleet Common Stock on a pro forma basis since the average market price
of the Fleet Common Stock for each of the nine months ended September 30, 1994
and the year ended December 31, 1993 did not exceed the exercise price of the
Warrants.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Fleet, including the respective
notes thereto, which are incorporated by reference in this Proxy
Statement-Prospectus. See "INFORMATION INCORPORATED BY REFERENCE".
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
1994 1993
------------------- -------------
<S> <C> <C>
FLEET COMMON STOCK:
Income per share from continuing operations:
Primary:
Historical......................................... $ 2.70 $ 3.01
Pro forma -- Fleet and NBB(1)...................... 2.68 3.02
Fully Diluted:
Historical......................................... 2.70 3.01
Pro forma -- Fleet and NBB(1)...................... 2.67 3.02
Cash dividends declared per share:
Historical......................................... 1.00 1.025
Pro forma -- Fleet and NBB(2)...................... 1.00 1.025
Book value per share at period end:
Historical(3)...................................... 22.50 22.84
Pro forma -- Fleet and NBB(4)...................... 22.50 22.84
</TABLE>
(1) Pro forma combined primary and fully diluted income per share data has been
computed based on the pro forma net income available to holders of Fleet
Common Stock and NBB Common Stock, using the historical weighted average
shares outstanding and common stock equivalents relating to stock options,
Fleet's Dual Convertible Preferred Stock, $1.00 par value (the "Dual
Convertible Preferred Stock"), and rights to acquire Fleet Common Stock
issued to holders of the Dual Convertible Preferred Stock, each outstanding
at period end, and the exercise of stock options as may be appropriate as of
the beginning of the earliest period presented, adjusted to the equivalent
number of shares of Fleet Common Stock. These calculations assume the
exchange of 1.457 shares of Fleet Common Stock for each share of NBB Common
Stock, that an aggregate of 6,165,912 shares of Fleet Common Stock are
issued in the Merger and that Fleet has repurchased all of such shares in
the open market prior to the Effective Time. Earnings used in the
calculation of pro forma primary and fully diluted income per share data are
adjusted by the dividend requirements of all preferred stock.
(2) Pro forma combined cash dividends declared per share of Fleet Common Stock
amounts are determined by dividing aggregate pro forma cash dividends
declared by the equivalent pro forma combined average outstanding shares of
Fleet Common Stock giving effect to the Merger and assuming the exchange of
1.457 shares of Fleet Common Stock for each share of NBB Common Stock, the
issuance of an aggregate of 6,165,912 shares of Fleet Common Stock in the
Merger and the repurchase by Fleet of all of such shares in the open market
prior to the Effective Time.
(3) Effective January 1, 1994 and December 31, 1993, respectively, Fleet adopted
Financial Accounting Standards Board (FASB) Statement No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." The standard
requires that securities available for sale be reported at fair value, with
unrealized gains or losses reflected as a separate component of
stockholders' equity net of related tax.
10
<PAGE> 12
Previously, these securities were recorded at the lower of aggregate cost or
market value with any net unrealized loss included in earnings. Historical
book value per common share at September 30, 1994 for Fleet includes any
adjustments for unrealized gains or losses relating to securities available
for sale.
(4) Pro forma combined book values per share represent the book values per share
giving effect to the Merger and assuming the exchange of 1.457 shares of
Fleet Common Stock for each share of NBB Common Stock, the issuance of an
aggregate of 6,165,912 shares of Fleet Common Stock in the Merger and the
repurchase by Fleet of all of such shares in the open market prior to the
Effective Time.
11
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain unaudited historical consolidated
financial data for Fleet. This data is based on the consolidated financial
statements of Fleet, including the respective notes thereto, which are
incorporated by reference in this Supplement and should be read in conjunction
therewith. See "INFORMATION INCORPORATED BY REFERENCE". The summary data for the
nine months ended September 30, 1994 and 1993 of Fleet is based on unaudited
financial statements which include all adjustments (consisting of normal
recurring items) that, in the opinion of the management of Fleet, are necessary
for a fair presentation of the results of the respective interim periods. The
results of operations for the nine months ended September 30, 1994 and September
30, 1993 are not necessarily indicative of the results for any other period.
Certain amounts in prior periods have been reclassified to conform to
current-year presentation.
SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
(HISTORICAL)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1994(1) 1993 1993 1992 1991(2) 1990(3) 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Consolidated Summary of Operations:
Interest income.................. $ 2,448 $ 2,417 $ 3,212 $ 3,416 $ 3,329 $ 3,279 $ 3,068
Interest expense................. 948 880 1,161 1,463 1,930 2,126 1,816
Net interest income.............. 1,500 1,537 2,051 1,953 1,399 1,153 1,252
Provision for credit losses...... 45 215 271 486 509 762 160
Net interest income after
provision for credit losses.... 1,455 1,322 1,780 1,467 890 391 1,092
Noninterest income............... 863 1,146 1,465 1,368 1,082 735 576
Noninterest expense.............. 1,566 1,872 2,424 2,318 1,819 1,289 1,128
Income (loss) before income
taxes.......................... 752 596 821 517 153 (163) 540
Income tax expense (benefit)..... 296 241 327 228 55 (89) 169
Net income (loss) before minority
interest....................... 456 355 494 289 98 (74) 371
Minority interest in FMG (after-
tax)(4)........................ 8 3 6 9 0 0 0
----- ----- ----- ----- ----- ----- -----
Net income (loss)................ $ 448 $ 352 $ 488 $ 280 $ 98 $ (74) $ 371
----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- -----
Earnings (loss) per common share
(5):
Primary.......................... $2.70 $2.17 $3.01 $1.78 $.67 $(.75) $3.34
Fully diluted 2.70 2.16 3.01 1.77 .67 (.75) 3.30
Weighted average primary shares
outstanding 161,037,511 153,935,320 154,666,307 141,469,658 124,966,226 109,415,386 108,706,377
Weighted average fully diluted
shares outstanding.............161,163,382 154,397,390 154,899,995 142,778,665 127,092,029 111,259,336 111,025,858
Book value per common share(6)... $22.50 $22.17 $22.84 $19.50 $18.15 $17.65 $19.87
Cash dividends declared per
common share................... 1.00 .725 1.025 .825 .80 1.25 1.31
Common dividend payout
ratio(7)....................... 30.8% 28.1% 28.7% 36.1% 96.7% --(7) 38.3%
Ratio of Earnings to Fixed
Charges(8):
Excluding interest on deposits... 2.73x 2.80x 2.81x 2.22x 1.32x --(8) 1.93x
Including interest on deposits... 1.76 1.65 1.68 1.34 1.08 --(8) 1.29
Ratio of Earnings to Fixed Charges
and Dividends on Preferred
Stock(9):
Excluding interest on deposits... 2.68 2.71 2.67 2.09 1.31 --(9) 1.91
Including interest on deposits... 1.75 1.64 1.66 1.33 1.08 --(9) 1.29
Consolidated Balance Sheet --
Average Balances:
Total assets..................... $49,134 $45,542 $45,966 $45,166 $38,839 $34,363 $29,798
Securities held to
maturity(10)................... 858 1,882 2,496 650 6,787 7,127 4,894
Securities available for sale.... 15,338 10,786 10,442 11,059 1,376 -- --
Loans and leases, net of unearned
income......................... 26,450 26,109 26,144 26,615 23,995 21,027 20,371
Interest-bearing deposits........ 25,568 25,340 25,173 26,551 24,248 18,607 16,914
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1994(1) 1993 1993 1992 1991(2) 1990(3) 1989
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Short-term borrowings(11)........ $8,401 $5,552 $5,971 $4,753 $3,284 $6,366 $4,260
Long-term debt/subordinated notes
and debentures(12)............. 3,362 3,724 3,718 3,127 3,020 2,544 1,809
Dual Convertible Preferred
Stock(13)...................... -- -- -- 283 134 -- --
Stockholders' equity............. 3,661 3,410 3,453 2,611 2,269 2,197 2,182
Consolidated Ratios(14):
Net interest margin (fully
taxable equivalent)............ 4.62% 5.06% 5.02% 4.80% 4.09% 3.92% 4.96%
Return (loss) on average
assets......................... 1.22 1.03 1.06 .62 .25 (.21) 1.25
Return (loss) on average common
stockholders' equity........... 17.87(15) 15.76 16.07 11.01 4.02 (3.93) 17.70
Return (loss) on average
stockholders' equity........... 16.35(15) 13.80 14.14 10.72 4.31 (3.35) 17.02
Average stockholders' equity to
average assets................. 7.45(16) 7.49(16) 7.51(16) 5.78(16) 5.84(16) 6.39 7.32
Tier 1 risk-based capital
ratio(17)...................... 10.58 11.57 11.76 10.44 9.77 7.58 7.26
Total risk-based capital
ratio(17)...................... 14.96 16.51 16.62 15.38 13.79 11.19 10.70
Period-end reserve for possible
loan and lease losses to
period-end loans and leases,
net of unearned income......... 3.58 3.86 3.80 3.86 3.81 3.42 1.58
Net charge-offs to average loans
and leases, net of unearned
income......................... .36 1.14 1.11 2.05 1.65 1.92 .72
Period-end nonperforming assets
to period-end loans and leases,
net of unearned income, and
other real estate owned(18).... 1.94 2.78 2.27 3.68 5.89 6.64 1.84
</TABLE>
- ---------------
(1) Effective January 1, 1994, Fleet adopted FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
standard requires that securities available for sale be reported at fair
value, with unrealized gains or losses reflected as a separate component of
stockholders' equity. In connection with the adoption of FASB Statement No.
115, Fleet transferred securities netting to $767 million from the held to
maturity portfolio to the available for sale portfolio. Fleet's Tier I
capital and total capital ratios do not include any adjustments for
unrealized gains or losses relating to securities available for sale. All
1994 information has been restated to include the acquisition of Sterling
Bancshares Corporation as if it had occurred on January 1, 1994.
(2) Data for the year ended December 31, 1991 includes results of the banks
acquired in the Bank of New England acquisition from July 14, 1991.
(3) Results for the year ended December 31, 1990 reflect the restatement of
earnings relating to Fleet's accounting for declines in the market value of
its marketable equity securities discussed in Fleet's Current Reports on
Form 8-K dated May 3, 1991 and August 16, 1991 and its Annual Report on
Form 10-K for the year ended December 31, 1991.
(4) For the year ended December 31, 1992, the minority interest deduction for
Fleet Mortgage Group, Inc. ("FMG") totalled approximately 19% of FMG's
earnings from the date of the initial public offering (August 7, 1992) to
the end of the period.
(5) Earnings (losses) used in the calculation of primary and fully diluted
earnings per share are adjusted by the dividend requirements of all
outstanding preferred stock. Weighted average primary shares outstanding
have been computed using the historical weighted average shares outstanding
and common stock equivalents relating to stock options, Fleet's Dual
Convertible Preferred Stock and rights to acquire Fleet Common Stock issued
to holders of the Dual Convertible Preferred Stock, each outstanding at
period end, and the exercise of stock options as may be appropriate as of
the beginning of the earliest period presented, adjusted to the equivalent
number of shares of Fleet Common Stock using the average closing price of
Fleet Common Stock for the respective periods presented. Weighted average
fully diluted shares outstanding have been computed as described above
using the higher of the average closing price for the respective periods or
closing price at the respective period end, in each case of Fleet Common
Stock, to compute the equivalent number of shares of Fleet Common Stock.
(6) Common stockholders' equity (used to compute book value per common share)
is equal to the difference between total assets and total liabilities less
total preferred stockholders' equity. Total assets of Fleet for each
relevant period-end include goodwill and core deposit intangible. Such
goodwill and core deposit intangible amounted to $331 million, $361
million, $341 million, $212 million and $229 million, at December 31, 1993,
1992, 1991, 1990 and 1989, respectively, and $325 million and $342 million
at September 30, 1994 and 1993, respectively. Fleet adopted FASB Statement
No. 115 effective January 1, 1994. Fleet's book value per common share for
the nine months ended September 30, 1994 includes the average unrealized
gains and losses on securities available for sale. Excluding the impact of
FASB Statement No. 115, Fleet's book value per common share would have been
$24.34 for the nine months ended September 30, 1994.
(7) The common dividend payout ratio is equal to the ratio of aggregate common
dividends declared during the indicated period to the consolidated net
income of Fleet during such period. For the year ended December 31, 1990,
common dividends aggregated $137 million and the net loss was $74 million.
(8) Earnings consist of income before income taxes plus fixed charges
(excluding capitalized interest). Fixed charges consist of interest on
short-term debt and long-term debt (including interest related to
capitalized leases and capitalized interest) and one-third of rent expense,
which approximates the interest component of such expense. In addition,
where indicated, fixed charges include interest on deposits. 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.
13
<PAGE> 15
(9) Earnings consist of income before income taxes plus fixed charges
(excluding capitalized interest) and the pretax equivalent of dividends on
preferred stock. Fixed charges and dividends on preferred stock 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, plus
the pretax equivalent of dividends on preferred stock. In addition, where
indicated, fixed charges include interest on deposits. The sum of fixed
charges and dividends exceeded earnings by $164 million (excluding interest
on deposits) and by $164 million (including interest on deposits) for the
year ended December 31, 1990.
(10) For a discussion of Fleet's reclassification in 1992 of its "portfolio
securities" to "securities held for sale", see Fleet's Current Report on
Form 8-K dated October 21, 1992.
(11) Short-term borrowings consist mainly of federal funds purchased, securities
sold under agreements to repurchase, commercial paper and bank debt.
(12) On October 21, 1994, Fleet issued $200 million of 7 1/4% Senior Notes due
October 15, 1997, the proceeds of which were used for general corporate
purposes. In January, 1995, Fleet issued an aggregate of $119 million of
its senior Medium-Term Notes due in 1996, the proceeds of which were used
for general corporate purposes.
(13) The Dual Convertible Preferred Stock was issued in 1991 and reclassified to
stockholders' equity as of December 31, 1992.
(14) Interim financial percentages have been annualized, where appropriate.
(15) Fleet adopted FASB Statement No. 115 effective January 1, 1994. Fleet's
return on average common stockholders' equity, return on average
stockholders' equity and average stockholders' equity to average assets
ratios include the average unrealized gains and losses on securities
available for sale. Excluding the impact of FASB Statement No. 115, Fleet's
return on average common stockholders' equity, return on average
stockholders' equity and average stockholders' equity to average assets
ratios would have been 16.14%, 17.61% and 7.54%, respectively for the nine
months ended September 30, 1994.
(16) Excludes $283 million of Fleet's Dual Convertible Preferred Stock at
December 31, 1992 and December 31, 1991 and includes $283 million of
Fleet's Dual Convertible Preferred Stock at September 30, 1994, September
30, 1993 and December 31, 1993. Including the $283 million of Dual
Convertible Preferred Stock, this ratio would be 6.41% and 6.19% at
December 31, 1992 and December 31, 1991, respectively. The Dual Convertible
Preferred Stock was reclassified to stockholders' equity as of December 31,
1992.
(17) Calculated using final 1992 risk-based capital guidelines.
(18) Nonperforming assets include loans and leases on a nonaccrual basis, loans
renegotiated due to the financial deterioration of the borrower and OREO,
defined as insubstance foreclosures and other real estate owned.
14
<PAGE> 16
THE MERGER
Fleet and NBB entered into the Merger Agreement on May 9, 1994, and amended
and restated the Merger Agreement on August 26, 1994. A copy of the Merger
Agreement was attached to the Proxy Statement-Prospectus as Exhibit A. The
Merger was consummated on the Effective Date.
At the Effective Time, NBB merged with and into Fleet. Fleet was the
surviving corporation in the Merger, and will continue its corporate existence
under Rhode Island law under the name Fleet Financial Group, Inc. and at the
Effective Time, the separate corporate existence of NBB terminated. The articles
of incorporation and by-laws of Fleet, as in effect at the Effective Time,
continued as the articles of incorporation and by-laws of the surviving
corporation.
Stock certificates representing the shares of Fleet Common Stock issued in
the Merger, warrant certificates representing the Warrants issued in the Merger,
checks in payment of fractional shares and checks in payment of cash paid in the
Merger will be distributed to NBB stockholders as soon as practicable after the
Effective Date of the Merger and the completion by the Exchange Agent of its
processing of the Election Forms. See "EXCHANGE OF CERTIFICATES; ELECTION
PROCEDURES; FRACTIONAL SHARES".
CONVERSION OF NBB COMMON STOCK AND OTHER MATTERS
In the Merger, each share of NBB Common Stock outstanding (other than
shares (a) held by NBB as treasury stock or (b) held by Fleet or NBB or any
subsidiary thereof (other than in both cases shares held directly or indirectly
in trust accounts, managed accounts and the like or otherwise held in a
fiduciary capacity that are beneficially owned by third parties ("Trust Account
Shares") or as a result of debts previously contracted ("DPC Shares") or (c)
held by dissenting stockholders) was converted into and exchangeable for the
right to receive (i) .280 Warrants and (ii) at the election of the NBB
stockholder, subject to the allocation procedures discussed below, either the
Per Share Stock Consideration which is equal to 1.457 shares of Fleet Common
Stock or the Per Share Cash Consideration which is equal to $48.50 in cash.
The determination of the number of shares of Fleet Common Stock to be
received for each share of NBB Common Stock was based on the average of the
closing sales price (the "Average Closing Price") for Fleet Common Stock on the
Stock Exchange during the ten trading day period which ended on the fifth
business day preceding (but not including) the Effective Date. Whether an NBB
stockholder will receive Fleet Common Stock or cash, or a combination of both,
in the Merger will depend on (i) the stated preference of the NBB stockholder as
indicated on the Election Form and (ii) allocation procedures to be used by
Fleet if the total number of shares of NBB Common Stock held by NBB stockholders
who have elected to receive Fleet Common Stock does not equal 4,231,923,
calculated by dividing the 6,165,912 shares of Fleet Common Stock issued in the
Merger by 1.457, the Per Share Stock Consideration. See "EXCHANGE OF
CERTIFICATES; ELECTION PROCEDURE; FRACTIONAL SHARES".
Each Warrant will entitle the holder to purchase one share of Fleet Common
Stock at $43.875 per share at any time during the five year period commencing on
January 27, 1996 and ending on January 26, 2001. See "DESCRIPTION OF FLEET
CAPITAL STOCK AND WARRANTS".
Shares of NBB Common Stock which were issued and outstanding immediately
prior to the Effective Time and which were owned by NBB stockholders who,
pursuant to applicable law, (a) delivered to NBB, before the taking of the vote
of the NBB stockholders on the Merger Agreement and each of the transactions
contemplated thereby, written demand for the appraisal of their shares, and (b)
whose shares were not voted in favor of the Merger Agreement and each of the
transactions contemplated thereby, nor consented thereto in writing (the
"Dissenting Shares"), were not converted at the Effective Time into Fleet Common
Stock and/or cash and Warrants, unless and until such holders shall have failed
to perfect or shall have effectively withdrawn or lost their right of appraisal
and payment under applicable law. If any such holder fails to perfect or shall
have effectively withdrawn or lost such right of appraisal, the NBB Common Stock
of such holder will thereupon be deemed to have been converted into the right to
receive and become exchangeable for, as of the Effective Time, that number of
whole shares of Fleet Common Stock and/or cash and Warrants as set forth
15
<PAGE> 17
above. Holders of NBB Common Stock who become entitled pursuant to the
provisions of Section 262 of Delaware law to payment for their shares of NBB
Common Stock under the provisions thereof will receive payment therefor from
Fleet and such shares of NBB Common Stock will be cancelled. See "APPRAISAL
RIGHTS OF DISSENTING STOCKHOLDERS".
Each stock option to acquire NBB Common Stock granted under the NBB Stock
Option Plan which was outstanding at the Effective Time and not exercised or
cancelled, was converted at the Effective Time into options to purchase Fleet
Common Stock plus .280 Warrants. Fleet has adopted the NBB Acquisition Option
Plan under which such options have been granted. The rights to Fleet Common
Stock received by holders of NBB stock options in the Merger are the same as the
rights such optionees had under the NBB Stock Option Plan immediately prior to
the Effective Time, except that (a) the number of shares of Fleet Common Stock
subject to the new option are equal to the product of the number of shares of
NBB Common Stock subject to the original option and the Per Share Stock
Consideration, rounded to the nearest share, and (b) the exercise price per
share of Fleet Common Stock subject to the new option is equal to the exercise
price per share of NBB Common Stock under the original option divided by the Per
Share Stock Consideration, rounded to the nearest cent. The duration and other
terms of each new option are the same as the original option except that all
references in such option to NBB shall be deemed to be references to Fleet.
Fleet has filed a Registration Statement on Form S-8 covering the shares of
Fleet Common Stock issuable upon exercise of the options which were converted in
the Merger.
Shares of Fleet capital stock (including Fleet Common Stock) issued and
outstanding immediately prior to the Effective Time remained issued and
outstanding immediately after the Merger.
EXCHANGE OF CERTIFICATES; ELECTION PROCEDURE; FRACTIONAL SHARES
The following is a summary of information concerning the election
procedures. The procedures for completing the Election Form are described in
detail therein and in the accompanying instructions, which stockholders are
urged to read carefully. The election and allocation procedures are set forth in
the Merger Agreement and are also described in the Proxy Statement-Prospectus
under the heading "THE MERGER -- Exchange of Certificates; Election Procedures;
Fractional Shares".
The conversion of NBB Common Stock into the right to receive Fleet Common
Stock and/or cash and Warrants occurred automatically at the Effective Time.
Accompanying this Supplement is the Election Form. The Election Form contains
instructions with respect to the surrender of certificates representing NBB
Common Stock, and will permit each NBB stockholder, with respect to each share
of NBB Common Stock, to elect to receive Fleet Common Stock, to receive cash or
to make no election. ANY SUCH ELECTION SHALL HAVE BEEN PROPERLY MADE ONLY IF THE
EXCHANGE AGENT SHALL HAVE ACTUALLY RECEIVED A PROPERLY COMPLETED ELECTION FORM
BY 5:00 P.M. ON FEBRUARY 21, 1995 (THE "ELECTION DEADLINE"). AN ELECTION FORM
SHALL BE DEEMED PROPERLY COMPLETED ONLY IF ACCOMPANIED BY ONE OR MORE
CERTIFICATES REPRESENTING ALL SHARES OF NBB COMMON STOCK COVERED BY SUCH
ELECTION FORM, TOGETHER WITH DULY EXECUTED TRANSMITTAL MATERIALS INCLUDED WITH
THE ELECTION FORM. ANY HOLDER OF NBB COMMON STOCK WHO SHALL NOT HAVE SUBMITTED
TO THE EXCHANGE AGENT AN EFFECTIVE, PROPERLY COMPLETED ELECTION FORM ON OR
BEFORE THE ELECTION DEADLINE WILL BE DEEMED TO HAVE MADE NO ELECTION.
Any Election Form may be revoked or changed by the person submitting such
Election Form at or prior to the Election Deadline by written notice to the
Exchange Agent, which notice must be received by the Exchange Agent at or prior
to the Election Deadline. In the event an Election Form is revoked prior to the
Election Deadline, the shares of NBB Common Stock represented by such Election
Form shall be deemed to have made no election.
Notwithstanding the elections made, upon consummation of the Merger, shares
of Fleet Common Stock will be issued in exchange for 4,231,923 shares of NBB
Common Stock (the "Stock Conversion Number"),
16
<PAGE> 18
calculated by dividing the 6,165,912 shares of Fleet Common Stock issued in the
Merger (the "Aggregate Parent Stock Amount") by 1.457, the Per Stock
Consideration. In the event that the number of shares held by NBB stockholders
that elect to receive Fleet Common Stock is less than the Stock Conversion
Number, then all shares electing to receive Fleet Common Stock will be converted
into the right to receive Fleet Common Stock and the Exchange Agent will select
on a pro rata basis, first from the holders who made no election and then if
necessary from those electing to receive cash, a sufficient number of shares of
NBB Common Stock such that the number of such selected shares will, when added
to the number of shares electing to receive Fleet Common Stock, equal as closely
as practicable the Stock Conversion Number. Under such circumstances, such
selected shares will be converted into the right to receive Fleet Common Stock
and any shares not so selected will be converted into the right to receive cash.
On the other hand, in the event that the number of shares held by NBB
stockholders that elect to receive Fleet Common Stock is more than the Stock
Conversion Number, then all shares electing to receive cash will be converted
into the right to receive cash, and the Exchange Agent will select on a pro rata
basis first from the holders who made no election and then if necessary from
those electing to receive Fleet Common Stock, a sufficient number of shares of
NBB Common Stock such that the number of such selected shares will, when added
to the number of shares electing to receive cash, equal the difference between
the number of shares of NBB Common Stock outstanding as of the Effective Time
which are being converted and the Stock Conversion Number. Any shares which are
not so selected will be converted into the right to receive Fleet Common Stock.
FLEET MAKES NO RECOMMENDATION AS TO THE MANNER IN WHICH EACH INDIVIDUAL NBB
STOCKHOLDER'S ELECTION SHOULD BE MADE. EACH NBB STOCKHOLDER SHOULD CONSIDER,
AMONG OTHER THINGS, HIS OR HER DESIRE TO RECEIVE CASH, THE RISKS RELATED TO THE
FLEET COMMON STOCK, HIS OR HER DESIRE TO ASSUME THOSE RISKS AND THE RESPECTIVE
TAX CONSEQUENCES OF RECEIVING CASH OR FLEET COMMON STOCK. SEE "CERTAIN FEDERAL
INCOME TAX CONSEQUENCES".
Until the certificates representing NBB Common Stock are surrendered for
exchange after the Effective Time of the Merger, holders of such certificates
will accrue but will not be paid dividends or other distributions on any Fleet
Common Stock into which their shares have been converted. When such certificates
are surrendered, any unpaid dividends or other distributions will be paid,
without interest. No interest will be paid or accrued on the cash into which
their shares have been converted or the cash in lieu of fractional shares
payable to holders of such certificates. For all other purposes, however, each
certificate which represented outstanding shares of NBB Common Stock outstanding
at the Effective Time of the Merger will be deemed to evidence ownership of the
Warrants, shares of Fleet Common Stock and/or cash into which those shares have
been converted pursuant to the Merger.
No fractional shares of Fleet Common Stock will be issued to any NBB
stockholder. For each fractional share that would otherwise be issued, Fleet
will pay cash in an amount equal to such fraction multiplied by the Average
Closing Price of $33.29. Calculations will be made to the nearest one-thousandth
of a share of Fleet Common Stock and to the nearest cent.
Fleet will pay all stock transfer taxes, if any, owing in connection with
the exchange of shares of NBB Common Stock for Warrants, shares of Fleet Common
Stock and/or cash. Fleet will not pay any stock transfer taxes resulting from
such issuances and/or payment to any person other than a registered holder.
For a description of the capital stock and Warrants of Fleet, see
"DESCRIPTION OF FLEET CAPITAL STOCK AND WARRANTS".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of the material federal
income tax consequences of the Merger. This summary is not a complete
description of all of the consequences of the Merger and, in particular, may not
address federal income tax considerations that may affect the treatment of a
stockholder which, at the Effective Time, already owned some Fleet capital
stock, was a foreign corporation, a tax exempt entity, or an individual who
acquired NBB Common Stock pursuant to an employee stock option, or exercised
17
<PAGE> 19
some form of control over NBB. In addition, no information is provided herein
with respect to the tax consequences of the Merger under applicable foreign,
state or local laws. Consequently, each NBB stockholder is advised to consult a
tax advisor as to the specific tax consequences of the transaction to that
stockholder. The following discussion is included for general information only
and is based on the Code as in effect on the date of this Supplement without
consideration of the particular facts or circumstances of any holder of NBB
Common Stock.
Unless an exemption applies, the Exchange Agent will be required to
withhold, and will withhold, 31% of any cash payments to which a NBB stockholder
or other payee is entitled pursuant to the Merger Agreement unless the NBB
stockholder or other payee provides his tax identification number (social
security number or employer identification number) and certifies that such
stockholder or other payee is not subject to back-up withholding. Each NBB
stockholder and, if applicable, each other payee should complete and sign the
substitute Form W-9 that will be included as part of the Election Form to avoid
back-up withholding, unless an applicable exemption exists and is proved in a
manner satisfactory to Fleet and the Exchange Agent.
The Merger. Neither Fleet nor NBB requested an advance ruling from the
Internal Revenue Service as to the tax consequences of the Merger. On the
Effective Date of the Merger, NBB received an opinion from Goodwin, Procter and
Hoar, its counsel, dated as of such date, based upon certain customary
representations and assumptions set forth therein, substantially to the effect
that for federal income tax purposes the Merger constituted a reorganization
within the meaning of Section 368(a) of the Code, and Fleet and NBB each will be
a party to the reorganization within the meaning of Section 368(b) of the Code
(noting, however, that the nontaxability of the stockholders of NBB resulting
from such reorganization does not extend to the Warrants or to any cash received
as Per Share Cash Consideration, cash in lieu of a fractional share interest in
Fleet Common Stock or cash received by dissenting stockholders).
Based on such opinion, the material federal income tax results of the
Merger are as follows. No gain or loss will be recognized by NBB or by Fleet as
a result of the Merger. An NBB stockholder who receives solely cash and Warrants
in exchange for all of his shares of NBB Common Stock will recognize a gain or
loss for federal income tax purposes equal to the difference between (i) the sum
of the cash and the fair market value of the Warrants as of the Effective Time
and (ii) the stockholder's tax basis in the NBB Common Stock surrendered in
exchange therefor. Assuming such NBB stockholder, at the time of the exchange,
holds NBB Common Stock as a capital asset, such gain or loss will be capital
gain or loss, and will be long-term capital gain or loss if the stockholder's
holding period is more than one year. There are limitations on the extent to
which stockholders may deduct capital losses from ordinary income.
If the consideration received in the Merger by an NBB stockholder consists
in part of Fleet Common Stock, and such stockholder's adjusted basis in the
shares of NBB Common Stock surrendered in the transaction is less than the sum
of the fair market value, as of the Effective Time, of the Fleet Common Stock
and Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock), such stockholder will realize a gain on the
transaction (a "Realized Gain"). Such stockholder will recognize a gain equal to
the lesser of (i) such Realized Gain and (ii) the sum of the fair market value
of the Warrants and the amount of any cash received (other than for a fractional
share of Fleet Common Stock). Provided the exchange does not have the effect of
a dividend, the gain so recognized will be characterized as a capital gain
(assuming the NBB Common Stock exchanged was a capital asset in the hands of the
stockholder). If an NBB stockholder who receives part Fleet Common Stock in the
Merger realizes a loss, such loss will not be currently recognized for federal
income tax purposes. Such disallowed loss will be reflected in the adjusted tax
basis of the shares of Fleet Common Stock received in the Merger. If an NBB
stockholder who receives part Fleet Common Stock in the Merger acquired his NBB
Common Stock at different times at different prices, the foregoing calculations
must be done on a block-by-block-basis, allocating a proportionate part of the
Fleet Common Stock, the Warrants and any cash received among the various blocks
based upon the relative value of each such block. (Cash received in lieu of a
fractional share is subject to different treatment, described below.)
The determination of whether the Warrants and any cash received in the
Merger by an NBB stockholder has the effect of the distribution of a dividend
will be made by comparing the proportionate interest of such
18
<PAGE> 20
stockholder after the Merger with the proportionate interest the stockholder
would have had if the stockholder had received solely Fleet Common Stock in the
Merger. This comparison is made as though Fleet had issued in the Merger to such
stockholder solely Fleet Common Stock and, in a hypothetical redemption under
the rules of section 302 of the Code, Fleet had redeemed such portion of Fleet
Common Stock as represented in value, at the time of the Merger, the amount of
any cash and the fair market value of the Warrants the stockholder received. For
this purpose, the constructive ownership rules in section 318 of the Code apply.
These rules apply in certain specified circumstances to attribute ownership of
shares of a corporation from the stockholder actually owning the shares, whether
an individual, a trust, a partnership or a corporation, to certain members of
the individual's family or to certain individuals, trusts, partnerships or
corporations in which that stockholder has an ownership or beneficial interest,
or which have an ownership or beneficial interest in that stockholder. A
stockholder is also considered under these rules to own any shares with respect
to which he holds exercisable options. The amount of any such dividend, so
determined, is limited to that stockholder's ratable share of the accumulated
earnings and profits of NBB at the Effective Time.
Under IRS guidelines interpreting the rules of Section 302(b)(1) of the
Code, if a hypothetical redemption involves a minority Fleet stockholder whose
relative stock interest in Fleet is minimal, who exercises no control over the
affairs of Fleet and who experiences a reduction in his proportionate stock
interest, such stockholder will not receive dividend treatment on the Warrants
and any cash received. Because the determination of whether the receipt of
Warrants or any cash will be treated as having the effect of the distribution of
a dividend generally will depend in part upon the facts and circumstances of
each NBB stockholder, such stockholders are strongly advised to consult their
own tax advisors regarding the tax treatment of the Warrants and any cash
received in the Merger.
If an NBB stockholder receives part Fleet Common Stock in the Merger, the
stockholder's basis in the Fleet Common Stock received will equal his basis in
the NBB Common Stock surrendered in exchange therefor less the fair market value
of the Warrants and any cash received, increased by any gain recognized.
Provided the NBB Common Stock surrendered was held as a capital asset at the
time of the exchange, the holding period of the Fleet Common Stock received will
include the holding period of the shares of NBB Common Stock surrendered.
The tax basis of a Warrant in the hands of an NBB stockholder will be equal
to the fair market value of the Warrant at the Effective Time of the Merger.
Holders of NBB Common Stock who receive cash in lieu of fractional share
interests of Fleet Common Stock will be treated as having received such fraction
of a share of Fleet Common Stock and then as having received cash in redemption
of the fractional share interest, subject to the provisions of section 302 of
the Code.
The transaction will be a fully taxable event for federal income tax
purposes for holders of shares of NBB Common Stock who seek appraisal and
receive solely cash in exchange for their shares. An NBB stockholder who
receives solely cash through the exercise of rights of appraisal and, as a
result of the surrender of all of his shares, owns no shares either directly or
through the constructive ownership rules of section 318 of the Code, would
recognize capital gain or loss (assuming that the shares are held by such
stockholder as a capital asset) equal to the difference between the amount of
cash received and the stockholder's tax basis in the shares.
Warrants received by holders of options issued under the NBB Stock Option
Plan which are being converted into stock options under the Fleet Stock Option
Plan are also subject to federal income tax.
19
<PAGE> 21
STOCK PRICES AND DIVIDENDS
Fleet Common Stock is listed on the Stock Exchange under the symbol FLT.
The following table sets forth the high and low sales prices for Fleet Common
Stock as reported on the New York Stock Exchange Composite Tape, and the cash
dividends declared, for the calendar periods indicated.
<TABLE>
<CAPTION>
PRICE CASH
------------------- DIVIDENDS
YEAR HIGH LOW DECLARED
---------------------------------------------------- ------- ------- ---------
<S> <C> <C> <C>
1991
First Quarter..................................... $18.000 $ 9.625 $.200
Second Quarter.................................... 25.875 15.500 .200
Third Quarter..................................... 26.250 21.500 .200
Fourth Quarter.................................... 25.500 20.125 .200
1992
First Quarter..................................... $30.750 $24.250 $.200
Second Quarter.................................... 31.000 26.750 .200
Third Quarter..................................... 30.875 25.750 .200
Fourth Quarter.................................... 33.875 27.500 .225
1993
First Quarter..................................... $37.875 $30.250 $.225
Second Quarter.................................... 37.625 28.250 .250
Third Quarter..................................... 35.500 30.375 .250
Fourth Quarter.................................... 35.625 29.500 .300
1994
First Quarter..................................... $38.000 $31.750 $.300
Second Quarter.................................... 41.375 34.375 .350
Third Quarter..................................... 40.500 34.875 .350
Fourth Quarter.................................... 37.875 29.875 .400
1995
First Quarter (through January 27, 1995).......... 35.125 29.875 N/A
</TABLE>
On the Effective Date, the closing sales price for Fleet Common Stock as
reported on the New York Stock Exchange Composite Tape was $31.875 per share. On
May 6, 1994, the last full trading day prior to the announcement of the proposed
Merger, the closing sales price of Fleet Common Stock as so reported was $36.875
per share.
RECENT DEVELOPMENTS
1994 FOURTH QUARTER AND YEAR-END
Fleet's net income for the quarter ended December 31, 1994, was $165
million, or $1.05 per fully diluted share, compared to net income of $136
million, or $0.85 per fully diluted share for the fourth quarter of 1993. Net
income for the year ended December 31, 1994 was $613 million, or $3.75 per fully
diluted share, compared to net income in 1993 of $488 million, or $3.01 per
fully diluted share.
Included in the results for the quarter ended December 31, 1994 was $60
million of pre-tax income relating to a tax settlement with the Internal Revenue
Service, which was offset by $24 million in charges at Fleet Finance, Inc.
("Fleet Finance") relating to a $12 million restructuring charge relating to
Fleet Finance's efficiency improvement program and $12 million relating to
additional OREO (Other Real Estate Owned) reserves, a loss of $21 million on the
sale of $2.5 billion in securities and a $9 million market writedown on
investments by Fleet Equity Partners, Fleet's venture capital subsidiary.
20
<PAGE> 22
Net interest income for the fourth quarter and for the year ended December
31, 1994 totaled $493 million and $2.0 billion, respectively, compared to $522
million and $2.1 billion for the comparable periods in the previous year. The
net interest margin for the fourth quarter was 4.75%, an increase of 30 basis
points compared to the third quarter of 1994. The net interest margin for the
year ended December 31, 1994 was 4.64%, compared to 5.02% for the previous year.
Noninterest income (excluding securities gains/losses) for the year ended
December 31, 1994 was $1.17 billion, compared to $1.18 billion for the previous
year. Noninterest income for the fourth quarter of 1994, excluding securities
losses of $21 million, totaled $331 million compared to $296 million in 1993,
excluding securities gains of $23 million. Results for the fourth quarter of
1994 include the previously mentioned $60 million tax settlement and a $9
million market writedown at Fleet Equity Partners.
Noninterest expense for the year ended December 31, 1994 totaled $2.0
billion, excluding $44 million of restructuring charges. Excluding the $125
million restructuring charge and a $90 million charge related to the accelerated
amortization of mortgage servicing assets recorded in 1993, noninterest expense
was reduced by approximately $185 million, or 8%. Noninterest expense for the
fourth quarter of 1994 totaled $504 million, compared to $552 million in 1993.
Fourth quarter results included a $12 million restructuring charge related to an
efficiency improvement study and $12 million of additional OREO reserves at
Fleet Finance. Excluding such charges, noninterest expenses were $480 million
and the resulting efficiency ratio was 61.6%.
Fleet's provision for credit losses was $62 million for the year ended
December 31, 1994, compared to $271 million in 1993. The decline was due to
continued improvements in asset quality and significant reductions in net
charge-offs. Such provisions for the fourth quarter were $17 million, compared
to $55 million in the fourth quarter of 1993.
As of December 31, 1994, nonperforming assets were $518 million, compared
to $601 million at December 31, 1993, a reduction of $83 million, or 14%.
Fleet's reserve for credit losses was $953 million at December 31, 1994,
representing 3.46% of loans, compared to $1 billion, or 3.80% of loans, at
December 31, 1993.
At December 31, 1994, Fleet had total assets of $48.8 billion and total
stockholders' equity of $3.4 billion, compared to total assets of $47.9 billion
and stockholders' equity of $3.6 billion at December 31, 1993. The decrease in
stockholders' equity reflects the previously announced repurchase of Fleet
Common Stock in anticipation of the Merger. At December 31, 1994, Fleet's
capital ratios exceeded all minimum regulatory capital requirements.
All 1994 financial information has been restated to include the acquisition
of Sterling Bancshares Corporation as if it had occurred on January 1, 1994.
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" transaction. Under such
method of accounting, the book value of the assets and liabilities of NBB, as
reported on its balance sheet, will be increased or decreased to their fair
market value at the Effective Time and goodwill will be recorded to the extent
that the purchase price exceeds the fair market value of the net assets and
liabilities. The income of NBB will be included in the consolidated income of
Fleet from the Effective Time, and not for the entire fiscal year.
RESALE OF FLEET COMMON STOCK, WARRANTS AND WARRANT SHARES
The Fleet Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares issued to any NBB
stockholder who may be deemed to be an affiliate of Fleet for purposes of Rule
144 promulgated under the Securities Act ("Rule 144") or an affiliate of NBB for
purposes of Rule 145 promulgated under the Securities Act ("Rule 145") (each an
"Affiliate"). Affiliates are generally defined as persons (generally executive
officers, directors and ten percent stockholders) who control, are controlled
by, or are under common control with (a) Fleet or NBB at the time of the Special
Meeting or (b) Fleet at or after the Effective Time.
21
<PAGE> 23
Rules 144 and 145 restrict the sale of Fleet Common Stock received in the
Merger by Affiliates and certain of their family members and related interests.
Generally speaking, during the two years following the Effective Time,
Affiliates of NBB, provided they are not Affiliates of Fleet, may publicly
resell the Fleet Common Stock received by them in the Merger, subject to certain
limitations as to the amount of Fleet Common Stock sold by them in any
three-month period and as to the manner of sale. After the two-year period, such
Affiliates of NBB who are not Affiliates of Fleet may resell their shares
without such restrictions so long as there is adequate current public
information with respect to Fleet as required by Rule 144. Persons who become
Affiliates of Fleet prior to, at or after the Effective Time may publicly resell
the Fleet Common Stock received by them in the Merger subject to similar
limitations and subject to certain filing requirements specified in Rule 144.
The ability of Affiliates to resell shares of Fleet Common Stock received
in the Merger under Rule 144 or 145 as summarized herein generally will be
subject to Fleet's having satisfied its Exchange Act reporting requirements for
specified periods prior to the time of sale. Affiliates also would be permitted
to resell Fleet Common Stock received in the Merger pursuant to an effective
registration statement under the Securities Act or another available exemption
from the Securities Act registration requirements.
Resales of the Warrants and Warrant Shares would be governed by resale
restrictions under Rule 144 and 145 which are similar to those described for
Fleet Common Stock, except that in the case of the Warrant Shares, the two year
period commences on the date of exercise of the applicable Warrant.
Neither the Proxy Statement-Prospectus nor this Supplement covers any
resales of Fleet Common Stock, Warrants or the Warrant Shares received by
persons who may be deemed to be Affiliates of Fleet or NBB.
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
A holder of record of NBB Common Stock on the date of making a demand for
appraisal, as described below, who continued to hold such shares through the
Effective Time and who strictly complies with the procedures set forth under
Section 262 of the Delaware General Corporation Law ("Section 262") will be
entitled to have such shares appraised by the Delaware Court of Chancery under
Section 262 and to receive payment of the "fair value" of such shares in lieu of
the consideration provided for in the Merger Agreement. The Proxy
Statement-Prospectus was sent to all holders of record of NBB Common Stock at
the Record Date and constituted notice of the appraisal rights available to such
holders under Section 262. THE STATUTORY RIGHT OF APPRAISAL GRANTED BY SECTION
262 REQUIRES STRICT COMPLIANCE WITH THE PROCEDURES SET FORTH IN SECTION 262.
FAILURE TO FOLLOW ANY OF SUCH PROCEDURES MAY RESULT IN A TERMINATION OR WAIVER
OF DISSENTERS' RIGHTS UNDER SECTION 262. The Proxy Statement-Prospectus
contained a summary of the provisions of the appraisal rights of dissenting
stockholders under the heading "THE MERGER -- Appraisal Rights of Dissenting
Stockholders." In addition, a copy of Section 262 was attached to the Proxy
Statement-Prospectus as Exhibit C. A NBB stockholder who has thus far complied
with such provisions should review such summary and Section 262 to ensure
further compliance therewith.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, Fleet is subject to regulation by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). Fleet
Bank of Maine, Fleet Bank-NH and Fleet-NY are state-chartered banks that are
members of the Federal Reserve System; as such, they are subject to regulation
by the Federal Reserve Board and bank regulators in their respective states.
Fleet-RI, Fleet-CT and the Surviving Bank are national banks subject to
regulation and supervision by the Office of the Comptroller (the "OCC"). Each
subsidiary bank's deposits are insured by the Federal Deposit Insurance
Corporation (the "FDIC") and is therefore subject to FDIC supervision and
regulation. Fleet is also subject to the reporting and other requirements of the
Exchange Act.
22
<PAGE> 24
The credit quality of the assets held by certain of Fleet's subsidiaries is
subject to periodic review by the state and federal bank regulatory agencies
noted above. While Fleet believes its present reserve for credit losses is
adequate in light of prevailing economic conditions and the current regulatory
environment, there can be no assurance that Fleet's subsidiaries will not be
required to make certain adjustments to their reserves for credit losses and
charge-off policies in response to changing economic conditions or regulatory
examinations.
Neither Fleet nor any of its subsidiaries has entered into formal written
agreements with state and federal regulators. At the request of its regulators,
Fleet and its subsidiaries continue to evaluate and refine oversight and
reporting systems and procedures to enhance the ability of such companies to
respond to the changing economic environment.
PAYMENT OF DIVIDENDS
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including NBB
stockholders who become holders of Fleet Common Stock and Warrants upon
consummation of the Merger and Warrant Shares upon exercise of the Warrants, to
benefit from the distribution of assets of a subsidiary upon the liquidation or
reorganization of such subsidiary is subordinate to prior claims of creditors of
the subsidiary (including depositors, in the case of banking subsidiaries)
except to the extent that a claim of Fleet as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices. 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 the Surviving Bank and Fleet-CT. 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. Further, 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,
on the common stock of Fleet Banking Group, Inc., a subsidiary of Fleet which
holds the capital stock of the Surviving Bank and Fleet-CT ("Fleet Banking
Group"). As of the date of this 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 policies of 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.
RECENT LEGISLATION AND RELATED MATTERS
In addition to extensive existing government regulation, Federal and state
statutes and regulations are subject to changes that may have significant impact
on the way in which banks may conduct business. The likelihood and potential
effects of any such changes cannot be predicted. Legislation enacted in recent
years has substantially increased the level of competition among commercial
banks, thrift institutions and non-banking institutions, including insurance
companies, brokerage firms, mutual funds, investment banks and major retailers.
In addition, the enactment of recent banking legislation such as the Financial
Institutions Reform, Recovery and Enforcement Act ("FIRREA") and the Federal
Deposit Insurance Corporation Improvement Act of 1991 (the "FDICIA") have
affected the banking industry by, among other things,
23
<PAGE> 25
broadening the regulatory powers of the federal banking agencies in a number of
areas. The following summary is qualified in its entirety by the text of the
relevant statutes and regulations.
FIRREA
As a result of the enactment of FIRREA on August 9, 1989, any or all of
Fleet's subsidiary banks can be held liable for any loss incurred 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 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. The FDICIA
also provides authority for special assessments against insured deposits and for
the development of a general risk-based assessment system. The FDIC has set
assessment rates for BIF-insured institutions ranging from 0.23% to 0.31%, based
on a risk assessment of the institution. Each financial institution is assigned
to one of three capital groups -- "well capitalized", "adequately capitalized"
or "undercapitalized" -- and further assigned to one of three subgroups within
each capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and other information
relevant to the institution's financial condition and the risk posed to the
applicable insurance fund. 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. As of 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 for
regulatory purposes ranging from "well-capitalized" to "critically
undercapitalized." Under prompt corrective action regulations adopted by the
federal banking agencies in December 1992, a depository institution is (a)
"well-capitalized" if it has a total risk-based capital ratio of 10% or more, a
Tier 1 risk-based ratio of 6% or more, a leverage ratio of 5% or more and is not
subject to any written agreement, order or capital directive or prompt
corrective action directive issued by the primary regulator to meet and maintain
a specific capital measure; (b) "adequately capitalized" if it 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 (3% if the bank is rated composite 1
under the CAMEL rating system in its most recent examination and is not
experiencing or anticipating significant growth) and does not qualify as
"well-capitalized"; (c) "undercapitalized" if it has a total risk-based capital
ratio that is less than 8%, a Tier 1 risk-based capital ratio that is less than
4% or a leverage ratio that is less than 4% (3% if the bank is rated composite 1
under the CAMEL rating system in its most recent examination and is not
experiencing or anticipating significant growth); (d) "significantly
undercapitalized" if the bank has a total risk-based capital ratio that is less
than 6%, a Tier 1 risk-based capital ratio that is less
24
<PAGE> 26
than 3% or a leverage ratio that is less than 3%; and (e) "critically
undercapitalized" if the depository institution has a ratio of tangible equity
to total assets that is equal to or less than 2% of total assets, or otherwise
fails to meet certain established critical capital levels. 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 institutions was
classified as "well-capitalized" under the prompt corrective action 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. The guarantee of a controlling bank holding company
under the FDICIA of performance of a capital restoration plan is limited to the
lower of 5% of an undercapitalized banking subsidiary's assets or the amount
required for the bank to be classified as adequately capitalized. Federal
banking agencies may not accept a capital restoration plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. If a
depository institution fails to submit an acceptable plan within the time
required (generally 45 days after receiving notice that the institution is
undercapitalized, significantly undercapitalized or critically
undercapitalized), it is treated as if it is significantly undercapitalized. If
the controlling bank holding company fails to fulfill its guaranty obligations
under the FDICIA and files (or has filed against it) a petition under the
federal Bankruptcy Code, the applicable regulatory agency would have a claim as
a general creditor of the bank holding company and, if the capital restoration
plan were deemed to be a commitment to maintain capital under the Federal
Bankruptcy Code, the claim would be entitled to a priority in such bankruptcy
proceeding over unsecured third party creditors of the bank holding company.
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.
Brokered Deposits and Pass-Through Deposit Insurance Limitation. Under the
FDICIA, 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. The definitions of "well-capitalized", "adequately capitalized" and
"undercapitalized" conform to the definitions described above for prompt
corrective action, except that the term "undercapitalized" also includes an
institution that is "significantly undercapitalized" or "critically
undercapitalized" under the prompt corrective action requirements. In addition,
"pass-through" insurance coverage may not be available for certain employee
benefit accounts. 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
25
<PAGE> 27
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,
including the Surviving Bank, 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, effective January 17, 1995, the federal banking agencies adopted
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 on a historical basis
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.
INTERSTATE BANKING LEGISLATION
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 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.
26
<PAGE> 28
DESCRIPTION OF FLEET CAPITAL STOCK AND WARRANTS
GENERAL
Fleet's Restated Articles of Incorporation (the "Fleet Restated Articles")
currently authorize the issuance of 300,000,000 shares of Fleet Common Stock,
16,000,000 shares of Preferred Stock, $1.00 par value (the "Fleet $1 Par
Preferred Stock"), issuable in one or more series from time to time by action of
the Board of Directors, and 1,500,000 shares of Preferred Stock with Cumulative
and Adjustable Dividends, $20.00 par value (the "Fleet $20 Par Adjustable Rate
Preferred Stock" and, together with any series of issued and outstanding Fleet
$1 Par Preferred Stock, the "Preferred Stock").
At September 30, 1994, 136,359,034 shares of Fleet Common Stock were issued
and outstanding. In addition, 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 September
30, 1994, Fleet also had authorized 1,500,000 shares of a separate class of
Preferred Stock with Cumulative and Adjustable Dividends, $20 par value (the
"Fleet $20 Par Adjustable Rate Preferred Stock"), having a liquidation value of
$50 per share, plus accrued and unpaid dividends, none of which were issued and
outstanding as of September 30, 1994. Each such outstanding series and class is
described below under "Description of Existing Preferred Stock".
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island Business Corporation
Act ("Rhode Island law") and the Fleet Restated Articles and Fleet By-Laws.
FLEET COMMON STOCK
General. Holders of the Fleet 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 series of
preferred stock at the time outstanding, to receive pro rata the net assets of
Fleet. Dividends are paid on the Fleet Common Stock only if all dividends on the
outstanding classes or series of Preferred Stock 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 Fleet 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 Fleet 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 the Preferred Stock or may provide, in
the future, with respect to any other series of preferred stock which it may
hereafter authorize. See "-- Preferred Stock". Shares of Fleet 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 Restated Articles
of Fleet; Business Combinations with Related Persons".
27
<PAGE> 29
The Fleet Common Stock is listed on the Stock Exchange. The outstanding
shares of Fleet Common Stock are, and the shares to be issued to NBB
stockholders upon consummation of the Merger 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.
Restrictions on Ownership. 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 Fleet 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 Fleet Common Stock under
the Change in Bank Control Act (the "CBCA"). The partnerships which purchased
the Dual Convertible Preferred Stock (the "Partnerships") made a filing under
the CBCA because of their acquisition of such stock. Any holder of 25% or more
of the Fleet 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
("Right") for each outstanding share of Fleet Common Stock. 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 the Junior Preferred Stock of Fleet, 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 earlier to occur of
the Distribution Date and the Expiration Date (each as hereinafter defined),
Fleet will issue one Right with each share of Fleet Common Stock; accordingly,
each stockholder of NBB who receives Fleet Common Stock upon consummation of the
Merger shall automatically receive one Right with each such share issued. 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, 1990 between Fleet and Fleet National Bank,
as Rights Agent, a copy of which was filed as an exhibit to the Registration
Statement on Form 8-A dated November 29, 1990, as amended by a First Amendment
to Rights Agreement dated March 28, 1991 and a Second Amendment to Rights
Agreement dated July 12, 1991, copies of which were filed as exhibits to Fleet's
Amendment to Application or Report on Form 8 dated September 6, 1991 (as
amended, the "Rights Agreement").
The Rights are not represented by separate certificates and are not
exercisable or transferable apart from the Fleet 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, subsequent to November
21, 1990 (the "Declaration Date") acquired, or obtained the right to acquire,
beneficial ownership (as defined in the Rights Agreement) of 10% or more (or, in
the case of a qualifying 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 Fleet
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
Fleet 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 Fleet 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 Fleet Common Stock to the Partnerships and (ii) to permit the Board
of Directors of Fleet to
28
<PAGE> 30
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 Fleet Common Stock. The Rights will
expire on the earliest of November 21, 2000 (the "Final Expiration Date"), the
date on which the Rights are earlier redeemed by Fleet or the date on which the
Rights are exchanged (such earliest date being referred to as the "Expiration
Date").
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 (and in lieu of Junior Preferred Stock), Fleet Common
Stock (or, under certain circumstances, cash, property or other debt or equity
securities ("Fleet 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 any such Acquiring Person and its transferees) for shares of
Fleet Common Stock or Fleet Common Stock equivalents at an exchange ratio of one
share of Fleet 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 the date of a public announcement by
Fleet that there is an Acquiring Person. Thereafter, the Board of Directors may
amend the Rights Agreement only to eliminate ambiguities or to provide
additional benefits to, and if the amendment would not adversely affect, 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.
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 Fleet 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.
Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Fleet Common Stock is Fleet-RI.
WARRANTS
The Warrants are being issued under a Warrant Agreement, dated as of the
Effective Time (the "Warrant Agreement"), between the Company and Fleet-RI, as
Warrant Agent (the "Warrant Agent"), a form of which was filed as an exhibit to
the Registration Statement of which the Proxy Statement-Prospectus and this
Supplement is a part. The following summaries of certain provisions of the
Warrant Agreement do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the Warrants
and the Warrant Agreement, including the definitions therein of certain terms.
Each whole Warrant entitles the registered holder thereof (the "holder"),
subject to and upon compliance with the provisions thereof and of the Warrant
Agreement, at such holder's option at any time from 9:00 a.m., New York City
time, on the first anniversary of the Effective Time until 5:00 p.m., New York
29
<PAGE> 31
City time on the day prior to the sixth anniversary of the Effective Time, to
purchase from Fleet one share of Fleet Common Stock at a purchase price of
$43.875 per share (the "Exercise Price"). The Exercise Price is subject to
adjustment as discussed below.
Warrants may be exercised by surrendering the Warrant certificate
evidencing such Warrants with the form of election to purchase shares set forth
on the reverse side thereof duly completed and executed by the holder thereof
and paying in full the Exercise Price for each such Warrant (and any other
amounts required to be paid under the Merger Agreement) at the office or agency
designated for such purpose, which will initially be the office or agency of the
Warrant Agent in New York, New York and Providence, Rhode Island. Each Warrant
may only be exercised in whole. The Exercise Price must be paid by certified or
official bank check or by wire transfer of immediately available funds.
The Warrant certificates evidencing the Warrants may be surrendered for
exercise, exchange or registration of transfer at the office or agency of Fleet
maintained for such purpose, which initially will be the office or agency of the
Warrant Agent in New York, New York and Providence, Rhode Island. The Warrant
certificates will be issued only in fully registered form. No service charge
will be made for any exercise, exchange or registration of transfer of Warrant
certificates, but Fleet may require payment of a sum sufficient to cover any
stamp or other tax or other governmental charge payable in connection therewith.
Holders of Warrants are not entitled, by virtue of being such holders, to
receive dividends, vote, receive notice of any meetings of stockholders or
otherwise have any right of stockholders of Fleet.
The Exercise Price of a Warrant is subject to adjustment from time to time
upon the occurrence of certain events, including (a) dividends or distributions
on Fleet Common Stock payable in Fleet Common Stock or certain other capital
stock; (b) subdivisions, combinations or certain reclassifications of Fleet
Common Stock; (c) distributions to all holders of Fleet Common Stock of certain
rights, warrants or options to purchase Fleet Common Stock expiring within 60
days at a price per share less than the Quoted Price (defined in the Warrant
Agreement as the average of the closing prices of the Fleet Common Stock as
reported by the Stock Exchange over a specified period of time); and (d)
distributions to such holders of assets or debt securities of Fleet or certain
rights, warrants or options to purchase securities of Fleet (excluding ordinary
cash dividends or other cash distributions from current or retained earnings and
dividends or distributions or rights or warrants referred to in subsections (a),
(b) or (c) above). In cases where the fair market value of the assets, debt
securities or certain rights, warrants or options to purchase securities of
Fleet distributed to stockholders equals or exceeds the Quoted Price of the
Fleet Common Stock, rather than being entitled to an adjustment in the Exercise
Price, the holder of a Warrant upon exercise thereof will be entitled to receive
in addition to the shares of Fleet Common Stock for which the Warrant is
exercisable, the kind and amount of securities, cash or other assets comprising
the distribution that such holder would have received if such holder had
exercised such Warrant immediately prior to the record date for determining the
stockholders entitled to receive the distribution.
If Fleet is a party to a consolidation, merger or binding share exchange,
or certain transfers of all or substantially all of its assets occur, the right
to exercise a Warrant for Fleet Common Stock may be changed into a right to
receive securities, cash or other assets of Fleet or another person.
In the event of a taxable distribution to holders of Fleet Common Stock
which results in an adjustment to the Exercise Price at which a Warrant may be
exercised, the holders of the Warrants may, in certain circumstances, be deemed
to have received a distribution subject to United States Federal income tax as a
dividend.
Fractional shares of Fleet Common Stock are not required to be issued upon
exercise of Warrants, but in lieu thereof Fleet will pay a cash adjustment.
The Warrant Agreement permits, with certain exceptions, the amendment
thereof and the modification of the rights and obligations of Fleet and the
rights of the holders of Warrants under the Warrant Agreement at any time by
Fleet and the Warrant Agent with the consent of the holders of Warrants
representing a majority in number of the then outstanding Warrants.
30
<PAGE> 32
The Warrants are listed on the Stock Exchange, and are freely transferable
under the Securities Act, subject to the restrictions discussed under "RESALE OF
FLEET COMMON STOCK, WARRANTS AND WARRANT SHARES".
PREFERRED STOCK
Fleet $1 Par Preferred Stock
Fleet $1 Par 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 term
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 of Fleet.
As of the date of this Supplement, Fleet has three series of Fleet $1 Par
Preferred Stock outstanding, and one series designated but unissued.
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 Fleet 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
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 Fleet Restated 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.
31
<PAGE> 33
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 Fleet 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 Fleet Restated 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 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 Restated 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.
32
<PAGE> 34
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 rights (the "DCP Rights") to purchase 6,500,000 shares of Fleet
Common Stock at $17.65 per share.
The Dual Convertible Preferred Stock is convertible into Fleet 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 Fleet 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 equal to 50%
of the Appraisal price less the sum of (i) the market value of the shares of
Fleet Common Stock into which the Dual Convertible Preferred Stock are then
convertible (and such shares of Fleet 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 issued to holders of the Fleet Common Stock. As of the date
of this Proxy Statement-Prospectus, there were 1,500,000 shares of Fleet $1 Par
Preferred Stock reserved for issuance upon the exercise of the Rights. See
"-- 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
Fleet 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 Fleet Common Stock. Finally, in the event of
any merger, consolidation or other transaction in which shares of Fleet Common
Stock are exchanged, each share of Junior Preferred Stock will, subject to the
rights
33
<PAGE> 35
of such senior securities, be entitled to receive 100 times the amount received
per share of Fleet Common Stock. Each share of Junior Preferred Stock will have
100 votes, voting together with the Fleet Common Stock. The rights of the Junior
Preferred Stock are protected by customary antidilution provisions.
SELECTED PROVISIONS IN THE FLEET RESTATED ARTICLES
Business Combinations with Related Persons. The Fleet Restated 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 Fleet Restated
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 or any of its affiliates or associates
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 and its
subsidiaries) 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, as of the date on which a binding agreement providing for a Business
Combination is authorized by the Board of Directors or 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 then outstanding 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 Fleet Restated 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 Fleet Restated 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 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 Fleet Restated 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
34
<PAGE> 36
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.
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.
LEGAL OPINIONS
The legality of the shares of Fleet Common Stock issued to the NBB
stockholders pursuant to the Merger, the Warrants and Warrant Shares and certain
other legal matters in connection with the Merger, was passed upon by Edwards &
Angell, 2700 Hospital Trust Tower, Providence, Rhode Island 02903. V. Duncan
Johnson, a partner of Edwards & Angell, is a director of Fleet-RI, Fleet-CT and
the Surviving Bank and beneficially owns 4,052 shares of Fleet Common Stock.
Edwards & Angell has from time to time acted as counsel in advising NBB and its
affiliates with respect to certain regulatory and labor matters and in
connection with various transactions. Edwards & Angell did not act as counsel to
NBB or its affiliates with respect to the Merger or any transaction in
connection therewith.
Goodwin, Procter & Hoar, Boston, Massachusetts, rendered an opinion to NBB
on the Effective Date substantially to the effect that the Merger constituted a
"reorganization" under Section 368(a) of the Code and Fleet and NBB are parties
to the reorganization within Section 368(b) of the Code. Goodwin, Procter &
Hoar, counsel to NBB, has from time to time acted as counsel in advising Fleet
and its affiliates with respect to certain regulatory matters and in connection
with various transactions. Goodwin, Procter & Hoar did not act as counsel to
Fleet or its affiliates with respect to the Merger or any transaction in
connection therewith.
35
