Filed Pursuant to Rule 424(b)(5)
Registration No. 333-00701
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 25, 1996)
[FLEET FINANCIAL GROUP LOGO]
1,000,000 DEPOSITARY SHARES
FLEET FINANCIAL GROUP, INC.
EACH REPRESENTING A ONE-FIFTH INTEREST IN A SHARE OF
SERIES VIII FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK
-------------------
Each of the Depositary Shares offered hereby (the "Depositary Shares")
represents a one-fifth interest in a share of Series VIII Fixed/Adjustable Rate
Noncumulative Preferred Stock, $250 liquidation preference per share (the
"Offered Preferred Stock"), of Fleet Financial Group, Inc. ("Fleet") deposited
with the Depositary (as defined herein) and, through the Depositary, entitles
the holder to all proportionate rights and preferences of the Offered Preferred
Stock (including dividend, voting, redemption and liquidation rights). The
proportionate liquidation preference of each Depositary Share is $50. See
"Certain Terms of the Depositary Shares".
Dividends on the Offered Preferred Stock are noncumulative and will be
payable quarterly on January 1, April 1, July 1 and October 1 of each year,
commencing January 1, 1997, at a rate of 6.59% of the liquidation preference per
annum through October 1, 2001. Thereafter, the dividend rate on the Offered
Preferred Stock will be the Applicable Rate (as defined herein) from time to
time in effect. The Applicable Rate per annum for any dividend period beginning
on or after October 1, 2001 will be equal to .45% plus the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate (each as defined herein), as determined in advance of
such dividend period. The Applicable Rate per annum for any dividend period
beginning on or after October 1, 2001 will not be less than 7.0% nor greater
than 13.0%. The amount of dividends payable in respect of the Offered Preferred
Stock will be adjusted in the event of certain amendments to the Internal
Revenue Code of 1986, as amended (the "Code"), in respect of the dividends
received deduction. See "Certain Terms of the Offered Preferred
Stock--Dividends".
The Offered Preferred Stock is not redeemable prior to October 1, 2001. The
Offered Preferred Stock is redeemable at the option of Fleet in whole or in
part, on and after October 1, 2001, at $250 per share (equivalent to $50 per
Depositary Share), plus, in each case, an amount equal to the sum of all accrued
and unpaid dividends thereon for the then-current dividend period. The Offered
Preferred Stock may also be redeemed prior to October 1, 2001, in whole, at the
option of Fleet, in the event of certain amendments to the Code in respect of
the dividends received deduction. The Offered Preferred Stock will not be
entitled to the benefit of any sinking fund. See "Certain Terms of the Offered
Preferred Stock--Redemption".
-------------------
The Depositary shares are not savings accounts, deposits or other obligations
of any bank or nonbank subsidiary of Fleet and are not insured by The Federal
Deposit Insurance Corporation, bank insurance fund or any other government
agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR RELATED PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) FLEET(1)(3)
<S> <C> <C> <C>
Per Depositary Share........................ $50.00 $0.625 $49.375
Total....................................... $50,000,000 $625,000 $49,375,000
</TABLE>
(1) Plus accrued dividends, if any, from September 27, 1996.
(2) Fleet has agreed to indemnify the Underwriter against certain liabilities
under the Securities Act of 1933, as amended. See "Underwriting".
(3) Before deducting expenses payable by Fleet estimated at $175,000.
-------------------
The Depositary Shares are offered by the Underwriter, subject to prior sale,
when, as and if issued to and accepted by it, and subject to the approval of
certain legal matters by counsel for the Underwriter and certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Depositary Receipts evidencing the Depositary Shares will be
made in certificated form at the offices of Lehman Brothers, or through the
facilities of The Depository Trust Company, on or about September 27, 1996.
-------------------
LEHMAN BROTHERS
July 26, 1996
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This section supplements the section entitled "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
Fleet hereby incorporates by reference its Annual Report on Form 10-K for
the year ended December 31, 1995, its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, its Current Reports on Form 8-K dated March 25,
1996, March 26, 1996, March 27, 1996, April 1, 1996, April 15, 1996, April 17,
1996, May 1, 1996, May 15, 1996 and July 17, 1996, and its Form 8-K/A
dated April 5, 1996 (amending its Form 8-K dated March 15, 1996), which were
filed by Fleet with the Securities and Exchange Commission (the "Commission")
since the date of the accompanying Prospectus.
All documents filed with the Commission by Fleet pursuant to Sections 13, 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
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.
S-2
<PAGE>
FLEET FINANCIAL GROUP, INC.
GENERAL
This section replaces the section entitled "Fleet Financial Group,
Inc.--General" in the accompanying Prospectus.
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At March 31, 1996, Fleet was the 12th largest bank
holding company in the United States in terms of total assets, with total assets
of $72.1 billion, total deposits of $50.1 billion and total equity capital of
$6.8 billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of Connecticut, Massachusetts, New Jersey, New York, Rhode
Island, Maine, New Hampshire and Florida through its banking subsidiaries, Fleet
National Bank ("FNB"); Fleet Bank, National Association ("Fleet-Metro NY");
Fleet Bank ("Fleet-Upstate NY"); Fleet Bank of Maine; Fleet Bank-NH and Fleet
Bank, F.S.B.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing, securities brokerage services,
investment banking, investment advice and management, data processing and
student loan servicing.
On February 20, 1995, Fleet and Shawmut National Corporation ("Shawmut")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Shawmut with and into Fleet (the "Shawmut Merger"). The
Shawmut Merger was consummated on November 30, 1995. For additional information
regarding the Shawmut Merger and Fleet's supplemental consolidated financial
statements giving effect thereto, see Fleet's Current Reports on Form 8-K dated
February 20, 1995, February 21, 1995, April 13, 1995, May 17, 1995, June 21,
1995, August 11, 1995, August 23, 1995, November 15, 1995, November 30, 1995 and
January 19, 1996, which are incorporated by reference herein. Unless otherwise
noted, all of Fleet's historical financial information set forth in this
Prospectus Supplement has been restated to give effect to the Shawmut Merger for
all periods presented.
On December 19, 1995, Fleet entered into an Agreement and Plan of Merger (as
amended, the "NatWest Merger Agreement") with National Westminster Bank Plc
("NatWest Plc") providing for the merger (the "NatWest Merger") of Fleet Bank of
New York, National Association with and into NatWest Bank, N.A. ("NatWest
Bank"), a national bank operating in New York and New Jersey. NatWest Bank will
continue its existence following the closing under the name "Fleet Bank,
National Association". The NatWest Merger was consummated on May 1, 1996. See
"Unaudited Pro Forma Combined Financial Statements". For additional information
regarding the NatWest Merger, including a copy of the NatWest Merger Agreement
and certain historical and pro forma financial information related thereto, see
Fleet's Current Reports on Form 8-K dated December 19, 1995, February 8, 1996,
March 15, 1996, March 25, 1996, May 1, 1996 and May 15, 1996, which are
incorporated by reference herein.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 292-2000.
S-3
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND DIVIDENDS
ON PREFERRED STOCK
This section replaces the section entitled "Consolidated Ratios of Earnings
to Fixed Charges and Dividends on Preferred Stock".
Fleet's consolidated ratios of earnings to fixed charges and dividends on
preferred stock were as follows for the years and periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
QUARTER ENDED -----------------------------------------
MARCH 31, 1996 1995 1994 1993 1992 1991
-------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges and
Dividends on Preferred Stock:
Excluding interest on deposits......... 2.84x 1.74x 2.27x 2.27x 1.82x *
Including interest on deposits......... 1.70 1.33 1.61 1.54 1.25 *
</TABLE>
- ------------
* The sum of fixed charges and dividends on preferred stock exceeded earnings by
$16 million for both the ratio excluding and including interest on deposits
for the year ended December 31, 1991.
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest)
and, where indicated, the pretax equivalents of dividends on preferred stock.
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
RECENT DEVELOPMENTS
SECOND QUARTER RESULTS
Fleet reported net income of $278 million for the second quarter of 1996, or
$0.96 per common share, an increase of 9% compared with $254 million, or $0.91
per common share, earned in the second quarter of 1995. Return on average assets
and return on average common equity for the second quarter of 1996 were 1.32%
and 17.20%, respectively, up from 1.22% and 16.79%, respectively, for the second
quarter of 1995. Earnings for the first six months of 1996 were $542 million, or
$1.89 per common share, an increase of 13%, compared to $480 million, or $1.73
per common share, for the first six months of 1995.
Net interest income totaled $863 million during the second quarter of 1996,
an increase of $131 million from the first quarter of 1996. The increase in net
interest income is attributable to the acquisition of NatWest Bank partially
offset by the loss of revenue from the branch divestitures in connection with
the Shawmut Merger.
Fleet reported a net interest margin of 4.76%, an increase of 33 basis
points over the 4.43% recorded in the first quarter of 1996, and an increase of
61 basis points over the 4.15% recorded in the second quarter of 1995. This
increase reflects the more favorable mix of earning assets and advantaged
liabilities as a result of the NatWest Merger, which added higher-yielding loans
and lower-cost core deposits, coupled with the ongoing impact of the balance
sheet restructuring undertaken during the first quarter of 1996.
The provision for credit losses in the second quarter of 1996 was $48
million, compared to $35 million in the prior quarter and $28 million for the
second quarter of 1995. Net charge-offs for both the second quarter of 1996 and
1995 amounted to $76 million despite the addition of $17 million of net
charge-offs from NatWest Bank. Nonperforming assets increased by $192 million in
the second quarter
S-4
<PAGE>
to $745 million with NatWest Bank accounting for $165 million of the increase.
The reserve for loan losses was $1.6 billion, $1.3 billion and $1.5 billion at
June 30, 1996, March 31, 1996 and June 30, 1995, respectively. The reserve for
loan losses represented 2.7%, 2.7% and 2.9% of loans at June 30, 1996,
March 31, 1996 and June 30, 1995, respectively.
Noninterest income in the second quarter totaled $549 million, up $73
million from the second quarter of 1995 which included a $25 million gain on
interest rate contracts to manage prepayment risk at Fleet Mortgage Group, Inc.
This increase in noninterest income is attributable to $46 million from NatWest
Bank and $32 million of gains relating to branch divestitures as a result of the
Shawmut Merger. Revenues of $26 million at Fleet Private Equity, Fleet's venture
capital business, were comparable with the first quarter as the value of their
investments has continued to strengthen. Investment services revenue increased
by $15 million year over year, or 19%, due to a strong equity market, which
resulted in an increase in the overall value of managed assets. Student loan
servicing revenue increased $7 million, or 47%, due to increases in the volume
of loans serviced as a result of the extension of Fleet's direct loan servicing
contracts with the government.
Noninterest expense in the second quarter of 1996 totaled $885 million,
including $131 million related to the NatWest Merger, compared to the $797
million during the second quarter of 1995. Excluding the incremental impact of
the NatWest Merger, noninterest expense declined $43 million from the year
earlier, primarily the result of lower compensation costs.
Total assets at June 30, 1996 were $87.7 billion, while total loans and
leases were $59.1 billion at the same date, a net increase of $15.6 billion and
$11.5 billion, respectively, from March 31, 1996. The increase was attributable
to the NatWest Merger. Stockholders' equity amounted to $7.13 billion at June
30, 1996, and $6.84 billion at March 31, 1996, an increase of $283 million,
primarily attributable to the issuance of $175 million of preferred stock in
conjunction with the NatWest Merger. Common equity to assets and tangible
common equity to assets were 6.98% and 5.06%, respectively, at June 30, 1996.
S-5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected financial
data for Fleet and its subsidiaries for the three months ended March 31, 1996
and 1995 and for each of the years in the five-year period ending December 31,
1995. The following summary should be read in conjunction with the financial
information incorporated herein by reference to other documents. See
"Incorporation of Certain Documents by Reference". The summary for the three
months ended March 31, 1996 and 1995 is based on unaudited financial statements
which include all adjustments that, in the opinion of management of Fleet, are
necessary for a fair presentation of the results of the respective interim
periods. The results of operations for the three months ended March 31, 1996 are
not necessarily indicative of the results expected for 1996 or any other interim
period. All per share information shown below has been adjusted to reflect stock
splits and stock dividends as applicable. All information included herein has
been restated to give effect to the Shawmut Merger for all periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
QUARTER ENDED QUARTER ENDED -------------------------------------------------------------------
MARCH 31, 1996 MARCH 31, 1995 1995 1994 1993 1992 1991
-------------- -------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Consolidated Summary of
Operations:
Interest income (fully
taxable equivalent)..... $ 1,345 $ 1,461 $ 6,069 $ 5,260 $ 5,086 $ 5,318 $ 5,425
Interest expense....... 613 692 3,005 2,161 1,917 2,337 3,142
Net interest income.... 732 769 3,064 3,099 3,169 2,981 2,283
Provision for credit
losses.................. 35 20 101 65 327 728 995
Net interest income
after provision for
credit losses........ 697 749 2,963 3,034 2,842 2,253 1,288
Noninterest income..... 519 402 1,850 1,555 1,883 1,897 1,627
Noninterest expense.... 758 764 3,735 3,145 3,579 3,479 2,864
Net income (loss)...... 264 226 610(a) 849 817(b) 366(b) (76)
Earnings (loss) per
common share:
Fully diluted.......... $0.94 0.82 $1.57(a) $3.09 $3.03(b) $1.40(b) $(0.44)
Weighted average fully
diluted shares
outstanding............. 268,376,014 263,780,319 265,886,363 264,828,469 257,373,073 237,116,784 204,024,214
Book value per common
share................... $22.90 $22.49 $22.71 $20.68 $21.76 $17.65 $16.81
Cash dividends declared
per common share........ 0.43 0.40 1.63 1.40 1.025 0.825 0.80
Common dividends
declared as a
percentage of
earnings per share...... 45.7% 48.8% 103.8% 45.3% 33.8% 58.9% --(h)
Ratio of Earnings to
Fixed Charges:
Excluding interest on
deposits................ 3.02x 2.19x 1.78x 2.33x 2.36x 1.90x --(f)
Including interest on
deposits................ 1.72 1.53 1.34 1.62 1.56 1.26 --(f)
Ratio of Earnings to
Fixed Charges and
Dividends on Preferred
Stock:
Excluding interest on
deposits................ 2.84 2.14 1.74 2.27 2.27 1.82 --(g)
Including interest on
deposits................ 1.70 1.52 1.33 1.61 1.54 1.25 --(g)
Consolidated Balance
Sheet--
Average Balances:
Total assets........... $75,026 $80,195 $82,727 $79,561 $75,286 $71,633 $65,099
Securities held to
maturity(c)............. 823 8,793 7,736 8,787 7,735 4,300 12,358
Securities available
for sale(c).......... 11,307 12,977 12,779 16,923 14,140 14,061 1,597
Loans and leases, net
of unearned income... 49,497 48,806 51,043 44,102 43,283 43,029 40,986
Interest-bearing
deposits................ 41,249 42,164 43,120 40,113 39,766 42,031 40,867
Short-term
borrowings.............. 8,059 13,170 14,046 15,355 12,807 8,848 6,520
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
QUARTER ENDED QUARTER ENDED -------------------------------------------------------------------
MARCH 31, 1996 MARCH 31, 1995 1995 1994 1993 1992 1991
-------------- -------------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term
debt/subordinated
notes and
debentures.............. $ 6,080 $ 6,313 $ 6,581 $ 5,383 $ 5,039 $ 4,116 $ 3,947
Dual Convertible
Preferred Stock(d)... -- -- -- -- -- 283 134
Stockholders' Equity... 6,542 6,116 6,545 5,782 5,311 4,118 3,596
Consolidated Ratios:
Net interest margin
(fully taxable
equivalent)............. 4.43% 4.27% 4.12% 4.30% 4.63% 4.57% 3.85%
Return (loss) on
average assets..... 1.41 1.14 0.74(a) 1.07 1.09(b) 0.51(b) (0.12)
Return (loss) on
average common
stockholders'
equity.................. 16.96(e) 16.24(e) 9.32(a)(e) 15.66(e) 17.11(b) 9.12(b) (2.73)
Average stockholders'
equity to average
assets.................. 8.72 7.63 7.91 7.27 7.05 6.14 5.52
Tier 1 risk-based
capital ratio...... 9.18 8.44 7.62 9.14 10.44 9.89 7.38
Total risk-based
capital ratio...... 13.03 12.44 11.29 12.92 14.89 14.61 11.27
Period-end reserve
for credit losses
to period-end loans
and leases, net of
unearned income.... 2.71 3.02 2.56 3.25 3.82 4.43 4.73
Net charge-offs to
average loans and
leases, net of
unearned income.... 0.49 0.49 0.59 0.54 1.35 2.15 2.02
Period-end
nonperforming
assets to
period-end loans
and leases, net of
unearned income,
and other real
estate owned....... 1.16(i) 1.62 0.97(i) 1.65 2.35 4.53 7.05
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Includes impact of the loss on assets held for sale or accelerated disposition ($175 million
pretax) and merger related charges ($490 million pretax) recorded in 1995. Excluding these special
charges, return on average common stockholders' equity and return on average assets would have
been 16.29% and 1.26%, respectively, while net income and earnings per share would have been
$1,039 million and $3.77, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53 million in 1993 and
extraordinary credit of $18 million in 1992.
(c) For a discussion of Fleet's reclassification in 1992 of its "securities held to maturity" to
"securities held for sale", see Fleet's Current Report on Form 8-K dated October 21, 1992.
Effective January 1, 1994, Fleet adopted FASB Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The standard requires that securities available for
sale be reported at fair value, with unrealized gains or losses reflected as a separate component
of stockholders' equity. In connection with the adoption of FASB Statement No. 115, Fleet
transferred securities netting to $345 million from the held to maturity portfolio to the
available for sale portfolio. During the fourth quarter of 1995, Fleet reclassified substantially
all of its securities held to maturity to securities available for sale as the FASB permitted a
one-time opportunity for institutions to reassess the appropriateness of the designations of all
securities.
(d) Fleet's DCP Stock was issued in 1991, reclassified to stockholders' equity as of December 31, 1992
and converted into common equity on December 31, 1995.
(e) Fleet's return on average common stockholders' equity includes 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 would have been 17.08%, 15.60%, 9.25% and 15.35%,
respectively, for the quarters ended March 31, 1996 and 1995 and the years ended December 31, 1995
and 1994.
(f) Fixed charges exceeded earnings by $16 million for both the ratio excluding and including interest
on deposits.
(g) The sum of fixed charges and dividends exceeded earnings by $16 million for both the ratio
excluding and including interest on deposits.
(h) For the year ended December 31, 1991, Fleet reported a $76 million net loss and therefore the
ratio is not applicable.
(i) Excludes $307 million and $317 million of nonperforming assets reclassified to held for sale or
accelerated disposition at March 31, 1996 and December 31, 1995, respectively. Including the $307
million and $317 million, the ratios would have been 1.81% and 1.58% at March 31, 1996 and
December 31, 1995, respectively.
</TABLE>
S-7
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On May 1, 1996, Fleet consummated the NatWest Merger. The following
Unaudited Pro Forma Combined Balance Sheet as of March 31, 1996, and the
Unaudited Pro Forma Combined Statements of Income for the three months ended
March 31, 1996 and for the year ended December 31, 1995, give effect to the
Merger accounted for by the purchase method of accounting as if such transaction
had occurred on January 1, 1995.
The pro forma information is based on the historical consolidated financial
statements of Fleet and National Westminster Bancorp, Inc. ("Bancorp") and their
subsidiaries under the assumptions and adjustments set forth in the accompanying
Notes to the Unaudited Pro Forma Combined Financial Statements. NatWest Bank was
a wholly-owned direct subsidiary of National Westminster Bancorp NJ, a New
Jersey corporation, which was a wholly-owned indirect subsidiary of Bancorp, a
Delaware corporation. Bancorp was a wholly-owned indirect subsidiary of NatWest
Plc. Pursuant to the terms of the NatWest Merger Agreement, certain operating
subsidiaries of Bancorp, including its leasing subsidiary, and certain assets
and liabilities of NatWest Bank were retained by Bancorp or transferred to other
affiliates of NatWest Plc. Such assets and liabilities are included as pro forma
adjustments in the Unaudited Pro Forma Combined Financial Statements. The
Unaudited Pro Forma Combined Financial Statements should be read in conjunction
with the consolidated financial statements of Fleet, filed in Fleet's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996 and Fleet's Annual
Report on Form 10-K for the year ended December 31, 1995 and the consolidated
financial statements of Bancorp, filed as Exhibit 99b to Fleet's Current Reports
on Form 8-K dated May 15, 1996 and March 25, 1996. The pro forma information is
presented for comparative purposes only and is not necessarily indicative of the
combined financial position or results of operations in the future or of the
combined financial position or results of operations which would have been
realized had the Merger been consummated during the period or as of the date for
which the pro forma information is presented.
S-8
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996 (A)
<TABLE>
<CAPTION>
FLEET/
BALANCE SHEET NATWEST
FLEET NATWEST PRO FORMA RESTRUCTURING PRO FORMA
HISTORICAL PRO FORMA ADJUSTMENTS ADJUSTMENTS (D) COMBINED
---------- --------- ----------- --------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents........... $ 3,305 $ 1,668 $ 0 $ 0 $ 4,973
Federal funds sold and securities
purchased under agreements to
resell............................ 1,808 2,650 (750)(b) (2,650) 1,058
Securities.......................... 10,091 2,837 0 (1,800) 11,128
Loans and leases.................... 47,559 13,763 (71)(c) 0 61,251
Reserve for credit losses........... (1,287) (252) 0 0 (1,539)
Mortgages held for resale........... 2,398 2,554 0 (2,554) 2,398
Premises and equipment.............. 974 420 (38)(c) 0 1,356
Mortgage servicing rights........... 1,406 16 6(c) 0 1,428
Excess cost over net assets
acquired............................ 907 964 (137)(c) 0 1,734
Other intangibles................... 164 24 (24)(c) 0 164
Other assets........................ 4,798 1,050 162(c) 0 6,010
---------- --------- ----------- ------- ---------
Total assets........................ $ 72,123 $25,694 $ (852) $(7,004) $89,961
---------- --------- ----------- ------- ---------
---------- --------- ----------- ------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand............................ $ 10,485 $ 4,454 $ 0 $ 0 $14,939
Regular savings, NOW, money
market.............................. 21,783 8,453 0 0 30,236
Time.............................. 17,853 5,749 0 (1,332) 22,270
---------- --------- ----------- ------- ---------
Total deposits...................... 50,121 18,656 0 (1,332) 67,445
---------- --------- ----------- ------- ---------
Federal funds purchased and
securities sold under agreements
to
repurchase........................ 3,810 462 700(b) (1,972) 3,000
Other short-term borrowings......... 3,363 2,142 675(b) (3,700) 2,480
Accrued expenses and other
liabilities......................... 1,985 934 653(c) 0 3,572
Long-term debt...................... 6,000 45 400(b) 0 6,445
---------- --------- ----------- ------- ---------
Total liabilities................... 65,279 22,239 2,428 (7,004) 82,942
---------- --------- ----------- ------- ---------
Stockholders' equity:
Preferred equity.................. 824 0 175(b) 0 999
Common equity..................... 6,020 3,455 (3,455)(c) 0 6,020
---------- --------- ----------- ------- ---------
Total stockholders' equity.......... 6,844 3,455 (3,280) 0 7,019
---------- --------- ----------- ------- ---------
Total liabilities and stockholders'
equity.............................. $ 72,123 $25,694 $ (852) $(7,004) $89,961
---------- --------- ----------- ------- ---------
---------- --------- ----------- ------- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-9
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996 (A)
<TABLE>
<CAPTION>
NATWEST PRO FORMA
BANCORP ADJUSTMENTS NATWEST
HISTORICAL (E) PRO FORMA
---------- -------------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents.................................. $ 1,668 $ 0 $ 1,668
Federal funds sold and securities purchased under
agreements to resell..................................... 2,650 0 2,650
Securities................................................. 2,839 (2) 2,837
Loans and leases........................................... 14,163 (400) 13,763
Reserve for credit losses.................................. (255) 3 (252)
Mortgages held for resale.................................. 2,554 0 2,554
Premises and equipment..................................... 537 (117) 420
Mortgage servicing rights.................................. 16 0 16
Excess cost over net assets acquired....................... 964 0 964
Other intangibles.......................................... 24 0 24
Other assets............................................... 2,521 (1,471) 1,050
---------- ------- ---------
Total assets............................................... $ 27,681 $ (1,987) $25,694
---------- ------- ---------
---------- ------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand................................................... $ 4,454 $ 0 $ 4,454
Regular savings, NOW, money market....................... 8,453 0 8,453
Time..................................................... 5,949 (200) 5,749
---------- ------- ---------
Total deposits............................................. 18,856 (200) 18,656
---------- ------- ---------
Federal funds purchased and securities sold under
agreements to repurchase................................. 1,662 (1,200) 462
Other short-term borrowings................................ 2,173 (31) 2,142
Accrued expenses and other liabilities..................... 1,067 (133) 934
Long-term debt............................................. 643 (598) 45
---------- ------- ---------
Total liabilities.......................................... 24,401 (2,162) 22,239
---------- ------- ---------
Stockholders' equity:
Preferred equity......................................... 0 0 0
Common equity............................................ 3,280 175 3,455
---------- ------- ---------
Total stockholders' equity................................. 3,280 175 3,455
---------- ------- ---------
Total liabilities and stockholders' equity................. $ 27,681 $ (1,987) $25,694
---------- ------- ---------
---------- ------- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-10
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (A)
<TABLE>
<CAPTION>
BALANCE SHEET FLEET /
RESTRUCTURING NATWEST
FLEET NATWEST PRO FORMA ADJUSTMENTS PRO FORMA
HISTORICAL PRO FORMA ADJUSTMENTS (D) COMBINED
----------- --------- -------------- -------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and
leases............................ $ 1,144 $ 370 $ 0 $ (51) $ 1,463
Interest on securities............ 193 110 (26)(b) (59) 218
----------- --------- ------ ------- -----------
Total interest income........... 1,337 480 (26) (110) 1,681
Interest expense:
Deposits........................ 402 147 0 (18) 531
Short-term borrowings........... 106 73 0 (75) 104
Long-term debt.................. 105 1 7(b) 0 113
----------- --------- ------ ------- -----------
Total interest expense.......... 613 221 7 (93) 748
----------- --------- ------ ------- -----------
Net interest income............... 724 259 (33) (17) 933
Provision for credit losses....... 35 23 0 0 58
----------- --------- ------ ------- -----------
Net interest income after
provision for credit losses..... 689 236 (33) (17) 875
----------- --------- ------ ------- -----------
Mortgage banking.................. 124 9 0 0 133
Investment services revenue....... 87 4 0 0 91
Service charges, fees and
commissions....................... 119 59 0 0 178
Securities available for sale
gains............................. 18 3 0 0 21
Gain from branch divestitures..... 60 0 0 0 60
Other noninterest income.......... 111 24 0 0 135
----------- --------- ------ ------- -----------
Total noninterest income........ 519 99 0 0 618
----------- --------- ------ ------- -----------
Employee compensation and
benefits.......................... 348 124 0 0 472
Occupancy and equipment........... 118 37 (1)(c) 0 154
Mortgage servicing rights
amortization...................... 41 1 0 0 42
FDIC assessment................... 2 0 0 0 2
Marketing......................... 22 10 0 0 32
Intangible asset amortization..... 25 19 (6)(c) 0 38
OREO expense...................... 3 0 0 0 3
Other noninterest expense......... 199 46 0 0 245
----------- --------- ------ ------- -----------
Total noninterest expense....... 758 237 (7) 0 988
----------- --------- ------ ------- -----------
Income before income taxes........ 450 98 (26) (17) 505
Applicable income taxes........... 186 47 (13) (7) 213
----------- --------- ------ ------- -----------
Net income........................ $ 264 $ 51 $ (13) $ (10) $ 292
----------- --------- ------ ------- -----------
----------- --------- ------ ------- -----------
Net income applicable to common
shares: (f)....................... $ 251 $ 51 $ (20)(b) $ (10) $ 272
----------- --------- ------ ------- -----------
----------- --------- ------ ------- -----------
Weighted average common shares
outstanding:(g)
Primary......................... 268,352,754 268,352,754
Fully Diluted................... 268,376,014 268,376,014
Earnings per share:
Primary......................... $ 0.94 $ 1.01
Fully Diluted................... 0.94 1.01
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-11
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (A)
<TABLE>
<CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS(E) PRO FORMA
---------- -------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases...................... $371 $ (1) $ 370
Interest on securities..................................... 110 0 110
----- ----- ---------
Total interest income.................................... 481 (1) 480
Interest expense:
Deposits................................................. 147 0 147
Short-term borrowings.................................... 67 6 73
Long-term debt........................................... 15 (14) 1
----- ----- ---------
Total interest expense................................... 229 (8) 221
----- ----- ---------
Net interest income........................................ 252 7 259
Provision for credit losses................................ 23 0 23
----- ----- ---------
Net interest income after provision for credit losses...... 229 7 236
----- ----- ---------
Mortgage banking........................................... 9 0 9
Investment services revenue................................ 4 0 4
Service charges, fees and commissions...................... 59 0 59
Securities available for sale gains........................ 3 0 3
Gain from branch divestitures.............................. 0 0 0
Other noninterest income................................... 23 1 24
----- ----- ---------
Total noninterest income................................. 98 1 99
----- ----- ---------
Employee compensation and benefits......................... 124 0 124
Occupancy and equipment.................................... 38 (1) 37
Mortgage servicing rights amortization..................... 1 0 1
FDIC assessment............................................ 0 0 0
Marketing.................................................. 10 0 10
Intangible asset amortization.............................. 19 0 19
OREO expense............................................... 0 0 0
Other noninterest expense.................................. 45 1 46
----- ----- ---------
Total noninterest expense................................ 237 0 237
----- ----- ---------
Income before income taxes................................. 90 8 98
Applicable income taxes.................................... 44 3 47
----- ----- ---------
Net income................................................. $ 46 $ 5 $ 51
----- ----- ---------
----- ----- ---------
Net income applicable to common shares: (f)................ $ 46 $ 5 $ 51
----- ----- ---------
----- ----- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-12
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
BALANCE
SHEET FLEET /
RESTRUCTURING NATWEST
FLEET NATWEST PRO FORMA ADJUSTMENTS PRO FORMA
PRO FORMA PRO FORMA ADJUSTMENTS (D) COMBINED
----------- --------- ----------- ----------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C> <C> <C>
Interest and fees on loans and
leases.............................. $ 4,785 $ 1,499 $ 0 $ (279) $ 6,005
Interest on securities.............. 1,365 641 (105)(b) (1,006) 895
----------- --------- ----- ----------- -----------
Total interest income............. 6,150 2,140 (105) (1,285) 6,900
Interest expense:
Deposits.......................... 1,782 619 0 (271) 2,130
Short-term borrowings............. 836 446 0 (872) 410
Long-term debt.................... 478 0 29(b) 0 507
----------- --------- ----- ----------- -----------
Total interest expense............ 3,096 1,065 29 (1,143) 3,047
----------- --------- ----- ----------- -----------
Net interest income................. 3,054 1,075 (134) (142) 3,853
Provision for credit losses......... 102 95 0 0 197
----------- --------- ----- ----------- -----------
Net interest income after provision
for credit losses................. 2,952 980 (134) (142) 3,656
----------- --------- ----- ----------- -----------
Mortgage banking.................... 512 30 0 0 542
Investment services revenue......... 322 16 0 0 338
Service charges, fees and
commissions......................... 496 237 0 0 733
Securities available for sale
gains............................... 38 90 0 0 128
Other noninterest income............ 496 143 0 0 639
----------- --------- ----- ----------- -----------
Total noninterest income.......... 1,864 516 0 0 2,380
----------- --------- ----- ----------- -----------
Employee compensation and
benefits............................ 1,474 452 0 0 1,926
Occupancy and equipment............. 468 136 (3)(c) 0 601
Mortgage servicing rights
amortization........................ 196 2 0 0 198
FDIC assessment..................... 70 21 0 0 91
Marketing........................... 94 52 0 0 146
Intangible asset amortization....... 113 77 (33)(c) 0 157
OREO expense........................ 16 6 0 0 22
Merger and restructuring related
charges............................. 490 7 0 0 497
Loss on assets held for sale or
accelerated disposition............. 175 0 0 0 175
Other noninterest expense........... 701 210 0 0 911
----------- --------- ----- ----------- -----------
Total noninterest expense......... 3,797 963 (36) 0 4,724
----------- --------- ----- ----------- -----------
Income before income taxes.......... 1,019 533 (98) (142) 1,312
Applicable income taxes............. 420 210 (52) (57) 521
----------- --------- ----- ----------- -----------
Net income.......................... $ 599 $ 323 $ (46) $ (85) $ 791
----------- --------- ----- ----------- -----------
----------- --------- ----- ----------- -----------
Net income applicable to common
shares: (f)......................... $ 404 $ 323 $ (88)(b) $ (85) $ 554
----------- --------- ----- ----------- -----------
----------- --------- ----- ----------- -----------
Weighted average common shares
outstanding: (g)
Primary........................... 264,352,367 264,352,367
Fully Diluted..................... 265,442,513 265,442,513
Earnings per share:
Primary........................... $ 1.53 $ 2.10
Fully Diluted..................... 1.52 2.09
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-13
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
FLEET PRO FORMA FLEET
HISTORICAL ADJUSTMENTS(H) PRO FORMA
----------- -------------- -----------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases............... $ 4,721 $ 64 $ 4,785
Interest on securities.............................. 1,304 61 1,365
----------- ----- -----------
Total interest income............................. 6,025 125 6,150
Interest expense:
Deposits.......................................... 1,726 56 1,782
Short-term borrowings............................. 801 35 836
Long-term debt.................................... 478 0 478
----------- ----- -----------
Total interest expense............................ 3,005 91 3,096
----------- ----- -----------
Net interest income................................. 3,020 34 3,054
Provision for credit losses......................... 101 1 102
----------- ----- -----------
Net interest income after provision for credit
losses.............................................. 2,919 33 2,952
----------- ----- -----------
Mortgage banking.................................... 511 1 512
Investment services revenue......................... 322 0 322
Service charges, fees and commissions............... 492 4 496
Securities available for sale gains................. 32 6 38
Other noninterest income............................ 493 3 496
----------- ----- -----------
Total noninterest income.......................... 1,850 14 1,864
----------- ----- -----------
Employee compensation and benefits.................. 1,448 26 1,474
Occupancy and equipment............................. 459 9 468
Mortgage servicing rights amortization.............. 190 6 196
FDIC assessment..................................... 67 3 70
Marketing........................................... 93 1 94
Intangible asset amortization....................... 105 8 113
OREO expense........................................ 15 1 16
Merger and restructuring related charges............ 490 0 490
Loss on assets held for sale or accelerated
disposition......................................... 175 0 175
Other noninterest expense........................... 693 8 701
----------- ----- -----------
Total noninterest expense......................... 3,735 62 3,797
----------- ----- -----------
Income before income taxes.......................... 1,034 (15) 1,019
Applicable income taxes............................. 424 (4) 420
----------- ----- -----------
Net income.......................................... $ 610 $(11) $ 599
----------- ----- -----------
----------- ----- -----------
Net income applicable to common shares: (f)......... $ 416 $(12) $ 404
----------- ----- -----------
----------- ----- -----------
Weighted average common shares outstanding: (g)
Primary........................................... 264,796,217 264,352,367
Fully Diluted..................................... 265,886,363 265,442,513
Earnings per share:
Primary........................................... $ 1.57 $ 1.53
Fully Diluted..................................... 1.57 1.52
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-14
<PAGE>
FLEET FINANCIAL GROUP, INC. AND NATWEST BANK N.A.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (A)
<TABLE>
<CAPTION>
NATWEST
BANCORP PRO FORMA NATWEST
HISTORICAL ADJUSTMENTS(E) PRO FORMA
---------- -------------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest and fees on loans and leases...................... $1,508 $ (9) $ 1,499
Interest on securities..................................... 642 (1) 641
---------- --- ---------
Total interest income.................................... 2,150 (10) 2,140
Interest expense:
Deposits................................................. 619 0 619
Short-term borrowings.................................... 420 26 446
Long-term debt........................................... 61 (61) 0
---------- --- ---------
Total interest expense................................... 1,100 (35) 1,065
---------- --- ---------
Net interest income........................................ 1,050 25 1,075
Provision for credit losses................................ 95 0 95
---------- --- ---------
Net interest income after provision for credit losses...... 955 25 980
---------- --- ---------
Mortgage banking........................................... 30 0 30
Investment services revenue................................ 16 0 16
Service charges, fees and commissions...................... 237 0 237
Securities available for sale gains........................ 90 0 90
Other noninterest income................................... 145 (2) 143
---------- --- ---------
Total noninterest income................................. 518 (2) 516
---------- --- ---------
Employee compensation and benefits......................... 459 (7) 452
Occupancy and equipment.................................... 137 (1) 136
Mortgage servicing rights amortization..................... 2 0 2
FDIC assessment............................................ 21 0 21
Marketing.................................................. 56 (4) 52
Intangible asset amortization.............................. 78 (1) 77
OREO expense............................................... 6 0 6
Merger and restructuring related charges................... 10 (3) 7
Loss on assets held for sale or accelerated disposition.... 0 0 0
Other noninterest expense.................................. 197 13 210
---------- --- ---------
Total noninterest expense................................ 966 (3) 963
---------- --- ---------
Income before income taxes................................. 507 26 533
Applicable income taxes.................................... 201 9 210
---------- --- ---------
Net income................................................. $ 306 $ 17 $ 323
---------- --- ---------
---------- --- ---------
Net income applicable to common shares: (f)................ $ 306 $ 17 $ 323
---------- --- ---------
---------- --- ---------
</TABLE>
See accompanying notes to the unaudited pro forma combined financial statements
S-15
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(a) The pro forma information presented is not necessarily indicative of the
results of operations or the combined financial position that would have
resulted had the NatWest Merger been consummated at the beginning of the period
indicated, nor is it necessarily indicative of the results of operations in
future periods or the future financial position of the combined entities. Under
generally accepted accounting principles ("GAAP"), the assets and liabilities of
NatWest Bank will be combined at market value with those of Fleet with the
excess of the purchase price over the net assets acquired allocated to goodwill.
On November 30, 1995, Fleet completed the Shawmut Merger with such merger
accounted for as a pooling of interests.
The pro forma combined financial statements do not give effect to the
anticipated cost savings in connection with the NatWest Merger or the Shawmut
Merger. While no assurance can be given, Fleet expects to achieve cost savings
of approximately $200 million (pre-tax) within eighteen months following the
NatWest Merger. Cost savings of $400 million (pre-tax) are also expected to be
achieved in connection with the Shawmut Merger. Such cost savings are expected
to be achieved within the first fifteen months after the consummation of the
Shawmut Merger. Cost savings from both the NatWest Merger and the Shawmut Merger
are expected to be realized primarily through reductions in staff, elimination
and consolidation of certain branches, and the consolidation of certain offices,
data processing and other redundant back-office operations. The extent to which
cost savings will be achieved in connection with the NatWest Merger and the
Shawmut Merger is dependent upon various factors beyond the control of Fleet,
including the regulatory environment, economic conditions, unanticipated changes
in business conditions and inflation. Therefore, no assurances can be given with
respect to the ultimate level of cost savings to be realized, or that such
savings will be realized in the time frame currently anticipated.
The pro forma information gives effect to the NatWest Merger as if the
Merger had occurred on January 1 of each period presented. In connection with
the NatWest Merger, Fleet substantially restructured its balance sheet to
replace lower-yielding assets, primarily securities and residential loans, with
higher-earning assets acquired from NatWest Bank, and to replace higher-cost
funding with lower-cost deposits acquired from NatWest Bank (see note d). The
pro forma information gives effect to the balance sheet restructuring. However,
due to differences in market conditions and the balance sheet mix and size
during 1995 and 1996 compared to the current market conditions and the current
balance sheet mix and size, pro forma results of operations may not be
indicative of the results of operations in the future or which would have
resulted had the NatWest Merger been consummated during the period for which the
pro forma information is presented.
(b) On May 1, 1996, Fleet purchased NatWest Bank for $2.7 billion in cash.
Pursuant to the NatWest Merger Agreement, the purchase price will be adjusted
upward or downward post-closing based upon the tangible equity of NatWest Bank
as of the closing date of the NatWest Merger. The following funding transactions
occurred in conjunction with the NatWest Merger and are reflected in the
accompanying Unaudited Pro Forma Combined Financial Statements. The $2.7 billion
purchase price was funded through the issuance of $600 million of preferred
stock with a weighted average dividend rate of 6.94%, the issuance of $400
million of long-term debt with an average borrowing rate of 7.20%, dividends of
$1.375 billion received from Fleet subsidiaries and asset sales within
Fleet-Metro NY totaling $325 million. The source of funds for the $1.375 billion
in dividends received from subsidiaries were the result of asset sales,
primarily securities. As part of this transaction, Fleet raised an additional
$675 million of short-term borrowings (primarily commercial paper) to
recapitalize certain of its subsidiaries which was utilized by such subsidiaries
to reduce short-term borrowings by $675 million. All funding transactions are
assumed to have occurred as of January 1, 1995.
(c) Purchase accounting adjustments include adjustments to reflect the
estimated fair value of the assets acquired and liabilities assumed, the
elimination of NatWest Bank's stockholder's equity, and the
S-16
<PAGE>
recording of goodwill in accordance with the purchase method of accounting.
Adjustments have been made to the Unaudited Pro Forma Combined Balance Sheet to
reflect the recording of goodwill as well as to eliminate any goodwill balances
previously recorded at NatWest Bank, in accordance with the purchase method of
accounting.
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Purchase price............................................... $2,700
Historical net tangible assets acquired...................... $3,455
Elimination of NatWest Bank goodwill and core deposit
intangible................................................... (971) 2,484
------
Estimated fair value adjustments............................. (277)
Estimated purchase price adjustment.......................... (167)(1)
------
Estimated fair value of net assets acquired.................. 2,040
------
Excess cost over net assets acquired (goodwill).............. $ 660
------
------
</TABLE>
- ------------
(1) In accordance with the NatWest Merger Agreement, the purchase price will be
adjusted based upon the tangible equity of NatWest Bank as of the closing
date of the NatWest Merger. The pro forma adjustment reflects the estimated
increase in the purchase price as if the NatWest Merger had been consummated
on March 31, 1996.
Goodwill of $660 million has been estimated assuming a purchase price of
$2.7 billion. The NatWest Merger Agreement provides for additional payments (the
"Earnout") to be made annually based upon the level of earnings from the NatWest
franchise, not to exceed $560 million during an eight year "Earnout Period",
which commenced on May 1, 1996 and will end on April 30, 2004. Assuming full
payout of the Earnout, the total purchase price would be $3.26 billion resulting
in an increase to goodwill of $560 million. Such increase, if any, will be
recorded when earned during the Earnout Period and will be amortized over the
remaining life of the goodwill. Included in the pro forma adjustments is an
increase to goodwill of $167 million ($169 million net of $2 million of
amortization for the first quarter of 1996) as of March 31, 1996, reflecting the
estimated payment required for fiscal year 1995 under the Earnout assuming
consummation of the NatWest Merger as of January 1, 1995. This estimate is based
on the level of NatWest Bank pro forma earnings and is not necessarily
indicative of payments that may be made, if any. Estimated fair value
adjustments include merger-related charges and other adjustments to reflect the
estimated fair value of assets being acquired and liabilities being assumed.
Significant adjustments include a liability of $250 million to reflect Fleet's
best estimate of merger-related charges. These merger-related charges include
personnel, facilities, data processing and other transaction costs. Personnel
charges relate primarily to the costs of employee severance, the costs related
to the termination of certain employee benefit plans and employee assistance for
separated employees. Facilities charges are the result of the consolidation of
back-office operations, and consist of lease-termination costs, writedowns of
owned properties, and other facilities-related costs. Data processing costs
consist primarily of the write-off of duplicate or incompatible systems hardware
and software. Other merger expenses consist primarily of transaction-related
costs, such as professional and other fees. Goodwill due to the NatWest Merger
is assumed to be amortized on a straight line basis over 15 years.
(d) In conjunction with the Merger, Fleet and Bancorp took certain actions
to restructure the Combined Balance Sheet through the liquidation of low-return
assets and the reduction of borrowed funds. Since Fleet and Bancorp began
restructuring their respective balance sheets during the first quarter of 1996,
the Unaudited Pro Forma Combined Statements of Income assume different levels of
restructuring for the three months ended March 31, 1996, when compared to the
year ended December 31, 1995. The accompanying Unaudited Pro Forma Combined
Statements of Income assume the reduction of approximately $7.0 billion and
$19.9 billion of assets and an equal amount of borrowed funds at March 31, 1996
and December 31, 1995, respectively. The assets assumed to be reduced include:
approximately $1.8 billion and $13.4 billion of securities with an average yield
of 6.24% and 6.18% for 1996 and 1995, respectively; approximately $2.6 billion
and $3.5 billion of loans, primarily
S-17
<PAGE>
residential real estate, with an average yield of 7.99% and 7.98% for 1996 and
1995, respectively; and approximately $2.6 billion and $3.0 billion in federal
funds sold with an average yield of 4.74% and 5.89% for 1996 and 1995,
respectively. The $7.0 billion and $19.9 billion of borrowed funds assumed to be
reduced include: approximately $5.7 billion and $14.6 billion of short-term
borrowings with an average borrowing rate of 5.30% and 5.69% for 1996 and 1995,
respectively; and $1.3 billion and $5.3 billion of time deposits with an average
borrowing rate of 5.33% and 5.89% for 1996 and 1995, respectively. Asset yields
and funding costs have been estimated based upon historical weighted average
yields and funding costs of similar assets and liabilities in the aggregate and
may not be indicative of the results of operations in the future or which would
have been realized had such transactions been consummated during the period for
which the pro forma information is presented. The balance sheet restructuring
adjustments have been calculated assuming a certain balance sheet size as well
as a certain mix of balance sheet assets (primarily securities and residential
loans) to total assets as of March 31, 1996 and December 31, 1995. As a result,
restructuring assumptions may not be indicative of the results of operations in
the future or that would have been achieved had the NatWest Merger been
consummated at the beginning of the period indicated.
(e) Pursuant to the NatWest Merger Agreement, certain operating subsidiaries
of Bancorp, including its leasing business, and certain assets and liabilities
of NatWest Bank were retained by Bancorp. Pro forma adjustments reflect the
approximate impact of those assets not being purchased and liabilities not being
assumed.
(f) The Fleet/NatWest Pro Forma net income applicable to common shares
reflects the sum of the Fleet Pro Forma net income applicable per common share
and the NatWest Pro Forma net income applicable per common share adjusted for
the purchase accounting, funding, and restructuring adjustments.
(g) The Fleet Pro Forma weighted average shares outstanding for the year
ended December 31, 1995, reflects the effect of reissuing treasury stock in
connection with the NBB Bancorp, Inc. ("NBB") and Northeast Federal Corp.
("Northeast") transactions as if such repurchase of common stock and reissuance
of treasury stock occurred on January 1, 1995.
(h) During 1995, Fleet also completed the merger (the "NBB Merger") of NBB
with and into Fleet, the merger (the "Plaza Merger") of Plaza Home Mortgage
Corp. ("Plaza") with and into Fleet, the merger (the "Northeast Merger") of
Northeast with and into Fleet, the acquisition (the "Barclays Acquisition") of
substantially all of the assets of Barclays Business Finance Division of
Barclays Business Credit, Inc. ("Barclays") by Fleet and Fleet's repurchase (the
"FMG Repurchase") of the publicly-held shares of Fleet's majority-owned
subsidiary, Fleet Mortgage Group, Inc. ("FMG"), each of which was accounted for
by the purchase method of accounting and each of which is included in the
Unaudited Pro Forma Combined Balance Sheet. Pro forma adjustments to the
Unaudited Pro Forma Combined Statements of Income reflect the impact of the NBB
Merger, the Barclays Acquisition, the FMG Repurchase, the Plaza Merger and the
Northeast Merger which were consummated on January 27, 1995, January 31, 1995,
February 28, 1995, March 3, 1995 and June 9, 1995, respectively, as if such
transactions had been consummated on January 1, 1995. Certain acquisitions
completed by NatWest Bank during 1995 have not been reflected in the Unaudited
Pro Forma Combined Financial Statements due to immateriality.
S-18
<PAGE>
CERTAIN TERMS OF THE OFFERED PREFERRED STOCK
The following description of certain terms of the Offered Preferred Stock
supplements, and to the extent inconsistent therewith, replaces, the description
of the general terms and provisions of the Preferred Stock of Fleet set forth
under the heading "Description of Preferred Stock" in the accompanying
Prospectus, to which description reference is hereby made. Certain terms not
defined in this description are defined in the Prospectus.
GENERAL
The Offered Preferred Stock is a series of the Fleet $1 Par Preferred Stock
(as defined in the Prospectus) which may be issued from time to time in one or
more series with such rights, preferences and limitations as are determined by
the Board of Directors of Fleet. The description of certain provisions of the
Offered Preferred Stock set forth below does not purport to be complete and is
subject to and qualified in its entirety by reference to the Certificate of
Designations relating to the Offered Preferred Stock, which Certificate will be
filed as an exhibit to the Form 8-K Current Report to be filed with respect to
this offering.
The Offered Preferred Stock offered hereby is a single series consisting of
200,000 shares. The Offered Preferred Stock will, on the date of original issue,
rank on a parity in all respects with each other outstanding series of the Fleet
$1 Par Preferred Stock (other than the Junior Preferred Stock) and will rank
senior in all respects to the Common Stock and the Junior Preferred Stock. See
"Description of Existing Preferred Stock" in the accompanying Prospectus.
DIVIDENDS
General
Holders of shares of Offered Preferred Stock will be entitled to receive
cash dividends, as, if and when declared by the Board of Directors of Fleet or a
duly authorized committee thereof out of assets of Fleet legally available for
payment. Dividends on the Offered Preferred Stock will not be cumulative.
Dividends will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Dividends will be payable to the holders of record at the close
of business on such record date, not exceeding 30 days (whether or not a
business day) preceding the Dividend Payment Date (as defined below), as shall
be fixed by the Board of Directors of Fleet. A dividend period with respect to a
Dividend Payment Date is the period commencing on the immediately preceding
Dividend Payment Date and ending on the day immediately prior to the next
succeeding Dividend Payment Date. The initial dividend will be $4.26 per share
(equivalent to $0.85 per Depositary Share) and will be payable on January 1,
1997. Thereafter, dividends on the Offered Preferred Stock will be payable
quarterly, as, if and when declared by the Board of Directors of Fleet or a duly
authorized committee thereof on January 1, April 1, July 1 and October 1 of each
year (each a "Dividend Payment Date") at the annual rate of 6.59% of the
liquidation preference per annum or $16.48 per share (equivalent to $3.30 per
Depositary Share) through October 1, 2001. After October 1, 2001, dividends on
the Offered Preferred Stock will be payable quarterly, as, if and when declared
by the Board of Directors or a duly authorized committee thereof on each
Dividend Payment Date at the Applicable Rate from time to time in effect. The
Applicable Rate per annum for any dividend period beginning on or after October
1, 2001 will be equal to .45% plus the highest of the Treasury Bill Rate, the
Ten Year Constant Maturity Rate and the Thirty Year Constant Maturity Rate (each
as defined below under "Adjustable Rate Dividends"), as determined in advance of
such dividend period. The Applicable Rate per annum for any dividend period
beginning on or after October 1, 2001 will not be less than 7.0% nor greater
than 13.0% (without taking into account any adjustments as described below under
"Changes in the Dividends Received Percentage").
S-19
<PAGE>
The rights of holders of Offered Preferred Stock to receive dividends is
noncumulative. Accordingly, if the Board of Directors of Fleet fails to declare
a dividend on the Offered Preferred Stock payable on a Dividend Payment Date,
then holders of the Offered Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such Dividend Payment Date,
and Fleet will have no obligation to pay any dividend accrued for such period,
whether or not dividends on the Offered Preferred Stock are declared payable on
any future Dividend Payment Dates.
Adjustable Rate Dividends
Except as provided below in this paragraph, the "Applicable Rate" per annum
for any dividend period beginning on or after October 1, 2001 will be equal to
.45% plus the Effective Rate (as defined below), but not less than 7.0% nor
greater than 13.0% (without taking into account any adjustments as described
below under "Changes in the Dividends Received Percentage"). The "Effective
Rate" for any dividend period beginning on or after October 1, 2001 will be
equal to the highest of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate and the Thirty Year Constant Maturity Rate (each as defined below) for such
dividend period. In the event that Fleet determines in good faith that for any
reason:
(i) any one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate or the Thirty Year Constant Maturity Rate cannot be determined for any
dividend period, then the Effective Rate for such dividend period will be
equal to the higher of whichever two of such rates can be so determined;
(ii) only one of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate or the Thirty Year Constant Maturity Rate can be determined for any
dividend period, then the Effective Rate for such dividend period will be
equal to whichever such rate can be so determined; or
(iii) none of the Treasury Bill Rate, the Ten Year Constant Maturity
Rate or the Thirty Year Constant Maturity Rate can be determined for any
dividend period, then the Effective Rate for the preceding dividend period
will be continued for such dividend period.
Except as described below in this paragraph, the "Treasury Bill Rate" for
each dividend period will be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate is published during the relevant Calendar
Period (as defined below)) for three-month U.S. Treasury bills, as published
weekly by the Federal Reserve Board (as defined below) during the Calendar
Period immediately preceding the last ten calendar days preceding the dividend
period for which the dividend rate on the Offered Preferred Stock is being
determined. In the event that the Federal Reserve Board does not publish such a
weekly per annum market discount rate during any such Calendar Period, then the
Treasury Bill Rate for such dividend period will be the arithmetic average of
the two most recent weekly per annum market discount rates (or the one weekly
per annum market discount rate, if only one such rate is published during the
relevant Calendar Period) for three-month U.S. Treasury bills, as published
weekly during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by Fleet. In the event that a per annum
market discount rate for three-month U.S. Treasury bills is not published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Treasury Bill Rate
for such dividend period will be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum market
discount rate, if only one such rate is published during the relevant Calendar
Period) for all of the U.S. Treasury bills then having remaining maturities of
not less than 80 nor more than 100 days, as published during such Calendar
Period by the Federal Reserve Board or, if the Federal Reserve Board does not
publish such rates, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by Fleet. In the event that Fleet determines in
good faith that for any reason no such U.S. Treasury Bill Rates are published as
provided above during such Calendar Period, then the Treasury Bill Rate for such
dividend period will be the
S-20
<PAGE>
arithmetic average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
non-interest-bearing U.S. Treasury securities with a remaining maturity of not
less than 80 nor more than 100 days from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to Fleet by at least
three recognized dealers in U.S. Government securities selected by Fleet. In the
event that Fleet determines in good faith that for any reason Fleet cannot
determine the Treasury Bill Rate for any dividend period as provided above in
this paragraph, the Treasury Bill Rate for such dividend period will be the
arithmetic average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
interest-bearing U.S. Treasury securities with a remaining maturity of not less
than 80 nor more than 100 days, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not generally
available) to Fleet by at least three recognized dealers in U.S. Government
securities selected by Fleet.
Except as described below in this paragraph, the "Ten Year Constant Maturity
Rate" for each dividend period will be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (as defined below) (or the one
weekly per annum Ten Year Average Yield, if only one such yield is published
during the relevant Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately preceding the last ten calendar
days preceding the dividend period for which the dividend rate on the Offered
Preferred Stock is being determined. In the event that the Federal Reserve Board
does not publish such a weekly per annum Ten Year Average Yield during such
Calendar Period, then the Ten Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the two most recent weekly per annum
Ten Year Average Yields (or the one weekly per annum Ten Year Average Yield, if
only such yield is published during the relevant Calendar Period), as published
weekly during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by Fleet. In the event that a per annum
Ten Year Average Yield is not published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the two most recent weekly per annum
average yields to maturity (or the one weekly per annum average yield to
maturity, if only one such yield is published during the relevant Calendar
Period) for all of the actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities (as defined below)) then having
remaining maturities of not less than eight nor more than twelve years, as
published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board does not publish such yields, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by Fleet. In the event
that Fleet determines in good faith that for any reason Fleet cannot determine
the Ten Year Constant Maturity Rate for any dividend period as provided above in
this paragraph, then the Ten Year Constant Maturity Rate for such dividend
period will be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than eight nor more than twelve years from the date of each such quotation, as
chosen and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to Fleet by at least
three recognized dealers in U.S. Government securities selected by Fleet.
Except as described below in this paragraph, the "Thirty Year Constant
Maturity Rate" for each dividend period will be the arithmetic average of the
two most recent weekly per annum Thirty Year Average Yields (as defined below)
(or the one weekly per annum Thirty Year Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately preceding the last
ten calendar days preceding the dividend period for which the dividend rate on
the Offered Preferred Stock is being determined. In the event that the Federal
Reserve Board does not publish such a weekly per annum Thirty Year Average
S-21
<PAGE>
Yield during such Calendar Period, then the Thirty Year Constant Maturity Rate
for such dividend period will be the arithmetic average of the two most recent
weekly per annum Thirty Year Average Yields (or the one weekly per annum Thirty
Year Average Yield, if only one such yield is published during the relevant
Calendar Period), as published weekly during such Calendar Period by any Federal
Reserve Bank or by any U.S. Government department or agency selected by Fleet.
In the event that a per annum Thirty Year Average Yield is not published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Thirty Year Constant
Maturity Rate for such dividend period will be the arithmetic average of the two
most recent weekly per annum average yields to maturity (or the one weekly per
annum average yield to maturity, if only one such yield is published during the
relevant Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities) then
having remaining maturities of not less than twenty-eight nor more than thirty
years, as published during such Calendar Period by the Federal Reserve Board or,
if the Federal Reserve Board does not publish such yields, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by Fleet.
In the event that Fleet determines in good faith that for any reason Fleet
cannot determine the Thirty Year Constant Maturity Rate for any dividend period
as provided above in this paragraph, then the Thirty Year Constant Maturity Rate
for such dividend period will be the arithmetic average of the per annum average
yields to maturity based upon the closing bids during such Calendar Period for
each of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity date not
less than twenty-eight nor more than thirty years from the date of such
quotation, as chosen and quoted daily for each business day in New York City (or
less frequently if daily quotations are not generally available) to Fleet by at
least three recognized dealers in U.S. Government securities selected by Fleet.
The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate will each be rounded to the nearest five hundredths
of a percent.
The Applicable Rate with respect to each dividend period beginning on or
after October 1, 2001 will be calculated as promptly as practicable by Fleet
according to the appropriate method described above. Fleet will cause notice of
each Applicable Rate to be enclosed with the dividend payment checks next mailed
to the holders of Offered Preferred Stock. For as long as the Depositary (as
defined herein) is a holder of Offered Preferred Stock, Fleet will advise the
Depositary of each Applicable Rate promptly after its determination. It is
expected that the holders of Depositary Shares will be able to determine such
Applicable Rate thereafter by telephoning Investor Relations at (617) 346-4966.
As used above, the term "Calendar Period" means a period of fourteen
calendar days; the term "Federal Reserve Board" means the Board of Governors of
the Federal Reserve System; the term "Special Securities" means securities which
can, at the option of the holder, be surrendered at face value in payment of any
Federal estate tax or which provide tax benefits to the holder and are priced to
reflect such tax benefits or which were originally issued at a deep or
substantial discount; the term "Ten Year Average Yield" means the average yield
to maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of ten years); and the term "Thirty
Year Average Yield" means the average yield to maturity for actively traded
marketable U.S. Treasury fixed interest rate securities (adjusted to constant
maturities of thirty years.)
Changes in the Dividends Received Percentage
If one or more amendments to the Internal Revenue Code of 1986, as amended
(the "Code"), are enacted that reduce the percentage of the dividends received
deduction (currently 70%) as specified in Section 243(a)(1) of the Code or any
successor provision (the "Dividends Received Percentage"), the amount of each
dividend payable per share of the Offered Preferred Stock for dividend payments
made on or after the date of enactment of such change shall be increased by
multiplying the amount of the dividend payable determined as described above
(before adjustment) by a factor which shall be the
S-22
<PAGE>
number determined in accordance with the following formula (the "DRD Formula"),
and rounding the result to the nearest cent:
1-.35 (1-.70)
----------------
1-.35 (1-DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage applicable to the dividend in question. No amendment to the Code,
other than a change in the percentage of the dividends received deduction set
forth in Section 243(a)(1) of the Code or any successor provision, will give
rise to an adjustment. Notwithstanding the foregoing provisions, in the event
that, with respect to any such amendment, Fleet shall receive either an
unqualified opinion of independent recognized tax counsel or a private letter
ruling or similar form of authorization from the Internal Revenue Service to the
effect that such an amendment would not apply to dividends payable on the
Offered Preferred Stock, then any such amendment shall not result in the
adjustment provided for pursuant to the DRD Formula. Unless the context
otherwise requires, references to dividends in this Prospectus Supplement shall
mean dividends as adjusted by the DRD Formula. Fleet's calculation of the
dividends payable as so adjusted and as certified accurate as to calculation and
reasonable as to method by the independent certified public accountants then
regularly engaged by Fleet shall be final and not subject to review.
If any amendment to the Code which reduces the Dividends Received Percentage
is enacted after a dividend payable on a Dividend Payment Date has been
declared and before it is paid, the amount of dividend payable on such Dividend
Payment Date will not be increased; but instead, an amount, equal to the excess
of (x) the product of the dividends paid by Fleet on such Dividend Payment Date
and the DRD Formula (where the DRP used in the DRD Formula would be equal to the
reduced Dividends Received Percentage) and (y) the dividends paid by Fleet on
such Dividend Payment Date, will be payable to holders of record on the next
succeeding Dividend Payment Date in addition to any other amounts payable on
such date.
In addition, if prior to March 31, 1997, an amendment to the Code is enacted
that reduces the Dividends Received Percentage and such reduction retroactively
applies to a Dividend Payment Date as to which Fleet previously paid dividends
(each an "Affected Dividend Payment Date"), Fleet will pay (if declared)
additional dividends (the "Additional Dividends") on the next succeeding
Dividend Payment Date (or if such amendment is enacted after the dividend
payable on such Dividend Payment Date has been declared, on the second
succeeding Dividend Payment Date following the date of enactment) to holders of
record on such succeeding Dividend Payment Date in an amount equal to the excess
of (x) the product of the dividends paid by Fleet on each Affected Dividend
Payment Date and the DRD Formula (where the DRP used in the DRD Formula would be
equal to the Dividends Received Percentage applied to each Affected Dividend
Payment Date) and (y) the dividends paid by Fleet on each Affected Dividend
Payment Date.
Additional Dividends will not be paid in respect of the enactment of any
amendment to the Code on or after March 31, 1997 which retroactively reduces the
Dividends Received Percentage, or if prior to March 31, 1997, such amendment
would not result in an adjustment due to Fleet having received either an opinion
of counsel or tax ruling referred to in the third preceding paragraph. Fleet
will only make one payment of Additional Dividends.
In the event that the amount of dividend payable per share of the Offered
Preferred Stock shall be adjusted pursuant to the DRD Formula and/or Additional
Dividends are to be paid, Fleet will cause notice of each such adjustment and,
if applicable, any Additional Dividends, to be sent to the holders of the
Offered Preferred Stock.
In the event that the Dividends Received Percentage is reduced to 40% or
less, Fleet may, at its option, redeem the Offered Preferred Stock as a whole
but not in part as described below. See "Redemption".
S-23
<PAGE>
See also "Federal Income Tax Consequences" for a discussion of certain
Proposals (as defined below) to reduce the Dividends Received Percentage.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Fleet, the
holders of shares of Offered Preferred Stock will be entitled to receive out of
the assets of Fleet available for distribution to stockholders, before any
distribution of assets is made on the Common Stock or any other class or series
of stock of Fleet ranking junior to the Offered Preferred Stock upon
liquidation, liquidating distributions in the amount of $250 per share
(equivalent to $50 per Depositary Share), plus an amount equal to the sum of all
accrued and unpaid dividends (whether or not earned or declared) for the
then-current dividend period (without accumulation of accrued and unpaid
dividends for prior dividend periods). See "Description of Preferred
Stock--Liquidation Rights" in the accompanying Prospectus.
REDEMPTION
The Offered Preferred Stock is not redeemable prior to October 1, 2001. On
and after such date, the Offered Preferred Stock (and the Depositary Shares) is
redeemable in cash at the option of Fleet in whole or in part, from time to time
upon not less than 30 nor more than 60 days' notice, at $250 per share
(equivalent to $50 per Depositary Share), plus accrued and unpaid dividends
(whether or not declared) for the then-current dividend period to the redemption
date (without accumulation of accrued and unpaid dividends for prior dividend
periods), including any dividends payable due to changes in the Dividends
Received Percentage and Additional Dividends, if any. The Offered Preferred
Stock will not be entitled to the benefits of any sinking fund. See "Description
of Preferred Stock--Redemption" in the accompanying Prospectus.
Notwithstanding the preceding paragraph, if the Dividends Received
Percentage is equal to or less than 40% and, as a result, the amount of
dividends on the Offered Preferred Stock payable on any Dividend Payment Date
will be or is adjusted upwards as described above under "Changes in the
Dividends Received Percentage", Fleet, at its option, may redeem all, but not
less than all, of the outstanding shares of the Offered Preferred Stock (and the
Depositary Shares), provided, that within sixty days of the date on which an
amendment to the Code is enacted which reduces the Dividends Received Percentage
to 40% or less, Fleet sends notice to holders of the Offered Preferred Stock of
such redemption. Any redemption of the Offered Preferred Stock pursuant to this
paragraph will take place on the date specified in the notice, which shall not
be less than thirty nor more than sixty days' from the date such notice is sent
to holders of the Offered Preferred Stock. Any redemption of the Offered
Preferred Stock in accordance with this paragraph shall be on notice as
aforesaid at the applicable redemption price set forth in the following table,
in each case plus accrued and unpaid dividends for the then-current dividend
period (whether or not declared) thereon to the date fixed for redemption
(without accumulation of accrued and unpaid dividends for prior dividend
periods), including any changes in dividends payable due to changes in the
Dividends Received Percentage and Additional Dividends, if any.
<TABLE>
<CAPTION>
REDEMPTION PRICE
---------------------------------
<S> <C> <C>
REDEMPTION PERIOD PER SHARE PER DEPOSITARY SHARE
- ---------------------------------------------------------------- --------- --------------------
October 1, 1996 to September 30, 1997........................... $262.50 $52.50
October 1, 1997 to September 30, 1998........................... 260.00 52.00
October 1, 1998 to September 30, 1999........................... 257.50 51.50
October 1, 1999 to September 30, 2000........................... 255.00 51.00
October 1, 2000 to September 30, 2001........................... 252.50 50.50
On or after October 1, 2001..................................... 250.00 50.00
</TABLE>
S-24
<PAGE>
Under certain circumstances, Fleet may need the approval of the Federal
Reserve Board prior to exercising its right to redeem shares of Offered
Preferred Stock.
VOTING RIGHTS
Except as indicated below or except as expressly required by applicable law,
the holders of the Offered Preferred Stock will not be entitled to vote.
If the equivalent of six quarterly dividends payable on the Offered
Preferred Stock or any other class or series of preferred stock are in default,
the number of directors of Fleet will be increased by two (without duplication
of any increase made pursuant to the terms of any other series of preferred
stock of Fleet), and the holders of the Offered Preferred Stock, voting as a
single class with the holders of shares of any one or more other series of Fleet
$l Par Preferred Stock and any other class of Fleet preferred stock ranking on a
parity with the Offered Preferred Stock 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 two directors to fill such
newly-created directorships. Such right of the holders of the Offered Preferred
Stock shall continue until dividends on the Offered Preferred Stock have been
paid or declared and set apart for payment regularly for at least one year. 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 Offered Preferred Stock will be required for any
amendment of the Articles (or any certificate supplemental thereto) which will
adversely affect the powers, preferences, privileges or rights of the Offered
Preferred Stock. The affirmative vote or consent of the holders of at least 66
2/3% of the outstanding shares of the Offered Preferred Stock and any other
series of Fleet $1 Par Preferred Stock ranking on a parity with the Offered
Preferred Stock either as to dividends or upon liquidation, voting as a single
class without regard to series, will be required to issue, authorize or increase
the authorized amount of, or issue or authorize any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of stock ranking prior to the Offered Preferred Stock as to dividends or
upon liquidation, or to reclassify any authorized stock of Fleet into such prior
shares, but such vote will not be required for Fleet to take any such actions
with respect to any stock ranking on a parity with or junior to the Offered
Preferred Stock.
CONVERSION RIGHTS
The Offered Preferred Stock is not convertible into shares of any other
class or series of the capital stock of Fleet.
TRANSFER AGENT AND REGISTRAR
The transfer agent, registrar, dividend disbursing agent and redemption
agent for the Depositary Shares and the Offered Preferred Stock is FNB.
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<PAGE>
CERTAIN TERMS OF THE DEPOSITARY SHARES
The following summary description of the Depositary Shares offered hereby
supplements, and to the extent inconsistent therewith, replaces, the description
of the terms of the Depositary Shares set forth under the heading "Description
of Depositary Shares" in the accompanying Prospectus, to which description
reference is hereby made. The summary description of the Depositary Shares set
forth below does not purport to be complete and is subject to and qualified in
its entirety by reference to the Deposit Agreement referred to below which will
be filed as an exhibit to the Form 8-K Current Report to be filed with respect
to this offering.
Each Depositary Share represents a one-fifth interest in a share of Offered
Preferred Stock. The shares of Offered Preferred Stock underlying the Depositary
Shares will be deposited with FNB, as Depositary (the "Depositary"), under a
Deposit Agreement (the "Deposit Agreement") among Fleet, the Depositary and the
holders from time to time of the depositary receipts issued by the Depositary
thereunder (the "Depositary Receipts"). The Depositary Receipts so issued will
evidence the Depositary Shares. Subject to the terms of the Deposit Agreement,
each owner of a Depositary Share will be entitled through the Depositary, in
proportion to the one-fifth interest in a share of Offered Preferred Stock
underlying such Depositary Share, to all rights and preferences of a share of
Offered Preferred Stock (including dividend, voting, redemption and liquidation
rights). Since each share of Offered Preferred Stock entitles the holder thereof
to one vote on matters on which the Offered Preferred Stock is entitled to vote,
each Depositary Share will, in effect, entitle the holder thereof to one-fifth
of a vote thereon, rather than one full vote. See "Certain Terms of the Offered
Preferred Stock--Voting Rights" above and "Description of Depositary Shares" in
the accompanying Prospectus. FNB is a wholly-owned subsidiary of Fleet, with the
depositary operations located at 111 Westminster Street, Providence, Rhode
Island 02903.
DESCRIPTION OF PREFERRED STOCK
GENERAL
This paragraph replaces the first paragraph of the section entitled
"Description of Preferred Stock--General" in the accompanying Prospectus.
Under Fleet's Restated Articles of Incorporation (the "Articles"), the Board
of Directors of Fleet is authorized, without further shareholder action, to
provide for the issuance of up to 16,000,000 shares of preferred stock, $1 par
value ("Fleet $1 Par Preferred Stock"), in one or more series, with such voting
powers, dividends, designations, preferences, rights, qualifications,
limitations and restrictions as shall be set forth in the resolutions providing
for the issuance thereof adopted by the Board of Directors. As of March
31, 1996, Fleet had outstanding seven series of Fleet $1 Par Preferred Stock as
follows: (i) 519,758 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) 478,838 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, (iii) 688,700 shares of Preferred Stock with Cumulative and
Adjustable Dividends (the "Adjustable Preferred"), having a liquidation value of
$50.00 per share, plus accrued and unpaid dividends, were designated and 688,700
were outstanding, (iv) 575,000 shares of 9.30% Cumulative Preferred Stock (the
"9.30% Preferred"), having a liquidation value of $250 per share, plus accrued
and unpaid dividends, were designated and 575,000 were outstanding, (v) 500,000
shares of 9.35% Cumulative Preferred Stock (the "9.35% Preferred"), having a
liquidation value of $250 per share, plus accrued and unpaid dividends, were
designated and 500,000 were outstanding, (vi) 1,265,000 shares of Series V 7.25%
Perpetual Preferred
S-26
<PAGE>
Stock (the "Series V Preferred"), having a liquidation value of $250 per share,
plus accrued and unpaid dividends, were designated and 1,100,000 were issued and
outstanding and (vii) 690,000 shares of Series VI 6.75% Perpetual Preferred
Stock (the "Series VI Preferred"), having a liquidation value of $250 per share,
plus accrued and unpaid dividends, were designated and 600,000 were issued and
outstanding. In addition, as of December 31, 1995, the Board of Directors of
Fleet had established a series of 3,000,000 shares of Cumulative Participating
Junior Preferred Stock, par value $1 per share (the "Junior Preferred Stock")
issuable upon exercise of the preferred share purchase rights described below,
of which no shares were issued and outstanding as of such date. On April 1,
1996, Fleet designated 805,000 shares of Series VII Fixed/Adjustable Rate
Cumulative Preferred Stock (the "Series VII Preferred"), having a liquidation
value of $250 per share, plus accrued and unpaid dividends, of which 700,000
shares are issued and outstanding. Fleet has also called all of the Series III
Preferred for redemption as of July 31, 1996. Each such outstanding series and
class is described below under "Description of Existing Preferred Stock".
DESCRIPTION OF EXISTING PREFERRED STOCK
The following section supplements the description of Fleet's existing
preferred stock set forth under the heading "Description of Existing Preferred
Stock--Fleet $1 Par Preferred Stock" in the accompanying Prospectus.
Series VII Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series VII Preferred
are entitled to receive a distribution of $250 per share, plus accrued and
unpaid dividends, if any.
Through April 1, 2006, the holders of Series VII Preferred are entitled to
receive dividends at the rate of 6.60% per annum computed on the basis of the
issue price thereof of $250 per share, payable quarterly, before any dividend
shall be declared or paid upon the Common Stock or the Junior Preferred Stock.
Thereafter the dividend rate on the Series VII Preferred will be the Applicable
Rate per annum, defined for the Series VII Preferred as the rate per annum for
any dividend period beginning on or after April 1, 2006 equal to .50% plus the
highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Thirty Year Constant Maturity Rate, as determined in advance of such dividend
period. The Applicable Rate per annum for any dividend period beginning on or
after April 1, 2006 will not be less than 7.0% nor greater than 13.0%. The
dividends on Series VII Preferred are cumulative. The amount of dividends
payable in respect of the Series VII Preferred will be adjusted in the event of
certain amendments to the Code, in respect of the dividends received deduction.
The Series VII Preferred is redeemable, in whole or in part, at Fleet's option,
on and after April 1, 2006, at $250 per share, plus accrued and unpaid
dividends, if any. The Series VII Preferred may also be redeemed prior to April
1, 2006, in whole, at the option of Fleet, in the event of certain amendments to
the Code in respect of the dividends received deduction. So long as any shares
of the Series VII Preferred are outstanding, Fleet may not redeem, repurchase or
otherwise acquire any shares of the Common Stock or any other class of Fleet
preferred stock ranking junior to or on a parity with the Series VII Preferred
either as to dividends or upon liquidation unless full cumulative dividends on
all outstanding shares of Series VII Preferred are paid for all past dividend
payment periods. Further, if any dividends on the Series VII Preferred are in
arrears, Fleet may not redeem, purchase or otherwise acquire any shares of the
Series VII Preferred unless all outstanding shares of such class are
simultaneously redeemed, purchased or otherwise acquired, except pursuant to a
purchase or exchange offer made on the same terms to holders of all outstanding
shares of the Series VII Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the Series VII Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series VII Preferred or any
other class or series of preferred stock (other than any other class of
S-27
<PAGE>
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
VII Preferred, voting as a single class with the holders of shares of any one or
more other series of 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 VII 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 VII 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 VII Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series VII
Preferred. The affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of the Series VII Preferred and any other series of
preferred stock ranking on a parity with the Series VII 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 VII Preferred as to dividends or upon liquidation, or to reclassify any
authorized stock of Fleet into such prior shares.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the Offered Preferred Stock represented by
such Depositary Shares.
In general, an actual or constructive distribution that is treated as a
dividend for Federal income tax purposes and that is made to a corporate
shareholder with respect to the Offered Preferred Stock will qualify for the 70%
dividends-received deduction. Holders should note, however, that there can be no
assurance regarding the amount of current or accumulated earnings and profits of
the Company in the future. As a result, there can be no assurance that the
dividends-received deduction will apply to distributions on the Offered
Preferred Stock.
On March 19, 1996, President Clinton released a budget plan that includes
certain tax proposals (the "Proposals") that may affect holders of the Offered
Preferred Stock and Depositary Shares. The Proposals have not yet been
introduced as legislation and there can be no certainty that they will be
enacted into law.
Under the Proposals, the Dividends Received Percentage that is currently
available to U.S. corporate shareholders for certain dividends received from
another corporation in which the shareholder owns less than 20% (by vote and
value) would be reduced from 70% to 50% for dividends received or accrued after
the 30th day after the date of enactment of the Proposals. Additionally, under
current law, the Dividends Received Percentage is allowed to a U.S. corporate
shareholder only if the shareholder satisfies a 46-day holding period for the
dividend-paying stock (or a 91-day period for certain dividends on preferred
stock); for this purpose, days on which the market risk of owning said stock is
reduced through certain hedging transactions may not be counted. The Proposals
provide that a taxpayer is not entitled to a Dividends Received Percentage if
the taxpayer's holding period for the dividend-paying stock is not satisfied
over a period immediately before or immediately after the taxpayer becomes
entitled to receive the dividend. This provision would be effective for
dividends received or accrued after the date of enactment of the Proposals.
A corporate stockholder's liability for alternative minimum tax may be
affected by the portion of dividends received which such corporate stockholder
deducts (pursuant to the dividends-received deduction) in computing taxable
income. This results from the fact that corporate stockholders are required to
increase alternative minimum taxable income by 75% of the excess of current
earnings and profits (with certain adjustments, but determined without regard
to the dividends-received deduction), over alternative minimum taxable income
(determined without regard to this earnings and profits adjustment or the
alternative tax net operating loss deduction, but taking into account the
dividends-received deduction).
S-28
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Fleet has agreed to sell to Lehman Brothers Inc.
(the "Underwriter"), and the Underwriter has agreed to purchase the number of
Depositary Shares, each representing a one-fifth interest in a share of Offered
Preferred Stock, set forth below. In the Underwriting Agreement, the Underwriter
has agreed, subject to the terms and conditions set forth therein, to purchase
all of the Depositary Shares offered hereby if any of the Depositary Shares are
purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Lehman Brothers Inc. ...................................... 1,000,000
---------
</TABLE>
The Underwriter has advised Fleet that it proposes initially to offer the
Depositary Shares to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of $.375 per Depositary Share. The Underwriter
may allow, and such dealers may reallow, a discount not in excess of $.15 per
Depositary Share to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
Fleet has not applied for listing of the Depositary Shares on a national
securities exchange, but has been advised by the Underwriter that it intends to
make a market in the Depositary Shares, as permitted by applicable laws and
regulations. The Underwriter will have no obligation to make a market in the
Depositary Shares, however, and may cease market making activities, if
commenced, at any time. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Depositary Shares.
Fleet has agreed to indemnify the Underwriter against, or contribute to
payments that the Underwriter may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Underwriter may engage in transactions with and perform services for
Fleet in the ordinary course of business.
S-29
<PAGE>
EXPERTS
This section replaces the section entitled "Experts" in the accompanying
Prospectus.
The consolidated financial statements of Fleet appearing in Fleet's Annual
Report on Form 10-K for the year ended December 31, 1995, 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. The report of KPMG Peat Marwick LLP refers to changes in the
methods of accounting for mortgage servicing rights, investments in debt and
equity securities, and income taxes.
The consolidated financial statements of Bancorp appearing in Fleet's
Current Report on Form 8-K dated March 25, 1996, incorporated by reference
herein, have been incorporated by reference herein 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. The report of KPMG
Peat Marwick LLP refers to changes in the methods of accounting for investments
and accounting for postretirement benefits other than pensions.
LEGAL OPINIONS
This section replaces the section entitled "Legal Opinions" in the
accompanying Prospectus.
The validity of the Notes offered hereby will be passed upon for Fleet by
Edwards & Angell, One Hospital Trust Plaza, Providence, Rhode Island 02903, and
for the Underwriters by Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019. V. Duncan Johnson, a partner of Edwards & Angell, is a director
of FNB and beneficially owns 4,052 shares of Common Stock.
S-30
<PAGE>
PROSPECTUS
COMMON STOCK, COMMON STOCK WARRANTS, PREFERRED STOCK, DEPOSITARY SHARES, AND
PREFERRED STOCK WARRANTS
FLEET FINANCIAL GROUP, INC.
Fleet Financial Group, Inc., a Rhode Island corporation ("Fleet"), may offer
from time to time (a) shares of Common Stock, par value $1.00 per share,
including the associated Preferred Share Purchase Rights (the "Common Stock"),
(b) shares of preferred stock, par value $1.00 per share (the "Preferred
Stock"), including, at its option, depositary shares (the "Depositary Shares")
evidenced by depositary receipts (the "Depositary Receipts") each representing a
fractional interest in such Preferred Stock and (c) warrants to purchase Common
Stock (the "Common Stock Warrants") or Preferred Stock (the "Preferred Stock
Warrants", together with the Common Stock Warrants, the "Warrants"), having a
public offering price of up to an aggregate of $1,488,400,000 (or the equivalent
thereof if any of the Securities are denominated in a foreign currency or a
foreign currency unit, such as European Currency Units ("ECU")). The Common
Stock, Preferred Stock, Depositary Shares and Warrants (collectively, the
"Securities") may be offered separately or as units with other securities, in
separate series, in amounts and at prices and terms to be set forth in an
accompanying Prospectus Supplement (a "Prospectus Supplement"). Pursuant to the
terms of the Registration Statement of which this Prospectus constitutes a part,
Fleet may also offer and sell its unsecured debt securities, which may be either
senior or subordinated, or warrants to purchase debt securities (the "Debt
Securities"). Any such Debt Securities will be offered and issued pursuant to
the terms of a separate Prospectus contained in such Registration Statement. The
aggregate amount of Securities that may be offered and sold pursuant hereto is
subject to reduction as the result of the sale of any Debt Securities pursuant
to such separate Prospectus.
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement,
together with the terms of the offering of the Securities and the initial price
and net proceeds to Fleet from the sale thereof. The Prospectus Supplement will
include, with regard to the particular Securities, the following information:
(i) in the case of Preferred Stock, the specific number of shares, title, stated
value and liquidation preference of each share, issuance price, dividend rate
(or method of calculation), dividend payment dates, any redemption or sinking
fund provisions, any conversion or exchange provisions and whether fractional
interests in shares of Preferred Stock will be represented by Depositary Shares;
(ii) in the case of Common Stock, the specific number of shares and issuance
price for such shares; (iii) in the case of Warrants, the duration, offering
price, exercise price and detachability of any such warrants; and (iv) in the
case of all Securities, whether such Securities will be offered separately or as
a unit with other securities. The Prospectus Supplement will also contain
information, where applicable, about certain United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Securities covered by the Prospectus Supplement.
Fleet may sell Securities to or through underwriters or dealers, and also
may sell Securities directly to other purchasers or through agents. See "Plan of
Distribution". If any agents or underwriters are involved in the sale of any of
the Securities, their names, any applicable fee, commission, purchase price or
discount arrangements with them will be set forth, or will be calculable from
the information set forth, in the Prospectus Supplement. Fleet may sell
Securities in an offering within the United States ("United States Offering") or
outside the United States ("International Offering").
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALE OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF
ANY BANK OR NONBANK SUBSIDIARY OF FLEET AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER GOVERNMENT
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is March 25, 1996.
<PAGE>
AVAILABLE INFORMATION
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Proxy statements, reports
and other information concerning Fleet can be inspected and copied at the
Commission's office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's Regional Offices in New York (Suite
1300, Seven World Trade Center, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Common Stock is listed on the New York Stock
Exchange. Reports, proxy material and other information concerning Fleet also
may be inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005. This Prospectus does not contain all the information
set forth in the Registration Statement and Exhibits thereto which Fleet has
filed with the Commission under the Securities Act of 1933, as amended (the
"Act"), which may be obtained from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the prescribed fees, and to which reference is hereby
made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fleet are incorporated
in this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994, as
amended by a Form 10-K/A dated April 28, 1995.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995, and September 30, 1995.
3. Current Reports on Form 8-K dated January 18, 1995, January 27, 1995,
February 20, 1995, February 21, 1995, April 13, 1995, May 11, 1995,
May 17, 1995, June 21, 1995, August 11, 1995, August 23, 1995, October
18, 1995, October 26, 1995, November 15, 1995, November 30, 1995,
December 19, 1995, January 17, 1996, January 19, 1996, February 8,
1996, February 21, 1996 and March 15, 1996.
4. The description of the Common Stock contained in a Registration
Statement filed by Industrial National Corporation (predecessor to
Fleet) on Form 8-B dated May 29, 1970, and any amendment or report
filed for the purpose of updating such description.
5. The description of the Preferred Share Purchase Rights contained in
Fleet's Registration Statement on Form 8-A dated November 29, 1990,
and any amendment or report filed for the purpose of updating such
description.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet pursuant to Sections 13, 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN (OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS). WRITTEN REQUESTS
SHOULD BE MAILED TO INVESTOR RELATIONS DEPARTMENT, FLEET FINANCIAL GROUP, INC.,
ONE FEDERAL STREET, BOSTON, MASSACHUSETTS 02110. TELEPHONE REQUESTS MAY BE
DIRECTED TO (617) 292-2000.
2
<PAGE>
FLEET FINANCIAL GROUP, INC.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At December 31, 1995, Fleet had total assets of
$84.4 billion, total deposits of $57.1 billion and stockholders' equity of $6.4
billion.
Fleet is engaged in a general commercial banking and trust business
throughout the states of New York, Rhode Island, Connecticut, Massachusetts,
Maine, New Hampshire and Florida through its banking subsidiaries, Fleet Bank
("Fleet-NY"); Fleet Bank of New York, National Association ("FBNY"); Fleet
National Bank ("Fleet-RI"); Fleet Bank, National Association ("Fleet-CT"); Fleet
National Bank of Connecticut ("FNB-CT"); Fleet Bank of Massachusetts, National
Association ("Fleet-MA"); Fleet National Bank of Massachusetts ("FNB-MA"); Fleet
Bank of Maine; Fleet Bank-NH and Fleet Bank, F.S.B.
Fleet provides, through its nonbanking subsidiaries, a variety of financial
services, including mortgage banking, asset-based lending, equipment leasing,
consumer finance, real estate financing, securities brokerage services,
investment banking, investment advice and management, data processing and
student loan servicing.
On February 20, 1995, Fleet and Shawmut National Corporation ("Shawmut")
entered into an Agreement and Plan of Merger (the "Merger Agreement") providing
for the merger of Shawmut with and into Fleet (the "Shawmut Merger"). The
Shawmut Merger was consummated on November 30, 1995. For additional information
regarding the Shawmut Merger and Fleet's supplemental consolidated financial
statements giving effect thereto, see Fleet's Current Reports on Form 8-K dated
February 20, 1995, February 21, 1995, April 13, 1995, May 17, 1995, June 21,
1995, August 11, 1995, August 23, 1995, November 15, 1995, November 30, 1995 and
January 19, 1996, which are incorporated by reference herein. Unless otherwise
noted, all of Fleet's historical financial information set forth in this
Prospectus Supplement has been restated to give effect to the Shawmut Merger for
all periods presented..
On December 19, 1995, Fleet entered into an Agreement and Plan of Merger
(the "NatWest Merger Agreement") with National Westminster Bank Plc ("NatWest
Plc") providing for the merger (the "NatWest Merger") of FBNY with and into
NatWest Bank, N.A. ("NatWest Bank"), a national bank operating in New York and
New Jersey. NatWest Bank will continue its existence following the closing under
the name "Fleet Bank of New York, National Association" (the "Surviving Bank").
See "Recent Developments--NatWest Merger". For additional information regarding
the NatWest Merger, including a copy of the NatWest Merger Agreement and certain
historical and pro forma financial information related thereto, see Fleet's
Current Reports on Form 8-K dated December 19, 1995, February 8, 1996, and March
15, 1996, which are incorporated by reference herein.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 292-2000.
REGULATORY MATTERS
General. Fleet is a legal entity separate and distinct from its
subsidiaries. The ability of holders of debt and equity securities of Fleet,
including the holders of the Securities offered hereby, to benefit from the
distribution of assets of any subsidiary upon the liquidation or reorganization
of such subsidiary is subordinate to prior claims of creditors of the subsidiary
(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
3
<PAGE>
bank to Fleet or any nonbanking subsidiary are limited in amount to 10% of the
bank's capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions consistent with
safe and sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at December 31, 1995, Fleet's banking subsidiaries could have
declared additional dividends of approximately $559 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank
Under the policy of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
FIRREA.
As a result of the enactment of the Financial Institutions Reform, Recovery
and Enforcement Act ("FIRREA") on August 9, 1989, any or all of Fleet's
subsidiary banks can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(a) the default of any other of Fleet's subsidiary banks or (b) any assistance
provided by the FDIC to any other of Fleet's subsidiary banks in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur without
regulatory assistance.
FDICIA.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA") 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.
Prompt Corrective Action. The FDICIA 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." 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 December 31, 1995, each of Fleet's
depository institutions was classified as "well-capitalized" under the prompt
corrective action regulations described above.
Brokered Deposits. Under the FDICIA, a depository institution that is
well-capitalized may accept brokered deposits. A depository institution that is
adequately capitalized may accept brokered deposits only if it obtains a waiver
from the FDIC, and may not offer interest rates on deposits "significantly
higher" than those prevailing rate in its market. An undercapitalized depository
institution may not accept brokered deposits. In Fleet's opinion, these
limitations do not have a material effect on Fleet.
4
<PAGE>
Safety and Soundness Standards. The FDICIA, as amended, directs each federal
banking agency to prescribe safety and soundness standards for depository
institutions relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, asset-quality, earnings and stock valuation. Final
interagency regulations to implement these new safety and soundness standards
have recently been adopted by the federal banking agencies. In July 1995, the
federal banking agencies published proposed guidelines establishing safety and
soundness standards concerning asset quality and earnings. If adopted in final
form, these proposed guidelines will be incorporated into the Interagency
Guidelines Establishing Standards for Safety and Soundness. 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 Federal Reserve Board's capital guidelines, 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 cumulative and noncumulative perpetual preferred stock, less
deductible intangibles ("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 average quarterly assets, net of goodwill) of
3% for bank holding companies that meet certain specified criteria, including
that they have the highest regulatory rating. The 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 banking subsidiaries are subject to similar capital requirements
except that preferred stock must be noncumulative to qualify as Tier 1 capital.
The federal banking agencies continue to consider capital requirements
applicable to banking organizations. Effective September 1, 1995, the federal
banking agencies adopted 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 amendments require that banks
effectively measure and monitor their interest rate risk and that they maintain
capital adequate for that risk. Under the amendments, banks with excess interest
rate risk 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 December 31, 1995, Fleet's capital ratios on a historical basis
exceeded all minimum regulatory capital requirements.
Under federal banking laws, 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 and Branching Legislation
On September 29, 1994, President Clinton signed the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Interstate Act") into law.
The Interstate Act facilitates the interstate expansion and consolidation of
banking organizations by permitting (i) beginning one year after
5
<PAGE>
enactment of the legislation, bank holding companies that are adequately
capitalized and managed to acquire banks located in states outside their home
states regardless of whether such acquisitions are authorized under the law of
the host state, (ii) the interstate merger of banks after June 1, 1997, subject
to the right of individual states to "opt in" or "opt out" of this authority
prior to such date, (iii) banks to establish new branches on an interstate basis
provided that such action is specifically authorized by the law of the host
state, (iv) foreign banks to establish, with approval of the appropriate
regulators in the United States, branches outside their home states to the same
extent that national or state banks located in such state would be authorized to
do so and (v) beginning September 29, 1995, banks to receive deposits, renew
time deposits, close loans, service loans and receive payments on loans and
other obligations as agent for any bank or thrift affiliate, whether the
affiliate is located in the same or different state. Connecticut and Rhode
Island, which are two states in which Fleet subsidiaries conduct banking
operations, have adopted legislation opting into the interstate provisions of
the Interstate Act. Fleet has recently filed applications for approval by the
Office of the Comptroller of the Currency to merge its banking subsidiaries in
Connecticut, Massachusetts and Rhode Island in order to achieve cost savings and
to increase convenience to its customers in those states.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of Fleet's subsidiary banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") administered by the
FDIC. The FDIC has adopted regulations establishing a permanent risk-related
deposit insurance assessment system. Under this system, the FDIC places each
insured bank in one of nine risk categories based on (a) the bank's
capitalization and (b) supervisory evaluations provided to the FDIC by the
institution's primary federal regulator. Each insured bank's insurance
assessment rate is then determined by the risk category in which it is
classified by the FDIC. On November 14, 1995, the FDIC voted to decrease
premiums effective January 1, 1996. The decrease lowered the rate of deposit
insurance premiums by $.04 per $100 of deposits for banks in each risk
assessment category. As a result, banks in the highest capital and supervisory
evaluation categories have an assessment rate of $0.00, and pay only the minimum
assessment of $2,000 per year for deposit insurance. Banks in the lowest capital
and supervisory evaluation categories are subject to a rate of $0.27 per $100 of
deposits. There is no guarantee that the rate of deposit insurance premiums will
not increase in the future.
These assessment rates also reflect the amount the FDIC has determined is
necessary to maintain the reserve ratio of BIF of 1.25% of total insured bank
deposits. The FDIC has announced that this reserve ratio was achieved during
1995. However, due primarily to the fact that the reserve ratio of the FDIC's
Savings Association Insurance Fund ("SAIF") is not projected to reach the
required level of 1.25% for several years, the FDIC has made a proposal to
Congress to (1) capitalize the SAIF through a special up-front cash assessment
on SAIF deposits; (2) spread the responsibility for payments to the Financing
Corporation created under Title III of the Competitive Equality Banking Act of
1987 proportionally over all FDIC-insured institutions; and (3) as soon as
practicable, merge the BIF and the SAIF. On November 14, 1995, the Board of
Directors of the FDIC voted to retain the existing assessment rate schedule
applicable to members of the SAIF for the first half of 1996.
Fleet's subsidiary banks do not hold significant amounts of deposits insured
by the SAIF.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND DIVIDENDS
ON PREFERRED STOCK
Fleet's consolidated ratios of earnings to fixed charges and dividends on
preferred stock were as follows for the years and periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges and Dividends on
Preferred Stock:
Excluding interest on deposits...................... 1.74x 2.27x 2.27x 1.82x *
Including interest on deposits...................... 1.33 1.61 1.54 1.25 *
</TABLE>
- ------------
* The sum of fixed charges and dividends on preferred stock exceeded earnings by
$16 million for both the ratio excluding and including interest on deposits
for the year ended December 31, 1991.
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest)
and, where indicated, the pretax equivalents of dividends on preferred stock.
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, Fleet
intends to use the net proceeds from the sale of the Securities for general
corporate purposes, principally to extend credit to, or fund investments in, its
subsidiaries. The precise amounts and timing of extensions of credit to, and
investments in, such subsidiaries will depend upon the subsidiaries' funding
requirements and the availability of other funds. Pending such applications, the
net proceeds may be temporarily invested in marketable securities or applied to
the reduction of Fleet's short-term indebtedness. Based upon the historic and
anticipated future growth of Fleet and the financial needs of its subsidiaries,
Fleet may engage in additional financings of a character and amount to be
determined as the need arises.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating to such series of the Preferred Stock. If so
indicated in the applicable Prospectus Supplement, the terms of any such series
may differ from the terms set forth below. The description of the provisions of
the Preferred Stock set forth below and in any Prospectus Supplement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Certificate of Designation relating to the applicable series of
the Preferred Stock.
GENERAL
Under Fleet's Restated Articles of Incorporation (the "Articles"), the Board
of Directors of Fleet is authorized, without further shareholder action, to
provide for the issuance of up to 16,000,000 shares of preferred stock, $1 par
value ("Fleet $1 Par Preferred Stock"), in one or more series, with such voting
powers, dividends, designations, preferences, rights, qualifications,
limitations and restrictions as shall be set forth in the resolutions providing
for the issuance thereof adopted by the Board of Directors. As of
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<PAGE>
December 31, 1995, Fleet had outstanding five series of Fleet $1 Par Preferred
Stock as follows: (i) 519,758 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) 478,838 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, (iii) 688,700 shares of Preferred Stock with
Cumulative and Adjustable Dividends (the "Adjustable Preferred"), having a
liquidation value of $50.00 per share, plus accrued and unpaid dividends, were
designated and 688,700 were outstanding, (iv) 575,000 shares of 9.30% Cumulative
Preferred Stock (the "9.30% Preferred"), having a liquidation value of $250 per
share, plus accrued and unpaid dividends, were designated and 575,000 were
outstanding and (v) 500,000 shares of 9.35% Cumulative Preferred Stock (the
"9.35% Preferred"), having a liquidation value of $250 per share, plus accrued
and unpaid dividends, were designated and 500,000 were outstanding. In addition,
as of December 31, 1995, the Board of Directors of Fleet had established a
series of 3,000,000 shares of Cumulative Participating Junior Preferred Stock,
par value $1 per share (the "Junior Preferred Stock") issuable upon exercise of
the preferred share purchase rights described below, of which no shares were
issued and outstanding as of such date. On February 21, 1996, Fleet established
two new series of Fleet $1 Par Preferred Stock as follows: (i) 1,265,000 shares
of Series V 7.25% Perpetual Preferred Stock (the "Series V Preferred"), having a
liquidation value of $250 per share, plus accrued and unpaid dividends, were
designated and 1,100,000 were issued and outstanding and (ii) 690,000 shares of
Series VI 6.75% Perpetual Preferred Stock (the "Series VI Preferred"), having a
liquidation value of $250 per share, plus accrued and unpaid dividends, were
designated and 600,000 were issued and outstanding. Each such outstanding series
and class is described below under "Description of Existing Preferred Stock".
Under regulations adopted by the Federal Reserve Board, if the holders of
any series of the Preferred Stock are or become entitled to vote for the
election of directors because dividends on such series are in arrears, such
series may then be deemed a "class of voting securities" and a holder of 25% or
more of such series (or a holder of 5% or more if it otherwise exercises a
"controlling influence" over Fleet) may then be subject to regulation as a bank
holding company in accordance with the Bank Holding Company Act of 1956, as
amended. In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
approval of the Federal Reserve Board to acquire or retain 5% or more of such
series and (ii) any person other than a bank holding company may be required to
obtain the approval of the Federal Reserve Board to acquire or retain 10% or
more of such series.
The Preferred Stock shall have the dividend, liquidation, redemption, voting
and conversion rights set forth below unless otherwise provided in the
Prospectus Supplement relating to a particular series of the Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular series
of the Preferred Stock offered thereby for specific terms, including: (i) the
title, stated value and liquidation preference of such Preferred Stock and the
number of shares offered; (ii) the initial public offering price at which such
Preferred Stock will be issued; (iii) the dividend rate or rates (or method of
calculation), the dividend periods, the dates on which dividends shall be
payable and whether such dividends shall be cumulative or noncumulative and, if
cumulative, the dates from which dividends shall commence to accumulate; (iv)
any redemption or sinking fund provisions; (v) any conversion provisions; (vi)
whether Fleet has elected to offer Depositary Shares as described under
"Description of Depositary Shares"; and (vii) any other rights, preferences,
privileges, limitations and restrictions on such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the Prospectus Supplement relating to a particular
series of the Preferred Stock, each series of the Preferred Stock will rank on a
parity in all respects with the outstanding preferred stock of Fleet and each
other series of the Preferred Stock (except for the Junior Preferred Stock) and
will rank senior in
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<PAGE>
all respects to any outstanding shares of Junior Preferred Stock and the Common
Stock. See "Description of Existing Preferred Stock". The Preferred Stock will
have no preemptive rights to subscribe for any additional securities which may
be issued by Fleet.
Unless otherwise specified in the applicable Prospectus Supplement, the
depositary, transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of the Preferred Stock will be Fleet-RI.
As described under "Description of Depositary Shares", Fleet may, at its
option, with respect to any series of the Preferred Stock, elect to offer
fractional interests in shares of Preferred Stock, and provide for the issuance
by a Depositary (as defined below) of depositary receipts ("Depositary
Receipts") representing depositary shares ("Depositary Shares"), each of which
will represent a fractional interest (to be specified in the applicable
Prospectus Supplement relating to a particular series of the Preferred Stock) in
a share of such series of the Preferred Stock.
DIVIDENDS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of Fleet, out of any funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. Such rates may be fixed or adjustable or both. If adjustable,
the formula or other method used for determining the applicable dividend rate
for each dividend period will be set forth in the applicable Prospectus
Supplement. Dividends will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If the Board
of Directors of Fleet fails to declare a dividend payable on a dividend payment
date on any series of the Preferred Stock for which dividends are noncumulative
("Noncumulative Preferred Stock"), then the holders of such series of the
Preferred Stock will have no right to receive a dividend in respect of the
dividend period ending on such dividend payment date, and Fleet will have no
obligation to pay the dividend accrued for such period, whether or not dividends
on such series are declared payable on any future dividend payment dates.
When dividends are not paid in full upon any series of the Preferred Stock
and any other series of Fleet's preferred stock ranking on a parity as to
dividends with such series of Preferred Stock, all dividends declared upon
shares of such series of Preferred Stock and any other series of Fleet's
preferred stock ranking on a parity as to dividends shall be declared pro rata
so that the amount of dividends declared per share on such series of Preferred
Stock and such other preferred stock shall in all cases bear to each other the
same ratio that accrued dividends per share on the shares of such series of
Preferred Stock (which shall not, if such Preferred Stock is Noncumulative
Preferred Stock, include any accumulation in respect of unpaid dividends for
prior dividend periods) and such other preferred stock bear to each other.
Except as provided in the preceding sentence, unless (i) with respect to any
series of Preferred Stock for which dividends are cumulative ("Cumulative
Preferred Stock"), full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on such Preferred Stock for all dividend periods
terminating on or prior to the date of payment of any such dividends on such
other series of preferred shares of Fleet or (ii) with respect to any series of
Noncumulative Preferred Stock, full dividends for the then-current dividend
period on such Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment, no dividends (other than in Common Stock or another stock ranking
junior to such series of Preferred Stock as to dividends and upon liquidation)
shall be declared or paid or set aside for payment, nor shall any other
distribution be made on the Common Stock or on any other stock of Fleet ranking
junior to or on a parity with such series of Preferred Stock as to dividends or
upon liquidation. Unless
9
<PAGE>
full dividends on the Cumulative Preferred Stock of any series have been paid
for the then-current and all past dividend periods and full dividends for the
then-current dividend period on the Noncumulative Preferred Stock of any series
have been declared and paid or declared and a sum sufficient for the payment
thereof set apart for such payment, no Common Stock or any other stock of Fleet
ranking junior to or on a parity with such series of Preferred Stock as to
dividends or upon liquidation may be redeemed, purchased or otherwise acquired
for any consideration (or any moneys paid to or made available for a sinking
fund for the redemption of any shares of any such stock) by Fleet (except by
conversion into or exchange for stock of Fleet ranking junior to such series of
Preferred Stock as to dividends and upon liquidation).
See "Fleet Financial Group, Inc." with respect to certain limitations on the
ability of Fleet and its banking subsidiaries to pay dividends.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of Fleet, the holders of each series of the Preferred Stock will be
entitled to receive and to be paid out of assets of Fleet available for
distribution to its stockholders, before any payment or distribution is made to
holders of Common Stock or any other class of stock ranking junior to such
series of the Preferred Stock upon liquidation, liquidating distributions in an
amount per share as set forth in the Prospectus Supplement relating to such
series of the Preferred Stock, plus accrued and unpaid dividends (whether or not
earned or declared) for the then-current dividend period and, if such series of
the Preferred Stock is Cumulative Preferred Stock, for all dividend periods
prior thereto. If, upon any voluntary or involuntary dissolution, liquidation or
winding up of Fleet, the amounts payable with respect to the Preferred Stock of
any series and any other shares of stock of Fleet ranking as to any such
distribution on a parity with the Preferred Stock of such series are not paid in
full, the holders of the Preferred Stock of such series and of such other shares
will share ratably in any such distribution of assets of Fleet in proportion to
the full respective distributable amounts to which they are entitled. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of shares of such series of the Preferred Stock will not
be entitled to any further participation in any distribution of assets by Fleet.
Neither the sale of all or substantially all the property or business of Fleet,
nor the merger or consolidation of Fleet into or with any other corporation
shall be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, of Fleet.
REDEMPTION
Any series of the Preferred Stock may be redeemable, in whole or in part, at
the option of Fleet, and may be subject to mandatory redemption pursuant to a
sinking fund or otherwise, in each case upon the terms, at the times and at the
redemption prices set forth in the Prospectus Supplement relating to such series
and subject to the rights of holders of other securities of Fleet. Preferred
Stock redeemed by Fleet will be restored to the status of authorized but
unissued preferred shares.
The Prospectus Supplement relating to a series of the Preferred Stock which
is subject to mandatory redemption will specify the number of shares of such
series of the Preferred Stock which shall be redeemed by Fleet in each year
commencing after a date to be specified, at a redemption price per share and on
one or more dates to be specified, together with an amount equal to all accrued
and unpaid dividends thereon (which shall not, if such Preferred Stock is
Noncumulative Preferred Stock, include any accumulation in respect of unpaid
dividends for prior dividend periods) to the date of redemption. The redemption
price may be payable in cash or other property, as specified in the Prospectus
Supplement relating to such series of Preferred Stock.
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<PAGE>
If fewer than all of the outstanding shares of any series of the Preferred
Stock are to be redeemed, the number of shares to be redeemed will be determined
by the Board of Directors of Fleet and such shares shall be redeemed pro rata
from the holders of record of such shares in proportion to the number of such
shares held by such holders (with adjustments to avoid redemption of fractional
shares) or by lot in a manner determined by the Board of Directors of Fleet.
Notwithstanding the foregoing, if any dividends, including any accumulation
on shares of Cumulative Preferred Stock, of any series are in arrears, no shares
of Preferred Stock of such series shall be redeemed unless all outstanding
shares of Preferred Stock of such series are simultaneously redeemed, and Fleet
shall not purchase or otherwise acquire any shares of Preferred Stock of such
series; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Preferred Stock of such series pursuant to a purchase
or exchange offer made on the same terms to all holders of such series of the
Preferred Stock.
Notice of redemption shall be given by mailing the same to each record
holder of the shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption thereof, to the respective addresses of
such holders as the same shall appear on the stock books of Fleet. Each such
notice shall state: (i) the redemption date; (ii) the number of shares and
series of the Preferred Stock to be redeemed; (iii) the redemption price; (iv)
the place or places where certificates for such shares of Preferred Stock are to
be surrendered for payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue or accumulate on such redemption
date; and (vi) the date upon which the holders' conversion rights, if any, as to
such shares, shall terminate. If fewer than all shares of any series of the
Preferred Stock held by any holder are to be redeemed, the notice mailed to such
holder shall also specify the number of shares to be redeemed from such holder.
If notice of redemption has been given, dividends on the shares of Preferred
Stock so called for redemption shall cease to accrue or accumulate from and
after the redemption date for the shares of the series of the Preferred Stock
called for redemption (unless default shall be made by Fleet in providing money
for the payment of the redemption price of the shares so called for redemption),
and such shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of Fleet (except the right to receive the
redemption price) shall cease. Upon surrender in accordance with such notice of
the certificates representing any shares of the Preferred Stock so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors of Fleet
shall so require and the notice shall so state), the redemption price set forth
above shall be paid out of funds provided by Fleet. If fewer than all of the
shares of the Preferred Stock represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will not be entitled to vote.
In the event Fleet issues shares of a series of the Preferred Stock, each share
will be entitled to one vote on matters on which holders of such series of the
Preferred Stock are entitled to vote. However, as more fully described below
under "Description of Depositary Shares", if Fleet elects to provide for the
issuance of Depositary Shares representing interests in a fraction of a share of
a series of the Preferred Stock, the holders of each such Depositary Share will,
in effect, be entitled through the Depositary to such fraction of a vote, rather
than a full vote. Since each full share of any series of the Preferred Stock
shall be entitled to one vote, the voting power of such series, on matters on
which holders of such series and holders of any other series of the Preferred
Stock or another series of preferred stock of Fleet are entitled to vote as a
single class, will depend on the number of shares in such series, not the
aggregate stated value, liquidation preference or initial offering price of the
shares of such series of the Preferred Stock.
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<PAGE>
If the equivalent of six quarterly dividends payable on any series of the
Preferred Stock or any other class or series of preferred stock are in default,
the number of directors of Fleet will be increased by two (without duplication
of any increase made pursuant to the terms of any other series of preferred
stock of Fleet), and the holders of all outstanding series of preferred stock,
including holders of any series of the Preferred Stock, voting as a single class
without regard to series, will be entitled at Fleet's next annual meeting of
stockholders (and at each subsequent annual meeting of stockholders) to elect
such additional two directors until full cumulative dividends for all
then-current and past dividend periods on all preferred shares of Fleet so
entitled to vote, including any shares of the Preferred Stock, have been paid or
declared and set apart for payment. Any such elected directors shall serve until
Fleet's next annual meeting of stockholders or until their respective successors
shall be elected and qualified. If a vacancy in the office of such director
shall occur during the continuance of a default in dividends on preferred shares
of Fleet so entitled to vote prior to the end of the term of such director, such
vacancy shall be filled for the unexpired term of such director by the remaining
director elected by the preferred shares so entitled to vote.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Preferred Stock of any series at the time outstanding,
voting as a class, will be required for any amendment of the Articles (or any
certificate supplemental thereto) which will adversely affect the powers,
preferences, privileges or rights of such series of Preferred Stock. The
affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of any series of Preferred Stock and any other series of
preferred stock of Fleet ranking on a parity with any series of Preferred Stock
as to dividends or upon liquidation, voting as a single class without regard to
series, will be required to issue, authorize or increase the authorized amount
of, or issue or authorize any obligation or security convertible into or
evidencing a right to purchase, any additional class or series of stock ranking
prior to any series of Preferred Stock as to dividends or upon liquidation, but
such vote will not be required to take any such actions with respect to any
stock ranking on a parity with or junior to the Preferred Stock of such series.
Subject to such affirmative vote or consent of the holders of the
outstanding shares of the Preferred Stock of any series, Fleet may, by
resolution of its Board of Directors or as otherwise permitted by law, from time
to time alter or change the preferences, rights or powers of the Preferred Stock
of such series. The holders of the Preferred Stock of such series shall not be
entitled to participate in any such vote if, at or prior to the time when any
such alteration or change is to take effect, provision is made for the
redemption of all the Preferred Stock of such series at the time outstanding.
Nothing in this section shall be taken to require a class vote or consent in
connection with the authorization, designation, increase or issuance of any
shares of any class or series (including additional Preferred Stock of any
series) ranking junior to or on a parity with the Preferred Stock of such series
as to dividends and liquidation rights or in connection with the authorization,
designation, increase or issuance of any bonds, mortgages, debentures or other
obligations of Fleet.
CONVERSION RIGHTS
The Prospectus Supplement relating to any series of the Preferred Stock that
is convertible will state the terms on which shares of such series are
convertible into Common Stock of Fleet or another series of Preferred Stock.
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DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement (as defined below) and of the Depositary
Shares and Depositary Receipts does not purport to be complete and is subject to
and qualified in its entirety by reference to the Deposit Agreement and
Depositary Receipts relating to the applicable series of the Preferred Stock,
forms of which will be filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
GENERAL
Fleet may, at its option, elect to offer fractional interests in shares of
Preferred Stock, rather than full shares of Preferred Stock. In the event such
option is exercised, Fleet will provide for the issuance by a Depositary of
Depositary Receipts evidencing Depositary Shares, each of which will represent a
fractional interest (to be set forth in the Prospectus Supplement relating to a
particular series of the Preferred Stock) in a share of a particular series of
the Preferred Stock as described below.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between Fleet and a bank or trust company selected by Fleet (which
may be affiliated with Fleet) having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000 (the
"Depositary"). The Prospectus Supplement relating to a series of Depositary
Shares will set forth the name and address of the Depositary. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositary for shares of
the Preferred Stock will be Fleet-RI. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, in proportion to
the applicable fractional interest in a share of Preferred Stock underlying such
Depositary Share, to all the rights and preferences of the Preferred Stock
underlying such Depositary Share (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Pending the preparation of definitive
engraved Depositary Receipts, the Depositary may, upon the written order of
Fleet, issue temporary Depositary Receipts substantially identical to, and
entitling the holders thereof to all the rights pertaining to, the definitive
Depositary Receipts but not in definitive form. Definitive Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at Fleet's
expense.
Upon surrender of Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption) and upon payment of the charges provided in the Deposit Agreement
and subject to the terms thereof, a holder of Depositary Shares is entitled to
have the Depositary deliver to, or upon the order of, such holder the whole
shares of Preferred Stock underlying, and any money or other property
represented by, the Depositary Shares evidenced by the surrendered Depositary
Receipts.
Partial shares of Preferred Stock will not be issued. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of Preferred Stock to be withdrawn, the Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. Holders of shares of Preferred Stock thus withdrawn will
not thereafter be entitled to deposit such shares under the Deposit Agreement or
to receive Depositary Shares therefor. Fleet does not expect that there will be
any public trading market for the Preferred Stock except as represented by the
Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in
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proportion to the numbers of such Depositary Shares owned by such holders on the
relevant record date. The Depositary shall distribute only such amount, however,
as can be distributed without attributing to any holder of Depositary Shares a
fraction of one cent, and any balance not so distributed shall be added to and
treated as part of the next sum received by the Depositary for distribution to
record holders of Depositary Shares.
In the event of a distribution other than in cash (including, without
limitation, distributions resulting from stock dividends, splits or plans of
reorganization), the Depositary will distribute property received by it to the
record holders of Depositary Shares entitled thereto, unless the Depositary
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of Fleet, sell such property and distribute
the net proceeds from such sale to such holders.
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by Fleet to holders of the
Preferred Stock shall be made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If any Preferred Stock deposited under a Deposit Agreement is subject to
redemption, the related Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever Fleet redeems shares of Preferred Stock held by
the Depositary, the Depositary will redeem as of the same redemption date the
number of Depositary Shares relating to shares of Preferred Stock so redeemed.
If less than all the Depositary Shares are to be redeemed, the Depositary Shares
to be redeemed will be selected pro rata or by lot as may be determined by the
Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and
Fleet will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock.
TAXATION
Owners of Depositary Shares will be treated for Federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares and, accordingly, will be entitled
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to take into account for Federal income tax purposes income and deductions to
which they would be entitled if they were holders of such Preferred Stock. In
addition, (i) no gain or loss will be recognized for Federal income tax purposes
upon the withdrawal of Preferred Stock in exchange for Depositary Shares as
provided in the Deposit Agreement, (ii) the tax basis of each share of Preferred
Stock to an exchanging owner of Depositary Shares will, upon such exchange, be
the same as the aggregate tax basis of the Depositary Shares exchanged therefor
and (iii) the holding period for shares of the Preferred Stock in the hands of
an exchanging owner of Depositary Shares who held such Depositary Shares as a
capital asset at the time of the exchange thereof for Preferred Stock will
include the period during which such person owned such Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between Fleet and the Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Depositary Shares then outstanding. A Deposit
Agreement may be terminated by Fleet or the Depositary only if (i) all
outstanding Depositary Shares relating thereto have been redeemed or (ii) there
has been a final distribution in respect of the Preferred Stock of the relevant
series in connection with any liquidation, dissolution or winding up of Fleet
and such distribution has been distributed to the holders of the related
Depositary Shares.
CHARGES OF DEPOSITARY
Fleet will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. Fleet will pay charges
of the Depositary in connection with the initial deposit of the Preferred Stock
and any redemption of the Preferred Stock. Holders of Depositary Shares will pay
other transfer and other taxes and governmental charges and such other charges
as are expressly provided in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all notices,
reports and other communications (including proxy solicitation materials) from
Fleet which are delivered to the Depositary and which Fleet is required to
furnish to the holders of the Preferred Stock.
Neither the Depositary nor Fleet will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Fleet and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, on information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
Any record holder of Depositary Shares who has been a holder for at least
six months or who holds at least five percent of the outstanding shares of
capital stock of Fleet will be entitled to inspect the transfer books relating
to the Depositary Shares and the list of record holders of Depositary Shares
upon certification to the Depositary that such holder is acting in good faith
and that such inspection is for a proper purpose.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Fleet notice of the
Depositary's election to do so, and Fleet may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.
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DESCRIPTION OF EXISTING PREFERRED STOCK
GENERAL
The following summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Rhode Island Business Corporation
Act (the "RIBCA") and the Articles and By-laws of Fleet.
FLEET $1 PAR PREFERRED STOCK
Fleet $1 Par Preferred Stock (which includes the Preferred Stock), is
issuable in series, with such relative rights, preferences and limitations of
each series (including dividend rights, dividend rate, liquidation preference,
voting rights, conversion rights and terms of redemption (including sinking fund
provisions), redemption price or prices and the number of shares constituting
any series) as may be fixed by the Board of Directors.
Series III Preferred. In the event of the dissolution, liquidation or
winding up of Fleet, holders of shares of the outstanding Series III Preferred
are entitled to receive a distribution of $100 per share, plus accrued and
unpaid dividends, if any.
The holders of Series III Preferred are entitled to receive dividends at the
rate of 10.12% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Common Stock or the Junior Preferred Stock. The dividends on Series III
Preferred are cumulative. The Series III Preferred is redeemable, in whole or in
part, at Fleet's option, on and after June 1, 1996, commencing at $105.06 per
share and declining ratably on June 1 of each year to $100 per share on or after
June 1, 2001, plus, in each case, accrued and unpaid dividends, if any.
Except as indicated below or except as expressly required by applicable law,
the holders of the Series III Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series III Preferred or any
other class or series of preferred stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) are in default, the number of directors of Fleet will be
increased by two (without duplication of any increase made pursuant to the terms
of any other series of preferred stock of Fleet), and the holders of the Series
III Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series III Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect two directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
III Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series III Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series III
Preferred. The affirmative vote or consent of the holders of at least 66 2/3% of
the outstanding shares of the Series III Preferred and any other series of Fleet
$1 Par Preferred Stock ranking on a parity with the Series III Preferred either
as to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the authorized amount of, or
issue or authorize any obligation or security convertible into or evidencing a
right to purchase, any additional class or series of
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stock ranking prior to the Series III Preferred as to dividends or upon
liquidation, or to reclassify any authorized stock of Fleet into such prior
shares.
Series IV Preferred. In the event of the dissolution, liquidation or winding
up of Fleet, holders of shares of the outstanding Series IV Preferred are
entitled to receive a distribution of $100 per share, plus accrued and unpaid
dividends, if any.
The holders of Series IV Preferred are entitled to receive dividends at the
rate of 9.375% per annum computed on the basis of the issue price thereof of
$100 per share, payable quarterly, before any dividend shall be declared or paid
upon the Common Stock or the Junior Preferred Stock. The dividends on Series IV
Preferred are cumulative. The Series IV Preferred is redeemable, in whole or in
part, at Fleet's option, on and after December 1, 1996, at $100 per share, plus
accrued and unpaid dividends, if any.
Except as indicated below or except as expressly required by applicable law,
the holders of the Series IV Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series IV Preferred or any
other class or series of preferred stock are in default (other than any other
class of preferred stock expressly entitled to elect additional directors by a
separate and distinct vote), the number of directors of Fleet will be increased
by two (without duplication of any increase made pursuant to the terms of any
other series of preferred stock of Fleet), and the holders of the Series IV
Preferred, voting as a single class with the holders of shares of any one or
more other series of Fleet $1 Par Preferred Stock (other than any other class of
preferred stock expressly entitled to elect additional directors by a separate
and distinct vote) and any other class of Fleet preferred stock ranking on a
parity with the Series IV Preferred either as to dividends or distribution of
assets and upon which like voting rights have been conferred and are
exercisable, will be entitled to elect such directors to fill each of the two
newly-created directorships. Such right shall continue until full cumulative
dividends for all past dividend periods on all preferred shares of Fleet (other
than any other class of preferred stock expressly entitled to elect additional
directors by a separate and distinct vote), including any shares of the Series
IV Preferred, have been paid or declared and set apart for payment. Any such
elected directors shall serve until Fleet's next annual meeting of stockholders
(notwithstanding that prior to the end of such term the dividend default shall
cease to exist) or until their respective successors shall be elected and
qualify.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series IV Preferred.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series IV Preferred and any other series of Fleet $1
Par Preferred Stock ranking on a parity with the Series IV Preferred either as
to dividends or upon liquidation, voting as a single class without regard to
series, is required to issue, authorize or increase the 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.
Adjustable Preferred. Dividends on the outstanding Adjustable Preferred are
cumulative. The dividend rate on the Adjustable Preferred is established
quarterly at the rate of 2.25% below the highest of (a) the three-month U.S.
Treasury bill rate, (b) the U.S. Treasury ten-year constant maturity rate and
(c) the U.S. Treasury twenty-year constant maturity rate, in each case as
defined in the terms of the Adjustable Preferred, but may not be less than 6%
per annum or greater than 12% per annum. So long as any shares of the Adjustable
Preferred are outstanding, Fleet may not redeem, repurchase or otherwise acquire
any shares of the Common Stock or any other class of Fleet stock ranking junior
to or on a parity with the Adjustable Preferred either as to dividends or upon
liquidation unless full cumulative dividends on all outstanding shares of
Adjustable Preferred are paid for all past dividend payment periods. Further, if
any dividends on the Adjustable Preferred are in arrears, Fleet may not
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<PAGE>
redeem, purchase or otherwise acquire any shares of the Adjustable Preferred
unless all outstanding shares of such class are simultaneously redeemed,
purchased or otherwise acquired, except pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of the Adjustable
Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the Adjustable Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Adjustable Preferred are in
default, the number of directors of Fleet will be increased by two and the
holders of all outstanding classes and series of Fleet preferred stock, voting
as a single class without regard to series, will be entitled to elect two
additional directors until all accrued dividends have been paid. In addition,
the vote of the holders of two-thirds of the Adjustable Preferred voting as a
separate class, is required in order to amend or alter the Articles in a manner
which would adversely affect the preferences, rights, powers or privileges of
the Adjustable Preferred; and the vote of two-thirds of the Adjustable
Preferred, and all of the classes and series of Fleet preferred stock ranking on
a parity, either as to dividends or upon liquidation, with the Adjustable
Preferred, voting together as a single class, is required in order to reclassify
stock of Fleet into stock ranking prior, either as to dividends or upon
liquidation, to the Adjustable Preferred, or to authorize the creation or
issuance of stock, or of a security convertible into or evidencing a right to
purchase stock, ranking prior, either as to dividends or upon liquidation, to
the Adjustable Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the Adjustable Preferred are entitled to receive $50.00 per share
plus accrued and unpaid dividends.
Shares of Adjustable Preferred may be redeemed at the option of Fleet at a
redemption price per share of $50.00 per share, plus accrued and unpaid
dividends.
9.30% Preferred. Dividends on the outstanding 9.30% Preferred are cumulative
and are payable quarterly at the rate of 9.30% per annum. So long as any shares
of the 9.30% Preferred are outstanding, Fleet may not redeem, repurchase or
otherwise acquire any shares of the Common Stock or any other class of Fleet
stock ranking junior to or on a parity with the 9.30% Preferred either as to
dividends or upon liquidation unless full cumulative dividends on all
outstanding shares of 9.30% Preferred are paid for all past dividend payment
periods. Further, if any dividends on the 9.30% Preferred are in arrears, Fleet
may not redeem, purchase or otherwise acquire any shares of the 9.30% Preferred
unless all outstanding shares of such class are simultaneously redeemed,
purchased or otherwise acquired, except pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of the 9.30%
Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the 9.30% Preferred are not entitled to vote. If the equivalent
of six quarterly dividends payable on any of the 9.30% Preferred are in default,
the number of directors of Fleet will be increased by two and the holders of all
outstanding classes and series of Fleet preferred stock, voting as a single
class without regard to series, will be entitled to elect two additional
directors until all accrued dividends have been paid. In addition, the vote of
the holders of two-thirds of the 9.30% Preferred, voting as a separate class, is
required in order to amend or alter the Articles in a manner which would
adversely affect the preferences, rights, powers or privileges of the 9.30%
Preferred; and the vote of two-thirds of the 9.30% Preferred, and all of the
classes and series of Fleet preferred stock ranking on a parity, either as to
dividends or upon liquidation, with the 9.30% Preferred, voting together as a
single class, is required in order to reclassify stock of Fleet into stock
ranking prior, either as to dividends or upon liquidation, to the 9.30%
Preferred, or to authorize the creation or issuance of stock, or of a security
convertible into or evidencing a right to purchase stock, ranking prior, either
as to dividends or upon liquidation, to the 9.30% Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the 9.30% Preferred are entitled to receive $250.00 per share plus
accrued and unpaid dividends.
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The 9.30% Preferred is redeemable on at least 30 but not more than 60 days
notice, at the option of Fleet, as a whole or in part, at any time on and after
October 15, 1997 at a redemption price equal to $250 per share plus accrued and
unpaid dividends.
9.35% Preferred. Dividends on the outstanding 9.35% Preferred are cumulative
and are payable quarterly at the rate of 9.35% per annum. So long as any shares
of the 9.35% Preferred are outstanding, Fleet may not redeem, repurchase or
otherwise acquire any shares of the Common Stock or any other class of Fleet
stock ranking junior to or on a parity with the Fleet 9.35% Preferred either as
to dividends or upon liquidation unless full cumulative dividends on all
outstanding shares of 9.35% Preferred are paid for all past dividend payment
periods. Further, if any dividends on the 9.35% Preferred are in arrears, Fleet
may not redeem, purchase or otherwise acquire any shares of the 9.35% Preferred
unless all outstanding shares of such class are simultaneously redeemed,
purchased or otherwise acquired, except pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of the 9.35%
Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the 9.35% Preferred are not entitled to vote. If the equivalent
of six quarterly dividends payable on any of the 9.35% Preferred are in default,
the number of directors of Fleet will be increased by two and the holders of all
outstanding classes and series of Fleet preferred stock, voting as a single
class without regard to series, will be entitled to elect two additional
directors until all accrued dividends have been paid. In addition, the vote of
the holders of two-thirds of the 9.35% Preferred, voting as a separate class, is
required in order to amend or alter the Articles in a manner which would
adversely affect the preferences, rights, powers or privileges of the 9.35%
Preferred; and the vote of two-thirds of the 9.35% Preferred, and all of the
classes and series of Fleet preferred stock ranking on a parity, either as to
dividends or upon liquidation, with the 9.35% Preferred, voting together as a
single class, is required in order to reclassify stock of Fleet into stock
ranking prior, either as to dividends or upon liquidation, to the 9.35%
Preferred, or to authorize the creation or issuance of stock, or of a security
convertible into or evidencing a right to purchase stock, ranking prior, either
as to dividends or upon liquidation, to the 9.35% Preferred.
In the event of any liquidation, dissolution or winding up of Fleet, the
holders of the 9.35% Preferred are entitled to receive $250.00 per share plus
accrued and unpaid dividends.
The 9.35% Preferred is redeemable on at least 30 but not more than 60 days
notice, at the option of Fleet, as a whole or in part, at any time on and after
January 15, 2000 at a redemption price equal to $250 per share plus accrued and
unpaid dividends.
Series V Preferred. In the event of the dissolution, liquidation or winding
up of Fleet, holders of shares of the outstanding Series V Preferred are
entitled to receive a distribution of $250 per share, plus accrued and unpaid
dividends, if any.
The holders of Series V Preferred are entitled to receive dividends at the
rate of 7.25% per annum computed on the basis of the issue price thereof of $250
per share, payable quarterly, before any dividend shall be declared or paid upon
the Common Stock or the Junior Preferred Stock. The dividends on Series V
Preferred are cumulative. The Series V Preferred is redeemable, in whole or in
part, at Fleet's option, on and after April 15, 2001, at $250 per share, plus
accrued and unpaid dividends, if any. So long as any shares of the Series V
Preferred are outstanding, Fleet may not redeem, repurchase or otherwise acquire
any shares of the Common Stock or any other class of Fleet preferred stock
ranking junior to or on a parity with the Series V Preferred either as to
dividends or upon liquidation unless full cumulative dividends on all
outstanding shares of Series V Preferred are paid for all past dividend payment
periods. Further, if any dividends on the Series V Preferred are in arrears,
Fleet may not redeem, purchase or otherwise acquire any shares of the Series V
Preferred unless all outstanding shares of such class are simultaneously
redeemed, purchased or otherwise acquired, except pursuant to a
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purchase or exchange offer made on the same terms to holders of all outstanding
shares of the Series V Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the Series V Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series V 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
V Preferred, voting as a single class with the holders of shares of any one or
more other series of 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 V 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 V 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 V Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series V Preferred.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series V Preferred and any other series of preferred
stock ranking on a parity with the Series V 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 V Preferred
as to dividends or upon liquidation, or to reclassify any authorized stock of
Fleet into such prior shares.
Series VI Preferred. In the event of the dissolution, liquidation or winding
up of Fleet, holders of shares of the outstanding Series VI Preferred are
entitled to receive a distribution of $250 per share, plus accrued and unpaid
dividends, if any.
The holders of Series VI Preferred are entitled to receive dividends at the
rate of 6.75% per annum computed on the basis of the issue price thereof of $250
per share, payable quarterly, before any dividend shall be declared or paid upon
the Common Stock or the Junior Preferred Stock. The dividends on Series VI
Preferred are cumulative. The amount of dividends payable in respect of the
Series VI Preferred will be adjusted in the event of certain amendments to the
Internal Revenue Code of 1986, as amended (the "Code"), in respect of the
dividends received deduction. The Series VI Preferred is redeemable, in whole or
in part, at Fleet's option, on and after April 15, 2006, at $250 per share, plus
accrued and unpaid dividends, if any. The Series VI Preferred may also be
redeemed prior to April 15, 2006, in whole, at the option of Fleet, in the event
of certain amendments to the Code in respect of the dividends received
deduction. So long as any shares of the Series VI Preferred are outstanding,
Fleet may not redeem, repurchase or otherwise acquire any shares of the Common
Stock or any other class of Fleet preferred stock ranking junior to or on a
parity with the Series VI Preferred either as to dividends or upon liquidation
unless full cumulative dividends on all outstanding shares of Series VI
Preferred are paid for all past dividend payment periods. Further, if any
dividends on the Series VI Preferred are in arrears, Fleet may not redeem,
purchase or otherwise acquire any shares of the Series VI Preferred unless all
outstanding shares of such class are simultaneously redeemed, purchased or
otherwise
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acquired, except pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of the Series VI Preferred.
Except as indicated below or except as expressly required by applicable law,
the holders of the Series VI Preferred are not entitled to vote. If the
equivalent of six quarterly dividends payable on the Series VI 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
VI Preferred, voting as a single class with the holders of shares of any one or
more other series of 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 VI 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 VI 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 VI Preferred is required for any amendment of
the Articles (or any certificate supplemental thereto) which will adversely
affect the powers, preferences, privileges or rights of the Series VI Preferred.
The affirmative vote or consent of the holders of at least 66 2/3% of the
outstanding shares of the Series VI Preferred and any other series of preferred
stock ranking on a parity with the Series VI 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 VI Preferred
as to dividends or upon liquidation, or to reclassify any authorized stock of
Fleet into such prior shares.
Junior Preferred Stock. The Junior Preferred Stock will be issued upon the
exercise of a Right (as hereinafter defined) issued to holders of the Common
Stock. As of the date of this Prospectus, there were 3,000,000 shares of Fleet
$1 Par Preferred Stock reserved for issuance upon the exercise of the Rights.
See "--Description of Common Stock--Preferred Share Purchase Rights". Shares of
Junior Preferred Stock purchasable upon exercise of the Rights will rank junior
to the Fleet $1 Par Preferred Stock and the Fleet $20 Par Adjustable Rate
Preferred Stock and will not be redeemable. Each share of Junior Preferred Stock
will, subject to the rights of such senior securities of Fleet, be entitled to a
preferential cumulative quarterly dividend payment equal to the greater of $1.00
per share or, subject to certain adjustments, 100 times the dividend declared
per share of Common Stock. Upon the liquidation, dissolution or winding up of
Fleet, the holders of the Junior Preferred Stock will, subject to the rights of
such senior securities, be entitled to a preferential liquidation payment equal
to the greater of $1.00 per share plus all accrued and unpaid dividends or 100
times the payment made per share of Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Junior Preferred Stock will, subject to the rights of
such senior securities, be entitled to receive 100 times the amount received per
share of Common Stock. Each share of Junior Preferred Stock will have 100 votes,
voting together with the Common Stock. The rights of the Junior Preferred Stock
are protected by customary antidilution provisions.
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DESCRIPTION OF COMMON STOCK
GENERAL
Holders of the Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of any funds legally available
therefor, and are entitled upon liquidation, after claims of creditors and
preferences of the Preferred Stock, and any other class or series of preferred
stock at the time outstanding, to receive pro rata the net assets of Fleet.
Dividends are paid on the Common Stock only if all dividends on the outstanding
series of Preferred Stock, and any other class or series of preferred stock at
the time outstanding, for the then-current period and, in the case of Cumulative
Preferred Stock, all prior periods have been paid or provided for.
Fleet $1 Par Preferred Stock and any other class of preferred stock have, or
upon issuance will have, preference over the Common Stock with respect to the
payment of dividends and the distribution of assets in the event of liquidation
or dissolution of Fleet and such other preferences as may be fixed by the Board
of Directors.
The holders of the Common Stock are entitled to one vote for each share held
and are vested with all of the voting power except as the Board of Directors has
provided with respect to outstanding preferred stock or may provide, in the
future, with respect to Preferred Stock or any other class or series of
preferred stock which it may hereafter authorize. See "Description of Existing
Preferred Stock". Shares of Common Stock are not redeemable and have no
subscription, conversion or preemptive rights.
The affirmative vote of not less than 80% of Fleet's outstanding voting
stock, voting separately as a class, is required for certain Business
Combinations between Fleet and/or its subsidiaries and persons owning 10% or
more of its voting stock. See "Selected Provisions in the Articles of Fleet;
Business Combinations with Related Persons".
The Common Stock is listed on the New York Stock Exchange. The outstanding
shares of Common Stock are, and the shares to be issued in connection with any
offering hereunder will be, validly issued, fully paid and non-assessable and
the holders thereof are not, and will not be, subject to any liability as
stockholders.
TRANSFER AGENT AND REGISTRAR.
The Transfer Agent and Registrar for the Common Stock is Fleet-RI.
RESTRICTIONS ON OWNERSHIP.
The Bank Holding Company Act (the "BHCA") requires any "bank holding
company", as such term is defined therein, to obtain the approval of the Federal
Reserve Board prior to the acquisition of 5% or more of the Common Stock. Any
person other than a bank holding company is required to obtain prior approval of
the Federal Reserve Board to acquire 10% or more of the Common Stock under the
Change in Bank Control Act (the "CBCA"). Any holder of 25% or more of the Common
Stock (or a holder of 5% or more if such holder otherwise exercises a
"controlling influence" over Fleet) is subject to regulation as a bank holding
company under the BHCA.
PREFERRED SHARE PURCHASE RIGHTS
On November 21, 1990, the Board of Directors of Fleet declared a dividend of
one Preferred Share Purchase Right (a "Right") for each outstanding share of
Common Stock of Fleet. The dividend was paid on December 4, 1990 to the
shareholders of record on that date. Each Right, when exercisable, will entitle
the registered holder to purchase from Fleet one one-hundredth of a share of
Junior Preferred Stock at an exercise price of $50 per one one-hundredth of a
share of Junior Preferred Stock (the "Purchase Price"), subject to certain
adjustments. Until the Distribution Date (as hereinafter defined), Fleet will
issue one Right with each share of Common Stock. The following summary does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the
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Rights Agreement dated as of November 21, 1990 between Fleet and Fleet-RI, as
Rights Agent, a copy of which was filed as an exhibit to the Registration
Statement on Form 8-A filed with the Commission on December 4, 1990, 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 and a Third Amendment to Rights Agreement dated February 20, 1995, a
copy of which was filed as an exhibit to Fleet's Form 8-A/A dated March 17, 1995
(as amended, the "Rights Agreement").
The Rights are not represented by separate certificates and are not
exercisable or transferable apart from the Common Stock until the earlier to
occur of (i) the tenth day after a public announcement by Fleet (x) that a
person or group of affiliated or associated persons has acquired, or obtained
the right to acquire, beneficial ownership (as defined in the Rights Agreement)
of 10% or more (or, in the case of an institutional investor, acting in the
ordinary course of business and not with the purpose of changing or influencing
control of Fleet (a "Qualifying Investor"), 15% or more) of the outstanding
shares of Common Stock, (y) that any person or group of affiliated or associated
persons, which beneficially owned 10% or more (or, in the case of a Qualifying
Investor, 15% or more) of the outstanding shares on the Declaration Date, or
which acquired beneficial ownership of 10% or more (or, in the case of a
Qualifying Investor, 15% or more) of the outstanding shares as a result of any
repurchase of shares by Fleet, thereafter acquired beneficial ownership of
additional shares constituting 1% or more of the outstanding shares, or (z) that
any person who was a Qualifying Investor owning 10% or more of the outstanding
shares of Common Stock ceased to qualify as a Qualifying Investor and thereafter
acquired beneficial ownership of additional shares constituting 1% or more of
the outstanding shares (any person described in clause (x), (y) or (z) being an
"Acquiring Person"); and (ii) the tenth day (or such later day as may be
determined by action of the Board of Directors of Fleet prior to such time as
any person becomes an Acquiring Person) after the date of the commencement of a
tender or exchange offer by any person (other than Fleet) to acquire (when added
to any shares as to which such person is the beneficial owner immediately prior
to such commencement) beneficial ownership of 10% or more of the issued and
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"). On March 28, 1991 and July 12, 1991, the Rights Agreement
was amended to change the definition of an "Acquiring Person" (i) to permit the
sale of Fleet's Dual Convertible Preferred Stock and issuance of rights to
purchase Common Stock to the partnerships which purchased such stock and (ii) to
permit the Board of Directors of Fleet to determine that a person who would
otherwise be an "Acquiring Person" had become such inadvertently and therefore
allow divestiture of a sufficient number of shares to avoid such designation.
The Rights Agreement was further amended on February 20, 1995 to amend the
definition of "Acquiring Person to permit the execution and delivery by Fleet of
the Shawmut Merger Agreement and the option agreement in connection therewith
without Shawmut becoming an Acquiring Person under the Rights Agreement.
The Rights will first become exercisable on the Distribution Date and could
then begin trading separately from the Common Stock. The Rights will expire on
November 21, 2000 (the "Final Expiration Date"), unless the Final Expiration
Date is extended or unless the Rights are earlier redeemed by Fleet.
In the event any person becomes an Acquiring Person, the Rights would give
holders (other than such Acquiring Person and its transferees) the right to buy,
for the Purchase Price, Common Stock (or, under certain circumstances, cash,
property or other debt or equity securities ("Common Stock equivalents")) with a
market value of twice the Purchase Price. In addition, at any time after any
person becomes an Acquiring Person, the Board may, at its option and in lieu of
any transaction described in the preceding sentence, exchange the outstanding
and exercisable Rights (other than Rights held by such Acquiring Person and its
transferees) for shares of Common Stock or Common Stock equivalents at an
exchange ratio of one share of Common Stock per Right, subject to certain
adjustments.
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In any merger or consolidation involving Fleet after the Rights become
exercisable, each Right will be converted into the right to purchase, for the
Purchase Price, common stock of the surviving corporation (which may be Fleet)
with a market value of twice the Purchase Price. The Board of Directors of Fleet
may amend the Rights Agreement or redeem the Rights for $.01 each at any time
until there is an Acquiring Person. Thereafter, the Board of Directors can amend
the Rights Agreement only to eliminate ambiguities or to provide additional
benefits to the holders of the Rights (other than the Acquiring Person).
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of Fleet, including, without limitation, the right to vote or
to receive dividends.
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights, and
the number of outstanding Rights, are subject to customary antidilution
adjustments.
The Rights have certain "anti-takeover" effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Fleet on
terms not approved by the Board of Directors of Fleet, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors prior to the time that there is an Acquiring Person (at
which time holders of the Rights become entitled to exercise their Rights for
shares of Common Stock at one-half the market price), since until such time the
Rights generally may be redeemed by the Board of Directors of Fleet at $.01 per
Right.
SELECTED PROVISIONS IN THE ARTICLES OF FLEET
BUSINESS COMBINATIONS WITH RELATED PERSONS
The Articles require that neither Fleet nor any of its subsidiaries may
engage in a Business Combination with a Related Person unless such Business
Combination (a) was approved by an 80% vote of the Board of Directors prior to
the time the Related Person became such; (b) is approved by a vote of 80% of the
Continuing Directors and a majority of the entire Board and certain conditions
as to price and procedure are complied with; or (c) is approved by a vote of 80%
of Fleet's outstanding shares of Fleet capital stock entitled to vote generally
in the election of directors, voting as a single class. Under the Articles, a
"Business Combination" includes any merger or consolidation of Fleet or any of
its subsidiaries into or with a Related Person or any of its affiliates or
associates; any sale, exchange, lease, transfer or other disposition to or with
a Related Person of all, substantially all or any Substantial Part (defined as
assets having a value of more than 5% of the total consolidated assets of Fleet)
of the assets of Fleet or any of its subsidiaries; any purchase, exchange, lease
or other acquisition by Fleet or any of its subsidiaries of all or any
Substantial Part of the assets or business of a Related Person or any of its
affiliates or associates; any reclassification of securities, recapitalization
or other transaction which has the effect, directly or indirectly, of increasing
the proportionate amount of voting shares of Fleet or any subsidiary which are
beneficially owned by a Related Person; and the acquisition by a Related Person
of beneficial ownership of voting securities, securities convertible into voting
securities or any rights, warrants or options to acquire voting securities of a
subsidiary of Fleet; a "Related Person" includes any person who is the
beneficial owner of 10% or more of Fleet's voting shares prior to the
consummation of a Business Combination or any person who is an affiliate of
Fleet and was the beneficial owner of 10% or more of Fleet's voting shares at
any time within the five years preceding the date on which a binding agreement
providing for a Business Combination is authorized by the Board of Directors;
and the "Continuing Directors" are those individuals who were members of the
Fleet Board of Directors prior to the time a Related Person became the
beneficial owner of 10% or more of Fleet's voting stock or those individuals
designated as Continuing Directors (prior to their initial election as
directors) by a majority of the then Continuing Directors. To amend these
provisions, a super majority vote (80%) of the Board of Directors, a majority
vote of the Continuing Directors and a super majority vote (80%) of the
stockholders is required unless the amendment is recommended to the stockholders
by a majority of the
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Board of Directors and not less than 80% of the Continuing Directors, in which
event only the vote provided under Rhode Island law is required.
DIRECTORS
The Articles contain a number of additional provisions which are intended to
delay an insurgent's ability to take control of Fleet's Board of Directors, even
after an insurgent has obtained majority ownership of the Common Stock. The
Articles provide for a classified Board of Directors, consisting of three
classes of directors serving staggered three-year terms. Directors of Fleet may
only be removed for cause and only (a) by a vote of the holders of 80% of the
outstanding shares of Fleet stock entitled to vote thereon voting separately as
a class at a meeting called for that purpose or (b) by a vote of a majority of
the Continuing Directors and a majority of the Board of Directors as constituted
at that time. Vacancies on the Board of Directors, whether due to resignation,
death, incapacity or an increase in the number of directors, may only be filled
by the Board, acting by a vote of 80% of the directors then in office. The
Articles provide that the number of directors of Fleet (exclusive of directors
to be elected by the holders of any one or more series of the Preferred Stock
voting separately as a class or classes) that shall constitute the Board of
Directors shall be 13, unless otherwise determined by resolution adopted by a
super majority vote (80%) of the Board of Directors and a majority of the
Continuing Directors. Pursuant to such an adopted resolution, the number of
directors that may serve is currently fixed at 15, except in the event that
quarterly dividends are not paid on non-voting Preferred Stock as described
above, and may only be increased by the affirmative vote of 80% of the Board of
Directors and a majority of the Continuing Directors. A super majority vote
(80%) of the Board of Directors, a majority vote of the Continuing Directors and
a super majority vote (80%) of the outstanding shares of Fleet stock entitled to
vote thereon voting separately as a class are required to amend any of these
provisions.
DESCRIPTION OF WARRANTS
Fleet may issue Warrants for the purchase of Preferred Stock or Common
Stock. Warrants may be issued independently or together with Preferred Stock or
Common Stock offered by any Prospectus Supplement and may be attached to or
separate from any such Securities. Each series of Warrants will be issued under
a separate warrant agreement (a "Warrant Agreement") to be entered into between
Fleet and a bank or trust company, as warrant agent (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection with the
Warrants and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants. The following summary
of certain provisions of the Warrants does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of the
Warrant Agreement that will be filed with the Commission in connection with the
offering of such Warrants.
The Prospectus Supplement relating to any particular issue of Preferred
Stock Warrants or Common Stock Warrants will describe the terms of such
Warrants, including the following: (a) the title of such Warrants; (b) the
offering price for such Warrants, if any; (c) the aggregate number of such
Warrants; (d) the designation and terms of the Common Stock or Preferred Stock
purchasable upon exercise of such Warrants; (e) if applicable, the designation
and terms of the Securities with which such Warrants are issued and the number
of such Warrants issued with each such Security; (f) if applicable, the date
from and after which such Warrants and any Securities issued therewith will be
separately transferable; (g) the number of shares of Common Stock or Preferred
Stock purchasable upon exercise of a Warrant and the price at which such shares
may be purchased upon exercise; (h) the date on which the right to exercise such
Warrants shall commence and the date on which such right shall expire; (i) if
applicable, the minimum or maximum amount of such Warrants that may be exercised
at any one time; (j) information with respect to book-entry procedures, if any;
(k) the currency or currency units in which the offering price, if any, and the
exercise price are payable; (l) if applicable, a discussion of material United
States federal income tax considerations; (m) the antidilution provisions of
such Warrants, if any; (n) the redemption or call provisions, if any, applicable
to such Warrants; and (o) any additional terms of the Warrants, including terms,
procedures, and limitations relating to the exchange and exercise of such
Warrants.
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PLAN OF DISTRIBUTION
Fleet may sell Securities to or through underwriters, and also may sell
Securities through agents (which are registered broker-dealers or banks) which
may be affiliates.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities. Certain
restrictions relating to the distribution of Securities in connection with an
International Offering will be set forth in the applicable Prospectus
Supplement.
In connection with the sale of Securities, underwriters or agents acting on
Fleet's behalf may receive compensation from Fleet or from purchasers of
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers and agents that
participate in the distribution of Securities may be deemed to be underwriters
under the Act and any discounts or commissions received by them and any profits
on the resale of Securities by them may be deemed to be underwriting discounts
and commissions under the Act. Any such underwriter will be identified and any
such compensation will be described in the applicable Prospectus Supplement.
Under agreements which may be entered into by Fleet, underwriters, dealers
and agents who participate in the distribution of Securities may be entitled to
indemnification by Fleet against certain liabilities, including liabilities
under the Act, and to certain rights of contribution from Fleet.
If so indicated in the applicable Prospectus Supplement, Fleet will
authorize underwriters or other persons acting as Fleet's agents to solicit
offers by certain institutions to purchase Preferred Stock, Depositary Shares or
Warrants from Fleet pursuant to delayed delivery contracts providing for payment
and delivery on a future date or dates stated in the applicable Prospectus
Supplement. Each such contract will be for an amount not less than, and the
aggregate amount of such securities sold pursuant to such contracts shall not be
less nor more than, the respective amounts stated in the applicable Prospectus
Supplement. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases
such institutions must be approved by Fleet. The obligations of any purchaser
under any such contract will not be subject to any condition except that (1) the
purchase of the Preferred Stock, Depositary Shares or Warrants shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and (2) if the Preferred Stock, Depositary Shares or
Warrants are also being sold to underwriters acting as principals for their own
account, the underwriters shall have purchased such Preferred Stock, Depositary
Shares or Warrants not sold for delayed delivery. The underwriters and such
other persons will not have any responsibility in respect of the validity or
performance of such contracts.
Certain of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services, for, Fleet
or one or more of its affiliates in the ordinary course of business.
EXPERTS
The consolidated financial statements of Fleet appearing in Fleet's Current
Report on Form 8-K dated March 15, 1996, 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. The report of KPMG
Peat Marwick LLP refers to changes in the methods of accounting for mortgage
servicing rights, investments in debt and equity securities, and income taxes.
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The consolidated financial statements of National Westminster Bancorp, Inc.
appearing in Fleet's Current Report on Form 8-K dated February 8, 1996,
incorporated by reference herein, have been incorporated by reference herein 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. The report of KPMG Peat Marwick LLP refers to changes in the methods
of accounting for investments and accounting for postretirement benefits other
than pensions.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for Fleet by
Edwards & Angell, One Hospital Trust Plaza, Providence, Rhode Island 02903, and
for the Underwriters by Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019. V. Duncan Johnson, a partner of Edwards & Angell, is a director
of Fleet-RI, Fleet-CT, Fleet-MA, FNB-CT and FNB-MA and beneficially owns 4,052
shares of Common Stock.
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NO DEALER, SALESMAN OR OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR 1,000,000 DEPOSITARY SHARES
TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS [FLEET FINANCIAL GROUP LOGO]
SUPPLEMENT OR THE PROSPECTUS IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS. IF GIVEN OR FLEET FINANCIAL
MADE, SUCH INFORMATION OR REPRESENTATIONS GROUP, INC.
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY FLEET OR BY THE UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER AND THEREUNDER SHALL UNDER EACH REPRESENTING A ONE-FIFTH
ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT INTEREST IN A SHARE OF
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SERIES VIII FIXED/ADJUSTABLE
FLEET SINCE THE DATE HEREOF. THIS PROSPECTUS RATE NONCUMULATIVE
SUPPLEMENT AND THE PROSPECTUS DOES NOT PREFERRED STOCK
CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
-------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by ---------------------
Reference........................... S-2 PROSPECTUS SUPPLEMENT
Fleet Financial Group, Inc............ S-3 July 26, 1996
Consolidated Ratios of Earnings to ---------------------
Fixed Charges and Dividends on
Preferred Stock..................... S-4
Recent Developments................... S-4
Selected Consolidated Financial
Data.................................. S-6
Unaudited Pro Forma Combined Financial
Statements............................ S-8
Notes to Unaudited Pro Forma Combined
Financial Statements.................. S-16
Certain Terms of the Offered Preferred
Stock................................. S-19
Certain Terms of the Depositary
Shares................................ S-26
Description of Preferred Stock........ S-26
Description of Existing Preferred
Stock................................. S-27
Federal Income Tax Consequences....... S-28
Underwriting.......................... S-29
Experts............................... S-30
Legal Opinions........................ S-30
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference............................. 2
Fleet Financial Group, Inc. .......... 3
Consolidated Ratios of Earnings to
Fixed Charges and Dividends on
Preferred Stock..................... 7
Use of Proceeds....................... 7
Description of Preferred Stock........ 7
Description of Depositary Shares...... 13
Description of Existing Preferred
Stock................................. 16
Description of Common Stock........... 22
Selected Provisions in the Articles of
Fleet................................. 24 LEHMAN BROTHERS
Description of Warrants............... 25
Plan of Distribution.................. 26
Experts............................... 26
Legal Opinions........................ 27
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