Filed Pursuant to Rule 424(b)(3)
Registration Number 333-62905-1
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 24, 1998)
[LOGO]
$250,000,000
CAPITAL SECURITIES
FLEET CAPITAL TRUST V
FLOATING RATE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED BY
FLEET FINANCIAL GROUP, INC.
------------
THE TRUST:
Fleet Capital Trust V is a Delaware business trust. The trust will:
- sell capital securities (representing undivided beneficial interests in
the trust) to the public.
- sell common securities (representing undivided beneficial interests in the
trust) to Fleet Financial Group, Inc.
- use the proceeds from these sales to buy an equal principal amount of
Floating Rate Junior Subordinated Deferrable Interest Debentures due 2028
of Fleet Financial Group, Inc.
- distribute the cash payments it receives on the junior subordinated
debentures it owns to the holders of the capital and common securities.
QUARTERLY DISTRIBUTIONS:
- For each capital security that you own, you will receive cumulative cash
distributions at a variable annual rate, reset quarterly, equal to
Three-Month LIBOR plus 1.00% on the liquidation amount of $1,000 per
capital security, on March 18, June 18, September 18 and December 18 of
each year, beginning March 18, 1999.
- Fleet Financial Group, Inc. can defer interest payments on the junior
subordinated debentures at any time for up to 20 consecutive quarterly
periods. If Fleet Financial Group, Inc. does defer interest payments, the
trust will also defer payment of distributions on the capital and common
securities. However, deferred distributions will themselves accrue
interest at a variable annual rate equal to Three-Month LIBOR plus 1.00%,
compounded quarterly (to the extent permitted by law).
FLEET FINANCIAL GROUP, INC.:
- Fleet Financial Group, Inc. will fully and unconditionally guarantee the
payment by the trust of the capital securities based on obligations
discussed in the accompanying prospectus.
INVESTING IN THE CAPITAL SECURITIES INVOLVES CERTAIN RISKS WHICH ARE
DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE S-6 OF THIS PROSPECTUS
SUPPLEMENT.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the prospectus to which it relates is truthful or
complete. Any representation to the contrary is a criminal offense.
PER CAPITAL
SECURITY TOTAL
------------------- ---------------
Public offering price........................................................ $ 979.77 $ 244,942,500
Underwriting commission...................................................... (1) (1)
Proceeds to the trust........................................................ $ 979.77 $ 244,942,500
(1) Since the proceeds of the sale of the capital securities will be invested in
the junior subordinated debentures of the company, Fleet Financial Group,
Inc. has agreed to pay to the underwriters as compensation for their
arranging the investment of such proceeds in the junior subordinated
debentures an amount equal to $10.00 per capital security (or $2,500,000 in
the aggregate). The underwriters have agreed to reimburse certain of the
company's expenses in connection with the offering of the capital
securities. See "Underwriting".
-------------------
LEHMAN BROTHERS
CHASE SECURITIES INC. GOLDMAN, SACHS & CO.
BLAYLOCK & PARTNERS, L.P.
The date of this prospectus supplement is December 15, 1998.
TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT RELATING TO CAPITAL SECURITIES OF FLEET CAPITAL TRUST V
Summary Information--Q&A.................................................................................... S-3
Risk Factors................................................................................................ S-6
Fleet Financial Group, Inc.................................................................................. S-9
Fleet Capital............................................................................................... S-10
Selected Consolidated Financial Data--Fleet Financial Group, Inc............................................ S-11
Capitalization.............................................................................................. S-13
Accounting Treatment........................................................................................ S-15
Use of Proceeds............................................................................................. S-15
Description of the Capital Securities....................................................................... S-16
Description of the Guarantee................................................................................ S-28
Description of the Junior Subordinated Debentures........................................................... S-28
Effect of Obligations under the Junior Subordinated Debentures and the Guarantee............................ S-38
United States Federal Income Taxation....................................................................... S-39
ERISA Considerations........................................................................................ S-42
Underwriting................................................................................................ S-44
PROSPECTUS RELATING TO CAPITAL SECURITIES OF FLEET CAPITAL TRUST V
Available Information....................................................................................... 3
Incorporation of Certain Documents by Reference............................................................. 4
Fleet Financial Group, Inc.................................................................................. 5
The Trusts.................................................................................................. 6
Consolidated Ratios of Earnings to Fixed Charges............................................................ 7
Reason for Transaction...................................................................................... 7
Use of Proceeds............................................................................................. 7
Description of the Junior Subordinated Debentures........................................................... 8
Description of the Preferred Securities..................................................................... 13
Description of the Preferred Securities Guarantees.......................................................... 16
Effect of Obligations Under the Junior Subordinated Debentures and the Preferred Securities Guarantees...... 19
Plan of Distribution........................................................................................ 20
Legal Matters............................................................................................... 21
Experts..................................................................................................... 21
You should rely only on the information contained in this document or that
we have referred you to. We have not authorized anyone to provide you with any
other information.
The trust may sell capital securities after the date of this prospectus
supplement, and this prospectus supplement and the prospectus may be delivered
to you after the date of this prospectus supplement. However, you should realize
that the affairs of Fleet or the trust may have changed since the date of this
prospectus supplement. This prospectus supplement will not reflect such changes.
You should not consider this prospectus supplement or the prospectus to be
an offer or solicitation relating to the capital securities in any jurisdiction
in which such an offer or solicitation is not authorized. Furthermore, you
should not consider this prospectus supplement or the prospectus to be an offer
or solicitation relating to the capital securities if the person making the
offer or solicitation is not qualified to do so, or if it is unlawful for you to
receive such an offer or solicitation.
S-2
SUMMARY INFORMATION--Q&A
The following information supplements, and should be read together with, the
information contained in other parts of this Prospectus Supplement and in the
accompanying Prospectus. This summary highlights selected information from this
Prospectus Supplement and the accompanying Prospectus to help you understand the
Capital Securities. You should carefully read this Prospectus Supplement and the
accompanying Prospectus to understand fully the terms of the Capital Securities,
as well as the tax and other considerations that are important to you in making
a decision about whether to invest in the Capital Securities. You should pay
special attention to the "Risk Factors" section beginning on page S-6 of this
Prospectus Supplement to determine whether an investment in the Capital
Securities is appropriate for you. The Capital Securities are one of the series
of Preferred Securities referred to in the accompanying Prospectus.
For your convenience, we make reference to specific page numbers in this
Prospectus Supplement and the accompanying Prospectus for more detailed
information on some of the terms and concepts used throughout this Prospectus
Supplement.
WHAT ARE THE CAPITAL SECURITIES?
Each Capital Security (a "Capital Security") represents an undivided
beneficial interest in the assets of Fleet Capital. Each Capital Security will
entitle the holder to receive quarterly cash distributions as described in this
Prospectus Supplement. The underwriters are offering Capital Securities at a
price of $979.77 for each Capital Security.
WHO IS FLEET CAPITAL?
Fleet Capital Trust V ("Fleet Capital") is a recently created Delaware
business trust.
Fleet Capital will sell its Capital Securities to the public and its common
securities (the "Common Securities", and together with the Capital Securities,
the "Trust Securities") to Fleet Financial Group, Inc. ("Fleet"). Fleet Capital
will use the proceeds from these sales to buy a series of Floating Rate Junior
Subordinated Deferrable Interest Debentures due 2028 (the "Junior Subordinated
Debentures") from Fleet with the same financial terms as the Capital Securities.
Fleet will, on a subordinated basis, fully and unconditionally guarantee the
payment by Fleet Capital of the Capital Securities (the "Guarantee").
There are five trustees of Fleet Capital. Three of Fleet Capital trustees
are officers of Fleet (the "Regular Trustees"). The First National Bank of
Chicago will act as the institutional trustee of Fleet Capital (the
"Institutional Trustee") and one of its affiliates will act as the Delaware
trustee.
WHO IS FLEET?
Fleet is a diversified financial services company. Fleet is engaged in a
general consumer and commercial banking and investment management business
throughout Connecticut, Massachusetts, New Jersey, New York, Rhode Island,
Maine, New Hampshire and Florida through its banking subsidiaries, and also
provides, through its other subsidiaries, a variety of financial services.
WHEN WILL YOU RECEIVE QUARTERLY DISTRIBUTIONS?
If you purchase the Capital Securities, you are entitled to receive
cumulative cash distributions at a variable annual rate, reset quarterly, of
Three-Month LIBOR plus 1.00% of the liquidation amount of $1,000 per Capital
Security. Distributions will accumulate from the date Fleet Capital issues the
Capital Securities and will be paid quarterly in arrears on March 18, June 18,
September 18 and December 18 of each year, beginning March 18, 1999
("distributions"). See page S-33 for a description of how Three-Month LIBOR is
calculated.
WHEN CAN PAYMENT OF YOUR DISTRIBUTIONS BE DEFERRED?
Fleet can, on one or more occasions, defer interest payments on the Junior
Subordinated Debentures for up to 20 consecutive quarterly periods unless an
event of default (see page S-35) under the Junior Subordinated Debentures has
occurred and is continuing. A deferral of interest payments cannot extend,
however, beyond the maturity date of the Junior Subordinated Debentures (which
is December 18, 2028).
If Fleet defers interest payments on the Junior Subordinated Debentures,
Fleet Capital will also defer distributions on the Capital Securities. During
this deferral period, distributions will continue to accrue on the Capital
Securities at a variable annual rate, reset quarterly, of Three-Month LIBOR plus
1.00% of the liquidation amount of $1,000 per Capital Security. Also, the
deferred distributions will themselves accrue interest (to the extent permitted
by law) at a variable annual rate of Three-Month LIBOR plus 1.00%, compounded
quarterly. Once Fleet makes all interest payments on the Junior Subordinated
Debentures, with
S-3
accrued interest, it can again postpone interest payments on the Junior
Subordinated Debentures if no event of default under the Junior Subordinated
Debentures has occurred and is continuing.
During any period in which Fleet defers interest payments on the Junior
Subordinated Debentures, Fleet will not be permitted to (with limited exceptions
described on page S-17):
- - declare or pay a dividend or make any other payment or distribution on its
capital stock;
- - redeem, purchase or make a liquidation payment on any of its capital stock;
- - make an interest, principal or premium payment on, or repurchase or redeem,
any of its debt securities that rank equal with or junior to the Junior
Subordinated Debentures; or
- - make any guarantee payments relating to any of the above.
If Fleet defers the payment of interest on the Junior Subordinated
Debentures, the Capital Securities will be treated as being reissued with
original issue discount for United States federal income tax purposes. This
means that, beginning at such time, you will be required to recognize interest
income with respect to distributions (even during the period such distributions
are deferred) and include such amounts in your gross income for United States
federal income tax purposes before you receive any cash distributions relating
to such interest payments. See "United States Federal Income Taxation" beginning
on page S-39.
WHEN CAN FLEET CAPITAL REDEEM THE CAPITAL SECURITIES?
Fleet Capital will redeem all of the outstanding Capital Securities when the
Junior Subordinated Debentures are paid at maturity on December 18, 2028. In
addition, if Fleet redeems any Junior Subordinated Debentures before their
maturity, Fleet Capital will use the cash it receives on the redemption of the
Junior Subordinated Debentures to redeem, on a pro rata basis, Capital
Securities and Common Securities having an aggregate liquidation amount equal to
the aggregate principal amount of the Junior Subordinated Debentures redeemed.
Fleet can redeem some or all of the Junior Subordinated Debentures before
their maturity at 100% of their principal amount plus accrued interest to the
date of redemption:
- - on one or more occasions any time on or after December 18, 2003; and
- - before December 18, 2003, if certain changes in tax or regulatory law occur
(each of which is a "Special Event" and each of which is more fully
described on pages S-31 and 32), and within 90 days of the occurrence of the
Special Event.
Any redemption of the Junior Subordinated Debentures may require approval of
the Board of Governors of the Federal Reserve System.
WHAT IS FLEET'S GUARANTEE OF THE CAPITAL SECURITIES?
Fleet will fully and unconditionally guarantee the Capital Securities based
on:
- - its obligations under the Guarantee; and
- - its obligations under the declaration of trust which governs the terms of the
Capital Securities and the indenture which governs the terms of the Junior
Subordinated Debentures (see pages S-38 and S-39).
If Fleet does not make a payment on the Junior Subordinated Debentures,
Fleet Capital will not have sufficient funds to make payments on the Capital
Securities. The Guarantee does not cover payments when Fleet Capital does not
have sufficient funds to make payments on the Capital Securities. Fleet's
obligations under the Guarantee are subordinate to its obligations to make
payments on all of its other liabilities (except its obligations under similar
guarantees).
WHEN COULD THE JUNIOR SUBORDINATED DEBENTURES BE DISTRIBUTED TO YOU?
Fleet has the right to terminate Fleet Capital at any time. If Fleet decides
to exercise its right to terminate Fleet Capital, Fleet Capital will redeem the
Capital Securities by distributing the Junior Subordinated Debentures to holders
of the Capital Securities and the Common Securities on a pro rata basis.
Any distribution of the Junior Subordinated Debentures may require approval
of the Board of Governors of the Federal Reserve System.
WILL THE CAPITAL SECURITIES BE LISTED ON A STOCK EXCHANGE?
The Capital Securities will not be listed on any stock exchange.
S-4
WHAT HAPPENS IF FLEET CAPITAL IS TERMINATED AND THE JUNIOR SUBORDINATED
DEBENTURES ARE NOT DISTRIBUTED?
Fleet Capital may also terminate in circumstances where the Junior
Subordinated Debentures will not be distributed. In those situations, Fleet
Capital will pay the liquidation amount of $1,000 for each Capital Security plus
unpaid distributions to the date such payment is made. Fleet Capital will be
able to make this distribution of cash only if the Junior Subordinated
Debentures are redeemed by Fleet.
IN WHAT FORM WILL THE CAPITAL SECURITIES BE ISSUED?
The Capital Securities will be represented by one or more global securities
that will be deposited with and registered in the name of The Depository Trust
Company, New York, New York ("DTC") or its nominee. This means that you will not
receive a certificate for your Capital Securities. Fleet Capital expects that
the Capital Securities will be ready for delivery through DTC on or about
December 18, 1998.
S-5
RISK FACTORS
Your investment in the Capital Securities will involve certain risks. You should
carefully consider the following discussion of risks, and the other information
in this Prospectus Supplement and the accompanying Prospectus, before deciding
whether an investment in the Capital Securities is suitable for you.
FLEET'S OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES
ARE SUBORDINATED.
Fleet's obligations under the Guarantee are unsecured and will rank in
priority of payment:
- junior to all of Fleet's other liabilities, except those liabilities made
equal or junior to the Guarantee by their terms;
- equal with all of Fleet's senior most preferred and preference stock now
or hereafter issued by it, and with any guarantee now or hereafter issued
by it in respect of any preferred or preference stock of any of its
affiliates (including Fleet's guarantee of the outstanding preferred or
capital securities of Fleet Capital Trust I, Fleet Capital Trust II, Fleet
Capital Trust III and Fleet Capital Trust IV); and
- senior to Fleet's common stock.
This means that Fleet cannot make any payments on the Guarantee if it
defaults on a payment of any of its other liabilities, except those liabilities
made equal or junior to the Guarantee by their terms. In the event of the
bankruptcy, liquidation or dissolution of Fleet, its assets would be available
to pay obligations under the Guarantee only after all payments had been made on
its other liabilities (except those liabilities made equal or junior to the
Guarantee by their terms).
Fleet's obligations under the Junior Subordinated Debentures are unsecured
and will rank junior in priority of payment to Fleet's Senior Indebtedness and
Other Financial Obligations (see pages S-30 and S-31 for a definition of these
terms). This means that Fleet cannot make any payments of principal (including
redemption payments) or interest on the Junior Subordinated Debentures if it
defaults on a payment on its Senior Indebtedness or Other Financial Obligations.
In the event of the bankruptcy, liquidation or dissolution of Fleet, its assets
would be available to pay obligations under the Junior Subordinated Debentures
only after all payments had been made on its Senior Indebtedness and Other
Financial Obligations. As of September 30, 1998, Senior Indebtedness and Other
Financial Obligations of Fleet aggregated approximately $5.7 billion (holding
company only). In addition, because Fleet is a bank holding company, the Junior
Subordinated Debentures are effectively subordinated to all existing and future
liabilities of Fleet's subsidiaries, including depositors.
The Capital Securities, the Guarantee and the Junior Subordinated Debentures
do not limit the ability of Fleet and its subsidiaries to incur additional
indebtedness, including indebtedness that ranks senior in priority of payment to
the Junior Subordinated Debentures and the Guarantee.
For more information please refer to "Description of the Junior Subordinated
Debentures--Subordination" beginning on page S-29 and "Description of the
Preferred Securities Guarantee" beginning on page 16 of the accompanying
Prospectus.
GUARANTEE ONLY COVERS PAYMENTS IF FLEET CAPITAL HAS CASH AVAILABLE
The ability of Fleet Capital to pay scheduled distributions on the Capital
Securities, the redemption price of the Capital Securities and the liquidation
amount of each Capital Security is solely dependent upon Fleet making the
related payments on the Junior Subordinated Debentures when due.
If Fleet defaults on its obligation to pay principal or interest on the
Junior Subordinated Debentures, Fleet Capital will not have sufficient funds to
pay distributions, the redemption price or the liquidation amount of each
Capital Security. In those circumstances, you will not be able to rely upon the
Guarantee for payment of these amounts.
S-6
Instead, you:
- may directly sue Fleet or seek other remedies to collect your pro rata
share of payments owed; or
- rely on the Institutional Trustee to enforce Fleet Capital's rights under
the Junior Subordinated Debentures.
ABILITY TO DEFER DISTRIBUTIONS WILL CAUSE CASH PAYMENTS TO CEASE, WILL HAVE
FEDERAL INCOME TAX CONSEQUENCES FOR YOU AND MAY AFFECT THE TRADING PRICE OF THE
CAPITAL SECURITIES
If no event of default under the Junior Subordinated Debentures has occurred
and is continuing, Fleet can, on one or more occasions, defer interest payments
on the Junior Subordinated Debentures for up to 20 consecutive quarterly
periods. If Fleet defers interest payments on the Junior Subordinated
Debentures, Fleet Capital will defer distributions on the Capital Securities
during any deferral period. However, distributions would still accumulate and
such deferred distributions will themselves accrue interest at a variable annual
rate of Three-Month LIBOR plus 1.00% (to the extent permitted by law).
If Fleet defers the payment of interest on the Junior Subordinated
Debentures, you will be required to recognize interest income for United States
federal income tax purposes in respect of your pro rata share of the interest on
the Junior Subordinated Debentures held by Fleet Capital before you receive any
cash distributions relating to such interest payments. In addition, if you sell
the Capital Securities before the end of any deferral period or before the
record date relating to distributions which are paid, you will not receive the
cash distributions relating to any accrued and unpaid interest even though you
will be required to recognize such interest in income for United States federal
income tax purposes.
Fleet has no current intention of deferring interest payments on the Junior
Subordinated Debentures. However, if Fleet exercises its right in the future,
the Capital Securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest on the Junior Subordinated Debentures. If
you sell the Capital Securities during an interest deferral period, you may not
receive the same return on your investment as someone who continues to hold the
Capital Securities. In addition, the existence of Fleet's right to defer
payments of interest on the Junior Subordinated Debentures may mean that the
market price for the Capital Securities (which represent an undivided beneficial
interest in the Junior Subordinated Debentures) may be more volatile than other
securities that do not have these rights.
See "United States Federal Income Taxation" beginning on page S-39 for more
information regarding the United States federal income tax consequences of
purchasing, holding and selling the Capital Securities.
CAPITAL SECURITIES MAY BE REDEEMED BEFORE DECEMBER 18, 2003 IF A SPECIAL EVENT
OCCURS
If a Special Event (see pages S-31 and S-32) occurs and is continuing, Fleet
has the right to redeem all of the Junior Subordinated Debentures. If such a
redemption happens, Fleet Capital will use the cash it receives on the
redemption of the Junior Subordinated Debentures to redeem all of the Capital
and Common Securities within 90 days of the event.
Please see "Description of the Capital Securities--Redemption" on page S-18
and "Description of the Junior Subordinated Debentures--Optional Prepayment"
beginning on page S-31 for more information.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES MAY HAVE A POSSIBLE ADVERSE
EFFECT ON TRADING PRICE
Fleet has the right to terminate Fleet Capital at any time. If Fleet decides
to exercise its right to terminate Fleet Capital, Fleet Capital will redeem the
Capital and Common Securities by distributing the Junior Subordinated Debentures
to holders of the Capital Securities and Common Securities on a pro rata basis.
Any distribution of the Junior Subordinated Debtentures may require approval of
the Board of Governors of the Federal Reserve System.
Under current United States federal income tax laws, a distribution of
Junior Subordinated
S-7
Debentures to you on the dissolution of Fleet Capital should not be a taxable
event to you. However, if Fleet Capital is characterized for United States
federal income tax purposes as an association taxable as a corporation at the
time it is dissolved, the distribution of Junior Subordinated Debentures to you
may be a taxable event to you. If there is a change in law, a distribution of
Junior Subordinated Debentures to you on the dissolution of Fleet Capital could
be a taxable event to you.
Fleet has no current intention of causing the termination of Fleet Capital
and the distribution of the Junior Subordinated Debentures. Fleet anticipates
that it would consider exercising this right in the event that expenses
associated with maintaining Fleet Capital were substantially greater than
currently expected, such as if a Special Event occurred. Fleet cannot predict
the other circumstances under which this right would be exercised.
Fleet cannot predict the market prices for the Junior Subordinated
Debentures that may be distributed. Accordingly, the Junior Subordinated
Debentures that you receive on a distribution, or the Capital Securities you
hold pending such a distribution, may trade at a discount to the price that you
paid to purchase the Capital Securities.
Because you may receive Junior Subordinated Debentures, you should make an
investment decision with regard to the Junior Subordinated Debentures, in
addition to the Capital Securities. You should carefully review all the
information regarding the Junior Subordinated Debentures contained in this
Prospectus Supplement and the accompanying Prospectus.
LIMITED VOTING RIGHTS
You will have limited voting rights. In particular, only Fleet can elect or
remove any of Fleet Capital's trustees.
See "Fleet Capital" on page S-10 and "Description of the Capital
Securities--Voting Rights" beginning on page S-21.
TRADING PRICE OF THE CAPITAL SECURITIES MAY NOT REFLECT THE VALUE OF ACCRUED BUT
UNPAID INTEREST
If you use the accrual method of accounting for tax purposes and dispose of
your Capital Securities between quarterly distributions, you will be required
to:
- include accrued but unpaid interest as ordinary income for United States
federal tax purposes; and
- add the accrued but unpaid income to your adjusted tax basis in the
Capital Securities disposed of.
If you sell the Capital Securities for less than your adjusted tax basis in
the Capital Securities, you will recognize a loss which generally may not be
used to offset ordinary income for United States federal tax purposes. See
"United States Federal Income Taxation" beginning on page S-39.
THERE IS NOT AN ESTABLISHED TRADING MARKET FOR THE CAPITAL SECURITIES
The Capital Securities are a new issue of securities of Fleet Capital with
no established trading market. The Capital Securities will not be listed on any
stock exchange. Fleet Capital cannot assure you that an active trading market
for the Capital Securities will develop or be sustained in the future. While the
underwriters have indicated to Fleet and Fleet Capital their intention to create
a market for the Capital Securities, they are not obligated to do so and may
discontinue market-making at any time without notice. As a result, you may have
difficulty selling or otherwise disposing of the Capital Securities.
NO PROTECTION IN HIGHLY LEVERAGED TRANSACTIONS
Under the indenture which governs the terms of the Junior Subordinated
Debentures, you will not be protected from a highly leveraged transaction,
including a change of control of Fleet or other similar transaction. Such a
transaction may have the effect of increasing Fleet's liabilities that are
senior to the Junior Subordinated Debentures.
S-8
FLEET FINANCIAL GROUP, INC.
THIS SECTION REPLACES THE SECTION ENTITLED "FLEET FINANCIAL GROUP, INC." IN
THE ACCOMPANYING PROSPECTUS.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At September 30, 1998, Fleet was the tenth largest
bank holding company in the United States, with total assets of $99.5 billion,
total deposits of $66.0 billion and stockholders' equity of $9.2 billion.
Fleet is engaged in a general consumer and commercial banking and investment
management business throughout the states of Connecticut, Massachusetts, New
Jersey, New York, Rhode Island, Maine, New Hampshire and Florida through its
banking subsidiaries, and also provides, through its other subsidiaries, a
variety of financial services, including mortgage banking, asset-based lending,
consumer finance, real estate financing, securities brokerage services, capital
markets services and investment banking, investment advice and management, data
processing and student loan servicing.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 346-4000.
RECENT TRANSACTIONS
On November 23, 1998, Fleet and Fleet Capital Corporation ("Fleet Capital"),
a Rhode Island corporation and an indirect wholly-owned subsidiary of Fleet,
announced that they entered into a stock purchase agreement with The Sanwa Bank,
Limited ("SBL"), pursuant to which Fleet Capital agreed to purchase all of the
outstanding capital stock of Sanwa Business Credit Corporation ("SBCC") from SBL
(the "Sanwa Acquisition"). SBCC had loans and leases as of September 30, 1998 of
$6.9 billion, with earnings of $40.3 million and $62.0 million for the nine
months ended September 30, 1998 and the twelve months ended December 31, 1997,
respectively. SBCC, with approximately 750 employees and 18 offices nationwide,
creates a $16 billion leasing and commercial finance business at Fleet, with
various specialities and geographic exposures. The transaction is expected to
close in the first quarter of 1999 and will be accounted for under the purchase
accounting method.
HOLDING COMPANY
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including the holders
of the securities offered hereby, to benefit from the distribution of assets of
any subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to prior claims of creditors of the subsidiary (including depositors
in the case of banking subsidiaries) except to the extent that a claim of Fleet
as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions with safe and
sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at September 30, 1998, Fleet's banking subsidiaries could have
declared additional dividends of approximately $940 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
Under the policy of the Board of Govenors of the Federal Reserve Systems
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be
S-9
subordinate in right of payment to deposits and obligations to general creditors
of such subsidiary bank. Further, the Crime Control Act of 1990 amended the
federal bankruptcy laws to provide that in the event of the bankruptcy of Fleet,
any commitment by Fleet to its regulators to maintain the capital of a banking
subsidiary would be assumed by the bankruptcy trustee and entitled to a priority
of payment.
FLEET CAPITAL
THIS SECTION SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH, REPLACES
THE SECTION ENTITLED "THE TRUSTS" IN THE ACCOMPANYING PROSPECTUS.
Fleet Capital is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of November 1, 1996, executed
by Fleet, as sponsor (the "Sponsor"), and the trustees of Fleet Capital (the
"Fleet Capital Trustees") and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on November 1, 1996. Such
declaration will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Capital Securities, the purchasers thereof
will own all of the Capital Securities. See "Description of the Capital
Securities--Book-Entry Only Issuance--The Depository Trust Company." Fleet will
directly or indirectly acquire Common Securities in an aggregate liquidation
amount equal to at least 3 percent of the total capital of Fleet Capital. Fleet
Capital exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of Fleet Capital, (ii)
investing the gross proceeds of the Trust Securities in the Junior Subordinated
Debentures and (iii) engaging in only those other activities necessary or
incidental thereto.
Pursuant to the Declaration, the number of Fleet Capital Trustees will
initially be five. Three of the Fleet Capital Trustees (the "Regular Trustees")
will be persons who are employees or officers of, or who are affiliated with,
Fleet. The fourth trustee will be a financial institution that is unaffiliated
with Fleet, which trustee will serve as institutional trustee under the
Declaration and as indenture trustee for the purposes of compliance with the
provisions of the Trust Indenture Act (the "Institutional Trustee"). Initially,
The First National Bank of Chicago will be the Institutional Trustee until
removed or replaced by the holder of the Common Securities. For purposes of
compliance with the provisions of the Trust Indenture Act, The First National
Bank of Chicago will act as trustee (the "Guarantee Trustee") under the
Guarantee and as Debt Trustee (as defined herein) under the Indenture (as
defined herein). The fifth trustee will be an entity that maintains its
principal place of business in the state of Delaware (the "Delaware Trustee").
Initially, First Chicago Delaware Inc., an affiliate of the Institutional
Trustee, will act as Delaware Trustee. See "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus and "Description of the
Capital Securities--Voting Rights" herein.
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and will have
the power to exercise all rights, powers and privileges under the Indenture as
the holder of the Junior Subordinated Debentures. In addition, the Institutional
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Institutional Account") to hold all payments made in respect
of the Junior Subordinated Debentures for the benefit of the holders of the
Trust Securities. The Institutional Trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
Trust Securities out of funds from the Institutional Account. The Guarantee
Trustee will hold the Guarantee for the benefit of the holders of the Capital
Securities. Fleet, as the direct or indirect holder of all the Common
Securities, will have the right to appoint, remove or replace any Fleet Capital
Trustee and to increase or decrease the number of Fleet Capital Trustees. Fleet
will pay all fees and expenses related to Fleet Capital and the offering of the
Trust Securities. See "Description of the Junior Subordinated
Debentures--Miscellaneous."
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Business Trust Act") and the
Trust Indenture Act. See "Description of the Capital Securities."
S-10
SELECTED CONSOLIDATED FINANCIAL DATA
FLEET FINANCIAL GROUP, INC.
The following unaudited consolidated summary sets forth selected financial data
for Fleet and its subsidiaries for the nine months ended September 30, 1998 and
1997 and for each of the years in the five-year period ending December 31, 1997.
The following summary should be read in conjunction with the financial
information incorporated herein by reference to other documents. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus. The summary for the nine months ended September 30, 1998 and 1997 is
based on unaudited financial statements which include all adjustments that, in
the opinion of management of Fleet, are necessary for a fair presentation of the
results of the respective interim periods. The results of operations for the
nine months ended September 30, 1998 are not necessarily indicative of the
results expected for 1998 or any other interim period. All data has been
restated to reflect the Quick & Reilly acquisition, accounted for as a pooling
of interests. Certain amounts in prior periods have been reclassified to conform
to current-year presentation. All per common share amounts and associated ratios
have been adjusted to reflect Fleet's two-for-one common stock split effective
October 7, 1998.
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------------------- -----------------------------------------------------
1998 1997 1997 1996 1995
-------------- -------------- -------------- -------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
CONSOLIDATED SUMMARY
OF OPERATIONS:
Interest income
(fully taxable
equivalent)...... $ 5,066 $ 4,565 $ 6,130 $ 6,064 $ 6,257
Interest expense... 2,168 1,770 2,391 2,566 3,139
Net interest income
(fully taxable
equivalent)...... 2,898 2,795 3,739 3,498 3,118
Provision for
credit losses.... 330 233 322 213 101
Net interest income
after provision
for credit
losses........... 2,568 2,562 3,417 3,285 3,017
Noninterest
income........... 2,348 2,007 2,631 2,333 1,939
Noninterest
expense.......... 3,057 2,802 3,715 3,512 3,755
Net income......... 1,117(d) 1,033 1,367 1,221 679(a)
EARNINGS PER COMMON
SHARE:
Basic.............. $ 1.90(d) $ 1.78 $ 2.36 $ 2.02 $ .91(a)
Diluted............ 1.84(d) 1.73 2.30 1.98 .85(a)
Weighted average
basic shares
outstanding...... 567,873,966 552,509,092 551,956,482 568,896,262 530,918,056
Weighted average
diluted shares
outstanding...... 587,600,638 568,744,580 568,604,810 580,025,974 571,991,078
Book value per
common share..... $ 14.95 $ 12.46 $ 13.68 $ 12.04 $ 11.01
Cash dividends
declared per
common share..... .735 .675 .920 .870 .815
Common dividend
payout ratio..... 38.37% 35.37% 36.32% 40.64% 79.22%
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest
on deposits...... 3.22x 4.02x 3.90x 3.38x 1.79x
Including interest
on deposits...... 1.83 1.96 1.94 1.79 1.36
RATIO OF EARNINGS TO
FIXED CHARGES AND
DIVIDENDS ON
PREFERRED STOCK:
Excluding interest
on deposits...... 3.06 3.64 3.57 3.10 1.76
Including interest
on deposits...... 1.81 1.92 1.90 1.76 1.36
CONSOLIDATED BALANCE
SHEET--
AVERAGE BALANCES:
Total assets....... $ 96,801 $ 86,372 $ 86,660 $ 86,738 $ 86,241
Securities held to
maturity(c)...... 1,167 1,138 1,167 1,045 7,736
Securities
available for
sale(c).......... 9,220 7,395 7,507 10,287 12,779
Loans, net of
unearned
income........... 65,633 59,672 60,076 57,046 52,164
Due from
brokers/dealers... 3,869 2,673 2,884 2,179 1,927
Interest-bearing
deposits......... 50,304 47,704 47,514 47,334 43,120
Short-term
borrowings....... 8,331 5,012 5,266 6,351 14,807
Due to
brokers/dealers... 4,693 3,175 3,463 2,645 2,341
Long-term
debt/subordinated
notes
and debentures... 5,673 4,698 4,608 5,486 6,581
Stockholders'
equity........... 8,762 7,519 7,589 7,369 6,863
1994 1993
-------------- --------------
CONSOLIDATED SUMMARY
OF OPERATIONS:
Interest income
(fully taxable
equivalent)...... $ 5,389 $ 5,154
Interest expense... 2,245 1,956
Net interest income
(fully taxable
equivalent)...... 3,144 3,198
Provision for
credit losses.... 65 327
Net interest income
after provision
for credit
losses........... 3,079 2,871
Noninterest
income........... 1,654 1,833
Noninterest
expense.......... 3,221 3,479
Net income......... 890 859(b)
EARNINGS PER COMMON
SHARE:
Basic.............. $ 1.62 $ 1.59(b)
Diluted............ 1.50 1.48(b)
Weighted average
basic shares
outstanding...... 529,385,748 516,081,724
Weighted average
diluted shares
outstanding...... 571,946,052 556,838,980
Book value per
common share..... $ 9.94 $ 10.37
Cash dividends
declared per
common share..... .700 .515
Common dividend
payout ratio..... 35.86% 23.97%
RATIO OF EARNINGS TO
FIXED CHARGES:
Excluding interest
on deposits...... 2.30x 2.39x
Including interest
on deposits...... 1.64 1.58
RATIO OF EARNINGS TO
FIXED CHARGES AND
DIVIDENDS ON
PREFERRED STOCK:
Excluding interest
on deposits...... 2.24 2.31
Including interest
on deposits...... 1.62 1.57
CONSOLIDATED BALANCE
SHEET--
AVERAGE BALANCES:
Total assets....... $ 82,143 $ 77,763
Securities held to
maturity(c)...... 8,787 7,735
Securities
available for
sale(c).......... 16,923 14,140
Loans, net of
unearned
income........... 44,754 43,917
Due from
brokers/dealers... 1,606 1,611
Interest-bearing
deposits......... 40,113 39,766
Short-term
borrowings....... 15,807 13,268
Due to
brokers/dealers... 1,821 1,759
Long-term
debt/subordinated
notes
and debentures... 5,383 5,039
Stockholders'
equity........... 6,019 5,516
S-11
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------------------- -----------------------------------------------------
1998 1997 1997 1996 1995
-------------- -------------- -------------- -------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
CONSOLIDATED RATIOS:
Net interest margin
(fully taxable
equivalent)...... 4.64% 5.03% 5.01% 4.68% 4.03%
Return on average
assets........... 1.54(d) 1.60 1.58 1.40 0.79(a)
Return on average
common
stockholders'
equity........... 17.87(d) 19.77 19.30 17.68 9.93(a)
Average
stockholders'
equity to average
assets........... 9.05 8.71 8.76 8.50 7.96
Tier 1 risk-based
capital ratio.... 6.81 7.19 7.26 7.70 7.60
Total risk-based
capital ratio.... 11.07 10.74 10.71 11.27 11.16
Period-end reserve
for credit losses
to period-end
loans, net of
unearned
income........... 2.28 2.37 2.29 2.49 2.51
Net charge-offs to
average loans,
net of unearned
income........... .67 .64 0.63 0.65 0.58
Period-end
nonperforming
assets to
period-end loans,
net of unearned
income, and other
real estate
owned............ .42(e) .79(e) 0.66(e) 1.21(e) 0.95(e)
1994 1993
-------------- --------------
CONSOLIDATED RATIOS:
Net interest margin
(fully taxable
equivalent)...... 4.23% 4.52%
Return on average
assets........... 1.08 1.11(b)
Return on average
common
stockholders'
equity........... 15.74 17.26(b)
Average
stockholders'
equity to average
assets........... 7.33 7.09
Tier 1 risk-based
capital ratio.... 9.15 10.35
Total risk-based
capital ratio.... 12.82 14.65
Period-end reserve
for credit losses
to period-end
loans, net of
unearned
income........... 3.20 3.76
Net charge-offs to
average loans,
net of unearned
income........... 0.53 1.33
Period-end
nonperforming
assets to
period-end loans,
net of unearned
income, and other
real estate
owned............ 1.63 2.33
- ------------------------
(a) Includes impact of the loss on assets held for sale or accelerated
disposition ($175 million pre-tax) and merger-related charges ($490 million
pre-tax) recorded in 1995. Excluding these special charges, return on
average common stockholders' equity and return on average assets would have
been 16.55% and 1.29%, respectively, while net income and earnings per share
would have been $1,108 million and $1.60, respectively.
(b) Includes impact of cumulative effect of change in accounting method of $53
million in 1993.
(c) Effective January 1, 1994, Fleet adopted FASB Statement No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." The standard
requires that securities available for sale be reported at fair value, with
unrealized gains or losses reflected as a separate component of
stockholders' equity. In connection with the adoption of FASB Statement No.
115, Fleet transferred securities netting to $345 million from the held to
maturity portfolio to the available for sale portfolio. During the fourth
quarter of 1995, Fleet reclassified substantially all of its securities held
to maturity to securities available for sale as the FASB permitted a
one-time opportunity for institutions to reassess the appropriateness of the
designations of all securities.
(d) Includes impact of merger-related charges ($73 million pre-tax, $44 million
post-tax) recorded in the first quarter of 1998. Excluding these
merger-related charges, return on average common stockholders' equity and
return on average assets would have been 18.60% and 1.60%, respectively,
while net income, basic earnings per share and diluted earnings per share
would have been $1,161 million, $1.98 and $1.91, respectively.
(e) Excludes $126 million, $172 million, $214 million, $265 million and $317
million of nonperforming assets reclassified to held for sale or accelerated
disposition at September 30, 1998 and 1997 and December 31, 1997, 1996 and
1995, respectively. Including such amounts, the ratios would have been .61%,
1.08%, 1.01%, 1.65% and 1.55% at September 30, 1998 and 1997 and December
31, 1997, 1996 and 1995, respectively.
S-12
CAPITALIZATION
The following table sets forth the actual consolidated capitalization of
Fleet and its subsidiaries at September 30, 1998, and Fleet's capitalization as
of such date as adjusted to reflect the sale of the Capital Securities offered
hereby. The table should be read in conjunction with Fleet's consolidated
financial statements and notes thereto included in the documents incorporated by
reference herein. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus.
ACTUAL AS ADJUSTED
---------- -----------
AT SEPTEMBER 30, 1998
-----------------------
(DOLLARS IN MILLIONS)
Senior and subordinated debt............................................................. $ 6,764 $ 6,764
Company-obligated mandatorily redeemable preferred securities
of Fleet Capital Trust I(1)............................................................. 84 84
Company-obligated mandatorily redeemable capital securities
of Fleet Capital Trust II(2)............................................................ 250 250
Company-obligated mandatorily redeemable preferred securities
of Fleet Capital Trust III(3)........................................................... 120 120
Company-obligated mandatorily redeemable preferred securities
of Fleet Capital Trust IV(4)............................................................ 150 150
Company-obligated mandatory redeemable capital securities
of Fleet Capital Trust V(5)............................................................. -- 250
---------- -----------
Total long-term debt..................................................................... 7,368 7,618
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value......................................................... 691 691
Common stock, $.01 par value............................................................. 6 6
Common surplus........................................................................... 3,292 3,292
Retained earnings........................................................................ 5,102 5,102
Accumulated other comprehensive income................................................... 180 180
Treasury stock........................................................................... (96) (96)
---------- -----------
Total stockholders' equity............................................................... 9,175 9,175
---------- -----------
Total long-term debt and stockholders' equity............................................ $ 16,543 $ 16,793
---------- -----------
---------- -----------
- ------------------------
(1) Issued on February 4, 1997. The sole assets of Fleet Capital Trust I are
8.00% Junior Subordinated Deferrable Interest Debentures due 2027 with a
principal amount of approximately $86.3 million. Such debentures mature on
February 15, 2027, which may be (i) shortened to a date not earlier than
April 15, 2001 or (ii) extended to a date not later than February 15, 2046.
Fleet owns all of the common securities of such trust. Upon redemption of
such debentures, the preferred securities are mandatorily redeemable.
(2) Issued on December 11, 1996. The sole assets of Fleet Capital Trust II are
7.92% Junior Subordinated Deferrable Interest Debentures due 2026 with a
principal amount of approximately $257.7 million. Such debentures mature on
December 11, 2026. Fleet owns all of the common securities of such trust.
Upon redemption of such debentures, the capital securities are mandatorily
redeemable.
(3) Issued on January 29, 1998. The sole assets of Fleet Capital Trust III are
7.05% Junior Subordinated Deferrable Interest Debentures due 2028 with a
principal amount of approximately $123.7 million. Such debentures mature on
March 31, 2028. Fleet owns all of the common securities of such trust. Upon
redemption of such debentures, the preferred securities are mandatorily
redeemable.
S-13
(4) Issued on April 28, 1998. The sole assets of Fleet Capital Trust IV are
7.17% Junior Subordinated Deferrable Interest Debentures with a principal
amount of approximately $154.6 million. Such debentures mature on March 31,
2028. Fleet owns all of the Common Securities of such trust. Upon redemption
of such debentures, the preferred securities are mandatorily redeemable.
(5) As described herein, the sole assets of Fleet Capital will be the Junior
Subordinated Debentures with a principal amount of approximately $257.7
million. The Junior Subordinated Debentures will bear interest at a variable
annual rate, reset quarterly, equal to Three-Month LIBOR plus 1.00% on the
liquidation amount of $1,000 per Capital Security and will mature on
December 18, 2028. Fleet owns all of the Common Securities of Fleet Capital.
Upon redemption of the Junior Subordinated Debentures, the Capital
Securities will be mandatorily redeemable.
S-14
ACCOUNTING TREATMENT
The financial statements of Fleet Capital will be consolidated into Fleet's
consolidated financial statements, with the Capital Securities classified as a
component of long-term debt of Fleet. The financial statement footnotes of Fleet
will reflect that the sole asset of Fleet Capital will be $257.7 million
principal amount of the Junior Subordinated Debentures, bearing interest at a
variable annual rate, reset quarterly, equal to Three-Month LIBOR plus 1.00% on
the liquidation amount of $1,000 per Capital Security and maturing on December
18, 2028. All future reports filed by Fleet under the Exchange Act will present
information regarding Fleet Capital and other similar Fleet trusts in the manner
described above. In addition, a footnote to Fleet's audited financial statements
will reflect that:
(1) Fleet Capital and such other trusts are wholly-owned by Fleet;
(2) the sole assets of Fleet Capital are the Junior Subordinated Debentures
and the sole assets of such other trusts will be Junior Subordinated
Debentures, in each case specifying as to each trust the principal
amount, interest rate and maturity date of the junior subordinated
debentures held; and
(3) the Guarantee, when taken together with Fleet's obligations under the
Junior Subordinated Debenture and the Indenture and its obligations under
the Declaration, including its obligations to pay costs, expenses, debts
and liabilities of Fleet Capital (other than with respect to the Trust
Securities), and the corresponding obligations of Fleet with respect to
such other trusts, provide a full and unconditional guarantee of amounts
on the Capital Securities and the preferred securities issued by such
other trusts.
See "Capitalization."
USE OF PROCEEDS
THIS SECTION SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH, REPLACES
THE SECTION ENTITLED "USE OF PROCEEDS" IN THE ACCOMPANYING PROSPECTUS.
Fleet Capital will use all proceeds received from the sale of the Capital
Securities to purchase Junior Subordinated Debentures from Fleet. Fleet intends
to use the net proceeds from the sale of the Junior Subordinated Debentures in
connection with the Sanwa Acquisition. The remaining amounts necessary to fund
the Sanwa Acquisition will be provided through a combination of external
borrowings and working capital. Fleet intends to use any net proceeds from the
sale of the Junior Subordinated Debentures not used for such purpose for general
corporate purposes, principally to extend credit to, or fund investments in, its
subsidiaries. The precise amounts and timing of extensions of credit to, and
investments in, such subsidiaries will depend upon the subsidiaries' funding
requirements and the availability of other funds. Pending such applications, the
net proceeds may be temporarily invested in marketable securities or applied to
the reduction of Fleet's short-term indebtedness. Based upon the historic and
anticipated future growth of Fleet and the financial needs of its subsidiaries,
Fleet may engage in additional financings of a character and amount to be
determined as the need arises.
S-15
DESCRIPTION OF THE CAPITAL SECURITIES
The Capital Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The First National Bank of Chicago,
will act as indenture trustee for the Capital Securities under the Declaration
for purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Capital Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the material terms and provisions of the Capital Securities, which
supplements, and to the extent inconsistent, replaces, the description set forth
under the caption "Description of the Capital Securities" in the accompanying
Prospectus. Such summary, which describes the material provisions thereof, does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Declaration, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part, the
Business Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of Fleet
Capital the Trust Securities, which represent undivided beneficial interests in
the assets of Fleet Capital. All of the Common Securities will be owned,
directly or indirectly, by Fleet. The Common Securities rank equal, and payments
will be made thereon on a pro rata basis, with the Capital Securities, except
that upon the occurrence and during the continuance of a Declaration Event of
Default (as defined herein), the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Capital Securities. The Declaration does not permit the issuance by Fleet
Capital of any securities other than the Trust Securities or the incurrence of
any indebtedness by Fleet Capital. Pursuant to the Declaration, the
Institutional Trustee will own the Junior Subordinated Debentures purchased by
Fleet Capital for the benefit of the holders of the Trust Securities. The
payment of distributions out of money held by Fleet Capital, and payments upon
redemption of the Capital Securities or liquidation of Fleet Capital, are
guaranteed by Fleet to the extent described under "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus. The Guarantee will be
held by The First National Bank of Chicago, as Guarantee Trustee, for the
benefit of the holders of the Capital Securities. The Guarantee does not cover
payment of distributions when Fleet Capital does not have sufficient available
funds to pay such distributions. In such event, the remedy of a holder of
Capital Securities is to vote to direct the Institutional Trustee to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures except
in the circumstances in which there is a default in the payment of
distributions, including when Fleet Capital does not have sufficient available
funds to pay such distribution, in which case the holder may take Direct Action
(as defined in the accompanying Prospectus). See "Voting Rights" and
"Declaration Events of Default" below and "Description of the Preferred
Securities--Enforcement of Certain Rights by Holders of Trust Preferred
Securities" in the accompanying Prospectus.
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at a variable annual
rate, reset quarterly, equal to Three-Month LIBOR plus 1.00% on the liquidation
amount of $1,000 per Capital Security. Distributions in arrears for more than
one quarter will bear interest thereon at such rate, compounded quarterly. The
term "distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of the actual number of days in such period (which number
of actual days shall include the first day but exclude the last day of such
period) divided by 360.
S-16
Distributions on the Capital Securities will be cumulative, will accrue from
December 18, 1998, and, except as otherwise described below, will be payable
quarterly in arrears on March 18, June 18, September 18 and December 18 of each
year, commencing March 18, 1999, when, as and if available for payment.
So long as Fleet shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Fleet has the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures by extending the
interest payment period from time to time on the Junior Subordinated Debentures
(an "Extension Period"), which, if exercised, would defer quarterly
distributions on the Capital Securities (though such distributions would
continue to accrue with interest thereon at a variable annual rate, reset
quarterly, equal to Three-Month LIBOR plus 1.00% percent per annum compounded
quarterly, since interest would continue to accrue on the Junior Subordinated
Debentures) during any such Extension Period. Such right to extend the interest
payment period for the Junior Subordinated Debentures is limited to a period not
exceeding 20 consecutive quarters, and such period may not extend beyond
December 18, 2028 (the "Stated Maturity") of the Junior Subordinated Debentures.
In the event that Fleet exercises this right, then:
(1) Fleet shall not declare or pay any dividend on, make any distribution
with respect to, or redeem, purchase or acquire, or make a liquidation
payment with respect to, any of its capital stock (other than: (a)
purchases or acquisitions of shares of Fleet common stock, $0.01 par
value (the "Fleet Common Stock") in connection with the satisfaction by
Fleet of its obligations under any employee benefit plans or any other
contractual obligation of Fleet (other than a contractual obligation
ranking equal with or junior to the Junior Subordinated Debentures), (b)
as a result of a reclassification of Fleet capital stock or the exchange
or conversion of one class or series of Fleet's capital stock for another
class or series of Fleet capital stock or (c) the purchase of fractional
interests in shares of Fleet's capital stock pursuant to the conversion
or exchange provisions of such Fleet capital stock or the security being
converted or exchanged);
(2) Fleet shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by
Fleet that rank equal with or junior to such Junior Subordinated
Debentures; and
(3) Fleet shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Guarantee).
Prior to the termination of any such Extension Period, Fleet may further
extend the interest payment period; provided, that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
20 consecutive quarters or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, Fleet may select a new Extension Period,
subject to the above requirements. See "Description of the Junior Subordinated
Debentures--Interest" and "--Option to Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued but unpaid
interest thereon shall be paid to holders of record of the Capital Securities as
they appear on the books and records of Fleet Capital on the record date next
following the termination of such Extension Period.
Distributions on the Capital Securities must be paid on the dates payable to
the extent that Fleet Capital has funds available for the payment of such
distributions. Fleet Capital's funds available for distribution to the holders
of the Capital Securities will be limited to payments received from Fleet on the
Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures." The payment of distributions out of moneys held by Fleet Capital is
guaranteed by Fleet to the extent set forth under "Description of the Preferred
Securities Guarantees" in the accompanying Prospectus.
S-17
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the books and records of Fleet Capital on the relevant
record dates, which will be, as long as the Capital Securities remain in
book-entry form, one Business Day (as defined below) prior to the relevant
payment date and, in the event the Capital Securities are not in book-entry
form, the 15th day of the month in which the relevant payment date occurs. The
Declaration provides that the payment dates or record dates for the Capital
Securities shall be the same as the payment dates and record dates for the
Junior Subordinated Debentures. Distributions payable on any Capital Securities
that are not punctually paid on any distribution date as a result of Fleet
having failed to make the corresponding interest payment on the Junior
Subordinated Debentures will forthwith cease to be payable to the person in
whose name such Capital Security is registered on the relevant record date, and
such defaulted distribution will instead be payable to the person in whose name
such Capital Security is registered on the special record date established by
the Regular Trustees, which record date shall correspond to the special record
date or other specified date determined in accordance with the Indenture;
provided, however, that distributions shall not be considered payable on any
distribution payment date falling within an Extension Period unless Fleet has
elected to make a full or partial payment of interest accrued on the Junior
Subordinated Debentures on such distribution payment date. Distributions on the
Capital Securities will be paid through the Institutional Trustee, who will hold
amounts received in respect of the Junior Subordinated Debentures in the
Institutional Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "Book-Entry Only
Issuance--The Depository Trust Company" below. In the event that any date on
which distributions are to be made on the Capital Securities is not a Business
Day, then such distribution payment date will be postponed to the next
succeeding day which is a Business Day. A "Business Day" shall mean any day
other than Saturday, Sunday or any other day on which banking institutions in
New York City (in the State of New York) or Chicago, Illinois are permitted or
required by any applicable law to close.
REDEMPTION
The Stated Maturity of the Junior Subordinated Debentures is December 18,
2028. Upon the repayment of the Junior Subordinated Debentures at maturity, the
proceeds from such repayment shall simultaneously be applied to redeem Trust
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so repaid at a redemption
price of $1,000 per Trust Security, plus accrued and unpaid distributions
thereon. Moreover, the Junior Subordinated Debentures will be prepayable prior
to the Stated Maturity at the option of Fleet at a prepayment price equal to
100% of the principal amount thereof, plus accrued interest thereon to the date
of prepayment:
(1) in whole or in part, from time to time, on or after December 18, 2003;
or
(2) at any time prior to December 18, 2003, in whole but not in part, upon
the occurrence and continuation of a Special Event (as hereinafter
defined),
See "Description of the Junior Subordinated Debentures--Optional Prepayment."
Upon the repayment of the Junior Subordinated Debentures, whether at maturity or
upon redemption, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debentures so repaid or redeemed (the "Redemption Price");
provided, that holders of Trust Securities shall be given not less than 30 nor
more than 60 days' notice of such redemption. See "Description of the Junior
Subordinated Debentures--Optional Prepayment." In the event that fewer than all
of the outstanding Capital Securities are to be redeemed, the Capital Securities
will be redeemed pro rata as described under "Book-Entry Only Issuance--The
Depository Trust Company" below. Any such redemption may require prior approval
of the Federal Reserve Board if such approval is then required under applicable
law, rules, guidelines or policies.
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REDEMPTION PROCEDURES
Fleet Capital may not redeem fewer than all of the outstanding Capital
Securities unless all accrued and unpaid distributions have been paid on all
Capital Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If Fleet Capital gives a notice of redemption in respect of Capital
Securities (which notice will be irrevocable), then immediately prior to the
close of business on the redemption date, provided that Fleet has paid to Fleet
Capital a sufficient amount of cash in connection with the related redemption or
maturity of the Junior Subordinated Debentures, distributions will cease to
accrue on the Capital Securities called for redemption, such Capital Securities
shall no longer be deemed to be outstanding and all rights of holders of such
Capital Securities so called for redemption will cease, except the right of the
holders of such Capital Securities to receive the Redemption Price, but without
interest on such Redemption Price. If any date fixed for redemption of Capital
Securities is not a Business Day, then the redemption date will be postponed to
the next succeeding day that is a Business Day. If Fleet fails to repay Junior
Subordinated Debentures on maturity or on the date fixed for a redemption or if
payment of the Redemption Price in respect of Capital Securities is improperly
withheld or refused and not paid by Fleet Capital or by Fleet pursuant to the
Guarantee described under "Description of the Preferred Securities Guarantees"
in the accompanying Prospectus, distributions on such Capital Securities will
continue to accrue to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
Fleet Capital shall not be required to:
(1) issue, or register the transfer or exchange of, any Trust Securities
during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of Trust Securities and ending at the
close of business on the day of the mailing of the relevant notice of
redemption; and
(2) register the transfer or exchange of any Trust Securities so selected
for redemption, in whole or in part, except the unredeemed portion of any
Trust Securities being redeemed in part.
In the event that fewer than all of the outstanding Capital Securities are
to be redeemed, the Capital Securities will be redeemed pro rata as described
below under "Book-Entry Only Issuance-- The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws and the regulations of the Federal Reserve
Board), Fleet or its subsidiaries may at any time, and from time to time,
purchase outstanding Capital Securities by tender, in the open market or by
private agreement.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
Fleet will have the right at any time to liquidate Fleet Capital and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities, subject to the prior approval of the Federal Reserve Board if such
approval is then required under applicable law, rules, guidelines or policies.
If the Junior Subordinated Debentures are distributed to the holders of the
Capital Securities, Fleet will use its best efforts to cause the Junior
Subordinated Debentures to be listed on any exchange as the Capital Securities
are then listed.
On the date for any distribution of Junior Subordinated Debentures upon
dissolution of Fleet Capital:
(1) the Trust Securities will no longer be deemed to be outstanding;
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(2) the Depositary (as defined herein) or its nominee, as the record holder
of the Trust Securities, will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be
delivered upon such distribution; and
(3) any certificates representing Trust Securities not held by the
Depositary or its nominee will be deemed to represent Junior Subordinated
Debentures having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued
and unpaid distributions on, such Trust Securities until such
certificates are presented to Fleet or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Capital Securities if a dissolution and liquidation of Fleet
Capital were to occur. Accordingly, the Capital Securities or the Junior
Subordinated Debentures may trade at a discount to the price that the investor
paid to purchase the Capital Securities offered hereby.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any other voluntary or involuntary liquidation, dissolution,
winding-up or termination of Fleet Capital (each a "Liquidation"), the then
holders of the Capital Securities will be entitled to receive out of the assets
of Fleet Capital, after satisfaction of liabilities to creditors, distributions
in an amount equal to the aggregate of the stated liquidation amount of $1,000
per Capital Security plus accrued and unpaid distributions thereon to the date
of payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Capital Securities have been
distributed on a pro rata basis to the holders of the Capital Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because Fleet Capital has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
Fleet Capital on the Capital Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such dissolution pro rata with the holders of the Capital Securities, except
that if a Declaration Event of Default (as defined below) has occurred and is
continuing, the Capital Securities shall have a preference over the Common
Securities with regard to such distributions.
Pursuant to the Declaration, Fleet Capital shall terminate:
(1) on December 18, 2052, the expiration of the term of Fleet Capital;
(2) upon the bankruptcy of Fleet or Fleet Capital;
(3) upon the filing of a certificate of dissolution or its equivalent with
respect to Fleet, the filing of a certificate of cancellation with
respect to Fleet Capital after obtaining the consent of the holders of at
least a majority in liquidation amount of the Trust Securities, voting
together as a single class to file such certificate of cancellation, or
the revocation of the charter of Fleet and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(4) upon the distribution of Junior Subordinated Debentures to the holders
of the Trust Securities;
(5) upon the entry of a decree of a judicial dissolution of Fleet or Fleet
Capital; or
(6) upon the redemption of all the Trust Securities.
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DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Capital Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Capital Securities have been so cured, waived or otherwise
eliminated, the Institutional Trustee will be deemed to be acting solely on
behalf of the holders of the Capital Securities and only the holders of the
Capital Securities will have the right to direct the Institutional Trustee with
respect to certain matters under the Declaration, and therefore the Indenture.
If a Declaration Event of Default with respect to the Capital Securities is
waived by holders of Capital Securities, such waiver will also constitute the
waiver of such Declaration Event of Default with respect to the Common
Securities for all purposes under the Declaration, without any further act, vote
or consent of the holders of the Common Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debentures after a
holder of Capital Securities has made a written request, such holder of record
of Capital Securities may institute a legal proceeding against Fleet to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such event is attributable
to the failure of Fleet to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, the redemption date), then a holder of Capital
Securities may institute a Direct Action for enforcement of payment to such
holder of the principal of, or interest on, Junior Subordinated Debentures
having a principal amount equal to the aggregate liquidation amount of the
Capital Securities of such holder on or after the respective due date specified
in the Junior Subordinated Debentures. In connection with such Direct Action,
the rights of Fleet, as holder of the Common Securities, will be subrogated to
the rights of such holder of Capital Securities under the Declaration to the
extent of any payment made by Fleet to such holder of Capital Securities in such
Direct Action. The holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Junior Subordinated
Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. Fleet and Fleet
Capital are each required to file annually with the Institutional Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.
VOTING RIGHTS
Except as described herein, under the Business Trust Act, the Trust
Indenture Act and under "Description of the Preferred Securities
Guarantees--Modification of the Preferred Securities Guarantees; Assignment" in
the accompanying Prospectus, and as otherwise required by law and the
Declaration, the holders of the Capital Securities will have no voting rights.
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Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Capital Securities, voting separately as a class, have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee, or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Junior Subordinated
Debentures, to:
(1) exercise the remedies available to it under the Indenture as a holder of
the Junior Subordinated Debentures;
(2) waive any past Indenture Event of Default that is waivable under the
Indenture;
(3) exercise any right to rescind or annul a declaration that the principal
of all the Junior Subordinated Debentures shall be due and payable; or
(4) consent to any amendment, modification or termination of the Indenture
or the Junior Subordinated Debentures where such consent shall be
required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debentures (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority in aggregate
liquidation amount of the Capital Securities may direct the Institutional
Trustee to give such consent or take such action; and provided, further, that
where a consent or action under the Indenture is only effective against each
holder of Junior Subordinated Debentures who has consented thereto, such consent
or action will only be effective against a holder of Capital Securities who
directs the Institutional Trustee to give such consent or take such action. If
the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debentures after a holder of record of Capital Securities has made
a written request, such holder of record of Capital Securities may institute a
legal proceeding directly against Fleet to enforce the Institutional Trustee's
rights under the Junior Subordinated Debentures without first instituting any
legal proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Fleet to pay interest or principal on the Junior Subordinated Debentures on the
date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Capital Securities may
institute a Direct Action for enforcement of payment to such holder of the
principal of, or interest on, the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. The Institutional Trustee shall notify all
holders of the Capital Securities of any notice of default received from the
Debt Trustee with respect to the Junior Subordinated Debentures. Such notice
shall state that such Indenture Event of Default also constitutes a Declaration
Event of Default. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (1), (2) or (3) above unless the
Institutional Trustee has obtained an opinion of a nationally recognized tax
counsel experienced in such matters to the effect that, as a result of such
action, Fleet Capital will not fail to be classified as a grantor trust for
United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a
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consent under the Indenture would require the consent of a Super-Majority, the
Institutional Trustee may only give such consent at the direction of the holders
of at least the proportion in liquidation amount of the Trust Securities which
the relevant Super-Majority represents of the aggregate principal amount of the
Junior Subordinated Debentures outstanding; and provided, further, that where a
consent or action under the Indenture is only effective against each holder of
Junior Subordinated Debentures who has consented thereto, such consent or action
will only be effective against a holder of Capital Securities who directs the
Institutional Trustee to give such consent or take such action. The
Institutional Trustee shall not take any such action in accordance with the
directions of the holders of the Trust Securities unless the Institutional
Trustee has obtained an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that for the purposes of United States
federal income tax Fleet Capital will not be classified as other than a grantor
trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Capital Securities may be
given at a separate meeting of holders of Capital Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed to
each holder of record of Capital Securities. Each such notice will include a
statement setting forth the following information:
(1) the date of such meeting or the date by which such action is to be
taken;
(2) a description of any resolution proposed for adoption at such meeting on
which such holders are entitled to vote or of such matter upon which
written consent is sought; and
(3) instructions for the delivery of proxies or consents.
No vote or consent of the holders of Capital Securities will be required for
Fleet Capital to redeem and cancel Capital Securities or distribute Junior
Subordinated Debentures in accordance with the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned at such time by Fleet or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Fleet, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Capital Securities were
not outstanding.
The procedures by which holders of Capital Securities may exercise their
voting rights are described below. See "Book-Entry Only Issuance--The Depository
Trust Company" below.
Holders of the Capital Securities will have no rights to appoint or remove
the Regular Trustees, who may be appointed, removed or replaced solely by Fleet
as the holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect:
(1) any action that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment to
the Declaration or otherwise; or
(2) the dissolution, winding-up or termination of Fleet Capital other than
pursuant to the terms of the Declaration,
S-23
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of at least a majority in
liquidation amount of the Trust Securities affected thereby; provided, that, if
any amendment or proposal referred to in clause (1) above would adversely affect
only the Capital Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would:
(1) cause Fleet Capital to be classified for purposes of United States
federal income taxation as other than a grantor trust;
(2) reduce or otherwise adversely affect the powers of the Institutional
Trustee; or
(3) cause Fleet Capital to be deemed an "investment company" which is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Fleet Capital may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. Fleet Capital may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Institutional
Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into, or
be replaced by a trust organized as such under the laws of any State of the
United States; provided, that:
(1) if Fleet Capital is not the survivor, such successor entity either:
(a) expressly assumes all of the obligations of Fleet Capital under the
Trust Securities; or
(b) substitutes for the Trust Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments
upon liquidation, redemption and otherwise;
(2) Fleet expressly acknowledges a trustee of such successor entity
possessing the same powers and duties as the Institutional Trustee as the
holder of the Junior Subordinated Debentures;
(3) the Capital Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which the
Capital Securities are then listed or quoted;
(4) such merger, consolidation, amalgamation or replacement does not cause
the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization;
(5) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest
in the new entity);
(6) such successor entity has a purpose identical to that of Fleet Capital;
(7) prior to such merger, consolidation, amalgamation or replacement, Fleet
has received an opinion of a nationally recognized independent counsel to
Fleet Capital experienced in such matters to the effect that:
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(a) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities)
in any material respect (other than with respect to any dilution of
the holders' interest in the new entity);
(b) following such merger, consolidation, amalgamation or replacement,
neither Fleet Capital nor such successor entity will be required to
register as an investment company under the 1940 Act; and
(c) following such merger, consolidation, amalgamation or replacement,
Fleet Capital (or the successor entity) will be treated as a grantor
trust for United States federal income tax purposes; and
(8) Fleet guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee and
the Common Securities Guarantee (as described in the accompanying
Prospectus).
Notwithstanding the foregoing, Fleet Capital shall not, except with the
consent of holders of 100 percent in liquidation amount of the Trust Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it, if such consolidation, amalgamation, merger or replacement would
cause Fleet Capital or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Capital Securities. The Capital Securities will be issued
only as fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Capital Securities certificates
(each a "Global Certificate"), representing the total aggregate number of
Capital Securities, will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Participants in DTC include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear transactions through, or maintain a direct or indirect
custodial relationship with, a Direct Participant either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of Capital Securities within the DTC system must be made by or
through Participants, which will receive a credit for the Capital Securities on
DTC's records. The ownership interest of each actual purchaser of each Capital
Security ("Beneficial Owner") is in turn to be recorded on the Participants' and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Capital Securities. Transfers of
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ownership interests in the Capital Securities are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in the Capital Securities, except in the event that use of the
book-entry system for the Capital Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Capital
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Capital Securities are credited, which may or may not be
the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Capital Securities represented thereby for all
purposes under the Declaration and the Capital Securities. No beneficial owner
of an interest in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Declaration.
DTC has advised Fleet that it will take any action permitted to be taken by
a holder of Capital Securities (including the presentation of Capital Securities
for exchange as described below) only at the direction of one or more
Participants to whose account the DTC interests in the Global Certificates are
credited and only in respect of such portion of the aggregate liquidation amount
of Capital Securities as to which such Participant or Participants has or have
given such direction. However, if there is a Declaration Event of Default under
the Capital Securities, DTC will exchange the Global Certificates for
certificated securities, which it will distribute to its Participants and which
will be legended to give notice of such Declaration Event of Default.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Capital Securities held in book-entry
form will be sent to Cede & Co. If less than all of the Capital Securities are
being redeemed, DTC will determine the amount of the interest of each
Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Capital Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself consent
or vote with respect to Capital Securities. Under its usual procedures, DTC
would mail an Omnibus Proxy to Fleet Capital as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights
to those Participants to whose accounts the Capital Securities are credited on
the record date (identified in a listing attached to the Omnibus Proxy).
Distributions on the Capital Securities held in book-entry form will be made
to DTC in immediately available funds. DTC's practice is to credit Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants and Indirect
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of such Participants and
Indirect Participants and not of DTC, Fleet Capital or Fleet, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of distributions to DTC is the responsibility of Fleet Capital,
disbursement of such payments to Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility of
Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Capital
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Capital Securities.
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Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither Fleet, Fleet Capital
nor the Trustees will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depositary with
respect to the Capital Securities at any time by giving notice to Fleet Capital.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Capital Security certificates are required to be printed and
delivered. Additionally, Fleet Capital (with the consent of Fleet) may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary). In that event, certificates for the Capital Securities
will be printed and delivered. In each of the above circumstances, Fleet will
appoint a paying agent with respect to the Capital Securities.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Capital Securities as
represented by a Global Certificate.
PAYMENT
Payments in respect of the Capital Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution dates or, in the case of certificated
securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the records of Fleet's
registrar and transfer agent.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
First Chicago Trust Company of New York will act as registrar, transfer
agent and paying agent (the "Paying Agent") for the Capital Securities. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Regular Trustees. In the event that First Chicago Trust Company of
New York shall no longer be the Paying Agent, the Regular Trustees shall appoint
a successor bank or trust company to act as Paying Agent.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of Fleet Capital, but upon payment (with the giving of
such indemnity as Fleet Capital or Fleet may require) in respect of any tax or
other government charges which may be imposed in relation to it.
Fleet Capital will not be required to register or cause to be registered the
transfer of Capital Securities after such Capital Securities have been called
for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Capital Securities, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby. The
holders of Capital Securities will not be required to offer such indemnity in
the event such holders, by exercising their voting rights, direct the
Institutional Trustee to take any action it is empowered to take under the
Declaration following a Declaration Event of Default. The Institutional Trustee
also serves as trustee under the Guarantee and the Indenture. Fleet and certain
of its subsidiaries conduct certain banking transactions with the Institutional
Trustee in the ordinary course of their business.
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GOVERNING LAW
The Declaration and the Capital Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate Fleet Capital in
such a way so that Fleet Capital will not be required to register as an
"investment company" under the 1940 Act or characterized as other than a grantor
trust for United States federal income tax purposes. Fleet is authorized and
directed to conduct its affairs so that the Junior Subordinated Debentures will
be treated as indebtedness of Fleet for United States federal income tax
purposes. In this connection, Fleet and the Regular Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of Fleet Capital or the articles of incorporation of Fleet, that each of Fleet
and the Regular Trustees determine in their discretion to be necessary or
desirable to achieve such end, as long as such action does not adversely affect
the interests of the holders of the Preferred Securities or vary the terms
thereof.
Holders of the Capital Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Pursuant to the Guarantee, Fleet will agree, to the extent set forth
therein, to pay in full to the holders of the Capital Securities issued by Fleet
Capital, the Guarantee Payments (as defined in the accompanying Prospectus)
(except to the extent paid by Fleet Capital), as and when due, regardless of any
defense, right of setoff or counterclaim which Fleet Capital may have or assert.
Fleet's obligation to make a payment under the Guarantee may be satisfied by
direct payment of the required amounts by Fleet to the holders of Capital
Securities or by causing Fleet Capital to pay such amounts to such holders. The
Guarantee, when taken together with Fleet's obligations under the Junior
Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of Fleet Capital (other than with respect to the Trust Securities)
provides a full and unconditional guarantee on a subordinated basis by Fleet of
payments due on the Capital Securities. The Guarantee will be qualified as an
indenture under the Trust Indenture Act. The First National Bank of Chicago will
act as Guarantee Trustee. The terms of the Guarantee will be those set forth in
such Guarantee and those made part of such Guarantee by the Trust Indenture Act.
The Guarantee will be held by the Guarantee Trustee for the benefit of the
holders of the Capital Securities. A summary description of the Guarantee
appears in the accompanying Prospectus under the caption "Description of the
Preferred Securities Guarantees."
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which Fleet Capital will invest the proceeds from the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated
Debentures set forth in the accompanying Prospectus under the caption
"Description of the Junior Subordinated Debentures." While the following
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the description in the accompanying Prospectus
and the Indenture, dated as of December 18, 1998 (the "Base Indenture"), between
Fleet and The First National Bank of Chicago as Trustee (the "Debt Trustee"), as
supplemented by a First Supplemental Indenture, dated as of December 18, 1998
(the Base Indenture, as so supplemented, is hereinafter referred to as the
"Indenture"), the forms of which are filed as Exhibits to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part, all material terms of the Junior Subordinated Debentures are set
forth herein and in the accompanying Prospectus. Certain capitalized terms used
herein are defined in the Indenture.
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GENERAL
The Junior Subordinated Debentures will be issued as unsecured indebtedness
of Fleet under the Indenture. The Junior Subordinated Debentures will be limited
in aggregate principal amount to $257,732,000, such amount being the sum of the
aggregate stated liquidation value of the Trust Securities.
The Junior Subordinated Debentures are not subject to any sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on December 18, 2028.
If Junior Subordinated Debentures are distributed to holders of Capital
Securities in liquidation of such holders' interests in Fleet Capital, such
Junior Subordinated Debentures will initially be issued as a Global Security (as
defined herein). As described herein, Junior Subordinated Debentures may be
issued in certificated form in exchange for a Global Security. See "Book-Entry
and Settlement" below. In the event that Junior Subordinated Debentures are
issued in certificated form, such Junior Subordinated Debentures will be in
denominations of $1,000 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated
Debentures issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no depositary is used, to a Paying Agent for
the Junior Subordinated Debentures. In the event Junior Subordinated Debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the Junior Subordinated Debentures will be registrable and Junior
Subordinated Debentures will be exchangeable for Junior Subordinated Debentures
of other denominations of a like aggregate principal amount, at the corporate
trust office of the Institutional Trustee in New York, New York; provided, that
payment of interest may be made at the option of Fleet by check mailed to the
address of the holder entitled thereto or by wire transfer to an account
appropriately designated by the holder entitled thereto. Notwithstanding the
foregoing, so long as the holder of any Junior Subordinated Debentures is the
Institutional Trustee, the payment of principal and interest on the Junior
Subordinated Debentures held by the Institutional Trustee will be made at such
place and to such account as may be designated by the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving Fleet that may adversely
affect such holders.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all present and future Senior
Indebtedness and Other Financial Obligations of Fleet (each as defined herein)
and rank equal with and are equivalent to creditor obligations of those holding
general unsecured claims not entitled to statutory priority under the United
States Bankruptcy Code or otherwise. In addition, no payment may be made of the
principal of, premium, if any, or interest on the Junior Subordinated
Debentures, or in respect of any redemption, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures, at any time when:
(1) there is a default in the payment of the principal of, premium, if any,
interest on or otherwise in respect of any Senior Indebtedness, whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(2) any event of default with respect to any Senior Indebtedness has
occurred and is continuing, or would occur as a result of such payment on
the Junior Subordinated Debentures or any redemption, retirement,
purchase or other acquisition of any of the Junior Subordinated
Debentures, permitting the holders of such Senior Indebtedness (or a
trustee on behalf of the holders thereof) to accelerate the maturity
thereof.
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Upon any distribution of assets of Fleet to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, the payment of the
principal of, and interest on, the Junior Subordinated Debentures will, to the
extent set forth in the Indenture, be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness and Other Financial Obligations
of Fleet. Upon any payment or distribution of assets of Fleet to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or any bankruptcy, insolvency or
similar proceedings of Fleet, the holders of all Senior Indebtedness and the
holders of Other Financial Obligations will first be entitled to receive payment
in full of all amounts due or to become due thereon before the holders of the
Junior Subordinated Debentures will be entitled to receive and retain any
payment in respect of the principal of, or interest on, the Junior Subordinated
Debentures.
The term "Senior Indebtedness" means, with respect to Fleet:
(1) the principal, premium, if any, and interest in respect of:
(a) indebtedness of Fleet for money borrowed; and
(b) indebtedness evidenced by securities, debentures, bonds or other
similar instruments issued by Fleet;
(2) all capital lease obligations of Fleet;
(3) all obligations of Fleet issued or assumed as the deferred purchased
price of property, all conditional sale obligations of Fleet and all
obligations of Fleet under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business);
(4) all obligations of Fleet for the reimbursement of any letter of credit,
banker's acceptance, security purchase facility or similar credit
transaction;
(5) all obligations of the type referred to in clauses (1) through (4) above
of other persons for the payment of which Fleet is responsible or liable
as obligor, guarantor or otherwise; and
(6) all obligations of the type referred to in clauses (1) through (5) above
of other persons secured by any lien on any property or asset of Fleet
(whether or not such obligation is assumed by Fleet), except that Senior
Indebtedness shall not include:
(1) any such indebtedness that is by its terms subordinated to or ranks
equal with the Junior Subordinated Debentures; and
(2) any indebtedness between and among Fleet or its affiliates, including
all other debt securities and guarantees in respect to those debt
securities, issued to:
(a) any other Fleet Capital Trust (as defined in the accompanying
Prospectus) or a trustee of such Fleet Capital Trust; and
(b) any other trust, or a trustee of such trust, partnership or other
entity affiliated with Fleet that is a financing vehicle of Fleet
(a "financing entity") in connection with the issuance by such
financing entity of preferred securities or other securities that
rank equal with, or junior to, the Capital Securities.
The term "Other Financial Obligations" means all obligations of Fleet to
make payment pursuant to the terms of financial instruments, such as:
(1) securities contracts and foreign currency exchange contracts;
(2) derivative instruments, such as swap agreements (including interest rate
and foreign exchange rate swap agreements), cap agreements, floor
agreements, collar agreements, interest rate
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agreements, foreign exchange rate agreements, options, commodity futures
contracts, commodity option contracts; and
(3) in the case of both (1) and (2) above, similar financial instruments,
other than:
(a) obligations on account of Senior Indebtedness; and
(b) obligations on account of indebtedness for money borrowed ranking
equal with or subordinate to the Junior Subordinated Debentures.
Upon satisfaction of all claims of all Senior Indebtedness and Other
Financial Obligations then outstanding, the rights of the holders of the Junior
Subordinated Debentures will be subrogated to the rights of the holders of
Senior Indebtedness and Other Financial Obligations of Fleet to receive payments
or distributions applicable to Senior Indebtedness and Other Financial
Obligations until all amounts owing on the Junior Subordinated Debentures are
paid in full. Such Senior Indebtedness and Other Financial Obligations shall
continue to be Senior Indebtedness and Other Financial Obligations and be
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness or
Other Financial Obligations.
The Indenture does not limit the aggregate amount of Senior Indebtedness or
Other Financial Obligations that may be issued or entered into by Fleet. As of
September 30, 1998, Senior Indebtedness and Other Financial Obligations of Fleet
aggregated approximately $5.7 billion (holding company only). In addition,
because Fleet is a holding company, the Junior Subordinated Debentures are
effectively subordinated to all existing and future liabilities of Fleet's
subsidiaries, including depositors.
OPTIONAL PREPAYMENT
The Junior Subordinated Debentures will be prepayable prior to the Stated
Maturity at the option of Fleet:
(1) in whole or in part, from time to time, on or after December 18, 2003;
or
(2) at any time prior to December 18, 2003, in whole but not in part, upon
the occurrence and continuation of a Special Event (as defined herein),
in either case, upon not less than 30 nor more than 60 days' notice, at a
prepayment price (the "Prepayment Price") equal to 100% of the principal amount
thereof, plus accrued interest thereon to the date of prepayment. Such
prepayment may require prior approval of the Federal Reserve Board if such
approval is then required under applicable law, rules, guidelines or policies.
Following such prepayment, Trust Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Junior Subordinated
Debentures so repaid shall be redeemed by Fleet Capital at a redemption price
equal to the Prepayment Price (the "Redemption Price") plus accrued and unpaid
distributions through the redemption date.
A "Special Event" means a Tax Event or a Regulatory Capital Event (each as
defined herein), as the case may be.
A "Tax Event" means that the Regular Trustees shall have received an opinion
of nationally recognized independent tax counsel experienced in such matters to
the effect that, as a result of:
(1) any amendment to, or change (including any announced prospective change)
in, the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein; or
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(2) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or
after the date of original issuance of the Junior Subordinated
Debentures, there is more than an insubstantial risk that:
(a) Fleet Capital is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures;
(b) interest payable by Fleet on the Junior Subordinated Debentures is
not, or within 90 days of the date of such opinion will not be,
deductible by Fleet, in whole or in part, for United States federal
income tax purposes; or
(c) Fleet Capital is, or will be within 90 days of the date of such
opinion, subject to more than a DE MINIMIS amount of other taxes,
duties or other governmental charges.
Recently, the Internal Revenue Service asserted that the interest payable on
a security with terms that are similar in some respects to the terms of the
Junior Subordinated Debentures (but with a longer maturity than the Junior
Subordinated Debentures) was not deductible for United States federal income tax
purposes. The taxpayer in that case has filed a petition in the United States
Tax Court challenging the Internal Revenue Service's position on this matter.
Although the Internal Revenue Service's assertion does not constitute a Tax
Event, if this matter were to be litigated and the Tax Court were to sustain the
Internal Revenue Service's position on this matter, such judicial decision could
constitute a Tax Event which could result in an early redemption of the Junior
Subordinated Debentures.
A "Regulatory Capital Event" means that Fleet shall have received an opinion
of independent bank regulatory counsel experienced in such matters to the effect
that, as a result of:
(1) any amendment to or change (including any announced prospective
change) in the laws (or any regulations thereunder) of the United
States or any rules, guidelines or policies of the Federal Reserve
Board; or
(2) any official amendment or change is effective or such pronouncement
or decision is announced on or after the date of original issuance of
the Capital Securities, the Capital Securities do not constitute, or
within 90 days of the date thereof, will not constitute, Tier 1
capital (or its then equivalent); provided, however, that the
distribution of the Junior Subordinated Debentures in connection with
the liquidation of Fleet Capital by Fleet and the treatment
thereafter of the Junior Subordinated Debentures as other than Tier 1
capital shall not in and of itself constitute a Regulatory Capital
Event unless such liquidation shall have occurred in connection with
a Tax Event.
INTEREST
The Junior Subordinated Debentures shall bear interest at a variable annual
rate, reset quarterly, equal to Three-Month LIBOR plus 1.00% on the liquidation
amount of $1,000 per Capital Security from the original date of issuance,
payable quarterly in arrears on March 18, June 18, September 18 and December 18
of each year (each an "Interest Payment Date"), commencing March 18, 1999, to
the person in whose name such Junior Subordinated Debentures is registered on
the relevant record date. The period beginning on and including December 18,
1998 and ending on but excluding the first Interest Payment Date and each
successive period beginning on and including an Interest Payment Date and ending
on but excluding the next succeeding Interest Payment Date is herein called an
"Interest Period". The record dates for the Junior Subordinated Debentures will
be, for so long as the Junior Subordinated Debentures remain in book-entry form,
one Business Day prior to the relevant
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Interest Payment Date and, in the event the Junior Subordinated Debentures are
not in book-entry form, the 15th day of the month in which the relevant Interest
Payment Date occurs.
The amount of interest payable for any Interest Period will be computed on
the basis of the actual number of days in such Interest Period (which number of
actual days shall include the first day but exclude the last day of such
Interest Period) divided by 360. In the event that any Interest Payment Date is
not a Business Day, then such Interest Payment Date will be postponed to the
next succeeding day that is a Business Day.
First Chicago Trust Company of New York, as Calculation Agent (the
"Calculation Agent"), will calculate the interest rate for each Interest Period
based on Three Month LIBOR determined as of two London Banking Days (defined as
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market) prior to the first day of such Interest Period (each, a
"Determination Date"). "Three-Month LIBOR" means, with respect to an Interest
Period relating to an Interest Payment Date (in the following order of
priority):
(1) the rate (expressed as a percentage per annum) for Eurodollar
deposits having a three-month maturity that appears on Telerate Page
3750 as of 11:00 a.m. (London time) on the related Determination
Date;
(2) if such rate does not appear on Telerate Page 3750 as of 11:00 a.m.
(London time) on the related Determination Date, Three-Month LIBOR
will be the arithmetic mean of the offered rates (expressed as
percentages per annum) (unless Page 3750 by its terms provides only
for a single rate, on which case such single rate shall be used) for
Eurodollar deposits having a three-month maturity that appear (or, if
only a single rate is required as aforesaid, appears) on Reuters
Monitor Money Rates Service Page LIBO ("Reuters Page LIBO") as of
11:00 a.m. (London time) on such Determination Date;
(3) if such rates or rate do not appear on Reuters Page LIBO as of 11:00
a.m. (London time) on the related Determination Date, the Calculation
Agent will request the principal London offices of four major
reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with such banks'
offered quotations (expressed as percentages per annum) for
Eurodollar deposits having a three-month maturity to prime banks in
the London interbank market as of approximately 11:00 a.m. (London
time) on such Determination Date and in a principal amount that is
representative for a single transaction in Eurodollar deposits in
such market at such time. If at least two quotations are provided,
Three-Month LIBOR will be the arithmetic mean of such quotations;
(4) if fewer than two such quotations are provided as requested in clause
(3) above, the Calculation Agent will request three major New York
City banks to provide such banks' offered quotations (expressed as
percentages per annum) to leading European banks for loans in
Eurodollars having a three-month maturity as of 11:00 a.m. (London
time) on such Determination Date and in a principal amount that is
representative for a single transaction in Eurodollar deposits in
such market at such time. If at least two such quotations are
provided, Three-Month LIBOR will be the arithmetic mean of such
quotations; and
(5) if fewer than two such quotations are provided as requested in clause
(4) above, Three-Month LIBOR will be Three-Month LIBOR as determined
on the previous Determination Date.
If the rate for Eurodollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 or Reuters Page LIBO, as the case
may be, as of 11:00 a.m. (London time) on the related Determination Date is
superseded on Telerate Page 3750 or Reuters Page LIBO, as the
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case may be, by a corrected rate before 12:00 noon (London time) on such
Determination Date, the corrected rate as so substituted on the applicable
page will be the applicable Three-Month LIBOR for such Determination Date.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits).
All percentages resulting from any calculations on the Junior Subordinated
Debentures will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)),
and all dollar amounts used or resulting from such calculation will be rounded
to the nearest cent (with one-half cent being rounded upward).
The Calculation Agent will, upon the request of the holder of any Capital
Securities or Junior Subordinated Notes, provide the interest rate then in
effect. All calculations made by the Calculation Agent in the absence of
manifest error shall be conclusive for all purposes and binding on the Company
and the holders of the Capital Securities and Junior Subordinated Notes.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Fleet shall not be in default in the payment of interest on the
Junior Subordinated Debentures, Fleet shall have the right at any time, and from
time to time, during the term of the Junior Subordinated Debentures to defer
payments of interest by extending the interest payment period for a period not
exceeding 20 consecutive quarters or extending beyond the Stated Maturity, at
the end of which Extension Period, Fleet shall pay all interest then accrued and
unpaid (including any Additional Interest, as defined herein) together with
interest thereon compounded quarterly at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period:
(1) Fleet shall not declare or pay any dividend on, make any distribution
with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to any of its capital stock (other than (a)
purchases or acquisitions of shares of Fleet Common Stock in
connection with the satisfaction by Fleet of its obligations under
any employee benefit plans or any other contractual obligation of
Fleet (other than a contractual obligation ranking pari passu with or
junior to the Junior Subordinated Debentures), (b) as a result of a
reclassification of Fleet capital stock or the exchange or conversion
of one class or series of Fleet's capital stock for another class or
series of Fleet capital stock or (c) the purchase of fractional
interests in shares of Fleet's capital stock pursuant to the
conversion or exchange provisions of such Fleet capital stock or the
security being converted or exchanged);
(2) Fleet shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued
by Fleet that rank pari passu with or junior to the Junior
Subordinated Debentures; and
(3) Fleet shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Guarantee).
Prior to the termination of any such Extension Period, Fleet may further
defer payments of interest by extending the interest payment period; Fleet
provided, however, that, such Extension Period, including all such previous and
further extensions, may not exceed 20 consecutive quarters or extend beyond the
Stated Maturity of the Junior Subordinated Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, Fleet may commence
a new Extension
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Period, subject to the terms set forth in this section. No interest during an
Extension Period, except at the end thereof, shall be due and payable. Fleet has
no present intention of exercising its right to defer payments of interest by
extending the interest payment period on the Junior Subordinated Debentures. If
the Institutional Trustee shall be the sole holder of the Junior Subordinated
Debentures, Fleet shall give the Regular Trustees, the Institutional Trustee and
the Debt Trustee notice of its selection of such Extension Period one Business
Day prior to the earlier of:
(1) the date distributions on the Capital Securities are payable; or
(2) if the Junior Subordinated Debentures are then listed, the date the
Regular Trustees are required to give notice to any applicable
self-regulatory organization or to holders of the Capital Securities
of the record date or the date such distribution is payable.
The Institutional Trustee shall give notice of Fleet's selection of such
Extension Period to the holders of the Capital Securities. If the Institutional
Trustee shall not be the sole holder of the Junior Subordinated Debentures,
Fleet shall give the holders of the Junior Subordinated Debentures notice of its
selection of such Extension Period at least ten Business Days prior to the
earlier of:
(1) the Interest Payment Date; or
(2) if the Junior Subordinated Debentures are then listed, the date upon
which Fleet is required to give notice to any applicable
self-regulatory organization or to holders of the Junior Subordinated
Debentures of the record or payment date of such related interest
payment.
ADDITIONAL INTEREST
If, at any time while the Institutional Trustee is the holder of any Junior
Subordinated Debentures, Fleet Capital or the Institutional Trustee shall be
required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States, or
any other taxing authority, then, in any such case, Fleet will pay as additional
interest ("Additional Interest") on the Junior Subordinated Debentures held by
the Institutional Trustee, such additional amounts as shall be required so that
the net amounts received and retained by Fleet Capital and by the Institutional
Trustee after paying any such taxes, duties, assessments or other governmental
charges will be equal to the amounts Fleet Capital and the Institutional Trustee
would have received had no such taxes, duties, assessments or other governmental
charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "Description of the Junior
Subordinated Debentures--Events of Default, Waiver and Notice" in the
accompanying Prospectus for a description of Indenture Events of Default. An
Indenture Event of Default also constitutes a Declaration Event of Default. The
holders of Capital Securities in certain circumstances have the right to direct
the Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debentures. See "Description of the Capital Securities--
Declaration Events of Default" and "--Voting Rights." If the Institutional
Trustee fails to enforce its rights under the Junior Subordinated Debentures
after a holder of record of Capital Securities has made a written request, such
holder of record of Capital Securities may institute a legal proceeding directly
against Fleet to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity.
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Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Fleet to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Capital Securities may institute a Direct
Action for enforcement of payment to such holder of the principal of, or
interest on, the Junior Subordinated Debentures having a principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Junior Subordinated
Debentures. Notwithstanding any payments made to such holder of Capital
Securities by Fleet in connection with a Direct Action, Fleet shall remain
obligated to pay the principal of or interest on the Junior Subordinated
Debentures held by Fleet Capital or the Institutional Trustee, and Fleet shall
be subrogated to the rights of the holder of such Capital Securities with
respect to payments on the Capital Securities to the extent of any payments made
by Fleet to such holder in any Direct Action. Except as provided in the
preceding sentence and in the Guarantee, the holders of Capital Securities will
not be able to exercise directly any other remedy available to the holders of
the Junior Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Capital Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Fleet
Capital, the Junior Subordinated Debentures will be issued in the form of one or
more global certificates (each a "Global Security") registered in the name of
the Depositary. Except under the limited circumstances described below, Junior
Subordinated Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debentures in definitive form. The Global Securities described above may not be
transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or to a successor Depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Capital
Securities in liquidation of such holders' interests in Fleet Capital, DTC will
act as the Depositary for the Junior Subordinated Debentures. For a description
of DTC and the specific terms of the depositary arrangements, see "Description
of the Capital Securities--Book-Entry Only Issuance--The Depository Trust
Company." As of the date of this Prospectus Supplement, the description therein
of DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the Capital Securities apply in
all material respects to any debt obligations represented by one or more Global
Securities held by Fleet. Fleet may appoint a successor to DTC or any successor
Depositary in the
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event DTC or such successor Depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of Fleet, Fleet Capital, the Institutional Trustee, any paying agent
and any other agent of Fleet, or the Debt Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if:
(1) the Depositary notifies Fleet that it is unwilling or unable to
continue as a depositary for such Global Security and no successor
depositary shall have been appointed;
(2) the Depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the Depositary is
required to be so registered to act as such depositary and no
successor depositary shall have been appointed;
(3) Fleet, in its sole discretion, determines that such Global Security
shall be so exchangeable; or
(4) there shall have occurred an Indenture Event of Default with respect
to such Junior Subordinated Debentures.
Any Global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Junior Subordinated Debentures registered in such
names as the Depositary shall direct. It is expected that such instructions will
be based upon directions received by the Depositary from its Participants with
respect to ownership of beneficial interests in such Global Security.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Indenture will provide that Fleet will pay all fees and expenses related
to;
(1) the offering of the Trust Securities and the Junior Subordinated
Debentures;
(2) the organization, maintenance and dissolution of Fleet Capital;
(3) the retention of the Regular Trustees; and
(4) the enforcement by the Institutional Trustee of the rights of the
holders of the Capital Securities.
Fleet will have the right at all times to assign any of its respective
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of Fleet; provided that, in the event of any such assignment, Fleet
will remain liable for all of their respective obligations. Subject to the
foregoing, the Indenture will be binding upon and inure to the benefit of the
parties thereto and their respective successors and assigns. The Indenture
provides that it may not otherwise be assigned by the parties thereto.
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EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Fleet Capital is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of Fleet Capital, and to invest the proceeds from such issuance and sale
in the Junior Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors:
(1) the aggregate principal amount of Junior Subordinated Debentures will
be equal to the sum of the aggregate stated liquidation amount of the
Trust Securities;
(2) the interest rate and the interest and other payment dates on the
Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Capital Securities;
(3) Fleet shall pay all, and Fleet Capital shall not be obligated to pay,
directly or indirectly, all costs, expenses, debt, and obligations of
Fleet Capital (other than with respect to the Trust Securities); and
(4) the Declaration further provides that the Regular Trustees shall not
take or cause or permit Fleet Capital to, among other things, engage
in any activity that is not consistent with the purposes of Fleet
Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Capital Securities (to the extent funds therefor are
available) are guaranteed by Fleet as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If Fleet does not make interest payments on the Junior Subordinated
Debentures purchased by Fleet Capital, Fleet Capital will not have sufficient
funds to pay distributions on the Capital Securities. The Guarantee does not
apply to any payment of distributions unless and until the Trust has sufficient
funds for the payment of such distributions. The Guarantee covers the payment of
distributions and other payments on the Capital Securities if and to the extent
that Fleet has made a payment of interest or principal on the Junior
Subordinated Debentures held by Fleet Capital as its sole asset. The Guarantee,
when taken together with Fleet's obligations under the Junior Subordinated
Debentures and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of Fleet
Capital (other than with respect to the Trust Securities), provide a full and
unconditional guarantee of amounts on the Capital Securities.
If Fleet fails to make interest or other payments on the Junior Subordinated
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Capital Securities, using the
procedures described in "Description of the Capital Securities-- Book-Entry Only
Issuance--The Depository Trust Company" and "--Voting Rights," may direct the
Institutional Trustee to enforce its rights under the Junior Subordinated
Debentures. If the Institutional Trustee fails to enforce its rights under the
Junior Subordinated Debentures, a holder of Capital Securities may institute a
legal proceeding against Fleet to enforce the Institutional Trustee's rights
under the Junior Subordinated Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Fleet to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Capital Securities may institute a Direct
Action for payment on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Direct Action, Fleet will be
subrogated to the rights of such holder of Capital Securities under the
Declaration to the extent of any payment
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made by Fleet to such holder of Capital Securities in such Direct Action. Fleet,
under the Guarantee, acknowledges that the Guarantee Trustee shall enforce the
Guarantee on behalf of the holders of the Capital Securities. If Fleet fails to
make payments under the Guarantee, any holder of Capital Securities may
institute a Direct Action against Fleet to enforce the Guarantee Trustee's
rights under the Guarantee without first instituting a legal proceeding against
Fleet Capital, the Guarantee Trustee, or any other person or entity.
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Edwards & Angell, LLP, counsel to Fleet and Fleet Capital
("Tax Counsel"), the following is a summary of certain of the material United
States federal income tax consequences of the purchase, ownership and
disposition of Capital Securities held as capital assets by a holder who
purchases such Capital Securities upon initial issuance. It does not deal with
special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, United States Alien Holders (as
defined below) to the extent that the ownership of such Capital Securities are
held in connection with the conduct of a trade or business in the United States
or persons that will hold the Capital Securities as a position in a "straddle,"
as part of a "synthetic security" or "hedge," as part of a "conversion
transaction" or other integrated investment or as other than a capital asset.
This summary also does not address the tax consequences to persons that have a
functional currency other than the U.S. Dollar or the tax consequences to
shareholders, partners or beneficiaries of a holder of Capital Securities.
Further, it does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any foreign
government that may be applicable to the Capital Securities. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change, possibly on a
retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Junior Subordinated Debentures, Tax
Counsel will render its opinion generally to the effect that under then current
law and assuming full compliance with the terms of the Indenture (and certain
other documents), and based on certain facts and assumptions contained in such
opinion, the Junior Subordinated Debentures will be classified for United States
federal income tax purposes as indebtedness of Fleet.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Capital Securities, Tax Counsel will
render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, Fleet Capital will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Capital Securities generally will be considered the owner of a
pro rata undivided interest in the Junior Subordinated Debentures, and each
holder will be required to include in its gross income any interest (or original
issue discount ("OID")) paid or accrued with respect to its allocable share of
those Junior Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury regulations (the "Regulations") promulgated under the OID
provisions of the Code, a "remote" contingency that stated interest will not be
timely paid will be ignored in determining whether a debt instrument is issued
with OID. Fleet believes that the likelihood of its exercising its
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option to defer payments of interest on the Junior Subordinated Debentures is
"remote" since exercising that option would prevent Fleet from, among other
things, declaring dividends on any class of its equity securities. Accordingly,
Fleet intends to take the position, based on the advice of Tax Counsel, that the
Junior Subordinated Debentures will not be considered to be issued with OID and,
accordingly, stated interest on the Junior Subordinated Debentures generally
will be taxable to a holder as ordinary income at the time it is paid or accrued
in accordance with such holder's method of accounting.
Under the Regulations, if Fleet were to exercise its option to defer
payments of interest on the Junior Subordinated Debentures, the Junior
Subordinated Debentures would at that time be treated as reissued with OID, and
all stated interest on the Junior Subordinated Debentures would thereafter be
treated as OID as long as the Junior Subordinated Debentures remain outstanding.
In such event, all of a holder's taxable interest income with respect to the
Junior Subordinated Debentures would thereafter be accounted for on an economic
accrual basis regardless of such holder's method of tax accounting, and actual
cash distributions of stated interest would not be reported as taxable income.
Consequently, a holder of Capital Securities would be required to include in
gross income OID even if Fleet does not make actual cash payments during an
Extension Period.
The Regulations have not yet been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is possible
that the IRS could take a position contrary to Tax Counsel's interpretation
herein.
Because income on the Capital Securities will constitute interest or OID,
corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF FLEET
CAPITAL
Fleet will have the right at any time to liquidate Fleet Capital and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities. Under current law, such a distribution, for United States federal
income tax purposes, would be treated as a nontaxable event to each holder, and
each holder would receive an aggregate tax basis in the Junior Subordinated
Debentures received equal to such holder's aggregate tax basis in its Capital
Securities. A holder's holding period in the Junior Subordinated Debentures so
received in liquidation of Fleet Capital would include the period during which
the Capital Securities were held by such holder. If, however, Fleet Capital is
characterized for United States federal income tax purposes as an association
taxable as a corporation at the time of its dissolution, the distribution of the
Junior Subordinated Debentures may constitute a taxable event to holders of
Capital Securities.
Under certain circumstances described herein (see "Description of the
Capital Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Capital Securities. Under current law, such a redemption would, for United
States federal income tax purposes, constitute a taxable disposition of the
redeemed Capital Securities, and a holder could recognize gain or loss as if it
sold such redeemed Capital Securities for cash. See "Sales of Capital
Securities" below.
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities (including a redemption of the
Capital Securities by Fleet Capital) will recognize gain or loss equal to the
difference between its adjusted tax basis in the Capital Securities and the
amount realized on the sale of such Capital Securities (other than with respect
to accrued and unpaid interest which has not yet been included in income, which
will be treated as ordinary income). A holder's adjusted tax basis in the
Capital Securities generally will be its initial purchase price increased by OID
(if any) previously includable in such holder's gross income to the date of
disposition and decreased by payments received on the Capital Securities in
respect of OID (if
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any). Such gain or loss generally will be a capital gain or loss and generally
will be a long-term capital gain or loss if the Capital Securities have been
held for more than one year.
The Capital Securities may trade at a price that does not accurately reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are deemed to have been issued with OID) and who disposes of his Capital
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income (i.e.,
interest or, possibly, OID), and to add such amount to his adjusted tax basis in
his pro rata share of the underlying Junior Subordinated Debentures deemed
disposed of. To the extent the selling price is less than the holder's adjusted
tax basis (which will include all accrued but unpaid interest) a holder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a beneficial owner of Capital Securities who or which is
(i) a citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for federal income tax purposes, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includible in its gross income for federal income tax purposes
without regard to its source or (iv) a trust if, and only if, (x) a court within
the United States is able to exercise primary supervision over the
administration of the trust and (y) one or more United States persons have the
authority to control all substantial decisions of the trust.
Under present United States federal income tax law: (i) payments by Fleet
Capital or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder generally will not be subject to United
States federal withholding tax; provided that, (a) the beneficial owner of the
Capital Security does not actually or constructively own 10 percent or more of
the total combined voting power of all classes of stock of Fleet entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to Fleet through stock ownership, and (c)
either (A) the beneficial owner of the Capital Security certifies to Fleet
Capital or its agent, under penalties of perjury, that it is not a United States
Holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Capital Security in such capacity, certifies to
Fleet Capital or its agent, under penalties of perjury, that such statement has
been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and furnishes Fleet Capital or its agent
with a copy thereof; and (ii) a United States Alien Holder of a Capital Security
generally will not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Capital Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
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RECENT CHANGES TO INFORMATION REPORTING AND BACKUP WITHHOLDING RULES
Recently published final Treasury Regulations (the "Final Withholding
Regulations") make a number of important changes to the procedures for income
tax withholding and certification of eligibility for the portfolio interest
exemption or for a reduced rate of income tax withholding based on an applicable
income tax treaty. In general, the Final Withholding Regulations do not
significantly alter substantive withholding requirements, but unify
certification procedures and clarify reliance standards. The Final Withholding
Regulations are scheduled to be effective for payments made on or after January
1, 2000, subject to certain transition rules. The Final Withholding Regulations
are quite complex. United States Alien Holders are strongly urged to consult
their tax advisors regarding the potential application of the Final Withholding
Regulations to payments on the Capital Securities in light of their particular
circumstances.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan, and whether such investment would involve a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in civil penalty or
other liabilities under ERISA and/or an excise tax under Section 4975 of the
Code for such persons, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church plans
(as defined in Section 3(33) of ERISA) and foreign plans (as described in
Section 4(b)(4)of ERISA) are not subject to the requirements of ERISA or Section
4975 of the Code; however, governmental plans may be subject to similar
provisions under applicable state laws.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of Fleet Capital would be deemed to
be "plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code if
"plan assets" of the Plan were used to acquire an equity interest in the Trust
and no exception was applicable under the Plan Assets Regulation. An "equity
interest" is defined under the Plan Assets Regulation as any interest in an
entity other than an instrument which is treated as indebtedness under
applicable law and which has no substantial equity features and specifically
includes a beneficial interest in a trust.
Pursuant to the Plan Assets Regulation, the assets of Fleet Capital would
not be deemed to be "plan assets" of investing Plans if, among other exceptions,
at all times, less than 25% of the value of each class of equity interests in
Fleet Capital were held by Plans, other employee benefit plans not
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subject to ERISA or Section 4975 of the Code (such as governmental, church and
foreign plans), and entities holding assets deemed to be "plan assets" of any
Plan (collectively, "Benefit Plan Investors"), or if the Capital Securities were
"publicly-offered securities" for purpose of the Plan Assets Regulation. No
assurance can be given that the Capital Securities held by Benefit Plan
Investors will be less than 25% of the total value of such Capital Securities at
the completion of the initial offering or thereafter, and no monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception. In addition, no assurance can be given that the Capital
Securities would be considered to be "publicly-offered securities" under the
Plan Assets Regulation.
Fleet, the obligor with respect to the Junior Subordinated Debentures held
by Fleet Capital, and its affiliates and the Institutional Trustee may be
considered Parties in Interest with respect to many Plans and, as a result of
this transaction, may become parties in interest to Plans that purchase the
Capital Securities. Accordingly, the purchase and/or holding of Capital
Securities by a Plan with respect to which Fleet, the Institutional Trustee or
any affiliate is or becomes a Party in Interest may constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code, unless such
Capital Securities are acquired pursuant to and in accordance with an applicable
exemption.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the Capital
Securities if assets of Fleet Capital were deemed to be "plan assets" of Plans
investing in Fleet Capital. The class exemptions are PTCE 84-14 (an exemption
for certain transactions determined by independent qualified professional asset
managers); PTCE 90-1 (an exemption for certain transactions involving insurance
company pooled separate accounts); PTCE 91-38 (an exemption for certain
transactions involving bank collective investment funds); PTCE 95-60 (an
exemption for transactions involving certain insurance company general accounts)
or PTCE 96-23 (an exemption for plan asset transactions managed by in-house
asset managers).
Because the Capital Securities may be deemed to be equity interests in Fleet
Capital for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption. Any
purchaser or holder of the Capital Securities or any interest therein will be
deemed to have represented by its purchase and holding thereof that it either
(a) is not a Plan or a Plan Asset Entity and is not purchasing such securities
on behalf of or with "plan assets" of any Plan or (b) is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption with respect to such purchase or holding. If a
purchaser or holder of the Capital Securities that is a Plan or a Plan Asset
Entity elects to rely on an exemption other than PTCE 96-23, 95-60, 91-38, 90-1
or 84-14, Fleet and Fleet Capital may require a satisfactory opinion of counsel
or other evidence with respect to the availability of such exemption for such
purchase and holding.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt transactions, it is important that
fiduciaries or other persons considering purchasing the Capital Securities on
behalf of or with "plan assets" of any Plan consult with its ERISA counsel
regarding the potential consequences if the assets of Fleet Capital were deemed
to be "plan assets" and the availability of exemptive relief under PTCE 96-23,
95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), Fleet Capital has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase the number of Capital Securities set forth opposite its name below. In
the Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Capital Securities
offered hereby if any of the Capital Securities are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the non-defaulting Underwriters may
be increased or the Underwriting Agreement may be terminated.
NUMBER OF
CAPITAL
UNDERWRITERS SECURITIES
-----------
Lehman Brothers Inc............................................................... 147,500
Chase Securities Inc.............................................................. 45,000
Goldman, Sachs & Co............................................................... 45,000
Blaylock & Partners, L.P.......................................................... 12,500
-----------
Total................................................................... 250,000
-----------
-----------
The Underwriters propose to offer the Capital Securities, in part, directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus Supplement, and, in part, to certain securities dealers at
such price less a concession of $5.00 per Capital Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $2.50 per
Capital Security to certain brokers and dealers. After the Capital Securities
are released for sale to the public, the offering price and other selling terms
may be changed.
In view of the fact that the proceeds of the sale of the Capital Securities
will ultimately be used to purchase the Junior Subordinated Debentures of Fleet,
the Underwriting Agreement provides that Fleet will pay as compensation
("Underwriters' Compensation") to the Underwriters arranging the investment
therein of such proceeds, an amount in immediately available funds of $10.00 per
Capital Security (or $2,500,000 in the aggregate) for the accounts of the
several Underwriters. The Underwriters have agreed to reimburse the expenses
payable by Fleet in connection with the offering of the Capital Securities,
estimated at $312,500.
During a period of 7 days from the date of the Prospectus Supplement,
neither Fleet Capital nor Fleet will, without the prior written consent of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
sale of, or otherwise dispose of, any Capital Securities, any security
convertible into or exchangeable into or exercisable for Capital Securities or
Junior Subordinated Debentures or any debt securities substantially similar to
the Junior Subordinated Debentures or equity securities substantially similar to
the Capital Securities (except for the Junior Subordinated Debentures and the
Capital Securities offered hereby).
The Capital Securities constitute a new issue of securities of Fleet Capital
with no established trading market. Although the Underwriters have indicated to
Fleet and Fleet Capital that they intend to make a market in the Capital
Securities, as permitted by applicable laws and regulations, they are not
obligated to do so and may discontinue any such market-making at any time
without notice. Accordingly, no assurance can be given as to the liquidity of,
or trading markets for, the Capital Securities.
Fleet Capital and Fleet have agreed to indemnify the Underwriters against,
or contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act
of 1933, as amended.
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Until the distribution of the Capital Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
any selling group members to bid for and purchase the Capital Securities. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Capital Securities. Such
transactions consist of bids or purchases for the purposes of pegging, fixing or
maintaining the price of the Capital Securities.
If the Underwriters create a short position in the Capital Securities in
connection with the offering, I.E., if they sell more Capital Securities than
are set forth on the cover page of this Prospectus Supplement, the
Representatives may reduce the short position by purchasing Capital Securities
in the open market.
The Underwriters may also impose a penalty bid on certain selling group
members. This means that if the Underwriters purchase Capital Securities in the
open market to reduce the Underwriters' short position or to stabilize the price
of the Capital Securities, they may reclaim the amount of the selling concession
from the selling group members who sold those Capital Securities as part of the
offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
None of Fleet, Fleet Capital nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Capital
Securities. In addition, none of Fleet, Fleet Capital nor any of the
Underwriters makes any representation that the Underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
Certain of the Underwriters or their affiliates engage in transactions with,
and, from time to time, have performed services for, Fleet and its subsidiaries
in the ordinary course of business.
S-45
PROSPECTUS
FLEET FINANCIAL GROUP, INC.
JUNIOR SUBORDINATED DEBENTURES
FLEET CAPITAL TRUST V
FLEET CAPITAL TRUST VI
FLEET CAPITAL TRUST VII
FLEET CAPITAL TRUST VIII
FLEET CAPITAL TRUST IX
FLEET CAPITAL TRUST X
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
FLEET FINANCIAL GROUP, INC.
Fleet Financial Group, Inc. ("Fleet" or the "Company"), a Rhode Island
corporation, may from time to time offer its subordinated debentures, notes or
other evidence of indebtedness (the "Junior Subordinated Debentures") in one or
more series and in amounts, at prices and on terms to be determined at the time
of the offering. The Junior Subordinated Debentures when issued will be
unsecured obligations of the Company. The Company's obligations under the Junior
Subordinated Debentures will be subordinate and junior in right of payment to
certain other indebtedness of Fleet, as may be described in an accompanying
Prospectus Supplement (the "Prospectus Supplement").
Fleet Capital Trust V, Fleet Capital Trust VI, Fleet Capital Trust VII,
Fleet Capital Trust VIII, Fleet Capital Trust IX and Fleet Capital Trust X
(each, a "Fleet Capital Trust"), each a statutory business trust formed under
the laws of the State of Delaware, may offer, from time to time, preferred
securities representing undivided beneficial interests in the assets of the
respective Fleet Capital Trust ("Preferred Securities"). The payment of periodic
cash distributions ("distributions") with respect to Preferred Securities of
each of the Fleet Capital Trusts out of moneys held by each of the Fleet Capital
Trusts, and payment on liquidation, redemption or otherwise with respect to such
Preferred Securities, will be guaranteed by Fleet to the extent described herein
(each a "Preferred Securities Guarantee"). See "Description of the Preferred
Securities Guarantees" below. Fleet's obligations under the Preferred Securities
Guarantees will be subordinate and junior in right of payment to all other
liabilities of Fleet and will rank pari passu with the most senior preferred
stock, if any, issued from time to time by Fleet. Junior Subordinated Debentures
may be issued and sold from time to time in one or more series to a Fleet
Capital Trust, or a trustee of such Fleet Capital Trust, in connection with the
investment of the proceeds from the offering of Preferred Securities and Common
Securities (as defined herein, together the "Trust Securities") of such Fleet
Capital Trust. The Junior Subordinated Debentures purchased by a Fleet Capital
Trust may be subsequently distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such
Fleet Capital Trust upon the occurrence of certain events as may be described in
an accompanying Prospectus Supplement. The Junior Subordinated Debentures and
the Preferred Securities and the related Preferred Securities Guarantees are
sometimes collectively referred to hereafter as the "Offered Securities."
Pursuant to the terms of the Registration Statement of which this Prospectus
constitutes a part, Fleet may also offer and sell (i) its unsecured debt
securities, which may be either senior or subordinated, or warrants to purchase
debt securities (the "Debt Securities") and (ii) its preferred stock (the
"Preferred Stock"), which may be represented by depositary shares (the
"Depositary Shares"), shares of its common stock (the "Common Stock") or
warrants to purchase Preferred Stock or Common Stock (the "Equity Warrants").
Any such Debt Securities, on the one hand, and Preferred Stock, Depositary
Shares, Common Stock or Equity Warrants, on the other hand, will be offered and
issued pursuant to the terms of a separate Prospectus contained in such
Registration Statement. The aggregate amount of Preferred Securities that may be
offered and sold pursuant hereto is subject to reduction as the result of the
sale of any Debt Securities, on the one hand, and any Preferred Stock,
Depositary Shares, Common Stock or Equity Warrants, on the other hand, pursuant
to each such separate Prospectus.
Specific terms of the Junior Subordinated Debentures of any series or the
Preferred Securities of any Fleet Capital Trust, the terms of which will mirror
the terms of the Junior Subordinated Debentures held by the Fleet Capital Trust,
in respect of which this prospectus (the "Prospectus") is being delivered, will
be set forth in a Prospectus Supplement with respect to such securities, which
will describe, without limitation and where applicable, the following: (i) in
the case of Junior Subordinated Debentures, the specific designation, aggregate
principal amount, denomination, currency or currency unit for which Junior
Subordinated Debentures may be purchased, currency or currency unit in which the
principal and any interest on Junior Subordinated Debentures is payable,
maturity, the right of Fleet, if any, to extend or shorten the maturity after
issuance, premium, if any, any exchange, conversion or redemption provisions, if
any, interest rate (which may be fixed or variable), if any, the time and method
of calculating interest payments, if any, dates on which premium, if any, and
interest, if any, will be payable, the right of Fleet, if any, to defer payment
of interest on the Junior Subordinated Debentures and the maximum length of such
deferral period, the initial public offering price, subordination terms, and any
listing on a securities exchange and other specific terms of the offering; and
(ii) in the case of Preferred Securities, the designation, number of securities,
liquidation preference per security, initial public offering price, any listing
on a securities exchange, distribution rate (or method of calculation thereof),
dates on which distributions shall be payable and dates from which distributions
shall accrue, any voting rights, terms for any conversion or exchange into other
securities, any redemption, exchange or sinking fund provisions, any other
rights, preferences, privileges, limitations or restrictions relating to the
Preferred Securities and the terms upon which the proceeds of the sale of the
Preferred Securities shall be used to purchase a specific series of Junior
Subordinated Debentures of Fleet.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering. The Prospectus Supplement relating to any
series of Offered Securities will contain information concerning the United
States federal income tax considerations applicable to purchasers of the Offered
Securities.
Fleet and/or each of the Fleet Capital Trusts may sell the Offered
Securities directly, through agents designated from time to time, or through
underwriters or dealers. See "Plan of Distribution" below. If any agents of
Fleet and/or any Fleet Capital Trust or any underwriters or dealers are involved
in the sale of the Offered Securities, the names of such agents, underwriters or
dealers and any applicable commissions and discounts will be set forth in any
related Prospectus Supplement.
This Prospectus and related Prospectus Supplements may be used by direct or
indirect subsidiaries of Fleet in connection with offers and sales related to
secondary market transactions in the Offered Securities. Such subsidiaries may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF FLEET (OTHER THAN THE
FLEET CAPITAL TRUSTS) AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
The date of this Prospectus is September 24, 1998
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS, THE PURCHASE
OF PREFERRED SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS.
FOR INVESTORS OUTSIDE THE UNITED STATES: NO ACTION HAS BEEN OR WILL BE TAKEN
IN ANY JURISDICTION BY FLEET OR BY ANY UNDERWRITER THAT WOULD PERMIT A PUBLIC
OFFERING OF THE SECURITIES OR POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN
ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED, OTHER THAN IN THE
UNITED STATES. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED
BY FLEET AND THE UNDERWRITERS TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY
RESTRICTIONS AS TO THE OFFERING OF THE SECURITIES AND THE DISTRIBUTION OF THIS
PROSPECTUS.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in or incorporated by reference in this
Prospectus and accompanying Prospectus Supplement may be considered
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from those projected as
a result of certain risks and uncertainties, including but not limited to
changes in political and economic conditions, interest rate fluctuations,
competitive product and pricing pressures within Fleet's market, equity and bond
market fluctuations, personal and corporate customers' bankruptcies, inflation,
acquisitions and integrations of acquired businesses, risks relating to Year
2000 issues (particularly with respect to compliance by third parties on which
Fleet relies), as well as other risks and uncertainties detailed from time to
time in the filings of Fleet with the Securities and Exchange Commission (the
"Commission").
2
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by Fleet and the Fleet Capital Trusts with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Securities. This Prospectus does not contain all of the
information set forth in such Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, although
it does include a summary of the material terms of the Indenture and the
Declarations of Trust (each as defined herein). Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company, the Fleet Capital Trusts and the
Offered Securities. Any statements contained herein concerning the provisions of
any document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission or incorporated by reference herein are not
necessarily complete, and, in each instance, reference is made to the copy of
such document so filed for a more complete description of the matter involved.
Each such statement is qualified in its entirety by such reference.
Fleet is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith files reports, proxy statements and other information with the
Commission. Proxy statements, reports and other information concerning Fleet can
be inspected and copied at the Commission's office at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices in New York (Suite 1300, Seven World Trade Center, New York,
New York 10048) and Chicago (Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661), and copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates or by accessing the
Commission's World Wide Web site at http://www.sec.gov. The common stock, $.01
par value, of Fleet (the "Common Stock") is listed on the New York Stock
Exchange ("NYSE"). Reports, proxy material and other information concerning
Fleet also may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005. This Prospectus and the accompanying Prospectus Supplement
do not contain all the information set forth in the Registration Statement and
Exhibits thereto which Fleet has filed with the Commission under the Securities
Act, which may be obtained from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the prescribed fees, and to which reference is hereby made.
No separate financial statements of any of the Fleet Capital Trusts have
been included herein. Fleet does not consider that such financial statements
would be material to holders of the Preferred Securities because (i) all of the
voting securities of each of the Fleet Capital Trusts will be owned, directly or
indirectly, by Fleet, a reporting company under the Exchange Act, (ii) each of
the Fleet Capital Trusts has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in the
assets of such Fleet Capital Trust and investing the proceeds thereof in Junior
Subordinated Debentures issued by Fleet, and (iii) Fleet's obligations described
herein and in any accompanying Prospectus Supplement to provide certain
indemnities in respect of, and be responsible for, certain costs, expenses,
debts and liabilities of each of the Fleet Capital Trusts under the Indenture
and any supplemental indenture thereto and pursuant to the Declarations of each
Trust, the Preferred Securities Guarantee issued with respect to Preferred
Securities issued by that Trust, the Junior Subordinated Debentures purchased by
that Trust and the related Indenture, taken together, constitute a full and
unconditional guarantee of payments due on the Preferred Securities. See
"Description of the Junior Subordinated Debentures" and "Description of the
Preferred Securities Guarantees."
The Fleet Capital Trusts are not currently subject to the information
reporting requirements of the Exchange Act. The Fleet Capital Trusts will become
subject to such requirements upon the effectiveness of the Registration
Statement, although they intend to seek and expect to receive exemptions
therefrom.
3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Fleet are incorporated
by reference in this Prospectus:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
(b) Quarterly Reports on Form 10-Q for the quarter ended March 31, 1998 and
June 30, 1998.
(c) Current Reports on Form 8-K dated January 15, 1998, January 15, 1998,
January 26, 1998, February 2, 1998, March 4, 1998, March 6, 1998, March 30,
1998, April 15, 1998, April 28, 1998, May 5, 1998, May 20, 1998, July 7, 1998
and July 15, 1998.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the Commission by Fleet pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Offered Securities shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference herein or in any Prospectus Supplement shall be deemed to be modified
or superseded for purposes of this Prospectus or any Prospectus Supplement to
the extent that a statement contained herein or therein (or in any subsequently
filed document that also is or is deemed to be incorporated by reference herein
or therein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
FLEET WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS
PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON,
A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY
BE INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO SUCH DOCUMENTS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS). WRITTEN REQUESTS SHOULD BE MAILED TO INVESTOR RELATIONS DEPARTMENT,
FLEET FINANCIAL GROUP, INC., ONE FEDERAL STREET, BOSTON, MASSACHUSETTS 02110.
TELEPHONE REQUESTS MAY BE DIRECTED TO (617) 346-4000.
4
FLEET FINANCIAL GROUP, INC.
GENERAL
Fleet is a diversified financial services company organized under the laws
of the State of Rhode Island. At June 30, 1998, Fleet was the tenth largest bank
holding company in the United States, with total assets of $100.7 billion, total
deposits of $67.0 billion and stockholders' equity of $8.9 billion.
Fleet is engaged in a general consumer and commercial banking and investment
management business throughout the states of Connecticut, Massachusetts, New
Jersey, New York, Rhode Island, Maine, New Hampshire and Florida through its
banking subsidiaries, and also provides, through its other subsidiaries, a
variety of financial services, including mortgage banking, asset-based lending,
consumer finance, real estate financing, securities brokerage services, capital
markets services and investment banking, investment advice and management, data
processing and student loan servicing.
The principal office of Fleet is located at One Federal Street, Boston,
Massachusetts 02110, telephone number (617) 346-4000.
HOLDING COMPANY
Fleet is a legal entity separate and distinct from its subsidiaries. The
ability of holders of debt and equity securities of Fleet, including the holders
of the securities offered hereby, to benefit from the distribution of assets of
any subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to prior claims of creditors of the subsidiary (including depositors
in the case of banking subsidiaries) except to the extent that a claim of Fleet
as a creditor may be recognized.
There are various statutory and regulatory limitations on the extent to
which banking subsidiaries of Fleet can finance or otherwise transfer funds to
Fleet or its nonbanking subsidiaries, whether in the form of loans, extensions
of credit, investments or asset purchases. Such transfers by any subsidiary bank
to Fleet or any nonbanking subsidiary are limited in amount to 10% of the bank's
capital and surplus and, with respect to Fleet and all such nonbanking
subsidiaries, to an aggregate of 20% of each such bank's capital and surplus.
Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions with safe and
sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Fleet from its banking subsidiaries. Under applicable
banking statutes, at June 30, 1998, Fleet's banking subsidiaries could have
declared additional dividends of approximately $842.0 million. Federal and state
regulatory agencies also have the authority to limit further Fleet's banking
subsidiaries' payment of dividends based on other factors, such as the
maintenance of adequate capital for such subsidiary bank.
Under the policy of the Board of Govenors of the Federal Reserve Systems
(the "Federal Reserve Board"), Fleet is expected to act as a source of financial
strength to each subsidiary bank and to commit resources to support such
subsidiary bank in circumstances where it might not do so absent such policy. In
addition, any subordinated loans by Fleet to any of the subsidiary banks would
also be subordinate in right of payment to deposits and obligations to general
creditors of such subsidiary bank. Further, the Crime Control Act of 1990
amended the federal bankruptcy laws to provide that in the event of the
bankruptcy of Fleet, any commitment by Fleet to its regulators to maintain the
capital of a banking subsidiary would be assumed by the bankruptcy trustee and
entitled to a priority of payment.
5
THE TRUSTS
Each of the Trusts is a statutory business trust formed under Delaware law
pursuant to (i) a separate declaration of trust (each a "Declaration") executed
by Fleet, as sponsor for such trust (the "Sponsor") and the Fleet Capital
Trustees (as defined herein) for such trust and (ii) the filing of a certificate
of trust with the Delaware Secretary of State. Each Fleet Capital Trust exists
for the exclusive purposes of (i) issuing the Preferred Securities and common
securities representing undivided beneficial interests in the assets of such
Trust (the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities"), (ii) investing the gross proceeds of the Trust Securities
in Junior Subordinated Debentures, and (iii) engaging in only those other
activities necessary or incidental thereto. All of the Common Securities will be
directly or indirectly owned by Fleet. The Common Securities of each Trust will
rank pari passu, and payments will be made thereon pro rata, with the Preferred
Securities of such Trust except that upon an event of default under the
Declaration with respect thereto, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Fleet will, directly or indirectly, acquire Common
Securities of each Trust in an aggregate liquidation amount equal to at least 3
percent of the total capital of each Fleet Capital Trust.
Each Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to such Declaration or otherwise or (ii) the dissolution, winding-up
or termination of the related Fleet Capital Trust other than pursuant to the
terms of such Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby; provided, that, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Securities.
Each Fleet Capital Trust has a term of approximately 55 years, but may
terminate earlier as provided in the applicable Declaration. Each Fleet Capital
Trust's business and affairs will be conducted by the trustees (the "Fleet
Capital Trustees") appointed by Fleet, as the direct or indirect holder of all
the Common Securities. The holder of the Common Securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
Fleet Capital Trustees of a Fleet Capital Trust. The duties and obligations of
the Fleet Capital Trustees shall be governed by the Declaration of such Fleet
Capital Trust. One or more of the Fleet Capital Trustees for each Trust will be
persons who are employees or officers of or affiliated with Fleet (the "Regular
Trustees"). One Fleet Capital Trustee of each Fleet Capital Trust will be a
financial institution which will be unaffiliated with Fleet and which shall act
as institutional trustee under the Declaration and as indenture trustee for
purposes of the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), pursuant to the terms set forth in a Prospectus Supplement (the
"Institutional Trustee"). In addition, unless the Institutional Trustee
maintains a principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law, one Fleet Capital Trustee of each
Fleet Capital Trust will have its principal place of business or reside in the
State of Delaware (the "Delaware Trustee"). Fleet will pay all fees and expenses
related to the Fleet Capital Trusts and the offering of Trust Securities. The
office of the Delaware Trustee for each Fleet Capital Trust in the State of
Delaware, and its principal place of business is, First Chicago Delaware Inc.,
300 King Street, Wilmington, Delaware 19801. The principal place of business of
each Fleet Capital Trust shall be c/o Fleet Financial Group, Inc., One Federal
Street, Boston, Massachusetts 02110, telephone number (617) 346-4000.
6
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Fleet's consolidated ratios of earnings to fixed charges were as follows for
the years indicated:
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED ------------------------------------------
JUNE 30, 1998 1997 1996 1995 1994
----------------- --------- --------- --------- ---------
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits............................. 3.27x 3.90x 3.38x 1.79x 2.30x
Including Interest on Deposits............................. 1.83 1.94 1.79 1.36 1.64
1993
---------
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits............................. 2.39x
Including Interest on Deposits............................. 1.58
- ------------------------
For purposes of computing the consolidated ratios, earnings consist of
income before income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on short-term debt and long-term debt
(including interest related to capitalized leases and capitalized interest) and
one-third of rent expense, which approximates the interest component of such
expense. In addition, where indicated, fixed charges include interest on
deposits.
REASON FOR TRANSACTION
On October 21, 1996, the Federal Reserve Board issued a press release (the
"Federal Reserve Press Release") announcing that it had approved the use of
certain cumulative preferred stock instruments, such as the Preferred
Securities, as "Tier 1 capital" for purposes of the Federal Reserve Board's
capital guidelines for bank holding companies. Because Fleet intends to treat
the Preferred Securities as Tier 1 capital and, under current United States
federal tax law, will receive a tax deduction for interest in respect of the
Junior Subordinated Debentures, the issuance of the Preferred Securities is a
cost effective method of raising capital on an after-tax basis.
USE OF PROCEEDS
Each Trust will use the proceeds of the sale of the Trust Securities to
acquire Junior Subordinated Debentures from Fleet. Unless otherwise indicated in
the applicable Prospectus Supplement, Fleet intends to use the net proceeds from
the sale of the Junior Subordinated Debentures for general corporate purpose,
principally to extend credit to, or fund investments in, its subsidiaries. The
precise amounts and timing of extensions of credit to, and investments in, such
subsidiaries will depend upon the subsidiaries' funding requirements and the
availability of other funds. Pending such applications, the net proceeds may be
temporarily invested in marketable securities or applied to the reduction of
Fleet's short-term indebtedness. Based upon the historic and anticipated future
growth of Fleet and the financial needs of its subsidiaries, Fleet may engage in
additional financings of a character and amount to be determined as the need
arises.
7
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Junior Subordinated Debentures may be issued from time to time in one or
more series under an Indenture (the "Base Indenture"), between the Company and
The First National Bank of Chicago, as Trustee (the "Debt Trustee"), as
supplemented by a Supplemental Indenture or a resolution of the Company's Board
of Directors or a special committee appointed thereby (the "Supplemental
Indenture"; the Base Indenture, as so supplemented, is hereinafter referred to
as the "Indenture"). The terms of the Junior Subordinated Debentures will
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. While the following summary of the
material terms does not purport to be complete and is subject in all respects to
the provisions of, and is qualified in its entirety by reference to, the
Indenture, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Trust Indenture Act, all material terms of
the Junior Subordinated Debentures are set forth herein and in any Prospectus
Supplement relating to the particular Junior Subordinated Debentures being
offered thereby. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and Article references used herein are
references to provisions of the Indenture unless otherwise noted.
GENERAL
The Junior Subordinated Debentures will be unsecured, fully subordinated
obligations of the Company. The Indenture does not limit the aggregate principal
amount of Junior Subordinated Debentures which may be issued thereunder and
provides that the Junior Subordinated Debentures may be issued from time to time
in one or more series. (Section 2.03)
In the event Junior Subordinated Debentures are issued to a Fleet Capital
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such Fleet Capital Trust, such Junior Subordinated Debentures
subsequently may be distributed pro rata to the holders of such Trust Securities
in connection with the dissolution of such Fleet Capital Trust upon the
occurrence of certain events described in the Prospectus Supplement relating to
such Trust Securities. Only one series of Junior Subordinated Debentures will be
issued to a Fleet Capital Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Fleet Capital Trust.
Reference is made to the Prospectus Supplement relating to the particular
Junior Subordinated Debentures being offered thereby for the following terms:
(1) the designation of such Junior Subordinated Debentures; (2) the aggregate
principal amount of such Junior Subordinated Debentures; (3) the percentage of
their principal amount at which such Junior Subordinated Debentures will be
issued; (4) the date or dates on which such Junior Subordinated Debentures will
mature and the right, if any, to shorten or extend such date or dates; (5) the
rate or rates, if any, per annum, at which such Junior Subordinated Debentures
will bear interest, or the method of determination of such rate or rates; (6)
the date or dates from which such interest shall accrue, the interest payment
dates on which such interest will be payable or the manner of determination of
such interest payment dates and the record dates for the determination of
holders to whom interest is payable on any such interest payment dates; (7) the
right, if any, to extend the interest payment periods and the duration of such
extension; (8) provisions, if any, for a sinking purchase or other analogous
fund; (9) the period or periods, if any, within which, the price or prices of
which, and the terms and conditions upon which such Junior Subordinated
Debentures may be redeemed, in whole or in part, at the option of Fleet or the
holder; (10) the form of such Junior Subordinated Debentures; and (11) any other
specific terms of the Junior Subordinated Debentures. Principal, premium, if
any, and interest, if any, will be payable, and the Junior Subordinated
Debentures offered hereby will be transferable, at the corporate trust office of
the Debt Trustee in New York, New York, provided that payment of interest, if
any, may be made at the option of Fleet by check mailed to the address of the
person entitled thereto as it appears in the Security Register or by wire
transfer to an account appropriately designated by the person entitled thereto.
(Sections 3.01 and 3.02).
8
ADDITIONAL INTEREST
If, at any time while the Institutional Trustee is the holder of any Junior
Subordinated Debentures issued by a Trust, such Trust or the Institutional
Trustee shall be required to pay any taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any such case, Fleet will pay as
additional interest ("Additional Interest") on the Junior Subordinated
Debentures held by the Institutional Trustee, such additional amounts as shall
be required so that the net amounts received and retained by such Trust and by
the Institutional Trustee after paying any such taxes, duties, assessments or
other governmental charges will be equal to the amounts such Trust and the
Institutional Trustee would have received had no such taxes, duties, assessments
or other governmental charges been imposed.
If a Prospectus Supplement specifies that a series of Junior Subordinated
Debentures is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Junior Subordinated Debentures will be issued and the coin or
currency in which the principal, premium, if any, and interest, if any, on such
Junior Subordinated Debentures will be payable, which may be United States
dollars based upon the exchange rate for such other currency or currency unit
existing on or about the time a payment is due.
The covenants contained in the Indenture would not necessarily afford
protection to holders of the Junior Subordinated Debentures in the event of a
decline in credit quality resulting from takeovers, recapitalizations or similar
restructurings.
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Junior Subordinated Debentures will be issued in fully registered form without
coupons and in denominations of $1,000 and multiples of $1,000. No service
charge will be made for any transfer or exchange of the Junior Subordinated
Debentures, but the Company or the Debt Trustee may require payment of a sum
sufficient to cover any tax or other government charge payable in connection
therewith. (Section 2.07)
Unless otherwise provided in the applicable Prospectus Supplement, principal
and premium, if any, or interest, if any, will be payable and the Junior
Subordinated Debentures may be surrendered for payment or transferred at the
offices of the Debt Trustee as paying and authenticating agent, provided that
payment of interest on registered securities that are not issued to a Fleet
Capital Trust may be made at the option of Fleet by check mailed to the address
of the person entitled thereto as it appears in the Security Register or by wire
transfer to an account appropriately designated by the person entitled thereto.
(Section 3.01)
BOOK-ENTRY JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures of a series may be issued in whole or in
part in the form of one or more Global Securities that will be deposited with,
or on behalf of, a depositary (the "Global Depositary"), or its nominee,
identified in the Prospectus Supplement relating to such series. In such a case,
one or more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
outstanding Junior Subordinated Debentures of the series to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole or
in part for Junior Subordinated Debentures in definitive registered form, a
Global Security may not be registered for transfer or exchange except as a whole
by the Global Depositary for such Global Security to a nominee for such Global
Depositary and except in the circumstances described in the applicable
Prospectus Supplement. (Section 2.11)
The specific terms of the depositary arrangement with respect to any portion
of a series of Junior Subordinated Debentures to be represented by a Global
Security and a description of the Global Depositary will be provided in the
applicable Prospectus Supplement.
9
SUBORDINATION
The Junior Subordinated Debentures will be subordinated and junior in right
of payment to certain other indebtedness of Fleet to the extent set forth in the
applicable Prospectus Supplement.
CERTAIN COVENANTS OF FLEET
If Junior Subordinated Debentures are issued to a Fleet Capital Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Fleet Capital Trust and (i) there shall have occurred any event that would
constitute an Indenture Event of Default (as defined herein) or (ii) Fleet shall
be in default with respect to its payment of any obligations under the related
Preferred Securities Guarantee or Common Securities Guarantee, or (iii) Fleet
shall have given notice of its election to defer payments of interest on such
Junior Subordinated Debentures by extending the interest payment period as
provided in the Supplemental Indenture and such period, or any extension
thereof, shall be continuing, then (a) Fleet shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (x) purchases or acquisitions of shares of common stock, par value
$0.01 per share, of Fleet (the "Fleet Common Stock") in connection with the
satisfaction by Fleet of its obligations under any employee benefit plans or any
other contractual obligation of Fleet (other than a contractual obligation
ranking pari passu with or junior to the Junior Subordinated Debentures), (y) as
a result of a reclassification of Fleet capital stock or the exchange or
conversion of one class or series of Fleet capital stock for another class or
series of Fleet capital stock or (z) the purchase of fractional interests in
shares of Fleet capital stock pursuant to the conversion or exchange provisions
of such Fleet capital stock or the security being converted or exchanged), (b)
Fleet shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities issued by Fleet which rank
pari passu with or junior to such Junior Subordinated Debentures and (c) Fleet
shall not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee).
In the event Junior Subordinated Debentures are issued to a Fleet Capital
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such Fleet Capital Trust, for so long as such Trust Securities
remain outstanding, Fleet will covenant (i) to directly or indirectly maintain
100 percent ownership of the Common Securities of such Fleet Capital Trust;
provided, however, that any permitted successor of Fleet under the Indenture may
succeed to Fleet's ownership of such Common Securities, (ii) to use its
reasonable efforts to cause such Fleet Capital Trust (a) to remain a statutory
business trust, except in connection with the distribution of Junior
Subordinated Debentures to the holders of Trust Securities in liquidation of
such Fleet Capital Trust, the redemption of all of the Trust Securities of such
Fleet Capital Trust, or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Fleet Capital Trust, and (b) to
otherwise continue not to be treated as an association taxable as a corporation
or a partnership for United States federal income tax purposes and (iii) to use
its reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Junior Subordinated Debentures.
(Section 3.08)
LIMITATION ON MERGERS AND SALES OF ASSETS
Fleet shall not consolidate with, or merge into, any corporation or convey
or transfer its properties and assets substantially as an entirety to any Person
unless (a) the successor entity shall be a corporation organized under the laws
of any domestic jurisdiction and shall expressly assume the obligations of Fleet
under the Indenture and (b) after giving effect thereto, no Default shall have
occurred and be continuing under the Indenture. (Section 10.01)
10
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an "Indenture Event of
Default" with respect to each series of Junior Subordinated Debentures:
(a) default for 30 days in payment of any interest on the Junior
Subordinated Debentures of that series, including any Additional
Interest in respect thereof, when due; provided, however, that a
valid extension of the interest payment period by the Company
shall not constitute a default in the payment of interest for this
purpose; or
(b) default in payment of principal of, or premium, if any, on,
the Junior Subordinated Debentures of that series when due either
at maturity, upon redemption, by declaration or otherwise;
provided, however, that a valid extension of the maturity of such
Junior Subordinated Debentures shall not constitute a default for
this purpose; or
(c) default by the Company in the performance of any other of the
covenants or agreements in the Indenture which shall not have been
remedied for a period of 90 days after notice; or
(d) certain events of bankruptcy, insolvency or reorganization of
Fleet; or
(e) in the event Junior Subordinated Debentures are issued to a
Fleet Capital Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such Fleet Capital Trust, the
voluntary or involuntary dissolution, winding-up or termination of
such Fleet Capital Trust, except in connection with the
distribution of Junior Subordinated Debentures to the holders of
Trust Securities in liquidation of such Fleet Capital Trust, the
redemption of all of the Trust Securities of such Fleet Capital
Trust, or certain mergers, consolidations or amalgamations, each
as permitted by the Declaration of such Fleet Capital Trust.
The Indenture provides that, if an Indenture Event of Default on any series
of Junior Subordinated Debentures shall have occurred and be continuing, either
the Debt Trustee or the holders of not less than 25 percent in aggregate
principal amount of the Junior Subordinated Debentures of such series then
outstanding may declare the principal of all such Junior Subordinated Debentures
of such series to be due and payable immediately. The holders of a majority in
aggregate outstanding principal amount of such series of Junior Subordinated
Debentures may annul such declaration and waive the default if the default
(other than the non-payment of the principal of such series of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by accleration has been deposited with the Debt
Trustee. (Section 5.01).
The holders of a majority in principal amount of the Junior Subordinated
Debentures of any or all series affected and then outstanding shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Debt Trustee under the Indenture, provided that the
holders of the Junior Subordinated Debentures shall have offered to the Debt
Trustee reasonable indemnity against expenses and liabilities. Notwithstanding
the foregoing, subject to the subordination provisions set forth in a Prospectus
Supplement, the right of any holder of Junior Subordinated Debentures to receive
payment of the principal of and interest on such Junior Subordinated Debentures
on or after the due dates therefor, as the same may be extended in accordance
with the terms of such Junior Subordinated Debentures, or to institute suit for
the enforcement of any such payment provisions, shall not be impaired or
affected without the consent of such holder. (Sections 5.04 and 5.07)
The Indenture requires the annual filing by Fleet with the Debt Trustee of a
certificate as to the absence of certain defaults under the Indenture. (Section
3.05)
11
The Indenture provides that the Debt Trustee may withhold notice of an
Indenture Event of Default from the holders of a series of Junior Subordinated
Debentures (except an Indenture Event of Default in payment of principal of, or
of interest or premium on, the Junior Subordinated Debentures) if the Trustee
considers it in the interest of such holders to do so. (Section 5.08)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures of all series affected by
such modification at the time outstanding, and, in the case of Junior
Subordinated Debentures issued to a Trust, the holders of a majority in
aggregate liquidation amount of the related Preferred Securities, to modify the
Indenture or any supplemental indenture or the rights of the holders of the
Junior Subordinated Debentures; provided that no such modification shall,
without the consent of the holders of each Junior Subordinated Debenture (and
each Preferred Security, if applicable) affected thereby, (i) extend the fixed
maturity of any Junior Subordinated Debenture, or reduce the principal amount
thereof (including in the case of a discounted Junior Subordinated Debenture the
amount payable thereon in the event of acceleration or the amount provable in
bankruptcy) or any premium thereon, or reduce any amount payable on redemption
thereof, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or interest or premium on, the Junior Subordinated
Debentures payable in any coin or currency other than that provided in the
Junior Subordinated Debentures, or impair or affect the right of any holder of
Junior Subordinated Debentures to institute suit for the payment thereof or the
right of prepayment, if any, at the option of the holder, (ii) reduce the
aforesaid percentage of Junior Subordinated Debentures the consent of the
holders of which is required for any such modification or (iii) otherwise
materially adversely affect the interest of the holders of any series of Junior
Subordinated Debentures. (Section 9.02)
DEFEASANCE AND DISCHARGE
The Indenture provides that Fleet, at Fleet's option: (a) will be discharged
from any and all obligations in respect of the Junior Subordinated Debentures of
a series (except for certain obligations to register the transfer or exchange of
Junior Subordinated Debentures, replace stolen, lost or mutilated Junior
Subordinated Debentures, maintain paying agencies and hold moneys for payment in
trust) or (b) need not comply with certain restrictive covenants of the
Indenture (including those described herein under "Certain Covenants of Fleet"),
in each case if Fleet deposits, in trust with the Debt Trustee or the Defeasance
Agent, money or U.S. Government Obligations which through the payment of
interest thereon and principal thereof in accordance with their terms will
provide money, in an amount sufficient to pay all the principal (including any
mandatory sinking fund payments) of, and interest and premium, if any, on, the
Junior Subordinated Debentures of such series on the dates such payments are due
in accordance with the terms of such Junior Subordinated Debentures. To exercise
any such option, Fleet is required to deliver to the Debt Trustee and the
Defeasance Agent, if any, an opinion of counsel to the effect that (i) the
deposit and related defeasance would not cause the holders of the Junior
Subordinated Debentures of such series to recognize income, gain or loss for
U.S. federal income tax purposes and, in the case of a Discharge pursuant to
clause (a), such opinion shall be accompanied by a private letter ruling to that
effect received by Fleet from the United States Internal Revenue Service or a
revenue ruling pertaining to a comparable form of transaction to that effect
published by the United States Internal Revenue Service, and (ii) if listed on
any national securities exchange, such Junior Subordinated Debentures would not
be delisted from such exchange as a result of the exercise of such option.
(Section 11.05)
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
(Section 13.05)
12
THE DEBT TRUSTEE
Fleet or its affiliates maintain certain accounts and other banking
relationships with the Debt Trustee and its affiliates in the ordinary course of
business.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Fleet Capital Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each Fleet Capital Trust authorizes the
Regular Trustees of such Fleet Capital Trust to issue on behalf of such Fleet
Capital Trust one series of Preferred Securities. Each Declaration will be
qualified as an indenture under the Trust Indenture Act. The First National Bank
of Chicago will act as Indenture Trustee for purposes of the Trust Indenture
Act. The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act and which
will mirror the terms of the Junior Subordinated Debentures held by the Fleet
Capital Trust and described in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of the Fleet Capital Trust for specific terms, including (i) the
distinctive designation of such Preferred Securities; (ii) the number of
Preferred Securities issuable by such Fleet Capital Trust; (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
issued by such Fleet Capital Trust and the date or dates upon which such
distributions shall be payable; (iv) whether distributions on Preferred
Securities issued by such Fleet Capital Trust shall be cumulative, and, in the
case of Preferred Securities having such cumulative distribution rights, the
date or dates or method of determining the date or dates from which
distributions on Preferred Securities issued by such Fleet Capital Trust shall
be cumulative; (v) the amount or amounts which shall be paid out of the assets
of such Fleet Capital Trust to the holders of Preferred Securities of such Fleet
Capital Trust upon voluntary or involuntary dissolution, winding-up or
termination of such Fleet Capital Trust; (vi) the obligation, if any, of such
Fleet Capital Trust to purchase or redeem Preferred Securities issued by such
Fleet Capital Trust and the price or prices at which, the period or periods
within which, and the terms and conditions upon which, Preferred Securities
issued by such Fleet Capital Trust shall be purchased or redeemed, in whole or
in part, pursuant to such obligation; (vii) the voting rights, if any, of
holders of Preferred Securities issued by such Fleet Capital Trust in addition
to those required by law, including the number of votes per Preferred Security
and any requirement for the approval by the holders of Preferred Securities, or
of Preferred Securities issued by one or more Fleet Capital Trusts, or of both,
as a condition to specified action or amendments to the Declaration of such
Fleet Capital Trust; (viii) the terms and conditions, if any, upon which the
Junior Subordinated Debentures owned by such Fleet Capital Trust may be
distributed to holders of Preferred Securities of such Trust; (ix) if
applicable, any securities exchange upon which the Preferred Securities shall be
listed; and (x) any other relevant rights, preferences, privileges, limitations
or restrictions of Preferred Securities issued by such Fleet Capital Trust not
inconsistent with the Declaration of such Fleet Capital Trust or with applicable
law. All Preferred Securities offered hereby will be guaranteed by Fleet to the
extent set forth below under "Description of the Preferred Securities
Guarantees." Certain United States federal income tax considerations applicable
to any offering of Preferred Securities will be described in the Prospectus
Supplement relating thereto.
Except as described herein, under the Business Trust Act, the Trust
Indenture Act, under "Description of the Preferred Securities
Guarantees--Modification of the Preferred Securities Guarantees; Assignment"
herein, and under any Prospectus Supplement relating to the issuance of a series
of Preferred Securities, and as otherwise required by law and the Declarations,
the holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declarations, including the right to direct the
13
Institutional Trustee, as holder of the Junior Subordinated Debentures, to (i)
exercise the remedies available to it under the Indentures as a holder of the
related Junior Subordinated Debentures, (ii) waive any past Indenture Event of
Default that is waivable under the Indentures, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indentures or the Junior Subordinated
Debentures where such consent shall be required; provided, however, that, where
a consent or action under the Indentures would require the consent or act of
holders of more than a majority in principal amount of the Junior Subordinated
Debentures (a "Super-Majority") affected thereby, only the holders of at least
such Super-Majority in aggregate liquidation amount of the Preferred Securities
may direct the Institutional Trustee to give such consent or take such action;
and provided, further, that where a consent or action under the Indenture is
only effective against each holder of Junior Subordinated Debentures who has
consented thereto, such consent or action will only be effective against a
holder of Preferred Securities who directs the Institutional Trustee to give
such consent or take such action. If the Institutional Trustee fails to enforce
its rights under the Junior Subordinated Debentures after a holder of record of
Preferred Securities has made a written request, such holder of record of
Preferred Securities may institute a legal proceeding directly against Fleet to
enforce the Institutional Trustee's rights under the Junior Subordinated
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an event of default under the related Declaration has occurred and
is continuing and such event is attributable to the failure of Fleet to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may institute a legal
proceeding directly against Fleet for enforcement of payment to such holder of
the principal of, or interest on, the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. The Institutional Trustee shall notify all
holders of the Preferred Securities of any notice of default received from the
Debt Trustee with respect to the Junior Subordinated Debentures. Such notice
shall state that such Indenture Event of Default also constitutes an event of
default under the related Declaration. Except with respect to directing the
time, method and place of conducting a proceeding for a remedy, the
Institutional Trustee shall not take any of the actions described in clauses
(i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of a nationally recognized tax counsel experienced in such matters to
the effect that, as a result of such action, the related Fleet Capital Trust
will not fail to be classified as a grantor trust for United States federal
income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indentures with respect to
any amendment, modification or termination of such Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under such Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Junior Subordinated
Debentures outstanding; and provided, further, that where a consent or action
under the Indenture is only effective against each holder of Junior Subordinated
Debentures who has consented thereto, such consent or action will only be
effective against a holder of Preferred Securities who directs the Institutional
Trustee to give such consent or take such action. The Institutional Trustee
shall not take any such action in accordance with the directions of the holders
of the Trust Securities unless the Institutional Trustee has obtained an opinion
of a nationally recognized tax counsel experienced in such matters to the effect
that for the purposes of United States federal income tax the related Fleet
Capital Trust will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding event of default under the Declaration.
14
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Fleet Capital
Trusts to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the Declarations.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Fleet or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Fleet, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
Holders of the Preferred Securities will have no rights to appoint or remove
the Regular Trustees, who may be appointed, removed or replaced solely by Fleet
as the holder of all of the Common Securities.
In connection with the issuance of Preferred Securities, each Fleet Capital
Trust will issue one series of Common Securities. The Declaration of each Fleet
Capital Trust authorizes the Regular Trustees of such trust to issue on behalf
of such Fleet Capital Trust one series of Common Securities having such terms
including distributions, redemption, voting, liquidation rights or such
restrictions as shall be set forth therein. Except for voting rights, the terms
of the Common Securities issued by a Fleet Capital Trust will be substantially
identical to the terms of the Preferred Securities issued by such Trust and the
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities except that, upon an event of default under
the Declaration, the rights of the holders of the Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. Except in certain limited circumstances, the Common Securities of a
Fleet Capital Trust will also carry the right to vote to appoint, remove or
replace any of the Fleet Capital Trustees of such Trust. All of the Common
Securities of each Fleet Capital Trust will be directly or indirectly owned by
Fleet.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an Event of Default under the Declaration of a Fleet Capital Trust occurs
and is continuing, then the holders of Preferred Securities of such Fleet
Capital Trust would rely on the enforcement by the Institutional Trustee of its
rights as a holder of the applicable series of Junior Subordinated Debentures
against Fleet. In addition, the holders of a majority in liquidation amount of
the Preferred Securities of such Fleet Capital Trust will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Institutional Trustee or to direct the exercise of any trust or
power conferred upon the Institutional Trustee under the applicable Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it under the applicable Indenture as a holder of the Junior
Subordinated Debentures. If the Institutional Trustee fails to enforce its
rights under the applicable series of Junior Subordinated Debentures after a
holder of record of Preferred Securities of such Fleet Capital Trust has made a
written request, such holder of record of Preferred Securities may institute a
legal proceeding directly against Fleet to enforce the Institutional Trustee's
rights under the applicable series of Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
under the applicable Declaration has occurred and is continuing and such event
is attributable to the failure of Fleet to pay interest or principal on the
applicable series of Junior Subordinated Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Preferred Securities of such Fleet Capital Trust may
directly institute a proceeding
15
for enforcement of payment to such holder of the principal of or interest on the
applicable series of Junior Subordinated Debentures having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
applicable series of Junior Subordinated Debentures. In connection with such
Direct Action, Fleet will be subrogated to the rights of such holder of
Preferred Securities under the applicable Declaration to the extent of any
payment made by Fleet to such holder of Preferred Securities in such Direct
Action.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by Fleet for the
benefit of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be qualified as an indenture under the Trust Indenture
Act. The First National Bank of Chicago will act as indenture trustee under each
Preferred Securities Guarantee for purposes of the Trust Indenture Act (the
"Preferred Guarantee Trustee"). The terms of each Preferred Securities Guarantee
will be those set forth in such Preferred Securities Guarantee and those made
part of such Preferred Securities Guarantee by the Trust Indenture Act. While
the summary of the material terms of the Preferred Securities Guarantees does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the form of Preferred
Securities Guarantee, which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part, and the Trust Indenture Act, all material
terms of the Preferred Securities Guarantee are set forth herein and in any
Prospectus Supplement relating to the particular Preferred Securities being
offered thereby. Each Preferred Securities Guarantee will be held by the
Preferred Guarantee Trustee for the benefit of the holders of the Preferred
Securities of the applicable Fleet Capital Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, Fleet will agree, to the
extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by a Fleet Capital Trust, the Guarantee Payments (as defined
herein) (except to the extent paid by such Fleet Capital Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which such
Fleet Capital Trust may have or assert. The following payments with respect to
Preferred Securities issued by a Fleet Capital Trust, to the extent not paid by
such Fleet Capital Trust (the "Guarantee Payments"), will be subject to the
Preferred Securities Guarantee thereon (without duplication): (i) any accrued
and unpaid distributions which are required to be paid on such Preferred
Securities, to the extent such Fleet Capital Trust shall have funds available
therefor; (ii) the redemption price, including all accrued and unpaid
distributions to the date of payment (the "Redemption Price"), to the extent
such Fleet Capital Trust has funds available therefor with respect to any
Preferred Securities called for redemption by such Fleet Capital Trust; and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
such Fleet Capital Trust (other than in connection with the distribution of
Junior Subordinated Debentures to the holders of Preferred Securities or the
redemption of all of the Preferred Securities), the lesser of (a) the aggregate
of the liquidation amount and all accrued and unpaid distributions on such
Preferred Securities to the date of payment, to the extent such Fleet Capital
Trust has funds available therefor and (b) the amount of assets of such Fleet
Capital Trust remaining available for distribution to holders of such Preferred
Securities in liquidation of such Fleet Capital Trust. The redemption price and
liquidation amount will be fixed at the time the Preferred Securities are
issued. Fleet's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by Fleet to the holders of Preferred
Securities or by causing the applicable Fleet Capital Trust to pay such amounts
to such holders.
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The Preferred Securities Guarantees will not apply to any payment of
distributions except to the extent a Fleet Capital Trust shall have funds
available therefor. If Fleet does not make interest payments on the Junior
Subordinated Debentures purchased by a Fleet Capital Trust, such Fleet Capital
Trust will not pay distributions on the Preferred Securities issued by such
Fleet Capital Trust and will not have funds available therefor.
The Preferred Securities Guarantees, when taken together with Fleet's
obligations under the Junior Subordinated Debentures, the Indentures, and the
Declarations, including its obligations to pay costs, expenses, debts and
liabilities of the Fleet Capital Trusts (other than with respect to the Trust
Securities), will provide a full and unconditional guarantee on a subordinated
basis by Fleet of payments due on the Preferred Securities.
Fleet has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Fleet Capital Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantees, except that upon an event of default under the
Indenture, holders of Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF FLEET
In each Preferred Securities Guarantee, Fleet will covenant that, so long as
any Preferred Securities issued by the applicable Fleet Capital Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Indenture of
such Fleet Capital Trust, or if Fleet has exercised its option to defer interest
payments on the Junior Subordinated Debentures by extending the interest payment
period and such period or extension thereof shall be continuing, then (a) Fleet
shall not declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares of
Fleet Common Stock in connection with the satisfaction by Fleet of its
obligations under any employee benefit plans or any other contractual obligation
of Fleet (other than a contractual obligation ranking pari passu with or junior
to the Junior Subordinated Debentures), (ii) as a result of a reclassification
of Fleet capital stock or the exchange or conversion of one class or series of
Fleet capital stock for another class or series of Fleet capital stock or, (iii)
the purchase of fractional interests in shares of Fleet capital stock pursuant
to the conversion or exchange provisions of such Fleet capital stock or the
security being converted or exchanged), (b) Fleet shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by Fleet which rank pari passu with or junior to such
Junior Subordinated Debentures and (c) Fleet shall not make any guarantee
payments with respect to the foregoing (other than pursuant to such Preferred
Securities Guarantee).
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of at least a majority in liquidation amount of the outstanding
Preferred Securities issued by the applicable Fleet Capital Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of Fleet and shall
inure to the benefit of the holders of the Preferred Securities of the
applicable Fleet Capital Trust then outstanding. Except in connection with any
merger or consolidation of Fleet with or into another entity or any sale,
transfer or lease of Fleet's assets to another entity, each as permitted by the
Indenture, Fleet may not assign its rights or delegate its obligations under
such Preferred Securities Guarantee without the prior approval of the holders of
at least a majority in liquidation amount of the outstanding Preferred
Securities issued by the applicable Fleet Capital Trust.
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TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable Fleet Capital Trust (a) upon full payment of
the Redemption Price of all Preferred Securities of such Fleet Capital Trust,
(b) upon distribution of the Junior Subordinated Debentures held by such Fleet
Capital Trust to the holders of the Trust Securities of such Fleet Capital Trust
or (c) upon full payment of the amounts payable in accordance with the
Declaration of such Fleet Capital Trust upon liquidation of such Fleet Capital
Trust. Notwithstanding the foregoing, each Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities issued by the applicable Fleet Capital
Trust must restore payment of any sums paid under such Preferred Securities or
such Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee
or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities Guarantee. Any holder of
Preferred Securities relating to such Preferred Securities Guarantee may
institute a legal proceeding directly against Fleet to enforce the Preferred
Guarantee Trustee's rights and the obligations of Fleet under such Preferred
Securities Guarantee, without first instituting a legal proceeding against the
relevant Fleet Capital Trust, the Preferred Guarantee Trustee or any other
person or entity.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations of
Fleet and will rank (i) subordinate and junior in right of payment to all other
liabilities of Fleet, except those made pari passu or subordinate by their
terms, (ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by Fleet and with any guarantee now or hereafter entered into
by Fleet in respect of any preferred or preference stock of any affiliate of
Fleet, and (iii) senior to Fleet Common Stock. The terms of the Preferred
Securities provide that each holder of Preferred Securities issued by the
applicable Fleet Capital Trust by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee relating
thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
Preferred Securities Guarantee without instituting a legal proceeding against
any other person or entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
Fleet or its affiliates maintain certain accounts and other banking
relationships with the Preferred Guarantee Trustee and its affiliates in the
ordinary course of business.
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GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEES
As set forth in the Declaration, the sole purpose of each of the Fleet
Capital Trusts is to issue the Trust Securities evidencing undivided beneficial
interests in the assets of each of the Fleet Capital Trusts, and to invest the
proceeds from such issuance and sale in Junior Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures held by a Fleet Capital Trust, such payments will
be sufficient to cover distributions and payments due on the Trust Securities of
such Trust because of the following factors: (i) the aggregate principal amount
of such Junior Subordinated Debentures will be equal to the sum of the aggregate
stated liquidation amount of the Trust Securities; (ii) the interest rate and
the interest and other payment dates on such Junior Subordinated Debentures will
match the distribution rate and distribution and other payment dates for the
Preferred Securities; (iii) Fleet shall pay all, and the Fleet Capital Trust
shall not be obligated to pay, directly or indirectly, any costs, expenses, debt
and obligations of such Fleet Capital Trust (other than with respect to the
Trust Securities); and (iv) the Declaration further provides that the Fleet
Capital Trustees shall not take or cause or permit the Fleet Capital Trust to,
among other things, engage in any activity that is not consistent with the
purposes of such Fleet Capital Trust. Payments of distributions (to the extent
funds therefor are available) and other payments due on the Preferred Securities
(to the extent funds therefor are available) are guaranteed by Fleet as and to
the extent set forth under "Description of the Preferred Securities Guarantees."
If Fleet does not make interest payments on the Junior Subordinated Debentures
purchased by the applicable Fleet Capital Trust, the applicable Fleet Capital
Trust will not have sufficient funds to pay distributions on the Preferred
Securities. The Preferred Securities Guarantee does not apply to any payment of
distributions unless and until the applicable Fleet Capital Trust has sufficient
funds for the payment of such distributions. The Preferred Securities Guarantee
covers the payment of distributions and other payments on the Preferred
Securities only if and to the extent that Fleet has made a payment of interest
or principal on the Junior Subordinated Debentures held by the applicable Fleet
Capital Trust as its sole asset. The Preferred Securities Guarantee, when taken
together with Fleet's obligations under the Junior Subordinated Debentures and
the Indenture and its obligations under the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the applicable
Fleet Capital Trust (other than with respect to the Trust Securities), provide a
full and unconditional guarantee of amounts on the Preferred Securities.
If Fleet fails to make interest or other payments on a series of Junior
Subordinated Debentures when due (taking account of any Extension Period), the
Declarations provide a mechanism whereby the holders of the Preferred Securities
affected thereby, using the procedures described in any accompanying Prospectus
Supplement, may direct the Institutional Trustee to enforce its rights under the
Junior Subordinated Debentures. If the Institutional Trustee fails to enforce
its rights under the Junior Subordinated Debentures, a holder of Preferred
Securities of a Trust may institute a legal proceeding against Fleet to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
owned by such Trust without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Fleet to pay interest or principal
on Junior Subordinated Debentures on the date such interest of principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities of a Trust may institute a Direct Action for
payment on or after the respective due date specified in the Junior Subordinated
Debentures owned by such Trust. In connection with such Direct Action, Fleet
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by Fleet to such holder of
Preferred
19
Securities in such Direct Action. Fleet, under the Preferred Securities
Guarantee, acknowledges that the Guarantee Trustee shall enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities. If
Fleet fails to make payments under the Preferred Securities Guarantee, the
Preferred Securities Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. Any holder of Preferred Securities may institute a legal proceeding
directly against Fleet to enforce the Guarantee Trustee's rights and the
obligations of Fleet under the Preferred Securities Guarantee without first
instituting a legal proceeding against the applicable Fleet Capital Trust, the
Guarantee Trustee, or any other person or entity.
Fleet and each of the Fleet Capital Trusts believe that the above mechanisms
and obligations, taken together, provide a full and unconditional guarantee by
Fleet of payments due on the Preferred Securities. See "Description of the
Preferred Securities Guarantees--General."
PLAN OF DISTRIBUTION
Fleet may sell the Junior Subordinated Debentures and any Fleet Capital
Trust may sell Preferred Securities in any of, or any combination of, the
following ways: (i) directly to purchasers, (ii) through agents and (iii)
through underwriters or dealers. Such underwriters, dealers or agents may be
affiliates of Fleet, and offers or sales of such securities may include
secondary market transactions by affiliates of Fleet.
Offers to purchase Offered Securities may be solicited directly by Fleet
and/or any Fleet Capital Trust, as the case may be, or by agents designated by
Fleet and/or any Fleet Capital Trust, as the case may be, from time to time. Any
such agent, who may be deemed to be an underwriter as that term is defined in
the Securities Act, involved in the offer or sale of the Offered Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by Fleet to such agent will be set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agency will be
acting on a best efforts basis for the period of its appointment (ordinarily
five business days or less). Agents, dealers and underwriters may be customers
of, engage in transactions with, or perform services for Fleet in the ordinary
course of business.
If an underwriter or underwriters are utilized in the sale, Fleet will
execute an underwriting agreement with such underwriters at the time of sale to
them and the names of the underwriters and the terms of the transaction will be
set forth in the Prospectus Supplement, which will be used by the underwriters
to make releases of the Offered Securities in respect of which this Prospectus
is delivered to the public.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, Fleet and/or any Fleet Capital Trust, as the
case may be, will sell such Offered Securities to the dealer, as principal. The
dealer may then resell such Offered Securities to the public at varying prices
to be determined by such dealer at the time of resale. The name of the dealer
and the terms of the transaction will be set forth in the Prospectus Supplement.
Agents, underwriters, and dealers may be entitled under the relevant agreements
to indemnification by Fleet and/or any Fleet Capital Trust, as the case may be,
against certain liabilities, including liabilities under the Securities Act.
This Prospectus and related Prospectus Supplement may be used by direct or
indirect subsidiaries of Fleet in connection with offers and sales related to
secondary market transactions. Such subsidiaries may act as principal or agent
in such transactions. Such sales may be made at prices related to prevailing
market prices at the time of sale.
The participation of an affiliate or subsidiary of Fleet in the offer and
sale of the Offered Securities will comply with the requirements of Rule 2720 of
the By-laws of the National Association of Securities Dealers, Inc. (the "NASD")
regarding underwriting securities of the affiliate. No NASD member participating
in offers and sales will execute a transaction in the Securities in a
discretionary account without the prior written specific approval of the
member's customer.
20
Underwriters, agents or their controlling persons may engage in transactions
with and perform services for Fleet in the ordinary course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of each of the Fleet Capital Trusts by
Skadden, Arps, Slate, Meagher & Flom LLP, special Delaware counsel to the Fleet
Capital Trusts. The validity of the Junior Subordinated Debentures and the
Preferred Securities Guarantee and certain matters relating thereto will be
passed upon for Fleet and certain United States federal income taxation matters
will be passed upon for Fleet and the Fleet Capital Trusts by Edwards & Angell,
LLP, One BankBoston Plaza, Providence, Rhode Island 02903. V. Duncan Johnson, a
partner of Edwards & Angell, LLP, is a director of Fleet National Bank and
beneficially owns 4,052 shares of Fleet Common Stock. Certain legal matters will
be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.
EXPERTS
The consolidated financial statements of Fleet contained in Fleet's Current
Report on Form 8-K dated May 5, 1998, incorporated by reference herein (and
elsewhere in the Registration Statement) have been incorporated by reference
herein (and elsewhere in the Registration Statement) in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein (and elsewhere in the Registration Statement) and upon the
authority of said firm as experts in accounting and auditing.
21
$250,000,000
[LOGO]
FLEET CAPITAL TRUST V
FLOATING RATE CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
FLEET FINANCIAL GROUP, INC.
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PROSPECTUS SUPPLEMENT
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LEHMAN BROTHERS
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
BLAYLOCK & PARTNERS, L.P.
DECEMBER 15, 1998