<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 23, 1996
[LOGO]
$150,000,000
STATE STREET BOSTON CORPORATION
7.35% NOTES DUE JUNE 15, 2026
----------------
Interest on the Notes is payable on June 15 and December 15 of each year,
commencing December 15, 1996. The Notes will be represented by a Global Note
registered in the name of the nominee of The Depository Trust Company, as
depositary. Beneficial interests in the Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary
and its participants. Except as described under "Description of the Notes --
Book-Entry Procedures," Notes in definitive form will not be issued.
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in the Depositary's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Notes will therefore
settle in immediately available funds. All payments of principal and interest
will be made by State Street in immediately available funds. See "Description
of the Notes."
The Notes are not redeemable at the option of State Street prior to maturity
and no sinking fund is provided for the Notes. The registered holder of each
Note may elect to have that Note, or any portion of the principal amount
thereof that is a multiple of $1,000, redeemed on June 15, 2006, at 100
percent of the principal amount thereof together with accrued interest to June
15, 2006. Such election, which is irrevocable when made, must be made within
the period commencing on April 15, 2006, and ending at the close of business
on May 15, 2006. See "Description of the Notes."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------
THE NOTES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS BUT
ARE UNSECURED DEBT OBLIGATIONS OF STATE STREET BOSTON CORPORATION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
----------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Note......................... 100% 0.60% 99.40%
Total.............................. $150,000,000 $900,000 $149,100,000
</TABLE>
- --------
(1) Plus accrued interest from June 15, 1996 .
(2) The Company has agreed to indemnify Goldman, Sachs & Co. against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $175,000 payable by the Company.
----------------
The Notes offered hereby are offered by Goldman, Sachs & Co., subject to
receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that the Notes will be ready for delivery
in book-entry form only through the facilities of the Depositary on or about
June 21, 1996, against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
----------------
The date of this Prospectus Supplement is June 18, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, GOLDMAN, SACHS & CO. MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the Prospectus as the "Offered Securities" and herein
as the "Notes") supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the
Securities set forth in the accompanying Prospectus, to which description
reference is hereby made. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Senior Indenture, as hereinafter
defined.
GENERAL
The Notes are Senior Securities. The Notes will be issued under a Senior
Indenture, dated as of August 2, 1993 (the "Senior Indenture"), between State
Street Boston Corporation ("State Street" or the "Company") and The First
National Bank of Boston, as initial trustee, as succeeded by Fleet National
Bank, as successor trustee (the "Trustee"). A copy of the Senior Indenture has
been filed with the Commission as Exhibit 4 to State Street's Current Report
on Form 8-K dated October 8, 1993, and its terms are more fully described in
the accompanying Prospectus.
The Notes will be unsecured and will rank pari passu with all other senior
indebtedness of State Street. There is no limitation on the issuance of
additional senior indebtedness by State Street. As of May 31, 1996, the
aggregate amount of senior indebtedness of State Street outstanding was
approximately $219 million.
The Notes will be limited to $150,000,000 aggregate principal amount. The
Notes will be denominated in U.S. dollars and payments of principal of, and
interest on, the Notes will be in U.S. dollars. The Notes will be issued only
in fully registered form, without coupons, in denominations of $1,000 and
integral multiples thereof. Upon issuance, the Notes will be Book-Entry Notes
represented by a Global Note registered in the name of the nominee of The
Depository Trust Company, as depositary (the "Depositary") . See "Book-Entry
Procedures" below. State Street Bank and Trust Company, a wholly owned
subsidiary of State Street, will serve as Security Registrar and Paying Agent
(the "Paying Agent") for the Notes.
The Notes will mature on June 15, 2026 and will bear interest at the rate
per annum shown on the front cover of this Prospectus Supplement from June 15,
1996 or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable on June 15 and December 15 of each year,
commencing December 15, 1996, to the persons in whose names the Notes are
registered at the close of business on the June 1 or December 1, as the case
may be, next preceding such Interest Payment Date.
Payment of the principal of, and interest on, each Global Note representing
Book-Entry Notes will be made on each Interest Payment Date or at maturity by
the Paying Agent by wire transfer of immediately available funds to a separate
account of the Depositary or its nominee at the Federal Reserve Bank of New
York, provided that, in the case of payments made at maturity of such Global
Note, the Global Note is presented to the Paying Agent in time for the Paying
Agent to make such payments in accordance with its normal procedures. Payment
to beneficial owners of Book-Entry Notes will be made through the Depositary
and its participants. See "Book-Entry Procedures."
The Notes will not be redeemable by State Street prior to their Stated
Maturity and will not be entitled to the benefit of a sinking fund. State
Street may at any time repurchase Notes at any price in the open market or
otherwise. Notes so purchased by State Street may be held or resold or, at the
S-2
<PAGE>
discretion of State Street, may be surrendered to the Trustee for
cancellation. The provisions described under "Description of Debt
Securities -- Defeasance" in the accompanying Prospectus are applicable to the
Notes.
Settlement for the Notes will be made in immediately available funds. The
Notes will be in the Same Day Funds Settlement System at the Depositary, and,
to the extent that secondary market trading in the Notes is effected through
the facilities of such depositary, such trades will be settled in immediately
available funds.
REDEMPTION AT THE OPTION OF HOLDER
The Notes may be redeemed on June 15, 2006, at the option of the registered
holder, at 100 percent of their principal amount together with accrued
interest to June 15, 2006. In order for a holder to exercise this option,
State Street must receive at its office or agency in Boston, Massachusetts,
during the period beginning on April 15, 2006, and ending at 5:00 PM (Eastern
time) on May 15, 2006 (or, if May 15, 2006, is not a Business Day, the next
succeeding Business Day), the Global Note with the form entitled "Option to
Elect Repayment" on the reverse of the Global Note duly completed. Any such
notice received by State Street during the period beginning on April 15, 2006
and ending at 5:00 PM (Eastern time) on May 15, 2006, shall be irrevocable.
The redemption option may be exercised by the holder of a Note for less than
the entire principal amount of the Note held by such holder, so long as the
principal amount that is to be redeemed is equal to $1,000 or an integral
multiple of $1,000. Each Person owning a beneficial interest in a Note must
rely on the procedures of the Depositary, and, if such Person is not an Agent
Member, as hereinafter defined, of the Depositary, on the procedures of the
Agent Member through which such Person owns its interest, to exercise its
right of redemption. See "Book-Entry Procedures." All questions as to the
validity, form, eligibility (including time of receipt) and acceptance of any
Note for redemption will be determined by State Street, whose determination
will be final and binding.
BOOK-ENTRY PROCEDURES
Upon issuance, all Notes will be represented by a fully registered Global
Note (the "Global Note"). The Global Note will be deposited with, or on behalf
of, the Depositary and registered in the name of the Depositary or a nominee
thereof. Unless and until it is exchanged in whole or in part for Notes in
definitive form, the Global Note may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary.
The Depositary has advised State Street as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934 (the "Exchange Act"). The Depositary holds securities
that its participants ("Participants") deposit with the Depositary. The
Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
The Depositary is owned by a number of its Direct Participants, including
State Street Bank and Trust Company, and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary system is also available to others such
as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly. The Rules applicable to the Depositary and its
Participants are on file with the Securities and Exchange Commission.
S-3
<PAGE>
Ownership of beneficial interests in the Notes will be limited to Persons
that have accounts with the Depositary ("Agent Members") or Persons that may
hold interests through Agent Members. The Depositary has advised State Street
that, upon the issuance of the Global Note representing the Notes, the
Depositary will credit, on its book-entry registration and transfer system,
the Agent Members' accounts with the respective principal amounts of the Notes
beneficially owned by such Agent Members. Ownership of beneficial interests in
the Global Note will be shown on, and the transfer of such ownership interests
will be effected only through, records maintained by the Depositary (with
respect to interests of Agent Members), and on the records of Agent Members
(with respect to interests of Persons holding through Agent Members). The laws
of some states may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to own, transfer or pledge beneficial interests in the
Global Note.
So long as the Depositary, or its nominee, is the registered owner of the
Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Notes represented by such Global
Note for all purposes under the Senior Indenture. Except as provided below,
owners of beneficial interests in the Global Note will not be entitled to have
the Notes represented by such Global Note registered in their names, will not
receive or be entitled to receive physical delivery of the Notes in definitive
form and will not be considered the owners or Holders thereof under the Senior
Indenture. Accordingly, each Person owning a beneficial interest in the Global
Note must rely on the procedures of the Depositary and, if such Person is not
an Agent Member, on the procedures of the Agent Member through which such
Person owns its interest, to exercise any rights of a Holder under the Senior
Indenture. State Street understands that under existing industry practices, in
the event that State Street requests any action of Holders or that an owner of
a beneficial interest in such Global Note desires to give or take any action
which a Holder is entitled to give or take under the Senior Indenture, the
Depositary would authorize the Agent Members holding the relevant beneficial
interests to give or take such action, and such Agent Members would authorize
beneficial owners owning through such Agent Members to give or take such
action or would otherwise act upon the instructions of beneficial owners
holding through them.
Payments of principal of, and interest on, Notes registered in the name of
the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the Holder of the Global Note representing such Notes.
None of State Street, the Trustee or any other agent of State Street or agent
of the Trustee will have any responsibility or liability for any aspects of
the records relating to or payments made on account of beneficial ownership
interests or for supervising or reviewing any records relating to such
beneficial ownership interests. State Street expects that the Depositary, upon
receipt of any payment of principal or interest in respect of the Global Note,
will credit the accounts of the Agent Members with payment in amounts
proportionate to their respective beneficial interests in such Global Note as
shown on the records of the Depositary. State Street also expects that
payments by Agent Members to owners of beneficial interests in the Global Note
will be governed by standing customer instructions and customary practices, as
is now the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
Agent Members.
If (x) the Depositary is at any time unwilling or unable to continue as
Depositary or the Depositary ceases to be a clearing agency registered under
the Exchange Act, (y) an Event of Default has occurred and is continuing with
respect to the Notes, or (z) there shall exist such circumstances, if any, in
addition to or in lieu of the foregoing as have been specified for this
purpose as contemplated by the Senior Indenture, the Global Note will be
transferable or exchangeable for Notes in definitive form of like tenor and of
an equal aggregate principal amount, in denominations of $1,000 and integral
multiples thereof. Such definitive Notes shall be registered in such name or
names as the Depositary shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by the Depositary from
Agent Members with respect to ownership of beneficial interests in such Global
Note.
S-4
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by State Street from the sale of the Notes
will be added to the general funds of State Street and will be available for
general corporate purposes, including investments in, or extensions of credit
to, its bank and non-bank subsidiaries. Pending specific allocation, the net
proceeds will be invested temporarily in short-term securities. State Street
expects that it will engage from time to time in additional financings of a
character and in an amount to be determined.
CERTAIN ADDITIONAL INFORMATION
The Board of Directors of the Company has previously authorized the
repurchase of up to three million shares of State Street's common stock. As of
March 31, 1996, two million shares were purchased under this authorization.
From March 31, 1996 through the date hereof, an additional 338,100 shares were
purchased under this authorization. Management of the Company is considering
recommending to the Board of Directors of the Company for their approval an
increase in the number of shares of State Street common stock that are
authorized to be purchased.
The following table sets forth the consolidated ratios of earnings to fixed
charges for State Street for each of the five years in the five-year period
ended December 31, 1995 and for the three month period ended March 31, 1996.
For purposes of computing these ratios, earnings represent net income, plus
total taxes based on income, plus fixed charges. Fixed charges include
interest expense (ratios are presented both excluding and including interest
on deposits), the estimated interest component of net rental expense and
amortization of debt expense.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------ -----------------------------
1996 1995 1994 1993 1992 1991
------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Including interest on deposits...... 1.51x 1.41x 1.63x 1.74x 1.60x 1.49x
Excluding interest on deposits...... 2.04x 1.75x 2.29x 2.59x 2.43x 2.31x
</TABLE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
State Street has agreed to sell to Goldman, Sachs & Co. ("Goldman Sachs"), and
Goldman Sachs have agreed to purchase, the entire principal amount of the
Notes.
Under the terms and conditions of the Underwriting Agreement, Goldman Sachs
are committed to take and pay for all of the Notes, if any are taken.
Goldman Sachs propose to offer the Notes in part directly to the public at
the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 0.35% of the principal amount of the Notes. Goldman Sachs
may allow, and such dealers may reallow, a concession not to exceed 0.25% of
the principal amount of the Notes to certain brokers and dealers. After the
Notes are released for sale to the public, the offering price and such
concessions may from time to time be varied by Goldman Sachs.
S-5
<PAGE>
The Notes are a new issue of securities with no established trading market.
State Street has been advised by Goldman Sachs that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
State Street has agreed to indemnify Goldman Sachs against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
Goldman Sachs and its affiliates engage in transactions with, and perform
services for, State Street and its subsidiaries and the Trustee in the
ordinary course of business.
S-6
<PAGE>
STATE STREET BOSTON CORPORATION
DEBT SECURITIES
PREFERRED STOCK
----------------
State Street Boston Corporation ("State Street") may offer and sell from
time to time in one or more series its unsecured debt securities (the "Debt
Securities") and/or shares of its Preferred Stock, no par value (the
"Preferred Stock" and, together with the Debt Securities, the "Securities"),
on terms to be determined at the time or times of sale. The Debt Securities
and Preferred Stock will have an aggregate initial offering price not to
exceed $500,000,000 or the equivalent thereof in one or more foreign
currencies. The Securities may be offered as separate series in amounts, at
prices, and on terms to be determined at the time of sale and to be set forth
in a supplement to this Prospectus (the "Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered, such as, where applicable (i) in the case of Debt Securities,
the specific designation, aggregate principal amount, denominations, maturity,
premium, if any, rate (which may be fixed or variable) and time of payment of
interest, if any, terms for redemption at the option of State Street or the
holder, if any, terms for sinking or purchase fund payments, if any, currency
or currencies of denomination and payment, if other than U.S. dollars, the
securities exchanges on which the Debt Securities are to be listed, if any,
and any other terms in connection with the offering and sale of the Debt
Securities in respect of which this Prospectus is being delivered, as well as
the initial public offering price, and the principal amounts, if any, to be
purchased by underwriters and (ii) in the case of Preferred Stock, the
specific title and stated value, number of shares or fractional interests
therein, any dividend, liquidation, redemption, voting and other rights, the
terms for conversion into other preferred stock or for exchange for Debt
Securities, the securities exchanges on which such Preferred Stock is to be
listed, if any, the initial public offering price, and the number of shares,
if any, to be purchased by underwriters, will be as set forth in the
accompanying Prospectus Supplement (the "Offered Securities"). The Prospectus
Supplement will also contain information, where applicable, about certain
United States federal income tax considerations relating to the Securities
covered by the Prospectus Supplement. All or a portion of the Debt Securities
may be issued in permanent global form.
The Debt Securities may be unsubordinated (the "Senior Debt Securities") or
subordinated (the "Subordinated Debt Securities"). The Senior Debt Securities,
when issued, will rank on a parity with all other unsecured and unsubordinated
indebtedness of State Street, and the Subordinated Debt Securities, when
issued, will be subordinated as described under "Description of Debt
Securities--Subordination of Subordinated Debt Securities." Payment of the
principal of the Subordinated Debt Securities may be accelerated only in the
case of certain events involving the bankruptcy, insolvency or reorganization
of State Street. There is otherwise no right of acceleration in the case of a
default in the performance of any covenant of State Street related to the
Subordinated Debt Securities, including the payment of principal and interest.
See "Description of Debt Securities--Events of Default--The Subordinated
Indenture." In addition, unless otherwise indicated in the Prospectus
Supplement pursuant to which any Offered Securities are offered, such Offered
Securities and the covenants contained in the indentures pursuant to which
such Offered Securities are issued will not protect holders in the event of a
sudden decline in the creditworthiness of State Street that might result from
a recapitalization, restructuring or other highly leveraged transaction. See
"Description of Debt Securities--General."
The Securities may be sold directly by State Street, through agents of State
Street designated from time to time, through underwriters or dealers, or
through a combination of such methods. If any agents, underwriters or dealers
are involved in the sale of the Offered Securities, the names of such agents,
underwriters or dealers and any applicable commissions or discounts will be
set forth in the Prospectus Supplement with respect to such Offered
Securities. The Prospectus Supplement will also set forth the net proceeds to
State Street from the sale of the Offered Securities. Any agents, underwriters
or dealers participating in the offering may be deemed "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
See "Plan of Distribution" for possible indemnification arrangements for
agents, underwriters and dealers.
----------------
THE SECURITIES WILL BE UNSECURED OBLIGATIONS OF STATE STREET AND WILL NOT BE
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF STATE STREET AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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 OR ANY SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE THE SALE OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS APRIL 23, 1996.
<PAGE>
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any
accompanying Prospectus Supplement in connection with the offering described
herein and therein, and, if given or made, such other information or
representation must not be relied upon as having been authorized by State
Street or by any underwriter, dealer or agent. Neither this Prospectus nor any
Prospectus Supplement shall constitute an offer to sell or a solicitation of
an offer to buy any securities offered hereunder in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation or sale in
such jurisdiction. Neither the delivery of this Prospectus or any Prospectus
Supplement nor any sale made hereunder or thereunder implies that there has
been no change in the affairs of State Street at any time subsequent to the
date hereof or thereof or that the information herein or therein is correct as
of any time subsequent to the date hereof or thereof.
AVAILABLE INFORMATION
State Street 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"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following regional offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained by mail at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005, upon
which exchange State Street's common stock, par value $1.00 per share (the
"Common Stock"), is listed. In addition, State Street is required to file
electronic versions of these documents with the Commission through the
Commission's Electronic Data Gathering, Analysis and Retrieval (EDGAR) System,
and such electronic versions are available to the public at the Commission's
World Wide Web site, http://www.sec.gov.
State Street has filed with the Commission a registration statement on Form
S-3 with respect to the Securities (which, together with all amendments and
exhibits, is herein referred to as the "Registration Statement") under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by State Street with the Commission
(File No. 0-5108) are incorporated by reference in this Prospectus:
1. State Street's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
All documents filed by State Street pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
the Registration Statement or this Prospectus.
2
<PAGE>
State Street will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents which have been incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to State Street Boston Corporation, 225 Franklin Street, Boston,
Massachusetts 02110, Attention: Marketing Services, telephone: (617) 654-3383.
STATE STREET BOSTON CORPORATION
State Street is a bank holding company organized under the laws of The
Commonwealth of Massachusetts.
State Street was organized in 1970 and conducts its business principally
through its subsidiary, State Street Bank and Trust Company ("State Street
Bank"), which traces its beginnings to the founding of the Union Bank in 1792.
The charter under which State Street Bank now operates was authorized by a
special act of the Massachusetts Legislature in 1891, and its present name was
adopted in 1960.
State Street is the fifth largest provider of trust services in the United
States as ranked on the basis of 1994 fiduciary compensation. State Street had
$2.3 trillion of assets under custody, $283 billion of bonds under
trusteeship, and $226 billion of assets under management at year-end 1995.
Ranked on the basis of total assets as of September 30, 1995, State Street is
the 33rd largest bank holding company in the United States. State Street's
total assets were $25.8 billion at December 31, 1995, of which $18.6 billion,
or 72%, were investment securities and money market assets and $3.9 billion,
or 15%, were loans.
Services are provided from offices in the United States, as well as from
offices in Canada, Grand Cayman, Netherlands Antilles, the United Kingdom,
France, Belgium, Luxembourg, Denmark, Germany, United Arab Emirates, Hong
Kong, Taiwan, Japan, Australia, and New Zealand.
BUSINESS OF THE CORPORATION
State Street has three lines of business: financial asset services,
investment management and commercial lending. In 1995, 65% of net income came
from financial asset services, 24% came from commercial lending and 16% came
from investment management. Corporate items reduced net income by 5%.
FINANCIAL ASSET SERVICES
Financial asset services are primarily accounting, custody and other
services for large pools of assets such as mutual funds and pension plans,
both defined benefit and defined contribution, and corporate trusteeship. A
broad array of other services is provided, including information services and
recordkeeping. Also provided are banking functions of accepting deposits,
managing global cash, making loans and trading foreign exchange.
With $1 trillion of mutual fund assets under custody, State Street is the
leading mutual fund custodian in the United States, servicing 41% of the
registered funds. State Street began providing mutual fund services in 1924
and servicing pension assets in 1974. Customers who sponsor the 2,842 U. S.
mutual funds that State Street services include investment companies,
broker/dealers, insurance companies and others. In addition, State Street
services 242 offshore mutual funds and collective investment funds in other
countries.
State Street offers a full array of mutual fund services, including custody,
portfolio and general ledger accounting, pricing, fund administration and
information services. Shareholder accounting is provided through a 50%-owned
affiliate.
Servicing $927 billion of pension and other tax-exempt assets for North
American customers, State Street is ranked as the largest servicer of tax-
exempt assets for corporations and public funds in the United States and the
largest global custodian for U. S. pension assets. Services include portfolio
accounting, securities custody,
3
<PAGE>
securities lending, and other related services for retirement and other
financial assets of benefit pension plans, unions, endowments, foundations and
nuclear decommissioning trusts. In addition, State Street provides global and
domestic custody-related services for $115 billion in assets for customers
outside North America.
State Street acts as participant recordkeeper, securities custodian and
trustee for defined contribution plans, such as 401(k) plans and ESOPs, and
issues checks for employee benefit distributions. Corporate trust services for
asset-backed securities, corporate securities, leveraged leases and municipal
securities are provided to investment banks, corporations, municipalities and
government agencies from four offices in the United States. At December 31,
1995, bonds under trusteeship totaled $283 billion.
State Street provides foreign exchange trading and global cash management
services to financial institutions and corporations. Funds are gathered in the
form of domestic and foreign deposits, federal funds and securities sold under
repurchase agreements from local, national and international sources. Trading
and arbitrage operations are conducted with government securities, futures and
options. Municipal dealer activities include underwriting, trading and
distribution of general obligation tax-exempt bonds and notes. Treasury
centers are located in Boston, London, Hong Kong, Sydney, Munich and
Luxembourg. State Street also provides corporate finance services, including
private placement of debt and equity, acquisitions and divestitures and
project finance.
INVESTMENT MANAGEMENT
State Street was a pioneer in the development of domestic and international
index funds through State Street Global Advisors ("SSgA"), a division of State
Street Bank. The products now provided by SSgA include enhanced index and
fully active equity strategies, short-term investment funds and fixed income
products. These products are sold and managed both domestically and from
locations outside the United States. State Street is ranked as the largest
manager of internationally-indexed assets and as the second largest manager of
tax-exempt money in the United States. State Street is a leading New England
trustee and money manager for individuals, and provides planned gift
management service for non-profit organizations throughout the United States.
At December 31, 1995, institutional and personal trust assets under management
totaled $226 billion.
COMMERCIAL LENDING
State Street provides corporate banking, specialized lending and
international banking to businesses and financial institutions. One-third of
the loan portfolio supports the short-term needs of financial asset services
customers and securities brokers in conjunction with their trading and
settlement activity. Corporate banking services are offered primarily to
middle market companies in the Northeast as well as small businesses in the
local community. Specialized lending is both regional and national, with
specialties that include cable television, security alarm monitoring,
technology-based companies, publishing, law firms, non-profit institutions,
broker/dealers and other financial institutions. In addition, State Street
engages in asset-based finance, leasing and real estate and trade finance
transactions. Trade finance includes letters of credit, collection, payment
and other specialized services for importers and exporters.
4
<PAGE>
CERTAIN REGULATORY AND OTHER CONSIDERATIONS
State Street's principal asset and source of cash revenues is its investment
in State Street Bank. As a bank holding company, State Street is a legal
entity separate and distinct from State Street Bank and its non-bank
subsidiaries and is subject to supervision and examination by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). State
Street's principal source of cash revenues is cash dividends paid by State
Street Bank and, consequently, its ability to satisfy its financial
obligations, including the payment of interest or dividends on the Securities,
is dependent upon State Street Bank's ability to pay cash dividends or make
other distributions to State Street.
DIVIDENDS AND TRANSFERS OF FUNDS
Payment of dividends to State Street by State Street Bank is subject to
legal restrictions imposed by the Federal Reserve Act and Massachusetts
banking law. Future dividend payments to State Street from State Street Bank
cannot be determined at this time.
Under the Federal Reserve Act, the approval of the Federal Reserve Board
would be required if dividends declared by State Street Bank in any year were
to exceed the total of its net profits for that year combined with retained
net profits for the preceding two years, less any required transfers to
surplus. In addition, the Federal Reserve Board is empowered to prohibit State
Street Bank from paying a dividend to State Street if it determined that the
payment would constitute an unsafe or unsound banking practice. The Federal
Reserve Board has indicated that, generally, dividends should be paid by banks
only to the extent of earnings from continuing operations. The payment of
dividends by State Street and State Street Bank may also be affected or
limited by other factors, such as the requirement to maintain adequate capital
above regulatory guidelines.
Payment of dividends by State Street Bank is subject to provisions of the
Massachusetts banking law which provide that dividends may be paid out of net
profits provided (i) capital stock and surplus remain unimpaired, (ii)
dividend and retirement fund requirements of any preferred stock have been
met, (iii) surplus equals or exceeds capital stock, and (iv) there are
deducted from net profits any losses and bad debts, as defined, in excess of
reserves specifically established therefor.
Under applicable federal and state law restrictions, at December 31, 1995,
State Street Bank could have declared and paid dividends of $426,266,000
without regulatory approval.
The right of State Street to participate as a stockholder in any
distribution of assets of State Street Bank or any other subsidiary upon its
liquidation or reorganization or otherwise is subject to the prior claims by
creditors of the subsidiary, including, in the case of State Street Bank,
obligations for federal funds purchased and securities sold under repurchase
agreements, as well as deposit liabilities. The Indentures under which the
Debt Securities are to be issued do not limit the amount of debt which State
Street Bank or any other subsidiary may incur.
State Street and its non-bank subsidiaries are affiliates of State Street
Bank under the federal banking laws, which impose certain restrictions on
transfers of funds in the form of loans, extensions of credit, investments or
asset purchases by State Street Bank to State Street and its non-bank
subsidiaries. Transfers of this kind to State Street and its non-bank
subsidiaries by State Street Bank are limited to 10% of State Street Bank's
capital and surplus with respect to each affiliate and to 20% in the
aggregate, and are also subject to certain collateral requirements.
Federal Reserve Board regulations require a bank holding company to act as a
source of financial and managerial strength to its subsidiary banks. Under
this regulation, State Street may be required to commit resources to its
subsidiary bank in circumstances where it might not do so absent such
regulation. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority payment.
5
<PAGE>
CAPITAL ADEQUACY
The Federal Reserve Board has established risk-based capital guidelines for
bank holding companies and banks that require minimum ratios of capital to
risk-weighted assets and certain off-balance sheet credit exposure. The
Federal Reserve Board also maintains a leverage ratio guideline that is a
measure of capital to total average balance sheet assets.
The minimum ratio of qualifying total capital ("Total Capital") to risk-
weighted assets (including certain off-balance sheet items) is 8%. At least
half of the Total Capital is to be comprised of common stock, retained
earnings, noncumulative perpetual preferred stock, minority interests, and,
for bank holding companies, a limited amount of qualifying cumulative
perpetual preferred stock, less certain intangibles including goodwill ("Tier
1 capital"). The remainder may consist of other preferred stock, certain other
instruments, and limited amounts of subordinated debt and the loan and lease
loss allowance.
In addition, the Federal Reserve Board has established minimum Leverage
Ratio (Tier 1 capital to average total assets) guidelines for bank holding
companies and banks. The guidelines provide for a minimum Leverage Ratio of 3%
for bank holding companies and banks that meet certain specified criteria,
including having the highest regulatory rating. All other banking
organizations are required to maintain a Leverage Ratio of at least 3% plus an
additional cushion of 100 to 200 basis points. The guidelines also provide
that banking organizations experiencing significant internal growth or making
acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels, without significant
reliance on intangible assets. Furthermore, the guidelines indicate that the
Federal Reserve Board will continue to consider a "Tangible Tier 1 Leverage
Ratio" in evaluating proposals for expansion or new activities. The Tangible
Tier 1 Leverage Ratio is the ratio of Tier 1 capital, less intangibles not
deducted from Tier 1 capital, to average total assets.
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
substantially revised the depository institution regulatory and funding
provisions of the Federal Deposit Insurance Act ("FDIA") and made revisions to
several other federal banking statutes. State Street Bank is subject to the
provisions of FDICIA.
Among other things, FDICIA requires the federal banking regulators to take
prompt corrective action in respect of FDIC-insured depository institutions
that do not meet minimum capital requirements. FDICIA establishes five capital
tiers: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." A
depository institution's capital tier will depend upon how its capital levels
compare to various relevant capital measures and certain other factors, as
established by regulation. Under applicable regulations, an FDIC-insured bank
is defined to be well capitalized if it maintains a Leverage Ratio of at least
5%, a Tier 1 Capital Ratio of at least 6% and a Total Capital Ratio of at
least 10% and is not otherwise in a "troubled condition" as specified by its
appropriate federal regulatory agency. A bank is generally considered to be
adequately capitalized if it is not defined to be well capitalized but meets
all of its minimum capital requirements, i.e., if it has a Total Capital Ratio
of 8% or greater, a Tier 1 Capital Ratio of 4% or greater and a Leverage Ratio
of 4% or greater (or a Leverage Ratio of 3% or greater if the institution is
rated composite 1 under the regulatory rating system). A bank will be
considered undercapitalized if it fails to meet any minimum required measure,
significantly undercapitalized if it is significantly below such measure and
critically undercapitalized if it maintains a level of tangible equity capital
equal to or less than 2% of total assets. A bank may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating. The capital-
based prompt corrective action provisions of FDICIA and the implementing
regulations apply to insured depository institutions and are not directly
applicable to holding companies that control such banks. However, the Federal
Reserve Board has indicated that, in regulating bank holding companies it will
take appropriate action at the holding company level based on an assessment of
the effectiveness of supervisory actions imposed upon subsidiary depository
institutions pursuant to such provisions and regulations. At December 31,
1995, State Street Bank's Total Capital, Tier 1 Capital, and Leverage Ratios
were 13.4%, 13.1% and 5.2%, respectively. While other factors in addition to
capital ratios determine an institution's capital category, State Street
Bank's capital ratios were within the "well-capitalized" category at December
31, 1995.
6
<PAGE>
FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying any
management fee to its holding company if the depository institution is subject
to growth limitations and is required to submit a capital restoration plan.
The federal banking agencies may not accept a capital plan without
determining, among other things, that the plan is based on realistic
assumptions and is likely to succeed in restoring the depository institution's
capital. In addition, for an undercapitalized depository institution's capital
restoration plan to be acceptable, its holding company must guarantee the
capital plan up to an amount equal to the lesser of 5% of the depository
institution's assets at the time it became undercapitalized or the amount of
the capital deficiency when the institution fails to comply with the plan. In
the event of the parent holding company's bankruptcy, such guarantee would
take priority over the parent's general unsecured creditors. If a depository
institutions fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondence banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
PROPOSED LEGISLATION
Various bills have been introduced into the United States Congress that
would repeal, in some respects, the provisions of the Glass-Steagall Act
prohibiting certain banking organizations from engaging in certain securities
activities and the provisions of the BHCA prohibiting affiliations between
banking organizations and nonbanking organizations. State Street cannot
determine the ultimate effect that potential legislation, if enacted, or
implementing regulations, would have upon its financial condition or results
of operations.
Other proposals to change the laws and regulations governing the banking
industry are frequently introduced in Congress, in the state legislatures and
before the various bank regulatory agencies. The likelihood and timing of any
such changes and the impact such changes might have on State Street and its
subsidiaries, however, cannot be determined at this time.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratios of earnings to fixed
charges for State Street for each of the five years in the five-year period
ended December 31, 1995. For purposes of computing these ratios, earnings
represent net income, plus total taxes based on income, plus fixed charges.
Fixed charges include interest expense (ratios are presented both excluding
and including interest on deposits), the estimated interest component of net
rental expense and amortization of debt expense.
During the periods indicated below, no shares of preferred stock of State
Street were outstanding, and, therefore, the consolidated ratios of earnings
to fixed charges and preferred stock dividends would be identical to the
ratios set forth below.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Including interest on deposits.................... 1.41x 1.63x 1.74x 1.60x 1.49x
Excluding interest on deposits.................... 1.75x 2.29x 2.59x 2.43x 2.31x
</TABLE>
7
<PAGE>
SELECTED FINANCIAL DATA
The following table presents summary consolidated financial data which is
qualified in its entirety by the detailed information and financial statements
included in the documents incorporated by reference under "Incorporation of
Certain Documents by Reference."
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
--------- --------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Fee Revenue................ $ 1,119.1 $ 1,017.3 $ 865.6 $ 743.5 $ 596.4
Gain on sale of credit card
loan portfolio............ 56.2
Interest revenue--taxable
equivalent................ 1,371.5 961.3 751.3 770.7 803.7
Interest expense........... 907.2 544.1 394.1 449.6 487.6
--------- --------- -------- -------- --------
Net interest revenue--
taxable equivalent........ 464.3 417.2 357.2 321.1 316.1
Provision for loan losses.. 8.0 11.6 11.3 12.2 60.0
--------- --------- -------- -------- --------
Total revenue.......... 1,575.4 1,422.9 1,211.5 1,052.4 908.7
Operating expenses......... 1,174.0 1,057.8 898.7 766.3 646.6
--------- --------- -------- -------- --------
Income before income
taxes on a taxable
equivalent basis........ 401.4 365.1 312.8 286.1 262.1
Income taxes............... 119.4 119.7 101.7 100.7 89.8
Taxable equivalent
adjustment................ 34.9 25.1 21.7 15.3 21.0
--------- --------- -------- -------- --------
Net Income............. $ 247.1 $ 220.3 $ 189.4 $ 170.1 $ 151.3
========= ========= ======== ======== ========
PER SHARE EARNINGS:
Primary.................. $ 2.98 $ 2.66 $ 2.30 $ 2.07 $ 1.87
Fully diluted............ 2.95 2.64 2.28 2.04 1.83
Cash dividends declared.... .68 .60 .52 .445 .385
Book value at year end..... 19.27 16.22 14.68 12.83 11.11
Closing price.............. 45.00 28.63 37.50 43.75 32.13
Fully diluted shares
outstanding............... 83,843 83,454 83,149 83,670 83,088
ANNUAL AVERAGES
Interest-earnings assets... $ 23,120 $ 19,927 $ 16,885 $ 14,504 $ 10,680
Total assets............... 26,182 22,795 18,927 16,255 12,194
Noninterest-bearing
deposits.................. 4,113 4,701 4,059 3,305 2,674
Foreign deposits........... 8,470 7,392 4,954 3,955 2,648
Long-term debt............. 127 128 122 146 146
Stockholders' equity....... 1,483 1,284 1,125 970 844
RATIOS
Return on equity........... 16.7% 17.2% 16.8% 17.5% 17.9%
Return on assets........... .94 .97 1.00 1.05 1.24
Total risk-based capital... 14.5 14.2 13.1 15.0 16.7
Internal capital generation
rate...................... 12.9 13.3 13.1 13.8 14.3
Leverage................... 5.6 5.6 5.5 6.1 6.5
Employees at year end...... 11,324 11,528 10,445 9,698 8,670
</TABLE>
. In 1995 State Street acquired Investors Fiduciary Trust Company in a
transaction accounted for as a pooling of interests. All prior period
information has been restated to reflect this acquisition.
. Results for 1991 include a non-recurring gain on sale of the credit card
loan portfolio, which increased net income $32.6 million, equal to $.41
primary and $.40 fully diluted per share.
. Per share amounts for 1991 have been restated to reflect a two-for-one
stock split distributed in 1992.
8
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of any Offered Securities will be used for
the purposes specified in the corresponding Prospectus Supplement, which may
include, but are not limited to, being added to State Street's general funds
and being used for general corporate purposes, including investments in the
capital of or extensions of credit to State Street Bank and the repayment or
refinancing of long and short-term debt. Pending such use, the proceeds may be
temporarily invested in short-term securities. State Street expects that it
will engage from time to time in additional financings of a character and in
an amount to be determined.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
August 2, 1993 (the "Senior Indenture"), between State Street and Fleet
National Bank of Massachusetts, as successor Trustee. The Subordinated Debt
Securities are to be issued under a second Indenture (the "Subordinated
Indenture") that is expected to be entered into between State Street and Fleet
National Bank of Massachusetts, as Trustee. The form of the Subordinated
Indenture has been filed with the Commission as an exhibit to the Registration
Statement and the Senior Indenture has been filed with the Commission as
Exhibit 4 to State Street's Current Report on Form 8-K dated October 8, 1993.
The Senior Indenture and the Subordinated Indenture are sometimes referred to
collectively as the "Indentures." Fleet National Bank of Massachusetts is
hereinafter referred to as the "Senior Trustee" when referring to it in its
capacity as trustee under the Senior Indenture, as the "Subordinated Trustee"
when referring to it in its capacity as trustee under the Subordinated
Indenture, and as the "Trustee" when referring to it in its capacity as
trustee under both of the Indentures. The following summaries of certain
provisions of the Senior Debt Securities, the Subordinated Debt Securities and
the Indentures do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Indenture applicable to a particular series of Debt Securities (the
"Applicable Indenture"), including the definitions therein of certain terms.
Article and Section references used herein are references to the Applicable
Indenture. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Applicable Indenture.
The following sets forth certain general terms and provisions of the Debt
Securities to which any Prospectus Supplement may relate. The particular terms
of any specific series of Securities offered by any Prospectus Supplement (the
"Applicable Prospectus Supplement") will be described in such Prospectus
Supplement.
GENERAL
The Indentures do not limit the amount of Debt Securities that may be issued
thereunder and provide that Debt Securities may be issued thereunder from time
to time in one or more series. The Debt Securities will be unsecured
obligations of State Street.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities will be
payable, and the transfer of the Debt Securities will be registrable, at the
office or agency of State Street maintained for such purpose, except that, at
the option of State Street, interest may be paid by mailing a check to the
address of the Person entitled thereto as it appears on the register for the
Debt Securities. (Sections 305 and 307) The Debt Securities will be issued
only in fully registered form without coupons and, unless otherwise indicated
in the Applicable Prospectus Supplement, in denominations of $1,000 or any
integral multiple thereof. (Section 302) No service charge will be made for
any registration of transfer or exchange of the Debt Securities, but State
Street may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith. (Section 305)
The Applicable Prospectus Supplement will describe the following terms of
the Debt Securities offered thereby, to the extent applicable: (1) the title
of the Debt Securities; (2) whether the Debt Securities are Senior Debt
Securities or Subordinated Debt Securities; (3) any limit on the aggregate
principal amount of the Debt
9
<PAGE>
Securities; (4) the date or dates on which the Debt Securities will mature;
(5) the rate or rates (which may be fixed or variable) per annum at which the
Debt Securities will bear interest, if any, and the date or dates from which
such interest, if any, will accrue; (6) the dates on which such interest, if
any, on the Debt Securities will be payable and the Regular Record Dates for
such Interest Payment Dates; (7) any mandatory or optional sinking funds or
analogous provisions; (8) the date, if any, after which and the price or
prices at which the Debt Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed and the other detailed terms and provisions
of any such optional or mandatory redemption provision; (9) the obligation of
State Street, if any, to redeem or repurchase the Debt Securities at the
option of the Holder; (10) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which the Debt Securities will
be issuable; (11) if other than the principal amount thereof, the portion of
the principal amount of the Debt Securities that will be payable upon the
declaration of acceleration of the Maturity thereof; (12) if other than U.S.
dollars, the currency of payment of principal of and any premium and interest
on the Debt Securities; (13) any index used to determine the amount of payment
of principal of and any premium and interest on the Debt Securities; (14) the
applicability of the provisions described under Defeasance with respect to the
Debt Securities; (15) if the Debt Securities will be issuable only in the form
of a Global Security, the Depositary or its nominee with respect to the Debt
Securities and the circumstances under which the Global Security may be
registered for transfer or exchange in the name of a Person other than the
Depository or its nominee; (16) the person to whom any interest on the Debt
Securities of the series shall be payable if other than the person in whose
name the Debt Securities is registered at the close of business on the Regular
Record Date for such interest; (17) the place or places where the principal of
and any premium and interest on any Debt Securities of the series shall be
payable; (18) if the principal of or any premium or interest on any Debt
Securities of the series is to be payable, at the election of State Street or
the Holder thereof, in one or more currencies or currency units other than
that or those in which such Debt Securities are stated to be payable, the
currency, currencies or currency units in which the principal of or any
premium or interest on such Debt Securities as to which such election is made
shall be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the manner in
which such amount shall be determined); (19) if the principal amount payable
at the Stated Maturity of any Debt Securities of the series will not be
determinable as of any one or more dates prior to the Stated Maturity, the
amount which shall be deemed to be the principal amount of such Debt
Securities as of any such date, including the principal amount thereof which
shall be due and payable upon any Maturity other than the Stated Maturity or
which shall be deemed to be Outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to be
the principal amount shall be determined); (20) any addition to or change in
the Events of Default which applies to any Debt Securities of the series and
any change in the right of the Trustee or the requisite Holders of such Debt
Securities to declare the principal amount thereof due and payable; (21) any
addition to or change in the covenants which applies to Debt Securities of the
series; and (22) any other terms of the Debt Securities. (Section 301)
Both Senior Debt Securities and Subordinated Debt Securities may be issued
as discounted Debt Securities (bearing no interest or interest at a rate which
at the time of issuance is below market rates) to be sold at a substantial
discount below their stated principal amount. Federal income tax consequences
and other special considerations applicable to any such discounted Securities
will be described in the Applicable Prospectus Supplement.
Both Indentures provide that without the consent of any Holders, State
Street and the Trustee may enter into one or more supplemental indentures for
certain purposes, including (1) to add to the covenants of State Street for
the benefit of the Holders of all or any series of Debt Securities or to
surrender any right or power conferred upon State Street in the Indentures and
(2) to add any additional Events of Default, in the case of the Senior
Indenture, and Events of Default or Defaults, in the case of the Subordinated
Indenture. (Section 901)
In the event any sinking fund is established for the retirement of Debt
Securities of any series, State Street may satisfy all or any part of the
sinking fund payments with Debt Securities of such series under certain
circumstances and to the extent provided for by the terms of such Debt
Securities. (Section 1202)
10
<PAGE>
Unless otherwise indicated in the Applicable Prospectus Supplement, the
covenants contained in the Indenture and the Debt Securities will not afford
Holders protection in the event of a sudden decline in the creditworthiness of
State Street that might result from a recapitalization, restructuring, or
other highly leveraged transaction.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Applicable Prospectus Supplement, the
following provisions shall apply to the Subordinated Debt Securities.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness. In certain events of
insolvency, the payment of the principal of, premium, if any, and interest on
the Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, also be subordinated in right of payment to the prior
payment in full of all Other Financial Obligations. (Section 1415) Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of State Street, the holders of all Senior Indebtedness will first
be entitled to receive payment in full of all amounts due or to become due
thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Subordinated Debt Securities. (Section 1402) If upon
any such payment or distribution of assets to creditors, there remain, after
giving effect to such subordination provisions in favor of the holders of
Senior Indebtedness, any amounts of cash, property or securities available for
payment or distribution in respect of Subordinated Debt Securities ("Excess
Proceeds") and if, at such time, any Entitled Persons in respect of Other
Financial Obligations have not received payment in full of all amounts due or
to become due on or in respect of such Other Financial Obligations, then such
Excess Proceeds shall first be applied to pay or provide for the payment in
full of such Other Financial Obligations before any payment or distribution
may be made in respect of the Subordinated Debt Securities. (Section 1415) In
the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Indebtedness will first be entitled to
receive payment in full of all amounts due or to become due thereon before the
Holders of the Subordinated Debt Securities will be entitled to receive any
payment of the principal of, premium, if any, or interest on the Subordinated
Debt Securities. (Section 1402) Accordingly, in case of such an acceleration,
all Senior Indebtedness would have to be repaid before any payment could be
made in respect of the Subordinated Debt Securities. No payments on account of
principal, premium, if any, or interest in respect of the Subordinated Debt
Securities may be made if there shall have occurred and be continuing a
default in any payment with respect to any Senior Indebtedness, or if any
judicial proceeding shall be pending with respect to any such default.
(Section 1402)
By reason of such subordination, in the event of the insolvency of State
Street, creditors of State Street who are not holders of Senior Indebtedness
or the Subordinated Debt Securities may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than Holders of the
Subordinated Debt Securities. By reason of the obligation of the Holders of
Subordinated Debt Securities to pay over any Excess Proceeds to Entitled
Persons in respect of Other Financial Obligations, in the event of the
insolvency of State Street, holders of Existing Subordinated Indebtedness (as
defined in the Subordinated Indenture) may recover less, ratably, than
Entitled Persons in respect of Other Financial Obligations and may recover
more, ratably, than the Holders of Subordinated Debt Securities. State
Street's obligations under the Subordinated Debt Securities shall rank pari
passu in right of payment with each other and with the Existing Subordinated
Indebtedness, subject to the obligations of the Holders of Subordinated Debt
Securities to pay over any Excess Proceeds to Entitled Persons in respect of
Other Financial Obligations as provided in the Subordinated Indenture.
(Section 301)
The Subordinated Indenture permits, at any time, the modification or
elimination of the rights of Entitled Persons in respect of Other Financial
Obligations described above without the consent of any Entitled Persons in
respect of Other Financial Obligations. (Section 907)
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"Senior Indebtedness" is defined in the Subordinated Indenture to mean the
principal of and premium, if any, and interest on (1) indebtedness of State
Street (other than the Subordinated Debt Securities) whether or not secured
and whether incurred previously or subsequent to the date of execution of the
Subordinated Indenture (A) for borrowed money, or (B) incurred in connection
with the acquisition by State Street of assets other than in the ordinary
course of business, in each case described in clause (A) or (B) for the
payment of which State Street (or any corporation or person which becomes a
successor to State Street pursuant to the terms of the Subordinated Indenture
described below under the heading "Consolidation, Merger and Sale of Assets")
is liable directly or indirectly by guarantee, letter of credit, obligation to
purchase or acquire or otherwise, unless in the terms of the instrument
creating or evidencing any such indebtedness or pursuant to which it is
outstanding it is specifically provided that such indebtedness is not superior
in right of payment to the Subordinated Debt Securities or ranks pari passu
with the Subordinated Debt Securities and (2) renewals, extensions or
deferrals of any such indebtedness. (Section 101)
"Existing Subordinated Indebtedness" is defined in the Subordinated
Indenture as State Street's 7.75% Convertible Subordinated Debentures.
(Section 101)
"Other Financial Obligations" is defined in the Subordinated Indenture as,
unless otherwise determined with respect to any series of Securities pursuant
to terms described in the Applicable Prospectus Supplement, (a) obligations of
State Street under direct credit substitutes, (b) obligations and guaranties
of State Street for purchased money or funds, (c) any deferred obligation of,
or any direct or indirect guaranty of any such obligation by, State Street
incurred in connection with the acquisition by State Street of assets, and (d)
all obligations of State Street to make payment pursuant to the terms of
financial instruments, such as (i) securities contracts and foreign currency
exchange contracts, (ii) derivative instruments, such as swap agreements
(including interest rate and foreign exchange rate swap agreements), cap
agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange rate agreements, options, commodity futures contracts and
commodity option contracts and (iii) financial instruments similar to those
set forth in (d)(i) and (ii); provided that Other Financial Obligations do not
include (A) obligations on account of Senior Indebtedness and (B) obligations
on account of indebtedness for money borrowed ranking pari passu with or
subordinate to the Subordinated Debt Securities including Existing
Subordinated Indebtedness. (Section 101)
"Entitled Persons" is defined in the Subordinated Indenture as any person
who is entitled to payment pursuant to the terms of Other Financial
Obligations. (Section 101)
The Subordinated Indenture will not limit the amount of other indebtedness,
including Senior Indebtedness or Other Financial Obligations, that may be
issued by State Street, State Street Bank or any of its other Subsidiaries. As
of December 31, 1995, State Street had approximately $174 million of Senior
Indebtedness outstanding and no Other Financial Obligations outstanding.
GLOBAL SECURITIES
The Offered Securities of a series that are Debt Securities may be issued in
whole or in part in the form of one or more fully registered global Offered
Securities ("Global Securities") that will be deposited with, or on behalf of,
a depository (the "Depository") identified in the Applicable Prospectus
Supplement. Unless and until it is exchanged in whole or in part for Offered
Securities in definitive form, a Global Security may not be transferred except
as a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor of such Depository or a nominee of such successor or in the manner
provided in the final paragraph under this heading.
The specific terms of the depositary arrangement with respect to any Offered
Securities will be described in the Applicable Prospectus Supplement. State
Street anticipates that the following provisions will apply to all depositary
arrangements.
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Upon the issuance of a Global Security, the Depository for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Offered Securities represented by such
Global Security to the accounts of persons that have accounts with such
Depository ("participants"). The accounts to be credited shall be designated
by the underwriters or agents participating in the distribution of such
Offered Securities or by State Street, if such Offered Securities are offered
and sold directly by State Street. Ownership of beneficial interests in a
Global Security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interest in such
Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depository for such Global
Security (with respect to interests of participants) or by participants or
persons that hold through participants (with respect to interests of persons
other than participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee, is the
holder of such Global Security, such Depository or such nominee, as the case
may be, will be considered the sole owner or holder of the Offered Securities
represented by such Global Security for all purposes under the applicable
Indenture. Except as set forth below, owners of beneficial interests in a
Global Security will not be entitled to have Offered Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Offered Securities of
such series in definitive form and will not be considered the owners or
holders thereof under the applicable Indenture. Accordingly, each person
owning a beneficial interest in a Global Security must rely on the procedures
of the Depository for such Global Security and, if such person is not a
participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a holder under the applicable
Indenture. State Street understands that under existing industry practices, if
State Street requests any action of holders or if an owner of a beneficial
interest in a Global Security desires to give or take any action which a
holder is entitled to give or take under the applicable Indenture, the
Depository for such Global Security would authorize the participants holding
the relevant beneficial interest to give or take such action, and such
participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of or premium, if any, and interest, if any, on
Offered Securities represented by a Global Security registered in the name of
a Depository or its nominee will be made to such Depository or its nominee, as
the case may be, as the registered owner or the holder of the Global Security
representing such Offered Securities. None of State Street, the Trustee for
such Offered Securities, or any paying agent for such Offered Securities will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in a Global
Security for such Offered Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
State Street expects that the Depository for any Offered Securities
represented by a Global Security, upon receipt of any payment of principal,
premium or interest, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security as shown on the records of such
Depository. State Street also expects that payments by participants to owners
of beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
No Global Security may be exchanged in whole or in part for Debt Securities
registered, and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depository for such
Global Security or a nominee thereof unless (a) such Depository (i) has
notified State Street that it is unwilling or unable to continue as Depository
for such Global Security or (ii) has ceased to be a clearing agency registered
under the Exchange Act, (b) there shall have occurred and be continuing an
Event of Default or a Default, as the case may be, with respect to such Global
Security or (c) there shall exist such circumstances, if
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any, in addition to or in lieu of the foregoing as have been specified for
this purpose as contemplated by the Indentures. (Section 305)
LIMITATION UPON DISPOSITION OF VOTING STOCK OR ASSETS OF STATE STREET BANK
The Senior Indenture contains a covenant by State Street that, so long as
any of the Senior Debt Securities are outstanding, it will not sell, assign,
transfer, grant a security interest in or otherwise dispose of any shares of,
or securities convertible into, or options, warrants or rights to subscribe
for or purchase shares of, Voting Stock of State Street Bank or of any
Subsidiary which owns Voting Stock of State Street Bank, nor will it permit
State Street Bank to issue any shares of, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, Voting
Stock of State Street Bank (except for mergers, consolidations or combinations
of State Street with State Street Bank or in conjunction with a merger of
State Street and State Street Bank with a third corporation) or to sell, lease
or otherwise dispose of all or substantially all of its property, assets and
business, unless (a) any sale, assignment, transfer, grant of a security
interest, lease or other disposition is made for fair market value, as
determined by the Board of Directors of State Street and (b) in the case of
any such sale, assignment, transfer, grant of a security interest or other
disposition of shares of, securities convertible into or options, warrants or
rights to subscribe for or purchase shares of Voting Stock of State Street
Bank or of any such Subsidiary, State Street will own at least 80% of the
issued and outstanding Voting Stock of State Street Bank free and clear of any
security interest after giving effect to such transaction. (Section 1008)
The Subordinated Indenture does not contain a similar restriction on State
Street's ability to engage in or permit such transactions to occur.
EVENTS OF DEFAULT
The Senior Indenture
The Senior Indenture (with respect to any series of Senior Debt Securities)
defines an Event of Default as any one of the following events: (a) default in
the payment of any interest upon any Senior Security when it becomes due and
payable, and continuance of such default for a period of 30 days; (b) default
in the payment of the principal of (or premium, if any, on) any Senior
Security at its Maturity; (c) failure to deposit any sinking fund payment when
due; (d) failure to perform any other covenants or warranties of State Street
in the Senior Indenture (other than a covenant or warranty included in the
Senior Indenture solely for the benefit of a series of Senior Debt Securities
thereunder other than that series) continued for a period of 60 days after the
holders of at least 10% in principal amount of the Outstanding Senior Debt
Securities have given written notice as provided in the Senior Indenture; (e)
acceleration of any indebtedness for borrowed money in an aggregate principal
amount exceeding $20,000,000 of State Street or of State Street Bank, if such
acceleration is not annulled within 30 days after written notice as provided
in the Senior Indenture; (f) certain events in bankruptcy, insolvency or
reorganization of State Street or State Street Bank; and (g) any other Event
of Default provided with respect to Senior Debt Securities of that series.
(Section 501)
If an Event of Default with respect to the Senior Debt Securities of any
series at the time Outstanding occurs and is continuing, either the Senior
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Senior Debt Securities of that series may, by notice, declare the
principal amount (or, if the Senior Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms thereof) of all the Securities of that series to
be due and payable immediately. At any time after a declaration of
acceleration with respect to Senior Debt Securities of any series has been
made, but before a judgment or decree based on acceleration has been obtained,
the Holders of a majority in aggregate principal amount of Outstanding Senior
Debt Securities of that series may, under certain circumstances, rescind and
annul such acceleration. (Section 502)
The Subordinated Indenture
The Subordinated Indenture defines an Event of Default (with respect to any
series of Subordinated Debt Securities) as certain events involving the
bankruptcy, insolvency or reorganization of State Street. (Section 501)
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If an Event of Default with respect to Subordinated Debt Securities of any
series at the time Outstanding occurs and is continuing, either the
Subordinated Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Subordinated Debt Securities of that series may declare the
principal amount (or, if the Subordinated Debt Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) of all Subordinated Debt
Securities of that series to be due and payable immediately. At any time after
a declaration of acceleration with respect to Subordinated Debt Securities of
any series has been made, but before a judgment or decree based on the
acceleration has been obtained, Holders of a majority in principal amount of
the Outstanding Subordinated Debt Securities of that series may, under certain
circumstances, rescind and annul such acceleration. (Section 502)
Rights of acceleration are limited to circumstances involving an Event of
Default. The Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of Subordinated Debt
Securities upon a default in the payment of principal, premium, if any, or
interest or in the performance of any covenant or agreement in the
Subordinated Debt Securities of the particular series or in the Subordinated
Indenture.
The Subordinated Indenture defines a Default as any one of the following
events: (a) an Event of Default; (b) default in the payment of any interest on
any Subordinated Security when such interest becomes due and payable and such
default continues for a period of 30 days or in the payment of the principal
of (or premium, if any, on) any Subordinated Security at its Maturity (whether
or not payment is prohibited by the subordination provisions); (c) failure to
deposit any sinking fund payment when due (whether or not payment is
prohibited by the subordination provisions); (d) failure to perform any other
covenants or warranties of State Street in the Subordinated Indenture (other
than a covenant or warranty included in the Subordinated Indenture solely for
the benefit of a series of Subordinated Debt Securities thereunder other than
that series) continued for a period of 60 days after the holders of at least
10% in principal amount of the Outstanding Subordinated Debt Securities have
given written notice as provided in the Subordinated Indenture; (e)
acceleration of any indebtedness for borrowed money in an aggregate principal
amount exceeding $20,000,000 of State Street or of State Street Bank, if such
acceleration is not annulled within 30 days after written notice as provided
in the Subordinated Indenture; (f) certain events in bankruptcy, insolvency or
reorganization of State Street or State Street Bank; and (g) any other Default
provided with respect to Securities of that series. (Section 503) In case a
Default shall occur and be continuing, the Subordinated Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Subordinated Debt Securities to the payment of due and unpaid
principal and interest or the performance of such covenant or agreement by
appropriate judicial proceedings as the Subordinated Trustee deems most
effectual, including proceedings seeking the payment by State Street of money
damages for the breach by State Street of its obligations and the execution
upon any judgment entered against State Street. Unless such a Default involved
an Event of Default, the Subordinated Trustee would have no rights of
acceleration.
Both Indentures
Both Indentures provide that, subject to the duty of the Trustee during
default to act with the required standard of care set forth therein, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indentures at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity. (Section 603) Subject to such provisions for the indemnification of
the Trustee and to certain other conditions, the Holders of a majority in
aggregate principal amount of Outstanding Senior Debt Securities or
Outstanding Subordinated Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Senior Trustee and Subordinated Trustee, respectively, or
exercising any trust or power conferred on the Senior Trustee and Subordinated
Trustee, respectively. (Section 512)
No Holder of any series of Debt Securities will have any right to institute
any proceeding with respect to the Applicable Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the Trustee
under the Applicable Indenture written notice of a continuing Event of Default
and unless the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series shall have made written
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request, and offered reasonable indemnity, to such Trustee to institute such
proceeding as trustee, and such Trustee shall not have received from the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for enforcement of payment of the principal of, premium, if any,
or interest, if any, on such Debt Security on or after the respective due
dates expressed in such Debt Security. (Section 508)
State Street is required to furnish to the Trustee annually a statement as
to the performance by State Street of certain of its obligations under the
Indentures and as to any default in such performance. (Section 704)
Modification and Waiver
Modifications and amendments of each of the Senior Indenture and the
Subordinated Indenture may be made by State Street and the Trustee under the
Applicable Indenture with the consent of the Holders of not less than two-
thirds in aggregate principal amount of the Debt Securities of each series
issued under such Indenture and affected by the modification or amendment;
provided, however, that no such modification or amendment may, without the
consent of the Holders of all Debt Securities affected thereby, (1) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on, any Debt Security; (2) reduce the principal amount of or the
premium, if any, or (unless otherwise provided in the Applicable Prospectus
Supplement) interest on, any Debt Security (including in the case of any
discounted Debt Security the amount payable upon acceleration of the maturity
thereof); (3) change the place or currency of payment of principal of,
premium, if any, or interest on any Debt Security; (4) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Security; (5) in the case of the Subordinated Indenture, modify the
subordination provisions in a manner adverse to the Holders of the
Subordinated Debt Securities; or (6) reduce the percentage in principal amount
of Debt Securities, the consent of whose Holders is required for modification
or amendment of the Indenture or for waiver of compliance with certain
provisions of the Indentures or for waiver of certain defaults. (Section 902)
The Holders of at least two-thirds in aggregate principal amount of the
Senior Debt Securities or Subordinated Debt Securities may, on behalf of all
Holders of the Senior Debt Securities or Subordinated Debt Securities,
respectively, waive compliance by State Street with certain restrictive
provisions of the Applicable Indenture. (Senior Indenture Section 1009;
Subordinated Indenture Section 1008) The effect of any such waiver would be to
excuse State Street from complying with such provisions which may include
certain covenants for the benefit of Holders. The Holders of a majority in
aggregate principal amount of the Senior Debt Securities or the Subordinated
Debt Securities may, on behalf of all Holders of the Senior Debt Securities or
the Subordinated Debt Securities, respectively, waive any past default under
the Applicable Indenture, except a default in the payment of principal,
premium or interest or in the performance of certain covenants. (Section 513)
Consolidation, Merger and Sale of Assets
State Street, without the consent of the Holders of any of the Debt
Securities under the Indentures, may consolidate with or merge into any other
corporation, may transfer or lease its assets substantially as an entirety to
any Person, or may acquire or lease the assets of any Person substantially as
an entirety, or may permit any Person to merge into or consolidate with State
Street, provided that: (1) any successor or purchaser is a corporation
organized under the laws of any domestic jurisdiction; (2) any such successor
or purchaser assumes State Street's obligations on such Debt Securities and
under the Indentures; (3) after giving effect to the transaction no Event of
Default in the case of Senior Debt Securities and no Default in the case of
Subordinated Debt Securities, and no event that, after notice or lapse of
time, would become an Event of Default or Default, as the case may be, shall
have occurred and be continuing; and (4) certain other conditions are met.
(Section 801)
Defeasance
The Indentures provide that State Street, at State Street's option, will be
discharged from any and all obligations in respect of the Debt Securities of
any series (except for certain obligations to register the transfer
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of or to exchange Debt Securities of such series, to replace stolen, lost or
mutilated Debt Securities of such series, to maintain paying agencies and hold
moneys for payment in trust) if State Street deposits, in trust, with the
Trustee money or U.S. Government Obligations, which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay all the principal of, premium, if
any, and interest on the Debt Securities of such series on the dates such
payments are due in accordance with the terms of the Debt Securities of such
series. Such a trust may be established only if, among other things, (i) no
Event of Default under the Senior Indenture or Default under the Subordinated
Indenture or event which with the giving of notice or lapse of time, or both,
would become such an Event of Default under the Senior Indenture or Default
under the Subordinated Indenture shall have occurred and be continuing on the
date of such deposit, (ii) such deposit will not result in a breach or
violation of any agreement or instrument to which State Street is a party and
(iii) State Street shall have delivered an Opinion of Counsel to the effect
that the Holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit or defeasance and will be subject to
Federal income tax in the same manner as if such defeasance had not occurred.
(Senior Indenture Sections 1302 and 1304)
Concerning the Trustee
Fleet National Bank of Massachusetts is the Trustee under both the Senior
Indenture and the Subordinated Indenture. State Street and certain of its
subsidiaries, including State Street Bank, conduct banking transactions with
Fleet National Bank of Massachusetts and its affiliates, including Fleet Bank,
N.A., in the ordinary course of business.
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 terms of any series of the Preferred
Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. If so indicated in the Prospectus Supplement, the terms
of any series of Preferred Stock may differ from the terms set forth below.
The description of certain 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 State Street's
Articles of Organization, including the definitions therein of certain terms,
and the certificate of designation (each a "Certificate of Designation")
relating to each series of the Preferred Stock that will be filed with the
Commission at or prior to the time of the issuance of such series of the
Preferred Stock. State Street's Articles of Organization have been filed as
Exhibit 3.1 to State Street's Annual Report on Form 10-K for the year ended
December 31, 1995 and are incorporated by reference thereto into the
Registration Statement of which this Prospectus is part.
GENERAL
Under State Street's Articles of Organization, State Street is authorized,
without further stockholder action, to issue up to 3,500,000 shares of
Preferred Stock, without par value, in one or more series, with such
designations, voting powers, preferences and relative limitations or
restrictions thereon, as may be stated or expressed in resolutions providing
for the creation and issuance thereof adopted by the Board of Directors of
State Street. Thus, without stockholder approval, the Board of Directors could
authorize the issuance of Preferred Stock with voting, conversion and other
rights that could dilute the voting power and other rights of the holders of
Common Stock. No Preferred Stock is currently outstanding.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below, unless otherwise provided in a 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 hereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering
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price at which such Preferred Stock will be issued; (iv) the dividend rate or
rates (or method or methods of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to
cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion provisions; and (vii) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges,
limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
holders thereof will have no preemptive rights in connection therewith. Unless
otherwise provided in the applicable Prospectus Supplement, each series of the
Preferred Stock will rank on a parity as to the payment of dividends and
amounts upon dissolution, liquidation or winding up of State Street. The
rights of the holders of shares of each series of the Preferred Stock will be
subordinate to those of State Street's general creditors.
RANK
Any series of the Preferred Stock will, with respect to dividend rights and
rights on liquidation, winding up and dissolution rank (i) senior to all
classes of common stock of State Street and with all equity securities issued
by State Street, the terms of which specifically provide that such equity
securities will rank junior to the Preferred Stock (collectively referred to
as the "Junior Stock"); (ii) on a parity with all equity securities issued by
State Street, the terms of which specifically provide that such equity
securities will rank on a parity with the Preferred Stock (collectively
referred to as the "Parity Securities"); and (iii) junior to all equity
securities issued by State Street, the terms of which specifically provide
that such equity securities will rank senior to the Preferred Stock
(collectively referred to as the "Senior Debt Securities"). All shares of
Preferred Stock, will, regardless of series, be of equal rank. As used in any
Certificate of Designation for these purposes, the term "equity securities"
will not include debt securities convertible into or exchangeable for equity
securities.
DIVIDEND RIGHTS
Holders of each series of the Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of State Street, out of
funds of State Street legally available therefor, cash dividends on such dates
and at such rates as are set forth in, or as are determined by the method
described in, the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such
dividend will be payable to the holders of record as they appear on the stock
books of State Street on such record dates, fixed by the Board of Directors of
State Street, as specified in the Prospectus Supplement relating to such
series of the Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of State Street fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and State Street
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. Dividends on the shares of each series of Preferred Stock for
which dividends are cumulative will accrue from the date on which State Street
initially issues shares of such series or such other dates as may be set forth
in the applicable Prospectus Supplement.
Unless otherwise specified in the Applicable Prospectus Supplement, so long
as the shares of any series of the Preferred Stock are outstanding, unless (i)
full dividends (including, if such Preferred Stock is cumulative, dividends
for prior dividend periods) have been paid or declared and set apart for
payment on all outstanding shares of the Preferred Stock of such series (other
than Junior Stock) and (ii) State Street is not in default or in arrears with
respect to the mandatory or optional redemption or mandatory repurchase or
other mandatory retirement of, or with respect to any sinking or other
analogous fund for, any shares of Preferred Stock of such series (other than
Junior Stock), State Street may not declare any dividends on any shares of
Junior Stock, or make any payment on account of, or set apart money for, the
purchase, redemption or other retirement of, or for a sinking or other
analogous fund for, any shares of Junior Stock or make any distribution in
respect thereof,
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whether in cash or property or in obligations or stock of State Street, other
than Junior Stock that is neither convertible into, nor exchangeable or
exercisable for, any securities of State Street other than Junior Stock and
other than as a result of the reclassification of Junior Stock.
LIQUIDATION PREFERENCE
Unless otherwise specified in the Applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of State Street, whether
voluntary or involuntary, the holders of a series of Preferred Stock will be
entitled to receive out of the assets of State Street available for
distribution to stockholders, before any distribution of assets is made to the
holders of Junior Stock, the amount set forth in the Prospectus Supplement
relating to such series of the Preferred Stock. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of State Street, the
amounts payable with respect to the Preferred Stock of any series and any
other shares of preferred stock of State Street (including any other series of
the Preferred Stock) ranking as to the payment of amounts upon the
dissolution, liquidation or winding up of State Street on a parity with such
series of the Preferred Stock are not paid in full, the holders of the
Preferred Stock of such series and of such other shares of preferred stock of
State Street will share ratably in any such distribution of assets of State
Street in proportion to the full respective preferential amounts to which they
are entitled. After payment to the holders of the Preferred Stock of each
series of the full preferential amounts of the liquidating distribution to
which they are entitled, the holders of each such series of the Preferred
Stock will be entitled to no further participation in any distribution of
assets by State Street.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of State Street with prior Federal Reserve Board
approval, and may be subject to mandatory redemption pursuant to a sinking
fund or otherwise, in each case upon terms, at the times and at the redemption
prices set forth in the Prospectus Supplement relating to such series. Shares
of the Preferred Stock redeemed by State Street will be restored to the status
of authorized but unissued shares of preferred stock of State Street.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by State Street or by any other method as may be determined by State Street in
its sole discretion to be equitable. From and after the redemption date
(unless default is made by State Street in providing for the payment of the
redemption price plus accumulated and unpaid dividends, if any) dividends will
cease to accumulate on the shares of the Preferred Stock called for redemption
and all rights of the holders thereof (except the right to receive the
redemption price plus accumulated and unpaid dividends, if any) will cease.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as any dividends on shares of any series of the Preferred Stock or any other
series of preferred stock of State Street ranking on a parity as to payment of
dividends and amounts upon the liquidation, dissolution or winding up of State
Street with such series of the Preferred Stock are in arrears, no shares of
any such series of the Preferred Stock or such other series of preferred stock
of State Street will be redeemed (whether by mandatory or optional redemption)
unless all such shares are simultaneously redeemed, and State Street will not
purchase or otherwise acquire any such shares; provided, however, that the
foregoing will not prevent the purchase or acquisition of such shares pursuant
to a purchase or exchange offer made on the same terms to holders of all such
shares outstanding.
CONVERSION RIGHTS
Shares of Preferred Stock of any series offered hereunder may not be
exchanged for or converted (mandatorily or otherwise) into shares of Common
Stock but may be exchanged for or converted (mandatorily or otherwise) into
shares of another series of Preferred Stock.
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EXCHANGEABLITY
The holders of shares of Preferred Stock of any series may be obligated at
any time or at maturity to exchange such shares for debt securities of State
Street. The terms of any such exchange and any such debt securities will be
described in the Prospectus Supplement relating to such series of Preferred
Stock.
VOTING RIGHTS
Except as indicated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, or except as required by applicable
Massachusetts law or in State Street's Articles of Organization, the holders
of the Preferred Stock will not be entitled to vote for any purpose.
Under regulations adopted by the Federal Reserve Board, if the holders of
shares of any series of Preferred Stock of State Street become entitled to
vote for the election of directors, 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% if it otherwise exercises a "controlling influence" over State Street) 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 file with the Federal Reserve Board
under the Change in Bank Control Act to acquire or retain 10% or more of such
series.
TRANSFER AGENT AND REGISTRAR
Unless otherwise indicated in a Prospectus Supplement relating thereto,
State Street Bank and Trust Company will be the transfer agent, dividend and
redemption price disbursement agent and registrar for shares of each series of
the Preferred Stock.
PLAN OF DISTRIBUTION
State Street may sell Securities to or through underwriters, and also may
sell Securities directly to other purchasers or through agents. If one or more
underwriters are utilized in the sale of Securities, State Street will execute
an underwriting agreement with such underwriters setting forth, among other
things, certain terms of the sale and offering.
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, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from State Street or from purchasers of Securities for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters, and any discounts
or commissions received by them from State Street and any profit on the resale
of Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent with
respect to any Offered Securities will be identified, and any such
compensation received from State Street will be described, in the
corresponding Prospectus Supplement.
Under agreements which may be entered into by State Street, underwriters and
agents who participate in the distribution of Securities may be entitled to
indemnification by State Street against certain liabilities, including
liabilities under the Securities Act.
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If so indicated in the Prospectus Supplement, State Street will authorize
underwriters or other persons acting as State Street's agents to solicit
offers by certain institutions to purchase the Offered Securities from State
Street pursuant to contracts providing for payment and delivery on a future
date. 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 State Street. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of the Offered Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, State Street in the ordinary course of business.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for State Street by Ropes
& Gray, Boston, Massachusetts and for any underwriters, dealers or agents by
Sullivan & Cromwell, New York, New York. Sullivan & Cromwell may rely as to
all matters of Massachusetts law on the opinion of Ropes & Gray. Ropes & Gray
may rely as to all matters of New York law on the opinion of Sullivan &
Cromwell. Truman S. Casner, a director of State Street, is a partner of Ropes
& Gray. Mr. Casner owns beneficially a total of 5,716 shares of Common Stock
of State Street. In addition, a total of 600 shares of Common Stock of State
Street were owned beneficially by Ropes & Gray attorneys participating in the
matter.
EXPERTS
The consolidated financial statements of State Street at December 31, 1995
and 1994, and for each of the three years in the period ended December 31,
1995, incorporated by reference in State Street's Annual Report on Form 10-K
for the year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon, included therein,
and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SE-
CURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of the Notes................................................... S-2
Use of Proceeds............................................................ S-5
Certain Additional Information............................................. S-5
Underwriting............................................................... S-5
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
State Street Boston Corporation............................................ 3
Business of the Corporation................................................ 3
Certain Regulatory and Other Considerations................................ 5
Consolidated Ratios of Earnings to Fixed Charges........................... 7
Selected Financial Data.................................................... 8
Use of Proceeds............................................................ 9
Description of Debt Securities............................................. 9
Description of Preferred Stock............................................. 17
Plan of Distribution....................................................... 20
Validity of Securities..................................................... 21
Experts.................................................................... 21
</TABLE>
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$150,000,000
STATE STREET BOSTON CORPORATION
7.35% NOTES
DUE JUNE 15, 2026
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[LOGO]
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GOLDMAN, SACHS & CO.
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