<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 27, 1998)
[BANK ONE LOGO]
$2,850,000,000
BANK ONE CORPORATION
One First National Plaza, Chicago, Illinois 60670 - (312) 732-4000
MEDIUM-TERM NOTES, SERIES A
------------------------
Due Nine Months or More from Date of Issue
------------------------
BANK ONE CORPORATION MAY OFFER FROM TIME TO TIME MEDIUM-TERM NOTES. THE
SPECIFIC TERMS OF ANY NOTES OFFERED WILL BE INCLUDED IN A PRICING SUPPLEMENT.
UNLESS THE PRICING SUPPLEMENT PROVIDES OTHERWISE, THE NOTES OFFERED WILL HAVE
THE FOLLOWING GENERAL TERMS:
- - THE NOTES WILL MATURE IN 9 MONTHS OR MORE FROM THE DATE OF ISSUE.
- - THE NOTES MAY BE SENIOR OR SUBORDINATED IN PRIORITY OF PAYMENT.
- - THE NOTES WILL BEAR INTEREST AT EITHER A FIXED OR A FLOATING RATE. FLOATING
RATE INTEREST WILL BE BASED ON:
- CD RATE
- CMT RATE
- COMMERCIAL PAPER RATE
- FEDERAL FUNDS RATE
- LIBOR
- PRIME RATE
- TREASURY RATE
- ANY OTHER RATE SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT.
- - FIXED RATE INTEREST WILL BE PAID ON MARCH 15 AND SEPTEMBER 15, ACCRUING FROM
THE DATE OF ISSUE.
- - FLOATING RATE INTEREST WILL BE PAID ON THE DATES STATED IN THE APPLICABLE
PRICING SUPPLEMENT.
- - THE NOTES WILL BE HELD IN GLOBAL FORM BY THE
DEPOSITORY TRUST COMPANY, UNLESS OTHERWISE SPECIFIED.
- - THE NOTES MAY BE EITHER CALLABLE BY US OR PUTTABLE BY YOU IF SPECIFIED IN THE
APPLICABLE PRICING SUPPLEMENT.
- - THE NOTES WILL BE DENOMINATED IN U.S. DOLLARS AND HAVE MINIMUM DENOMINATIONS
OF $1,000, UNLESS
OTHERWISE SPECIFIED.
------------------------
<TABLE>
<CAPTION>
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------- ------------- -----------
<S> <C> <C> <C>
Per Note.................. 100% .125%-.750% 99.875%-99.250%
Total..................... $2,850,000,000 $3,562,500-$21,375,000 $2,846,437,500-$2,828,625,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus are truthful or complete. Any
representation to the contrary is a criminal offense.
Offers to purchase the notes are being solicited from time to time by the agents
listed below. The agents have agreed to use their reasonable efforts to sell the
notes. There is no established trading market for the notes and there can be no
assurance that a secondary market for the notes will develop.
The notes are not deposits or other obligations of a bank and are not insured by
the Federal Deposit Insurance Corporation or any other governmental agency. The
notes are not secured.
This prospectus supplement and the attached prospectus and pricing supplement
may be used by affiliates of the Company, including Banc One Capital Markets,
Inc. and First Chicago Capital Markets, Inc., in connection with offers and
sales of the notes in the secondary market. These affiliates may act as
principal or agent in those transactions. Secondary market sales by these
affiliates will be made at prices related to market prices at the time of sale.
------------------------
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER FIRST CHICAGO CAPITAL MARKETS, INC.
BANC ONE CAPITAL MARKETS, INC. BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC. CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
</TABLE>
MERRILL LYNCH & CO. J.P. MORGAN & CO. SALOMON SMITH BARNEY
November 4, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
About this Prospectus Supplement; Pricing Supplements....... S-3
Important Currency Information.............................. S-3
Description of Notes........................................ S-4
Certain United States Federal Income Tax Considerations..... S-19
Supplemental Plan of Distribution........................... S-25
Legal Opinions.............................................. S-26
PROSPECTUS
About this Prospectus....................................... 2
Where You Can Find More Information......................... 2
Forward-looking Statements.................................. 4
BANK ONE CORPORATION........................................ 5
Ratio of Earnings to Fixed Charges.......................... 5
Use of Proceeds............................................. 5
Regulatory Matters.......................................... 6
Description of Debt Securities.............................. 10
Senior Securities........................................... 15
Subordinated Securities..................................... 16
Description of Debt Warrants................................ 20
Description of Currency Warrants............................ 22
Description of Stock-Index Warrants......................... 23
Description of Other Warrants............................... 25
Description of Preferred Stock.............................. 26
Description of Depositary Shares............................ 30
Description of Existing Preferred Stock and Preferred
Purchase Units............................................ 33
Description of Preferred Stock Warrants..................... 34
Description of Common Stock Warrants........................ 35
Description of Common Stock................................. 36
Plan of Distribution........................................ 37
Legal Opinions.............................................. 39
Experts..................................................... 39
</TABLE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus We are offering to sell notes and making offers to
buy notes only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or any sale of
the notes. In this prospectus, the "Company" "we," "us" and "our" refer to BANK
ONE CORPORATION.
S-2
<PAGE> 3
ABOUT THIS PROSPECTUS SUPPLEMENT;
PRICING SUPPLEMENTS
The Company may use this Prospectus Supplement, together with the attached
Prospectus and an attached pricing supplement, to offer our Medium-Term Notes,
Series A, from time to time. The total initial public offering price of Notes
that may be offered by use of this Prospectus Supplement is $2,850,000,000 (or
the equivalent in foreign or composite currencies). That amount will be reduced
by the amount of any other securities issued under our shelf registration
statement (File No. 333-38387)(the "Registration Statement").
This Prospectus Supplement sets forth certain terms of the Notes that we
may offer. It supplements the description of the Debt Securities, Senior
Securities and Subordinated Securities contained in the attached Prospectus. If
information in this Prospectus Supplement is inconsistent with the Prospectus,
this Prospectus Supplement will apply and will supersede that information in the
Prospectus.
Each time we issue Notes, we will attach a pricing supplement to this
Prospectus Supplement. The pricing supplement will contain the specific
description of the Notes being offered and the terms of the offering. The
pricing supplement may also add, update or change information in this Prospectus
Supplement or the attached Prospectus. Any information in the pricing
supplement, including any changes in the method of calculating interest on any
Note, that is inconsistent with this Prospectus Supplement will apply and will
supersede that information in this Prospectus Supplement.
It is important for you to read and consider all information contained in
this Prospectus Supplement and the attached Prospectus and pricing supplement in
making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find More
Information About the Company" on page 2 of the attached Prospectus.
If we use a capitalized term in this Prospectus Supplement and do not
define the term in this document, it is defined in the Prospectus.
IMPORTANT CURRENCY INFORMATION
If any Note is not to be denominated in U.S. dollars, then certain
provisions with respect to such Note will be described in the applicable pricing
supplement. The pricing supplement will specify the currency or currencies,
including composite currencies, in which the principal, premium, if any, and
interest, if any, with respect to such Note are to be paid. The pricing
supplement will also describe any other relevant terms relating to the non-U.S.
dollar denomination, including exchange rates for the foreign currency as
against the U.S. dollar at selected times during the last five years and any
exchange controls affecting such currency.
You are required to pay for each Note in the currency specified by the
Company. You may ask an Agent to use its reasonable best efforts to arrange for
the exchange of U.S. dollars into the specified currency to enable you to pay
for such Note. You must make this request on or before the third Business Day
preceding the delivery date for such Note or by a later date if allowed by the
Agent. Each exchange will be made on the terms and conditions established by the
Agent and all costs will be paid by you.
Likewise, if the applicable pricing supplement for a Note provides for
payments on a foreign currency denominated Note to be made in U.S. dollars or
for payments on a U.S. dollar denominated note to be made in a foreign currency,
the conversion between the foreign currency into U.S. dollars and vice versa
will be handled by the Exchange Rate Agent identified in the Pricing Supplement.
Any Agent may act as Exchange Rate Agent for a particular Note. The costs of
such conversion among currencies will be paid by the holder of the Note through
deductions from such payments.
Reference in this Prospectus Supplement to "U.S. dollars" or "U.S.$" or "$"
are to the currency of the United States of America.
S-3
<PAGE> 4
DESCRIPTION OF NOTES
GENERAL
The Notes (which are referred to in the accompanying Prospectus as "Debt
Securities") will be issued under either (i) an Indenture originally between
BANC ONE CORPORATION ("BANC ONE") and The Chase Manhattan Bank, as trustee (the
"Trustee"), dated as of March 3, 1997, as supplemented by a First Supplemental
Indenture, dated as of October 2, 1998, between the Company and the Trustee, (as
so supplemented, the "Senior Indenture"), or (ii) an Indenture originally
between BANC ONE and the Trustee dated as of March 3, 1997, as supplemented by a
First Supplemental Indenture, dated as of October 2, 1998, between the Company
and the Trustee (as so supplemented, the "Subordinated Indenture") each of which
is more fully described in the accompanying Prospectus. Notes issued under the
Senior Indenture will be Senior Securities and Notes issued under the
Subordinated Indenture will be Subordinated Securities, each as more fully
described in the accompanying Prospectus. The following summaries of certain
provisions of the Indentures are not complete, are subject to, and are qualified
in their entirety by reference to, all of the provisions of each Indenture,
including the definitions therein of certain terms. The terms and conditions set
forth below will apply to each Note unless otherwise specified in the applicable
pricing supplement(each, a "Pricing Supplement"). References to interest
payments and interest-related information do not apply to Zero-Coupon Notes (as
defined below).
Neither Indenture limits the aggregate principal amount of Debt Securities
which may be issued under it. Each Indenture provides that Debt Securities may
be issued in one or more series up to the aggregate principal amount which may
be authorized from time to time by the Company. The Company may, from time to
time, without the consent of the Holders of the Notes, provide for the issuance
of additional Notes or other Debt Securities under either Indenture. As used
herein, "Holder" includes the Depository (as hereinafter defined) with respect
to Notes issued in book-entry form.
All Senior Securities, including the Notes issued and to be issued under
the Senior Indenture, will be unsecured and will rank pari passu with all other
Senior Securities issued or to be issued under the Senior Indenture and all
other unsecured and unsubordinated indebtedness of the Company from time to time
outstanding. All Subordinated Securities, including the Notes issued and to be
issued under the Subordinated Indenture, will be unsecured and subordinated as
set forth in the accompanying Prospectus under the heading "Subordinated
Securities -- Subordination".
The Notes offered by this Prospectus Supplement will constitute a single
series of Senior Securities for purposes of the Senior Indenture and a single
series of Subordinated Securities for purposes of the Subordinated Indenture,
and both such series shall be limited to Notes issued for proceeds of up to
$2,850,000,000 or the equivalent thereof in foreign currencies or composite
currencies on a combined basis. For the purpose of this Prospectus Supplement
(other than "Certain United States Federal Income Tax Considerations"), (i) the
principal amount of any Original Issue Discount Note (as defined herein) means
the Issue Price (as defined herein) of such Note, and (ii) the principal amount
of a Note issued in a foreign currency or composite currency means the U.S.
dollar equivalent on the date of issue of the Issue Price of such Note.
The Notes will be offered on a continuing basis and will mature on any
Business Day (as hereinafter defined) nine months or more from the date of
issue, as selected by the purchaser and agreed to by the Company, and may be
subject to redemption or repayment prior to maturity as set forth under
"Redemption and Repayment". Unless otherwise specified in the applicable Pricing
Supplement, Floating Rate Notes will mature on an Interest Payment Date (as
hereinafter defined). Each Note will bear interest at either (a) a fixed rate,
which may be zero in the case of certain Notes issued at a price representing a
discount from the principal amount payable at maturity, or (b) a floating rate
determined by reference to a Base Rate (as hereinafter defined), which may be
adjusted by adding or subtracting the Spread or multiplying by the Spread
Multiplier.
Except as may be specified for Notes denominated in foreign or composite
currencies or as otherwise provided in the applicable Pricing Supplement, the
Notes will be issued only in fully registered form in U.S.
S-4
<PAGE> 5
dollar denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000. If a Note is to be issued in a foreign currency or
composite currency, unless a higher minimum denomination is required by
applicable law, such Note will be issued in denominations of the equivalent of
U.S. $1,000 (rounded down to an integral multiple of 1,000 units of such foreign
currency or composite currency) or any amount in excess thereof which is an
integral multiple of 1,000 units of such foreign currency or composite currency,
as determined by reference to the noon dollar buying rate in New York City for
cable transfers of such currency published by the Federal Reserve Bank of New
York (the "Market Exchange Rate") on the Business Day (as defined below)
immediately preceding the date of issuance.
Unless otherwise provided in an applicable Pricing Supplement, the Notes
will be issued in book-entry form only through the facilities of The Depository
Trust Company (the "Depository") and will be registered in the name of the
nominee of the Depository. Transfers or exchanges of the Notes may only be
effected through a participating member of the Depository. So long as the
Depository or its nominee is the registered owner of a Note, the Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Note for all purposes under the applicable Indenture. Except as set forth
under "-- Book-Entry Notes" below, no Note issued in book-entry form will be
issuable in certificated form.
The Pricing Supplement relating to each Note will describe the following
terms:
(1) the specified currency with respect to such Note (and, if such currency
is other than U.S. dollars, certain other terms relating to such Note,
including the authorized denominations);
(2) whether such Note is a Senior Security or a Subordinated Security;
(3) whether such Note is a Fixed Rate Note or a Floating Rate Note;
(4) the price (expressed as a percentage of the aggregate principal amount
thereof) at which such Note will be issued (the "Issue Price");
(5) the date on which such Note will be issued;
(6) the date on which such Note will mature;
(7) if such Note is a Fixed Rate Note, the rate per annum at which such
Note will bear interest, if any;
(8) if such Note is a Floating Rate Note, the interest rate basis, the
Initial Interest Rate, the Interest Reset Dates, the Interest Payment
Dates, the Index Maturity, the maximum interest rate and the minimum
interest rate, if any, and the Spread and/or Spread Multiplier, if any,
(all as defined below) and any other terms relating to the particular
method of calculating the interest rate for such Note;
(9) whether such Note may be redeemed or repaid prior to the maturity date,
and, if so, the provisions relating to such redemption or payment; and
(10) any other terms of such Notes not inconsistent with the provisions of
the related Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, payments
of principal and premium, if any, and interest on any Note will be made in the
currency or composite currency in which such Note is denominated.
A Note, including any Zero-Coupon Note, is an "Original Issue Discount
Note" if (a) it is issued at a price lower than the stated principal amount
thereof, or (b) it is otherwise issued with original issue discount for United
States Federal income tax purposes. In the event of redemption or acceleration
of the maturity of an Original Issue Discount Note, the amount payable to the
Holder upon such redemption or acceleration will be determined in accordance
with the terms of such Note, and may be an amount less than the amount payable
at the stated maturity thereof. For a discussion of Federal income tax
considerations with respect to Original Issue Discount Notes, see "Certain
United States Federal Income Tax Considerations -- U.S. Holders -- Original
Issue Discount".
S-5
<PAGE> 6
Interest will be payable on each date specified in the applicable Note on
which an installment of interest is due and payable (an "Interest Payment Date")
and at maturity (or, if applicable, upon redemption or repayment). If the
original issue date of a Note is between a Regular Record Date (as hereinafter
defined) and an Interest Payment Date, the initial interest payment will be made
on the Interest Payment Date following the next succeeding Regular Record Date
to the registered Holder on such next succeeding Regular Record Date. Interest
payments, which may be zero in the case of Zero-Coupon Notes, will be in the
amount of interest accrued during the period from and including the next
preceding Interest Payment Date in respect of which interest has been paid or
duly provided for (or from and including the date of issue, if no interest has
been paid with respect to such Note), to but excluding the applicable Interest
Payment Date (an "Interest Accrual Period").
Payments on Notes issued in book-entry form will be made to the Depository.
See "-- Book-Entry Notes" below. Interest on any Notes issued in certificated
form will be payable at the office of The First National Bank of Chicago, the
Company's Paying Agent and Note Registrar, currently located at One First
National Plaza, Chicago, Illinois 60670, provided that payment of interest,
other than interest at maturity or upon earlier redemption or repayment, may be
made at the option of the Company by check mailed to the address of the person
entitled thereto as it appears on the Note Register at the close of business on
the Regular Record Date corresponding to the relevant Interest Payment Date. The
principal, interest and premium, if any, payable at maturity or upon earlier
redemption or repayment in respect of each Note, if any, issued in certificated
form will be paid in immediately available funds against presentation of the
Note at the office of The First National Bank of Chicago, One First National
Plaza, Chicago, Illinois 60670.
Unless otherwise specified in a Pricing Supplement, all percentages
resulting from any calculation on Floating Rate Notes 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 amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded in the
case of U.S. dollars to the nearest cent (with one-half cent being rounded
upward) or, in the case of a foreign currency or composite currency, to the
nearest unit (with one-half cent or unit being rounded upwards).
Interest rates, or interest rate formulas, are subject to change by the
Company from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of the Notes
purchased in a single transaction.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from the date of issue at the rate
per annum stated on the face thereof until the principal amount thereof is paid
or made available for payment. Unless otherwise specified in the applicable
Pricing Supplement, interest on Fixed Rate Notes will be payable semiannually in
arrears on March 15 and September 15 of each year, to the persons in whose names
the Notes are registered at the close of business on the first calendar day
(whether or not a Business Day) of the month in which such Interest Payment Date
occurs (the "Regular Record Date"). Interest is also payable at maturity (or, if
applicable, upon redemption or repayment). Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months. If any Interest
Payment Date or the maturity date (or the date of redemption or repayment) of a
Fixed Rate Note falls on a day that is not a Business Day, the payment will be
made on the next Business Day as if it were made on the date such payment was
due, and no additional interest will accrue as a result of such delayed payment.
When used with respect to Fixed Rate Notes, "Business Day" means any day, other
than a Saturday or Sunday, on which banking institutions in The City of New York
and the city of Chicago, Illinois are open for business, and with respect to
Notes denominated in any foreign currency, on which banking institutions in the
principal financial center of the country of the foreign currency are open for
business.
S-6
<PAGE> 7
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. Interest on Floating Rates Notes
will be determined by reference to a "Base Rate", which may be the "CD Rate"
("CD Rate Notes"), the "Commercial Paper Rate" ("Commercial Paper Rate Notes"),
the "Federal Funds Rate" ("Federal Funds Rate Notes"), "LIBOR" ("LIBOR Notes"),
the "Prime Rate" ("Prime Rate Notes"), the "Treasury Rate" ("Treasury Rate
Notes"), the "CMT Rate" ("CMT Rate Notes") or such other Base Rate as is set
forth in the applicable Pricing Supplement and Note, based upon the Index
Maturity and adjusted by a Spread or Spread Multiplier, if any, as specified in
the applicable Pricing Supplement.
The "Index Maturity" is the period to maturity of the instrument or
obligation with respect to which the Base Rate is calculated. The "Spread" is
the number of basis points above or below the Base Rate applicable to a Floating
Rate Note, and the "Spread Multiplier" is the percentage of the Base Rate
applicable to the interest rate for such Floating Rate Note. The Spread, Spread
Multiplier, Index Maturity and other variable terms of the Floating Rate Notes
are subject to change by the Company from time to time, but no such change will
affect any Floating Rate Note theretofore issued or as to which an offer has
been accepted by the Company.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually, annually or otherwise (each, an
"Interest Reset Date"), as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Interest
Reset Date" will be:
- in the case of Floating Rate Notes which reset daily, each Business Day;
- in the case of Floating Rate Notes which reset weekly, the Wednesday of
each week (with the exception of weekly reset Treasury Rate Notes, which
reset on the Tuesday of each week, except as specified below);
- in the case of Floating Rate Notes which reset monthly, the third
Wednesday of each month;
- in the case of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December;
- in the case of Floating Rate Notes which reset semiannually, the third
Wednesday of the two months specified in the applicable Pricing
Supplement; and
- in the case of Floating Rate Notes which reset annually, the third
Wednesday of the month specified in the applicable Pricing Supplement.
The interest rate in effect from the date of issue to the first Interest
Reset Date (the "Initial Interest Rate") will be as set forth in the applicable
Pricing Supplement.
If any Interest Reset Date for any Floating Rate Note would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding day that is a Business Day, except that in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date will be the next preceding Business Day. When used with
respect to Floating Rate Notes,
"Business Day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements: the day is (i) a day on which
banking institutions in the City of New York and the city of Chicago, Illinois
are open for business, (ii) with respect to Notes denominated in a foreign
currency other than euro, a day on which banking institutions in the principal
financial center of the country of the foreign currency are open for business,
(iii) with respect to Notes denominated in euro, a day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET)
System is open, and (iv) with respect to LIBOR Notes, a London Banking Day (as
defined below).
The interest rate applicable to each Interest Accrual Period commencing on
an Interest Reset Date will be the rate determined by reference to the
applicable Base Rate determined as of the "Interest Determination
S-7
<PAGE> 8
Date". If the Base Rate is the CD Rate, the Commercial Paper Rate, the Federal
Funds Rate, the Prime Rate or the CMT Rate, the Interest Determination Date
pertaining to an Interest Reset Date will be the second Business Day preceding
the Interest Reset Date. If the Base Rate is LIBOR, the Interest Determination
Date pertaining to an Interest Reset Date will be the second London Banking Day
preceding the Interest Reset Date. If the Base Rate is the Treasury Rate, the
Interest Determination Date pertaining to an Interest Reset Date will be the day
of the week in which the Interest Reset Date falls on which Treasury bills
normally would be auctioned. Treasury bills are usually sold at auction on the
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such auction may
be held on the preceding Friday. If an auction falls on any Interest Reset Date,
then the Interest Reset Date will instead be the first Business Day following
such auction.
A Floating Rate Note may also have either or both of the following: (i) a
maximum limit, or ceiling, on the rate of interest which may be applicable
during any Interest Accrual Period; and (ii) a minimum limit, or floor, on the
rate of interest which may be applicable during any Interest Accrual Period. In
addition to any specified maximum interest rate which may be applicable to any
Floating Rate Note, the interest rate on the Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same may
be modified by United States law of general application. Under present New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
The limit may not apply to Floating Rate Notes in which $2,500,000 or more has
been invested.
Each Floating Rate Note will bear interest from the date of issue at the
rates determined as described below until the principal thereof is paid or made
available for payment. Except as provided below or in the applicable Pricing
Supplement, interest will be payable:
- in the case of Floating Rate Notes which reset daily, weekly or monthly,
on the third Wednesday of each month or on the third Wednesday of March,
June, September and December of each year;
- in the case of Floating Rate Notes which reset quarterly, on the third
Wednesday of March, June, September and December of each year;
- in the case of Floating Rate Notes which reset semiannually, on the third
Wednesday of the two months of each year specified in the applicable
Pricing Supplement;
- in the case of Floating Rate Notes which reset annually, on the third
Wednesday of the month specified in the applicable Pricing Supplement;
- and, in each case, at maturity (or, if applicable, upon redemption or
repayment).
If any Interest Payment Date for any Floating Rate Note would fall on a day
that is not a Business Day with respect to such Note, such Interest Payment Date
will be the following day that is a Business Day with respect to such Note,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date will be the immediately
preceding day that is a Business Day with respect to such LIBOR Note. If the
maturity date (or date of redemption or repayment) of any Floating Rate Note
would fall on a day that is not a Business Day, the payment of interest and
principal (and premium, if any) may be made on the next succeeding Business Day,
and no interest will accrue as a result of such delayed payment.
The "Regular Record Date" with respect to Floating Rate Notes will be the
date 15 calendar days (whether or not a Business Day) prior to the applicable
Interest Payment Date.
Accrued interest on each Floating Rate Note is calculated by multiplying
the principal amount of such Floating Rate Note by an accrued interest factor.
Such accrued interest factor is computed by adding together the interest factors
calculated for each day from and including the date of issue, or from but
excluding the last date for which interest has been paid, to and including the
date for which accrued interest is being calculated. Unless otherwise specified
in the applicable Pricing Supplement, the interest factor for each such day is
computed by dividing the interest rate applicable to such day by 360 in the case
of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR
Notes and Prime Rate Notes, or by the actual number of days in the year in the
case of Treasury Rate Notes and CMT Rate Notes.
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<PAGE> 9
The applicable Pricing Supplement will specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. The
Calculation Agent for each Interest Reset Date will determine the interest rate
as described below. The Company will notify the Paying Agent of each
determination of the Interest Rate applicable to any Floating Rate Note promptly
after such determination is made. Upon the request of the Holder of any Floating
Rate Note, the Paying Agent will provide the interest rate then in effect and,
if determined, the interest rate that will become effective as a result of a
determination made for the next Interest Reset Date with respect to such
Floating Rate Note. All calculations by the Calculation Agent of the interest
rate on any Floating Rate Note shall be final and binding in the absence of
manifest error. The "Calculation Date", where applicable, pertaining to any
Interest Determination Date will be the earlier of (i) the tenth calendar day
after such Interest Determination Date, or, if any such day is not a Business
Day, the next succeeding Business Day, or (ii) the Business Day preceding the
applicable Interest Payment Date, redemption date, Optional Repayment Date or
maturity.
The Initial Interest Rate will be specified in the applicable Pricing
Supplement. The interest rate that will become effective on each subsequent
Interest Reset Date will be determined by the Calculation Agent as follows:
CD Rate. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any) specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note (a "CD Interest Determination Date"), the rate on such date for negotiable
certificates of deposit having the Index Maturity specified in the applicable
Pricing Supplement as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates" or any
successor publication of the Board of Governors of the Federal Reserve System
("H.15(519)") under the heading "CDs (Secondary Market)".
The following procedures will be followed if the CD Rate cannot be
determined as described above:
- If the above rate is not published in H.15(519) by 9:00 a.m., New York
City time, on the Calculation Date, the CD Rate will be the rate on such
CD Interest Determination Date set forth in the daily update of
H.15(519), available through the world wide website of the Board of
Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/h15/ update, or any successor site or
publication ("H.15 Daily Update"), for the day in respect of certificates
of deposit having the Index Maturity specified in the applicable Pricing
Supplement under the caption "CDs (Secondary Market)".
- If such rate is not yet published in either H.15(519) or the H.15 Daily
Update by 3:00 p.m., New York City time, on the Calculation Date, then
the Calculation Agent will determine the CD Rate to be the arithmetic
mean of the secondary market offered rates as of 10:00 a.m., New York
City time, on such CD Interest Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in New
York City selected by the Calculation Agent (after consultation with the
Company) for negotiable certificates of deposit of major United States
money center banks of the highest credit standing in the market for
negotiable certificates of deposit with a remaining maturity closest to
the Index Maturity specified in the applicable Pricing Supplement in the
denomination of $5,000,000.
- If the dealers selected by the Calculation Agent are not quoting as set
forth above, the CD Rate will remain the CD Rate then in effect on such
CD Interest Determination Date.
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at
the interest rates (calculated with reference to the Commercial Paper Rate and
the Spread or Spread Multiplier, if any) specified in the Commercial Paper Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date
relating to a Commercial Paper Rate Note (a "Commercial Paper Interest
Determination Date"), the Money Market Yield (calculated as described below) of
the rate on such
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<PAGE> 10
date for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper -- Nonfinancial".
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above:
- If the above rate is not published by 9:00 a.m., New York City time, on
the Calculation Date, then the Commercial Paper Rate will be the Money
Market Yield of the rate on such Commercial Paper Interest Determination
Date for commercial paper of the Index Maturity specified in the
applicable Pricing Supplement as published in H.15 Daily Update under the
heading "Commercial Paper -- Nonfinancial".
- If by 3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or H.15 Daily Update, then the
Calculation Agent will determine the Commercial Paper Rate to be the
Money Market Yield of the arithmetic mean of the offered rates as of
11:00 a.m., New York City time, on such Commercial Paper Interest
Determination Date of three leading dealers of commercial paper in New
York City selected by the Calculation Agent (after consultation with the
Company) for commercial paper of the Index Maturity specified in the
applicable Pricing Supplement placed for an industrial issuer whose bond
rating is "AA", or the equivalent, from a nationally recognized rating
agency.
- If the dealers selected by the Calculation Agent are not quoting as
mentioned above, the Commercial Paper Rate with respect to such
Commercial Paper Interest Determination Date will remain the Commercial
Paper Rate then in effect on such Commercial Paper Interest Determination
Date.
"Money Market Yield" will be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
D X 360 X 100
Money Market Yield = -------------
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the
interest rates (calculated with reference to the Federal Funds Rate and the
Spread or Spread Multiplier, if any) specified in the Federal Funds Rate Notes
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to a
Federal Funds Rate Note (a "Federal Funds Interest Determination Date"), the
rate on that day for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective)".
The following procedures will be followed if the Federal Funds Rate cannot
be determined as described above:
- If the above rate is not published by 9:00 a.m., New York City time, on
the Calculation Date, the Federal Funds Rate will be the rate on such
Federal Funds Interest Determination Date as published in H.15 Daily
Update under the heading "Federal Funds/(Effective)".
- If such rate is not yet published in either H.15(519) or H.15 Daily
Update by 3:00 p.m., New York City time, on the Calculation Date, the
Calculation Agent will determine the Federal Funds Rate to be the
arithmetic mean of the rates for the last transaction in overnight
Federal Funds arranged by each of three leading brokers of Federal Funds
transactions in New York City selected by the Calculation Agent (after
consultation with the Company) prior to 9:00 a.m., New York City time, on
such Federal Funds Interest Determination Date.
- If the brokers selected by the Calculation Agent are not quoting as
mentioned above, the Federal Funds Rate with respect to such Federal
Funds Interest Determination Date will remain the Federal Funds Rate then
in effect on such Federal Funds Interest Determination Date.
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<PAGE> 11
LIBOR. Notes will bear interest at the interest rates (calculated with
reference to the London interbank offered rate ("LIBOR") and the Spread or
Spread Multiplier, if any), and will be payable on the dates specified on the
face of the LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR with
respect to any Interest Reset Date will be determined by the Calculation Agent
in accordance with the following provisions:
With respect to an Interest Determination Date relating to a LIBOR Note (a
"LIBOR Interest Determination Date") LIBOR will be either
- If "LIBOR Reuters" is specified in the applicable Pricing Supplement,
LIBOR will be the arithmetic mean of the offered rates (unless the
Designated LIBOR Page (as defined below) by its terms provides only for a
single rate, in which case such single rate shall be used) for deposits
in the Index Currency having the Index Maturity specified in such Pricing
Supplement, commencing on the applicable Interest Reset Date, that appear
(or, if only a single rate is required as aforesaid, appears) on the
Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR
Interest Determination date.
- If "LIBOR Telerate" is specified in the applicable Pricing Supplement as
the method of calculating LIBOR, LIBOR will be the rate for deposits in
the Index Currency having the Index Maturity specified in such Pricing
Supplement, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 a.m., London time, on such LIBOR
Interest Determination Date.
- If neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, LIBOR
will be calculated as if "LIBOR Telerate" had been specified.
If fewer than two such offered rates appear, or if no such rate appears, as
applicable, LIBOR on such LIBOR Interest Determination Date will be determined
as follows:
- The Calculation Agent will request the principal London offices of each
of four major reference banks in the London Interbank market as selected
by the Calculation Agent (after consultation with the Company) to provide
the Calculation Agent with its offered quotation for deposits in the
Index Currency for the period of the Index Maturity designated in the
applicable Pricing Supplement, commencing on the Interest Reset Date, to
prime banks in the London interbank market at approximately 11:00 a.m.,
London time, on such LIBOR Interest Determination Date and in a principal
amount that is representative for a single transaction in such Index
Currency in such market at such time. If at least two such quotations are
provided, LIBOR determined on such LIBOR Interest Determination Date will
be the arithmetic mean of such quotations.
- If fewer than two quotations are provided, LIBOR determined on such LIBOR
Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., or such other time specified in the
applicable Pricing Supplement, in the applicable Principal Financial
Center, on such LIBOR Interest Determination Date by three major banks in
such Principal Financial Center selected by the Calculation Agent (after
consultation with the Company) for loans in the Index Currency to leading
European banks, having the Index Maturity designated in the applicable
Pricing Supplement and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time.
- If the banks so selected by the Calculation Agent are not quoting as
mentioned above, LIBOR determined on such LIBOR Interest Determination
Date will be LIBOR in effect on such LIBOR Interest Determination Date.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the display
on the Reuters Monitor Money Rates Service (or any successor service) for the
purpose of displaying the London Interbank rates of major banks for the
applicable Index Currency, (b) if "LIBOR Telerate" is specified in the
applicable Pricing Supplement as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) ("Telerate") for
the purpose of displaying the London Interbank rates of major banks for the
applicable Index
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<PAGE> 12
Currency, or (c) if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in
the applicable Pricing Supplement, "Designated LIBOR Page" means the display on
Telerate for the purpose of displaying the London interbank rates of major banks
for the applicable Index Currency.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be U.S. dollars.
"Principal Financial Center" means the capital city of the country issuing
the currency or composite currency in which any payment in respect of the
relevant Notes is to be made or, solely with respect to the calculation of
LIBOR, the Index Currency, except that with respect to U.S. dollars, Deutsche
marks, Italian lira, Swiss francs and Dutch guilders, the Principal Financial
Center shall be the City of New York, Frankfurt, Milan, Zurich and Amsterdam,
respectively.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
Prime Rate. Prime Rate Notes will bear interest at the interest rates
(calculated with reference to the Prime Rate and the Spread or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date relating to a Prime
Rate Note (a "Prime Interest Determination Date"), the rate on such date as
published in H.15(519) under the heading "Bank Prime Loan".
The following procedures will be followed if the Prime Rate cannot be
determined as described above:
- If the rate is not published prior to 9:00 a.m., New York City time, on
the Calculation Date, then the Prime Rate will be the rate on such Prime
Interest Determination Date as published in H.15 Daily Update opposite
the caption "Bank Prime Loan".
- If the rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date, in either H.15 (519) or H.15 Daily Update, then the
Calculation Agent will determine the Prime Rate to be the arithmetic mean
of the rates of interest publicly announced by each bank that appears on
the Reuters Screen US Prime1 Page (as defined below) as such bank's prime
rate or base lending rate as in effect for that Prime Interest
Determination Date.
- If fewer than four such rates but more than one such rate appear on the
Reuters Screen US Prime1 Page for the Prime Interest Determination Date,
the Calculation Agent will determine the Prime Rate to be the arithmetic
mean of the prime rates quoted on the basis of the actual number of days
in the year divided by 360 as of the close of business on such Prime
Interest Determination Date by at least two major money center banks in
New York City selected by the Calculation Agent (after consultation with
the Company).
- If fewer than two such rates appear on the Reuters Screen US Prime1 Page,
the Calculation Agent will determine the Prime Rate on the basis of the
rates furnished in New York City by three substitute banks or trust
companies organized and doing business under the laws of the United
States, or any State thereof, in each case having total equity capital of
at least U.S. $500,000,000 and being subject to supervision or
examination by Federal or State authority, selected by the Calculation
Agent (after consultation with the Company) to provide such rate or
rates.
- If the banks selected are not quoting as mentioned above, the Prime Rate
will remain the Prime Rate in effect on such Prime Interest Determination
Date.
"Reuters Screen US Prime1 Page" means the display designated as page "US
Prime1" on the Reuters Monitor Money Rates Service (or such other page as may
replace the US Prime1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
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<PAGE> 13
Treasury Rate. Treasury Rate Notes will bear interest at the interest
rates (calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any) specified in the Treasury Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note (a "Treasury Interest Determination Date"), the rate
applicable to the auction held on such date of direct obligations of the United
States ("Treasury bills") having the Index Maturity specified in the applicable
Pricing Supplement as such rate appears on either the display designated as Page
56 or the display designated as Page 57 on Telerate under the heading "AVGE
INVEST YIELD".
The following procedures will be followed if the Treasury Rate cannot be
determined as described above:
- If the above rate is not published by 9:00 a.m., New York City time, on
the Calculation Date, the Treasury Rate will be the auction average rate
on such Treasury Interest Determination Date (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. Treasury bills are usually sold at auction on
Monday of each week unless that day is a legal holiday, in which case the
auction is usually held on the following Tuesday, except that such
auction may be held on the preceding Friday.
- In the event that the results of the auction of Treasury bills having the
Index Maturity specified in the applicable Pricing Supplement are not
published or reported as provided above by 3:00 p.m., New York City time,
on such Calculation Date, or if no such auction is held on such Treasury
Interest Determination Date, then the Calculation Agent will determine
the Treasury Rate to be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 p.m., New York City time, on such
Treasury Interest Determination Date, of three leading primary United
States government securities dealers selected by the Calculation Agent
(after consultation with the Company), for the issue of Treasury bills
with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement.
- If the dealers selected by the Calculation Agent are not quoting as
mentioned above, the Treasury Rate with respect to such Treasury Interest
Determination Date will remain the Treasury Rate then in effect on such
Treasury Interest Determination Date.
CMT Rate. CMT Rate Notes will bear interest at the rates (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Notes and any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date relating to a CMT Rate
Note (a "CMT Interest Determination Date"), the rate displayed on the Designated
CMT Telerate Page (as defined below) under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 p.m.", under the column for the Designated CMT Maturity Index (as defined
below) for:
(i) If the Designated CMT Telerate Page is 7051, the rate on such CMT
Interest Determination Date; and
(ii) If the Designated CMT Telerate Page is 7052, the week or the month, as
applicable, ended immediately preceding the week in which the related
CMT Interest Determination Date occurs.
The following procedures will be used if the CMT Rate cannot be determined
as described above:
- If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 p.m., New York City time, on the related Calculation
Date, then the CMT Rate will be such Treasury Constant Maturity rate for
the Designated CMT Maturity Index as published in the relevant H.15(519).
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<PAGE> 14
- If that rate is no longer published, or, if not published by 3:00 p.m.,
New York City time, on the related Calculation Date, then the CMT Rate
will be such Treasury Constant Maturity rate for the Designated CMT
Maturity Index (or other United States Treasury rate for the Designated
CMT Maturity Index) for the CMT Interest Determination Date with respect
to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in the relevant H.15(519).
- If such information is not provided by 3:00 p.m., New York City time, on
the related Calculation Date, then the Calculation Agent will determine
the CMT Rate to be a yield to maturity, based on the arithmetic mean of
the secondary market closing offer side prices as of approximately 3:30
p.m., New York City time on the CMT Interest Determination Date reported,
according to their written records, by three leading primary United
States government securities dealers (each, a "Reference Dealer") in the
City of New York selected by the Calculation Agent as described in the
following sentence. The Calculation Agent will select five Reference
Dealers and will eliminate the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury
notes") with an original maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of not less than such
Designated CMT Maturity Index minus one year.
- If the Calculation Agent cannot obtain three such Treasury notes
quotations, the Calculation Agent will determine the CMT Rate to be a
yield to maturity based on the arithmetic mean of the secondary market
offer side prices as of approximately 3:30 p.m., New York City time, on
the CMT Interest Determination Date of three Reference Dealers in the
City of New York (selected using the same method described above), for
Treasury notes with an original maturity of the number of years that is
the next highest to the Designated CMT Maturity Index and a remaining
term to maturity closest to the Designated CMT Maturity Index and in an
amount of at least $100,000,000.
- If three or four (and not five) of such Reference Dealers are quoting as
described above, then the CMT Rate will be based on the arithmetic mean
of the offer prices obtained and neither the highest nor the lowest of
such quotes will be eliminated.
- If fewer than three Reference Dealers selected by the Calculation Agent
are quoting as described herein, the CMT Rate will be the CMT Rate in
effect on such CMT Interest Determination Date.
If two Treasury notes with an original maturity as described above, have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the quotes for the Treasury note with the shorter remaining term to maturity
will be used.
"Designated CMT Telerate Page" means the display on the Telerate (or any
successor service) on the page designated in the applicable Pricing Supplement
(or any other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519). If
no such page is specified in the applicable Pricing Supplement, the Designated
CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
ZERO-COUPON NOTES
Notes may be issued in the form of Original Issue Discount Notes that do
not provide any periodic payments of interest (the "Zero-Coupon Notes"). The
specific terms of any Zero-Coupon Notes will be set forth in the applicable
Pricing Supplement.
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<PAGE> 15
BOOK-ENTRY NOTES
The Notes may be issued in whole or in part in the form of one or more
fully registered Notes (each, a "Book-Entry Note") which will be deposited with,
or on behalf of, the Depository and registered in the name of the Depository's
nominee. Except as set forth below, a Book-Entry Note may not be transferred
except as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the Depository
or by the Depository or any nominee to a successor of the Depository or a
nominee of such successor. Book-Entry Notes will not be exchangeable for
certificated Notes and, except under the conditions described below, will not
otherwise be issuable in definitive form.
The Depository has advised the Company and the Agents that it is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934
(the "Exchange Act"). The Depository was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own the Depository. Access to the Depository's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by the Depository only through
participants.
Upon the issuance of Notes by the Company represented by a Book-Entry Note,
the Depository will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Notes represented by such Book-Entry
Note to the accounts of participants. The accounts to be credited shall be
designated by the Agents or by the Company if such Notes are offered and sold
directly by the Company.
Payments of principal of and interest, if any, on the Book-Entry Note
registered in the name of the Depository or its nominee will be made by the
Company through the Paying Agent to the Depository or its nominee, as the case
may be, as the registered owner of a Book-Entry Note. Neither the Company, the
Trustee, any Paying Agent nor the registrar for the Notes 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 Book-Entry Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company has been advised that the Depository, upon receipt of any
payment of principal or interest in respect of a Book-Entry Note, will credit
immediately the accounts of the related participants with payments in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in such Book-Entry Note as shown on the records of the Depository. The
Company expects that payments by participants to owners of beneficial interests
in a Book-Entry Note will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name". Such payments will be
the responsibility of such participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for each
Book-Entry Note. In addition, the Company may at any time determine not to have
Notes represented by one or more Book-Entry Notes, and, in such event, will
issue Notes in certificated form in exchange for the Book-Entry Note or Notes
representing such Notes. In any such instance, an owner of a beneficial interest
in a Book-Entry Note will be entitled to physical delivery in certificated form
of Notes equal in principal amount to such beneficial interest and to have such
Notes registered in its name. Notes so issued in certificated form will be
issued in denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000 or, in the case of Notes denominated in a Specified
Currency, unless a higher minimum denomination is required by applicable law, in
denominations of the equivalent of U.S. $1,000 (rounded down to an integral
multiple of 1,000 units of such Specified Currency) or any amount in excess
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<PAGE> 16
thereof which is an integral multiple of 1,000 units of such Specified Currency,
and will be issued in fully registered form only.
INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity,
premium, if any, and/or interest to be paid thereon to be determined with
reference to the price or prices of specified commodities (including baskets of
commodities or securities (including baskets of securities), interest rate
indices, interest rate or exchange rate swap indices, the exchange rate of one
or more specified currencies (including baskets of currencies or a composite
currency) relative to an indexed currency, or such other price or exchange rate
or other financial or non-financial index or indices (each an "Index") as may be
specified in such Note ("Indexed Notes"), as set forth in a Pricing Supplement
with respect to an Indexed Note. Holders of such Notes may receive a principal
amount at Maturity that is greater than or less than the face amount of such
Notes depending upon the relative value at Maturity of the specified Index.
Information as to the method for determining the principal payable at Maturity
and, where applicable, certain historical information with respect to the
specified indexed item or items and tax considerations associated with an
investment in Indexed Notes, will be set forth in the applicable Pricing
Supplement with respect to an Indexed Note.
Notwithstanding anything to the contrary contained herein or in the
Prospectus, for purposes of determining the rights of a Holder of a Note Indexed
as to principal in respect of voting for or against amendments to the indenture
and modifications and the waiver or rights thereunder, the principal amount of
such Indexed Note shall be deemed to be equal to the face amount thereof upon
issuance. The amount of principal payable at Maturity will be specified in the
applicable Pricing Supplement.
RENEWABLE NOTES
The Company may also issue from time to time variable rate renewable notes
(the "Renewable Notes") that will bear interest at the interest rate (calculated
with reference to a Base Rate and the Spread and/or Spread Multiplier, if any)
specified in the Renewable Notes and in the applicable Pricing Supplement.
The Renewable Notes will mature on an Interest Payment Date as specified in
the applicable Pricing Supplement (the "Initial Maturity Date"), unless the
maturity of all or any portion of the principal amount thereof is extended in
accordance with the procedures described below. On the Interest Payment Dates in
June and December in each year (unless different Interest Payment Dates are
specified in the applicable Pricing Supplement) (each such Interest Payment
Date, an "Election Date"), the maturity of the Renewable Notes will be extended
to the Interest Payment Date occurring twelve months after such Election Date,
unless the holder elects to terminate the automatic extension of the maturity of
the Renewable Notes (or of any portion thereof having a principal amount of
$1,000 or any multiple of $1,000 in excess thereof) by delivering a notice to
such effect to the Paying Agent not less than nor more than a number of days to
be specified in the applicable Pricing Supplement prior to such Election Date.
Such option may be exercised with respect to less than the entire principal
amount of the Renewable Notes; provided that the principal amount for which such
option is not exercised is at least $1,000 or any larger amount that is an
integral multiple of $1,000. Notwithstanding the foregoing, the maturity of the
Renewable Notes may not be extended beyond the Final Maturity Date, as specified
in the applicable Pricing Supplement (the "Final Maturity Date"). If the holder
elects to terminate the automatic extension of the maturity of any portion of
the principal amount of the Renewable Notes and such election is not revoked as
described below, such portion will become due and payable on the Interest
Payment Date falling six months (unless another period is specified in the
applicable Pricing Supplement) after the Election Date prior to which the holder
made such election.
An election to terminate the automatic extension of maturity may be revoked
as to any portion of the Renewable Notes having a principal amount of $1,000 or
any multiple of $1,000 in excess thereof by delivering a notice to such effect
to the Paying Agent on any day following the effective date of the election to
terminate the automatic extension of maturity and prior to the date 15 days
before the date on which such portion would otherwise mature. Such a revocation
may be made for less than the entire principal amount of the Renewable Notes for
which the automatic extension of maturity has been terminated; provided that the
principal amount
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of the Renewable Notes for which the automatic extension of maturity has been
terminated and for which such a revocation has not been made is at least $1,000
or any larger amount that is an integral multiple of $1,000. Notwithstanding the
foregoing, a revocation may not be made during the period from and including a
Record Date to but excluding the immediately succeeding Interest Payment Date.
An election to terminate the automatic extension of the maturity of the
Renewable Notes, if not revoked as described above by the holder making the
election or any subsequent holder, will be binding upon such subsequent holder.
The Renewable Notes may be redeemed in whole or in part at the option of
the Company on or commencing with the date or dates specified in the applicable
Pricing Supplement. The Renewable Notes will be redeemed at the redemption price
stated in the applicable Pricing Supplement, together with accrued and unpaid
interest to the date of redemption. Notwithstanding anything to the contrary in
this Prospectus Supplement, notice of redemption will be provided by mailing a
notice of such redemption to each holder by first class mail, postage prepaid,
at least 180 days prior to the date fixed for redemption.
AMORTIZING NOTES
The Company may from time to time offer Notes ("Amortizing Notes") on which
a portion or all the principal amount is payable prior to the stated maturity in
accordance with a schedule, by application of a formula, or by reference to an
index. Further information concerning additional terms and conditions of any
Amortizing Notes, including terms for repayment thereof, will be set forth in
the applicable Pricing Statement.
EXTENSION OF MATURITY
The Pricing Supplement relating to certain Notes (other than an Amortizing
Note) may provide that the Company has the option to extend the maturity of such
Notes for one or more periods of one or more whole years (each an "Extension
Period") up to but not beyond the date (the "Final Maturity Date") set forth in
such Pricing Supplement. If the Company has such option with respect to any such
Note (an "Extendible Note"), the following procedures will apply, unless
modified as set forth in the applicable Pricing Supplement.
The Company may exercise such option with respect to an Extendible Note by
notifying the Paying Agent of such exercise at least 45 but not more than 60
days prior to the maturity date originally in effect with respect to such Note
(the "Original Maturity Date") or, if the maturity date of such Note has already
been extended, prior to the maturity date then in effect (an "Extended Maturity
Date"). No later than 38 days prior to the Original Maturity Date or an Extended
Maturity Date, as the case may be (each, a "Maturity Date"), the Paying Agent
will mail to the holder of such Note a notice (the "Extension Notice") relating
to such Extension Period, by first class mail, postage prepaid, setting forth
(a) the election of the Company to extend the maturity of such Note; (b) the new
Extended Maturity Date; (c) the interest rate applicable to the Extension Period
(which, in the case of a Floating Rate Note, will be calculated with reference
to a Base Rate and the Spread and/or Spread Multiplier, if any); and (d) the
provisions, if any, for redemption during the Extension Period, including the
date or dates on which, the period or periods during which and the price or
prices at which such redemption may occur during the Extension Period. Upon the
mailing by the Paying Agent of an Extension Notice to the holder of an
Extendible Note, the maturity of such Note shall be extended automatically, and,
except as modified by the Extension Notice and as described in the next
paragraph, such Note will have the same terms it had prior to the mailing of
such Extension Notice.
Notwithstanding the foregoing, not later than 10:00 a.m., New York City
time, on the twentieth calendar day prior to the Maturity Date then in effect
for an Extendible Note (or, if such day is not a Business Day, not later than
10:00 a.m., New York City time, on the immediately succeeding Business Day), the
Company may, at its option, revoke the interest rate provided for in the
Extension Notice and establish a higher interest rate (or, in the case of a
Floating Rate Note, a higher Spread and/or Spread Multiplier, if any) for the
Extension Period by causing the Paying Agent to send notice of such higher
interest rate (or, in the case of a Floating Rate Note, a higher Spread and/or
Spread Multiplier, if any) to the holder of such Note by first class mail,
postage prepaid, or by such other means as shall be agreed between the Company
and the Paying Agent. Such
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notice shall be irrevocable. All Extendible Notes with respect to which the
Maturity Date is extended in accordance with an Extension Notice will bear such
higher interest rate (or, in the case of a Floating Rate Note, a higher Spread
and/or Spread Multiplier, if any) for the Extension Period, whether or not
tendered for repayment.
If the Company elects to extend the maturity of an Extendible Note, the
holder of such Note will have the option to require the Company to repay such
Note on the Maturity Date then in effect at a price equal to the principal
amount thereof plus any accrued and unpaid interest to such date. In order for
an Extendible Note to be repaid on such Maturity Date, the holder thereof must
follow the procedures set forth below under "Repayment and Repurchase" for
optional repayment, except that the period for delivery of such Note or
notification to the Paying Agent shall be at least 25 but not more than 35 days
prior to the Maturity Date then in effect and except that a holder who has
tendered an Extendible Note for repayment pursuant to an Extension Notice may,
by written notice to the Paying Agent, revoke any such tender for repayment
until 3:00 p.m., New York City time, on the twentieth calendar day prior to the
Maturity Date then in effect (or if such day is not a Business Day, until 3:00
p.m., New York City time, on the immediately succeeding Business Day).
REDEMPTION
Although Notes will not generally be redeemable prior to maturity, the
Company in the Pricing Supplement relating to a Note may specify that such Note
will be redeemable at the option of the Company on a date or dates specified
prior to maturity at a price or prices, set forth in the applicable Pricing
Supplement, together with accrued interest to the date of redemption. The Notes
will not be subject to any sinking fund. Unless otherwise specified in the
applicable Pricing Supplement, the Company may redeem any of the Notes which are
redeemable and remain outstanding either in whole or from time to time in part,
upon not less than 30, nor more than 60, days' notice. If less than all of the
Notes with like tenor and terms are to be redeemed, the Notes to be redeemed
shall be selected by the applicable Note Registrar by such method as such Note
Registrar shall deem fair and appropriate.
REPAYMENT AND REPURCHASE
Although Notes will not generally be repayable at the option of the holder
prior to maturity, the Company in the Pricing Supplement relating to a Note may
specify that such Note will be repayable at the option of the holder on a date
or dates specified prior to maturity at a price or prices set forth in the
applicable Pricing Supplement, together with accrued interest to the date of
repayment.
Unless otherwise specified in the applicable Pricing Supplement, in order
for a Note to be repaid, the Paying Agent must receive at least 30, but not more
than 45, days, prior to the repayment date (i) the Note with the form entitled
"Option to Elect Repayment" on the reverse of the Note duly completed or (ii) a
telegram, telex, facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States of America setting forth
the name of the holder of the Note, the principal amount of the Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of the Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled "Option to Elect Repayment" on the reverse of the
Note duly completed will be received by the Paying Agent not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter and such Note and form duly completed are received by the Paying Agent by
such fifth Business Day. Except in the case of Renewable Notes or Extendible
Notes, and unless otherwise specified in the applicable Pricing Supplement,
exercise of the repayment option by the holder of a Note shall be irrevocable.
The repayment option may be exercised by the holder of a Note for less than the
entire principal amount of the Note provided that the principal amount of the
Note remaining outstanding after repayment is an authorized denomination.
If a Note is a Book-Entry Note, the Depository's nominee will be the holder
of such Note and therefore will be the only entity that can exercise a right to
repayment. In order to ensure that the Depository's nominee
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will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depository of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depository.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may be held or resold or, at the
discretion of the Company, may be surrendered to the applicable Trustee for
cancellation.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary deals only with Notes held as capital assets and does
not deal with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons holding Notes as a hedge against currency risks or as a
position in a "straddle" for tax purposes, or persons whose functional currency
is not the United States dollar. It also does not deal with holders other than
original purchasers that acquire Notes for the initial offering price (except
where otherwise specifically noted). This summary is based upon United States
Federal tax laws and regulations as now in effect and as currently interpreted
and does not take into account possible changes in such tax laws or
interpretations, any of which may be applied retroactively. Persons considering
the purchase of the Notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the Notes arising under the laws of any other taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation created or organized under the laws of
the United States or of any political subdivision thereof, (iii) an estate or
trust the income of which is subject to United States Federal income taxation
regardless of source, (iv) a person otherwise subject to United States Federal
income taxation on its worldwide income regardless of its source or (v) any
other person whose income or gain in respect of a Note is effectively connected
with the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
PAYMENTS OF INTEREST
Payments of interest on a Note, including qualified stated interest as
defined below under "Original Issue Discount", generally will be taxable to a
U.S. Holder as ordinary interest income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of tax
accounting).
ORIGINAL ISSUE DISCOUNT
For United States Federal income tax purposes, original issue discount
("OID") is the excess of the stated redemption price at maturity of a Note over
its issue price, if such excess equals or exceeds a de minimis amount (generally
1/4 of 1% of the Note's stated redemption price at maturity multiplied by the
number of complete years to maturity from its issue date or, in the case of an
Amortizing Note, by the weighted average maturity). Generally, the issue price
of a Note (or any Note that is part of an issue of Notes) will be the first
price at which a substantial amount of Notes that are part of such issue of
Notes are sold to the public. The stated redemption price at maturity of a Note
is the sum of all payments provided by the Note other than "qualified stated
interest" payments. "Qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least
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annually at a single fixed rate (or at certain floating rates) that
appropriately takes into account the length of the interval between stated
interest payments.
Original issue discount is includible in income as ordinary interest for
United States Federal income tax purposes as it accrues under a constant yield
method in advance of receipt of the cash payments attributable to such income,
regardless of such U.S. Holder's regular method of tax accounting. In general,
the amount of OID included in income by the initial U.S. Holder of an Original
Issue Discount Note (a "Discount Note") is the sum of the daily portions of OID
for each day during the taxable year (or portion of the taxable year) on which
such U.S. Holder held such Discount Note. The "daily portion" is determined by
allocating the OID for an accrual period equally to each day in that accrual
period. The "accrual period" for a Discount Note may be of any length and may
vary in length over the term of the Note, provided that each accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs on the first or final day of an accrual period. The amount of OID for an
accrual period is generally equal to the excess of (i) the product of the
Discount Note's adjusted issue price at the beginning of such accrual period and
its yield to maturity over (ii) the amount of any qualified stated interest
payments allocable to such accrual period. The "adjusted issue price" of a
Discount Note at the beginning of any accrual period is the sum of the issue
price of the Discount Note plus the amount of OID allocable to all prior accrual
periods (determined without regard to the amortization of any acquisition or
bond premium, as discussed below) minus the amount of any prior payments on the
Discount Note that were not qualified stated interest payments. Under these
rules, U.S. Holders generally will have to include in income increasingly
greater amounts of OID in successive accrual periods.
Floating Rate Notes and Indexed Notes ("Variable Notes") are subject to
special rules. A Variable Note that provides for stated interest at one or more
qualified floating rates, a single fixed rate and one or more qualified floating
rates, a single objective rate, or a single fixed rate and a single objective
rate that is a qualified inverse floating rate throughout the term thereof
generally will qualify as a "variable rate debt instrument". In general, the
amount and accrual of OID and qualified stated interest on such a Variable Note
is calculated by converting it into a debt instrument with an appropriate fixed
rate and then applying the general OID rules.
If a Variable Note does not qualify as a "variable rate debt instrument",
then the Variable Note would be treated as a contingent payment debt obligation.
A U.S. Holder of such an instrument generally must include future contingent and
noncontingent interest payments in income as such interest accrues based upon a
projected payment schedule. Moreover, in general, any gain recognized by a U.S.
Holder on the sale, exchange, or retirement of a contingent payment debt
instrument will be treated as ordinary income and a portion of any loss realized
could be treated as ordinary loss as opposed to capital loss (depending upon the
circumstances).
The proper United States Federal income tax treatment of Variable Notes
that are treated as contingent payment debt obligations will be more fully
described in the applicable Pricing Supplement. Investors considering the
purchase of Variable Notes should consult their own tax advisors.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the OID consequences will depend,
in part, on the particular terms and features of the purchased Notes more fully
described in the applicable Pricing Supplement.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to OID obligations,
subject to certain limitations and exceptions. The election is to be made for
the taxable year in which the U.S. Holder acquired the Note, and may not be
revoked without the consent of the Internal Revenue Service (the "IRS").
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The Company will report to holders the amount of interest paid and OID
accrued each year.
Short-Term Notes. Special rules apply with respect to OID on Notes that
mature one year or less from the date of issuance ("Short-Term Notes"). In
general, a cash basis U.S. Holder of a Short-Term Note is not required to
include OID in income as it accrues for United States Federal income tax
purposes unless it elects to do so. Accrual basis U.S. Holders and certain other
U.S. Holders, including banks, regulated investment companies, dealers in
securities, and cash basis U.S. Holders who so elect, are required to include
OID in income as it accrues on Short-Term Notes on either a straight-line basis
or under the constant yield method (based on daily compounding), at the election
of the U.S. Holder. In the case of U.S. Holders not required and not electing to
include OID on Short-Term Notes in income currently, any gain realized on the
sale or retirement of Short-Term Notes will be ordinary income to the extent of
the OID accrued on a straight-line basis (unless an election is made to accrue
the OID under the constant yield method) through the date of sale or retirement.
U.S. Holders who are not required and do not elect to include OID on Short-Term
Notes in income as it accrues will be required to defer deductions for interest
on borrowings allocable to Short-Term Notes in an amount not exceeding the
deferred income until the deferred income is realized. For purposes of
determining the amount of OID subject to these rules, no interest payments on a
Short-Term Note are qualified stated interest, but instead such interest
payments are included in the Short-Term Note's stated redemption price at
maturity.
Any U.S. Holder of a Short-Term Note can elect to apply rules in the
preceding paragraph taking into account the amount of "acquisition discount", if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price therefor.
Market Discount. If a U.S. Holder purchases a Note, other than a
Short-Term Note, for an amount that is less than its issue price (or, in the
case of a subsequent purchaser, its stated redemption price at maturity) or, in
the case of a Discount Note, for an amount that is less than its adjusted issue
price as of the purchase date, such U.S. Holder will be treated as having
purchased such Note at a "market discount," unless such market discount is less
than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a Note as ordinary
income to the extent of the lesser of (i) the amount of such payment or realized
gain or (ii) the market discount which has not previously been included in
income and is treated as having accrued on such Note at the time of such payment
or disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
U.S. Holder elects to accrue market discount on a constant yield to maturity
basis.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or semiannual compounding basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
Premium. If a U.S. Holder purchases a Note for an amount that is greater
than the sum of all amounts payable on the Note after the purchase date other
than payments of qualified stated interest, such U.S. Holder will be considered
to have purchased the Note with "amortizable bond premium" equal in amount to
such excess. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the Note and may offset interest
otherwise required to be included in respect of the Note during any
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taxable year by the amortized amount of such excess for the taxable year.
However, if the Note may be optionally redeemed after the U.S. Holder acquires
it at a price in excess of its stated redemption price at maturity, special
rules would apply which could result in a deferral of the amortization of some
bond premium until later in the term of the Note. Any election to amortize bond
premium applies to all taxable debt obligations then owned and thereafter
acquired by the U.S. Holder on or after the first day of the first taxable year
to which such election applies and may be revoked only with the consent of the
IRS.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the stated redemption price at maturity will be considered to have purchased the
Discount Note at an "acquisition premium". Under the acquisition premium rules,
the amount of OID which such U.S. Holder must include in its gross income with
respect to such Discount Note for any taxable year (or portion thereof in which
the U.S. Holder holds the Discount Note) will be reduced (but not below zero) by
the portion of the acquisition premium properly allocable to the period.
Disposition of a Note. Except as discussed above, upon the sale, exchange
or retirement of a Note, a U.S. Holder generally will recognize capital gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement (other than amounts representing accrued and unpaid interest) and
such U.S. Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax
basis in a Note generally will equal such U.S. Holder's initial investment in
the Note increased by any OID included in income (and accrued market discount or
acquisition discount, if any, if the U.S. Holder has included such discount in
income) and decreased by the amount of any payments, other than qualified stated
interest payments, received and amortizable bond premium taken with respect to
such Note.
Extendible Notes, Reset Notes and Renewable Notes. Certain of the Notes
may provide that (i) the holder may extend the maturity of a Note (a "Renewable
Note"), and/or (ii) the Company may extend the maturity of a Note (an "Extension
of Maturity"), and/or (iii) the Company has the option to reset the interest
rate, the Spread, or the Spread Multiplier (a "Reset Note"). Notes containing
such features may be subject to rules that differ from the general rules
discussed above. Investors considering the purchase of Notes with such features
should consult their own tax advisors and the applicable Pricing Supplement
regarding the tax consequences of the holding and disposition of such Notes.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
("FOREIGN CURRENCY NOTES")
As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
Payments of Interest in a Foreign Currency. The U.S. dollar value,
determined on date of receipt, of a Foreign Currency payment of interest on a
Note (other than OID or market discount) will be includible in the income of a
cash method U.S. Holder regardless of whether the payment is converted to U.S.
dollars.
The U.S. dollar value of interest income (including OID or market discount
and reduced by amortizable bond premium to the extent applicable) that has
accrued and is otherwise required to be taken into account with respect to a
Note during an accrual period will be includible in income of an accrual basis
U.S. Holder. Such U.S. dollar value will be determined by translating such
income at the average rate of exchange for the accrual period or, with respect
to an accrual period that spans two taxable years, at the average rate for the
partial period within the taxable year. A U.S. Holder may elect, however, to
translate such accrued interest income using the rate of exchange on the last
day of the accrual period or, with respect to an accrual period that spans two
taxable years, using the rate of exchange on the last day of the taxable year.
If the last day of an accrual period is within five business days of the date of
receipt of the accrued interest, a U.S. Holder may translate such interest using
the rate of exchange on the date of receipt. The above election will apply to
other debt obligations held by the U.S. Holder and may not be changed without
the consent of the IRS. A U.S. Holder should consult a tax advisor before making
the above election. A U.S. Holder will recognize exchange gain or loss (which
will be treated as ordinary income or loss) with respect to accrued interest
income on the date such income is received. The amount of ordinary income or
loss recognized will equal the difference, if any, between the U.S. dollar value
of the Foreign Currency payment received (determined on the date such
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payment is received) in respect of such accrual period and the U.S. dollar value
of interest income that has accrued during such accrual period (as determined
above).
Sale and Retirement of Notes. A U.S. Holder's tax basis in a Foreign
Currency Note will be the U.S. dollar value of the Foreign Currency amount paid
for such Foreign Currency Note determined at the time of such purchase. To the
extent the amount realized on sale, exchange or retirement of a Foreign Currency
Note represents accrued but unpaid interest, such amounts must be taken into
account as interest income, with exchange gain or loss computed as described in
"Payments of Interest in a Foreign Currency" above. If a U.S. Holder receives
Foreign Currency on such a sale, exchange or retirement, the amount realized
will be based on the U.S. dollar value of the Foreign Currency on the date the
payment is received or the Note is disposed of (or deemed disposed of as a
result of a material change in the terms of such Note). In the case of a Note
that is denominated in Foreign Currency and is traded on an established
securities market, a cash basis U.S. Holder (or, upon election, an accrual basis
U.S. Holder) will determine the U.S. dollar value of the amount realized by
translating the Foreign Currency payment at the spot rate of exchange on the
settlement date of the sale.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense.
Original Issue Discount. In the case of a Foreign Currency Discount Note,
(i) OID is determined in units of the Foreign Currency, (ii) accrued OID is
translated into U.S. dollars in the same manner as interest income accrued by an
accrual basis U.S. Holder, described in "Payments of Interest in a Foreign
Currency" above, and (iii) the amount of Foreign Currency gain or loss on the
accrued OID is determined by comparing the amount of income received
attributable to the discount (either upon payment, maturity or an earlier
disposition), as translated into U.S. dollars at the rate of exchange on the
date of such receipt, with the amount of OID accrued, as translated above.
Premium and Market Discount. In the case of a Foreign Currency Note with
market discount, (i) market discount is determined in units of the Foreign
Currency, (ii) accrued market discount taken into account upon the receipt of
any partial principal payment or upon the sale, exchange, retirement or other
disposition of the Note is translated into U.S. dollars at the exchange rate on
such disposition date (and no part of such accrued market discount is treated as
exchange gain or loss) and (iii) accrued market discount currently includible in
income by a U.S. Holder for any accrual period is translated into U.S. dollars
on the basis of the average exchange rate in effect during such accrual period,
and the exchange gain or loss is determined upon the receipt of any partial
principal payment or upon the sale, exchange, retirement or other disposition of
the Note in the manner described in "Payments of Interest in a Foreign Currency"
above with respect to computation of exchange gain or loss on accrued interest
by an accrual basis U.S. Holder.
With respect to a Foreign Currency Note acquired with amortizable bond
premium, such premium is determined in the relevant Foreign Currency and reduces
interest income in units of the Foreign Currency. At the time amortized bond
premium offsets interest income, a U.S. Holder may realize ordinary income or
loss, measured by the difference between exchange rates at that time and at the
time of the acquisition of the Notes.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including OID, if any)
on a Note, unless such non-U.S. Holder is a direct or indirect 10% or greater
shareholder of the Company, a controlled foreign corporation for U.S. tax
purposes that is related to the Company (directly or indirectly) through stock
ownership or a bank receiving interest described in section 881(c)(3)(A) of the
Code. To qualify for the exemption from taxation, the last United States payor
in the chain of payment prior to payment to a non-U.S. Holder (the "Withholding
Agent") must have received in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a statement
that (i) is signed by the beneficial owner of the Note under penalties of
perjury, (ii) certifies that such owner is not a U.S. Holder and (iii) provides
the name and address of the beneficial
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owner. The statement may be made on an IRS Form W-8 or a substantially similar
form, and the beneficial owner must inform the Withholding Agent of any change
in the information on the statement within 30 days of such change. If a Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the Withholding Agent. However, in such case, the signed statement must be
accompanied by a copy of the IRS Form W-8 or the substitute form provided by the
beneficial owner to the organization or institution. Treasury Regulations
adopted on October 6, 1997 (the "Final Regulations") provide alternative methods
for satisfying these certification requirements with respect to payments made
after December 31, 1999.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) the U.S. office of a
broker, the broker must withhold 31% of the entire purchase price, unless either
(i) the broker determines that the seller is a corporation or other exempt
recipient or (ii) the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are met). Such a
sale must also be reported by the U.S. broker (and by a broker who is a
controlled foreign corporation for U.S. tax purposes, or a foreign person 50% or
more of whose gross income from all sources for the three-year period ending
with the close of its taxable year preceding the payment was effectively
connected with a U.S. trade or business) to the IRS, unless either (i) the
broker determines that the seller is an exempt recipient or (ii) the seller
certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status normally would be made
on an IRS Form W-8 under penalties of perjury, although in certain cases it may
be possible to submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
The Final Regulations unify current certification procedures and forms
relating to information reporting and backup withholding with respect to
payments made after December 31, 1999.
Prospective purchasers of the Notes should consult their own tax advisors
as to the application of information reporting and backup withholding in their
particular situations and to the effect, if any, of the Final Regulations on
their purchase, ownership and disposition of the Notes.
S-24
<PAGE> 25
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Distribution
Agreement, the Notes are being offered on a continuing basis for sale by the
Company through Morgan Stanley & Co. Incorporated, First Chicago Capital
Markets, Inc., Banc One Capital Markets, Inc., Bear, Stearns & Co. Inc., Chase
Securities Inc., Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
J.P. Morgan Securities Inc., Lehman Brothers Inc., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. (each
of them, an "Agent" and, collectively, the "Agents"), each of which has agreed
to use its reasonable efforts to solicit purchasers of the Notes.
The Notes will be sold to the public at 100% of their principal amount
unless otherwise indicated in the applicable Pricing Supplement. If the Company
sells a Note at a discount or premium over its principal amount, the price to
the public will be set forth in the applicable Pricing Supplement. Unless
otherwise agreed, the Company will pay each Agent a commission which, depending
on the maturity of the Notes, will range from .125% to .750% of the principal
amount of any Note sold through such Agent. and the Company will receive from
99.875% to 99.250% of the principal amount of each Note before deducting
expenses of approximately $600,000.
The Company may also sell Notes to an Agent, as principal, at a discount
from the principal amount thereof, and the Agent may later resell such Notes to
investors and other purchasers at a fixed public offering price or at varying
prices related to prevailing market prices at the time of resale as determined
by such Agent. The Notes may also be sold by the Company directly to investors
in those jurisdictions in which it is permitted to do so and to or through such
other agents as the Company shall designate from time to time. No commission
will be payable on Notes sold directly to investors by the Company. The Agents
may sell to or through dealers who may resell to investors, and the Agents may
pay all or part of their discount or commission to such dealers, such dealers
may be deemed "underwriters" within the meaning of the Act. After the initial
public offering of Notes that are to be issued on a fixed public offering basis,
the public offering price, concession and discount may be changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part whether placed
directly with the Company or through one of the Agents. Each Agent will have the
right, in its discretion reasonably exercised, to reject any offer to purchase
Notes solicited by it, in whole or in part.
Unless set forth in the Pricing Supplement, payment of the purchase price
of the Notes will be required to be made in immediately available funds in New
York City on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market but it is not obligated to
do so, and there can be no assurance that there will be a secondary market for
the Notes or liquidity in the secondary market if one develops. From time to
time, each of the Agents may make a market in the Notes, but it is not obligated
to do so and may discontinue market-making at any time without notice.
The Company has agreed to indemnify each of the Agents against, or to make
contributions relating to, certain liabilities, including liabilities under such
Act. The Company has agreed to reimburse each of the Agents for certain
expenses. Each of the Agents may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
In connection with the offering, the Agents may purchase and sell the Notes
in the open market. These transactions may include overallotment and stabilizing
transactions and purchases to cover short positions created by the Agents in
connection with the offering. Stabilizing transactions consist of certain kinds
of purchases for the purpose of preventing or retarding a decline in the price
of the Notes; and short positions created by the Agents involve the sale by the
Agents of a greater aggregate principal amount of Notes than they are required
to purchase from the Company in the offering. The Agents also may impose a
penalty bid, whereby selling concessions allowed to broker-dealers in respect of
the securities sold in the offering may be reclaimed by the Agents if such Notes
are repurchased by the Agents in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Notes, which may be
S-25
<PAGE> 26
higher than the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected in the over-the-counter market or otherwise.
Two of the Agents, Banc One Capital Markets, Inc. ("BOCM") and First
Chicago Capital Markets, Inc. ("FCCM"), are affiliates of the Company. The
participation of BOCM and FCCM in the offer and sale of the Notes as described
herein complies and will comply with Rule 2720 of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD") regarding the
offer and sale of securities of an affiliate. No NASD member participating in
offers and sales of securities will execute a transaction in the Notes in a
discretionary account without the prior specific written approval of the
member's customer. Any obligations of BOCM or FCCM are the sole obligations of
BOCM or FCCM, as the case may be, and do not create any obligations on the part
of the Company or any other affiliate of BOCM or FCCM.
This Prospectus Supplement and Prospectus may be used by BOCM and FCCM in
connection with offers and sales related to secondary market transactions in the
Notes. BOCM and FCCM 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.
Certain of the Agents and/or their affiliates engage from time to time in
various general financing and banking transactions with the Company and its
affiliates. The Chase Manhattan Bank, the Trustee under the Indentures, is an
affiliate of Chase Securities Inc., one of the Agents.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by Sherman I.
Goldberg, Esq., General Counsel and Secretary of the Company, and for the Agents
by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New
York 10019. Cravath, Swaine & Moore has represented and continues to represent
the Company from time to time in other matters.
As of October 2, 1998, Sherman I. Goldberg was the record and beneficial
owner of 407,653 shares of common stock of the Company and held options to
purchase 217,417 shares of common stock of the Company.
S-26
<PAGE> 27
PROSPECTUS
[BANK ONE LOGO]
BANK ONE CORPORATION
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670
(312) 732-4000
$2,850,000,000
DEBT SECURITIES AND DEBT WARRANTS
CURRENCY WARRANTS, STOCK-INDEX WARRANTS AND OTHER WARRANTS
PREFERRED STOCK, DEPOSITARY SHARES AND PREFERRED STOCK WARRANTS
COMMON STOCK AND COMMON STOCK WARRANTS
From time to time, we may sell any of the following securities:
- DEBT SECURITIES which may be
-- senior or subordinated in priority of payment
-- convertible or exchangeable into other of our securities or the
securities of another issuer
- DEBT WARRANTS which would allow a buyer to purchase our debt securities
- CURRENCY WARRANTS which would allow a buyer to receive a cash payment
based on the difference in value between two currencies or currency units
- STOCK-INDEX WARRANTS which would allow a buyer to receive a cash payment
based on an increase or decrease in the level of a stock index
- OTHER WARRANTS which would allow a buyer to purchase government
securities, commodities or some other item or to receive a cash payment
based upon the increase or decrease of some index other than a stock
index
- PREFERRED STOCK which may be convertible into our common stock or
exchangeable for our debt securities
- DEPOSITARY SHARES which represent a fractional share of our preferred
stock
- PREFERRED STOCK WARRANTS which would allow a buyer to purchase our
preferred stock
- COMMON STOCK
- COMMON STOCK WARRANTS which would allow a buyer to purchase our common
stock
When we decide to sell a particular series of securities, we will prepare a
Prospectus Supplement describing such securities offering and the particular
terms of the securities. You should read this Prospectus and any Prospectus
Supplement carefully.
Our common stock is listed on the New York Stock Exchange under the trading
symbol "ONE".
One or more of our subsidiaries may buy and sell any of the securities
after the securities are issued as part of their business as a broker-dealer.
Those subsidiaries may use this Prospectus and the related Prospectus Supplement
in such transactions. Any such sale will be made at the prevailing market price
at the time of sale.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE NOT
SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK
SUBSIDIARY OF BANK ONE CORPORATION, AND THEY ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY.
------------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998.
<PAGE> 28
ABOUT THIS PROSPECTUS
This Prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission (the "Commission") utilizing a "shelf"
registration process. Under this shelf process, we may, from time to time over
approximately the next two years, sell any combination of the securities
described in this Prospectus in one or more offerings up to a total dollar
amount of $2,850,000,000 or the equivalent of this amount in foreign currencies
or foreign currency units.
This Prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a Prospectus
Supplement that will contain specific information about the terms of that
offering. The Prospectus Supplement may also add, update or change information
contained in this Prospectus. You should read both this Prospectus and any
Prospectus Supplement together with additional information described under the
heading "Where You Can Find More Information" beginning on page 2 of this
Prospectus.
You should rely only on the information provided in this Prospectus and in
any Prospectus Supplement including the information incorporated by reference.
We have not authorized anyone to provide you with different information. We are
not offering the securities in any state where the offer is not permitted. You
should not assume that the information in this Prospectus, or any supplement to
this Prospectus, is accurate at any date other than the date indicated on the
cover page of these documents.
WHERE YOU CAN FIND MORE INFORMATION
The Company has filed with the Commission a Registration Statement under
the Securities Act that registers the distribution of the securities (the
"Registration Statement"). The Registration Statement, including the attached
exhibits and schedules, contains additional relevant information about the
Company and the Company's securities. The rules and regulations of the
Commission allow us to omit certain information included in the Registration
Statement from this Prospectus.
In addition, we file reports, proxy statements and other information with
the Commission under the Exchange Act. Our predecessor corporations, BANC ONE
CORPORATION ("BANC ONE") and First Chicago NBD Corporation ("FCN"), filed
similar information with the Commission under the Exchange Act. You may read and
copy this information at the following locations of the SEC.
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. You may obtain information on the
operation of the Public Reference Room by calling the Commission at 1-800-SEC-
0330.
The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like the Company,
who file electronically with the Commission. The address of that site is
http://www.sec.gov.
You can also inspect reports, proxy statements and other information about
the Company, BANC ONE and FCN at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York, and the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois.
The Commission allows us to "incorporate by reference" information into
this Prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the Commission. The
information incorporated by reference is considered to be a part of this
Prospectus, except for any information that is superseded by information that is
included directly in this document.
2
<PAGE> 29
This Prospectus incorporates by reference the documents listed below that
the Company, BANC ONE and FCN have previously filed with the Commission. They
contain important information about us and our predecessors.
<TABLE>
<CAPTION>
COMPANY SEC FILINGS PERIOD
------------------- ------
<S> <C>
Current Reports of Form 8-K................................ Dated:
- October 2, 1998
- October 6, 1998, as amended by the Form 8K/A
filed October 16, 1998
- October 22, 1998
Registration Statement on Form S-4 (Registration No. Filed:
333-60313)............................................... - July 31, 1998
The description of the Company Common Stock set forth in Dated:
our Current Report on Form 8-K........................... - October 2, 1998
</TABLE>
<TABLE>
<CAPTION>
BANC ONE SEC FILINGS PERIOD
-------------------- ------
<S> <C>
Annual Report on Form 10-K................................. Year ended December 31, 1997
Quarterly Reports on Form 10-Q............................. Quarters ended March 31, 1998 and
June 30, 1998
Current Reports on Form 8-K................................ Dated:
- January 26, 1998
- April 14, 1998, as amended by the Form 8-K/A
filed April 21, 1998, as amended by the Form
8-K/A filed May 19, 1998, as amended by the
Form 8-K/A filed August 17, 1998
- April 22, 1998
- July 21, 1998
- July 22, 1998
- July 24, 1998, as amended by a Form 8-K/A
filed August 11, 1998
- July 24, 1998
- August 28, 1998
- September 11, 1998
- September 17, 1998
</TABLE>
<TABLE>
<CAPTION>
FCN SEC FILINGS PERIOD
--------------- ------
<S> <C>
Annual Report on Form 10-K................................. Year ended December 31, 1997
Quarterly Reports on Form 10-Q............................. Quarters ended March 31, 1998 and
June 30, 1998
Current Reports on Form 8-K................................ Dated:
- January 16, 1998
- February 17, 1998
- April 10, 1998
- April 13, 1998
- April 21, 1998
- May 19, 1998
- July 13, 1998
- August 17, 1998
- September 11, 1998
- September 15, 1998
</TABLE>
3
<PAGE> 30
The Company incorporates by reference additional documents that it may file
with the Commission between the date of this Prospectus and the termination of
the offering of the securities. These documents include periodic reports, such
as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document through us, or from the Commission through the Commission's web site at
the address described above. Documents incorporated by reference are available
from us without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit in this
Prospectus. You can obtain documents incorporated by reference in this
Prospectus by requesting them in writing or by telephone from us at the
following addresses:
Investor Relations
BANK ONE CORPORATION
One First National Plaza
Mail Suite 0460
Chicago, Illinois 60670
Telephone (312) 732-4812
If you request any incorporated documents from us, we will mail them to you
by first class mail, or another equally prompt means, within one business day
after we receive your request.
FORWARD-LOOKING STATEMENTS
This Prospectus (including information included or incorporated by
reference herein) contains certain forward-looking statements with respect to
the financial condition, results of operations, plans, objectives, future
performance and business of the Company and its predecessors, BANC ONE and FCN,
as well as certain information relating to the merger of BANC ONE and FCN to
form the Company, including, without limitation, statements relating to the cost
savings, revenue enhancement and restructuring charges estimated to result from
the merger and statements preceded by, followed by or that included the words
"believes," "expects," "anticipates," "estimates" or similar expressions. These
forward-looking statements involve certain risks and uncertainties. Actual
results may differ materially from those contemplated by such forward-looking
statements due to, among others, the following factors: (a) expected cost
savings and revenue enhancements from the merger may not be fully realized or
realized within the expected time frame; (b) revenues following the merger may
be lower than expected, or deposit attrition, operating costs or customer loss
and business disruption following the merger may be greater than expected; (c)
competitive pressures among depository and other financial institutions may
increase significantly; (d) costs or difficulties related to the integration of
the business of BANC ONE and FCN may be greater than expected; (e) changes in
the interest rate environment may reduce margins; (f) general economic or
business conditions, either nationally or in the states in which the Company is
doing business, may be less favorable than expected resulting in, among other
things, a deterioration in credit quality or a reduced demand for credit; (g)
legislative or regulatory changes may adversely affect the business in which the
Company is engaged; (h) technological changes (including the costs of
remediating or failing to remediate "Year 2000" and "Euro" data systems
compliance issues, including those of the Company and those of other persons by
whom the Company's business may be affected) may be more difficult or expensive
than anticipated; and (i) changes may occur in the securities and capital
markets.
4
<PAGE> 31
BANK ONE CORPORATION
BANK ONE CORPORATION (the "Company") is a multi-bank holding company
organized in 1998 under the laws of the State of Delaware to effect the merger,
effective October 2, 1998 (the "Merger"), of First Chicago NBD Corporation
("FCN") with BANC ONE CORPORATION ("BANC ONE").
Through its bank subsidiaries, the Company provides domestic retail
banking, worldwide corporate and institutional banking, and trust and investment
management services. At October 2, 1998, the Company operated banking offices in
Arizona, Colorado, Florida, Illinois, Indiana, Kentucky, Louisiana, Michigan,
Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin. The Company also owns
nonbank subsidiaries that engage in businesses related to banking and finance,
including credit card and merchant processing, consumer and education finance,
mortgage lending and servicing, insurance, venture capital, investment and
merchant banking, trust, brokerage, investment management, leasing, community
development and data processing.
The Company is a legal entity separate and distinct from its affiliate
banks and its nonbank subsidiaries (collectively, the "affiliates").
Accordingly, the right of the Company, and thus the right of the Company's
creditors and shareholders, to participate in any distribution of the assets or
earnings of any affiliate is necessarily subject to the prior claims of
creditors of the affiliate except to the extent that claims of the Company in
its capacity as a creditor may be recognized. The principal sources of the
Company's revenues are dividends, interest on loans and fees from its
affiliates.
The Company's executive offices are located at One First National Plaza,
Chicago, Illinois 60670, and the telephone number is (312) 732-4000.
RATIO OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges for the Company, which are computed
on the basis of the total enterprise (as defined by the Commission) by dividing
earnings before fixed charges and income taxes by fixed charges, are set forth
below for the periods indicated. Also set forth below are the ratios of earnings
to combined fixed charges and preferred stock dividends, which are computed on
the basis of the total enterprise by dividing earnings before fixed charges and
income taxes by fixed charges and preferred stock dividend requirements for the
periods indicated. Fixed charges consist principally of interest expense on all
long- and short-term borrowings, excluding or including interest on deposits as
indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------- ----------
1997 1996 1995 1994 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding interest expense on deposits............. 2.4 2.6 2.2 2.6 2.6
Including interest expense on deposits............. 1.5 1.6 1.5 1.6 1.6
Earnings to Combined Fixed Charges and Preferred
Dividends:
Excluding interest expense on deposits............. 2.3 2.5 2.1 2.5 2.6
Including interest expense on deposits............. 1.5 1.6 1.5 1.6 1.6
</TABLE>
USE OF PROCEEDS
The Company currently intends to use the net proceeds from the sale of any
Securities for general corporate purposes, which may include the reduction of
its short-term indebtedness, investments at the holding company level,
investments in or extensions of credit to its affiliates and other banks and
companies engaged in other financial service activities, possible acquisitions
and such other purposes as may be stated in any Prospectus Supplement. Pending
such use, the Company may temporarily invest the net proceeds. The precise
amounts and timing of the application of proceeds will depend upon the funding
requirements of the Company and its affiliates and the availability of other
funds. Except as may be described in any Prospectus Supplement, specific
allocations of the proceeds to such purposes will not have been made at the date
of such Prospectus Supplement. Based upon the historical and anticipated future
growth of the Company and the
5
<PAGE> 32
financial needs of its affiliates, the Company anticipates that it will, on a
recurrent basis, engage in additional financings of a character and amount to be
determined as the need arises.
REGULATORY MATTERS
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to bank holding companies and their subsidiaries
and provides certain specific information relevant to the Company. This
regulatory framework is intended primarily for the protection of depositors and
the federal deposit insurance funds and not for the protection of security
holders. To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by reference to those
provisions. A change in the statutes, regulations or regulatory policies
applicable to the Company or its subsidiaries may have a material effect on the
business of the Company.
GENERAL
As a bank holding company, the Company is subject to regulation under the
Bank Holding Company Act of 1956, as amended (the BHCA), and to inspection,
examination and supervision by the Board of Governors of the Federal Reserve
System (the "Federal Reserve"). Under the BHCA, bank holding companies generally
may not acquire the ownership or control of more than 5% of the voting shares or
substantially all the assets of any company, including a bank, without the
Federal Reserve's prior approval. In addition, bank holding companies generally
may engage, directly or indirectly, only in banking and such other activities as
are determined by the Federal Reserve to be closely related to banking.
Various governmental requirements, including Sections 23A and 23B of the
Federal Reserve Act, as amended, limit borrowings by the Company and its nonbank
subsidiaries from the Company's affiliate banks. These requirements also limit
various other transactions between the Company and its nonbank subsidiaries, on
the one hand, and the Company's affiliate banks, on the other. For example,
Section 23A limits to no more than 10% of its total capital the aggregate
outstanding amount of any bank's loans and other "covered transactions" with any
particular nonbank affiliate, and limits to no more than 20% of its total
capital the aggregate outstanding amount of any bank's covered transactions with
all of its nonbank affiliates. Section 23A also generally requires that a bank's
loans to its nonbank affiliates be secured, and Section 23B generally requires
that a bank's transactions with its nonbank affiliates be on arms' length terms.
Most of the Company's affiliate banks (the "Banks") are national banking
associations and, as such, are subject to regulation primarily by the Office of
the Comptroller of the Currency ("OCC") and, secondarily, by the Federal Deposit
Insurance Corporation ("FDIC") and the Federal Reserve. The Company's
state-chartered banks also are subject to regulation by the FDIC and the Federal
Reserve and, in addition, by their respective state banking departments. The
Company and its subsidiaries also are affected by the fiscal and monetary
policies of the federal government and the Federal Reserve, and by various other
governmental requirements and regulations.
LIABILITY FOR BANK SUBSIDIARIES
The Federal Reserve has a policy to the effect that a bank holding company
is expected to act as a source of financial and managerial strength to each of
its subsidiary banks and to maintain resources adequate to support each such
subsidiary bank. This support may be required at times when the Company may not
have the resources to provide it. In addition, Section 55 of the National Bank
Act, as amended, permits the OCC to order the pro rata assessment of
shareholders of a national bank whose capital has become impaired. If a
shareholder fails within three months to pay such an assessment, the OCC can
order the sale of the shareholder's stock to cover the deficiency. In the event
of a bank holding company's bankruptcy, any commitment by the bank holding
company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank would be assumed by the bankruptcy trustee and entitled to
priority of payment.
Any depository institution insured by the FDIC can be held liable for any
loss incurred, or reasonably expected to be incurred, by the FDIC in connection
with (i) the default of a commonly controlled
6
<PAGE> 33
FDIC-insured depository institution or (ii) any assistance provided by the FDIC
to a commonly controlled FDIC-insured depository institution in danger of
default. "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a "default" is likely to occur in the absence
of regulatory assistance. All of the Company's subsidiary banks are FDIC-insured
institutions. Also, in the event that such a default occurred with respect to a
bank, any capital loans to the bank from its parent holding company would be
subordinate in right of payment to payment of the bank's depositors and certain
of its other obligations.
CAPITAL REQUIREMENTS
The Company is subject to capital requirements and guidelines imposed by
the Federal Reserve, which are substantially similar to the capital requirements
and guidelines imposed by the Federal Reserve, the OCC and the FDIC on the
depository institutions within their respective jurisdictions. For this purpose,
a depository institution's or holding company's assets and certain specified
off-balance sheet commitments are assigned to four risk categories, each
weighted differently based on the level of credit risk that is ascribed to such
assets or commitments. In addition, risk weighted assets are adjusted for
low-level recourse and market risk equivalent assets. A depository
institutions's or holding company's capital, in turn, is divided into three
tiers: core ("Tier 1") capital, which includes common equity, non-cumulative
perpetual preferred stock and a limited amount of cumulative perpetual preferred
stock and related surplus (excluding auction rate issues), and minority
interests in equity accounts of consolidated subsidiaries, less goodwill,
certain identifiable intangible assets and certain other assets; and
supplementary ("Tier 2") capital, which includes, among other items, perpetual
preferred stock not meeting the Tier 1 definition, mandatory convertible
securities, subordinated debt and allowances for loan and lease losses, subject
to certain limitations, less certain required deductions; and market risk ("Tier
3") capital, which includes qualifying unsecured subordinated debt.
The Company, like other bank holding companies, currently is required to
maintain Tier 1 and total capital (the sum of Tier 1, Tier 2 and Tier 3 capital)
equal to at least 4% and 8% of its total risk-weighted assets, respectively. At
June 30, 1998, the Company met both requirements, with Tier 1 and total capital
equal to 8.3% and 12.3% of its total risk-weighted assets, respectively.
The Federal Reserve, the FDIC and the OCC have adopted rules to incorporate
market and interest rate risk components into their risk-based capital
standards. Amendments to the risk-based capital requirements, incorporating
market risk, became effective January 1, 1998. Under the new market risk
requirements, capital will be allocated to support the amount of market risk
related to a financial institution's ongoing trading activities.
The Federal Reserve also requires bank holding companies to maintain a
minimum "leverage ratio" (Tier 1 capital to adjusted total assets) of 3%, if the
holding company has the highest regulatory rating or has implemented the
risk-based capital measures for market risk, or 4% if the holding company does
not meet these requirements. At June 30, 1998, the Company's leverage ratio was
8.0%.
The Federal Reserve may set capital requirements higher than the minimums
noted above for holding companies whose circumstances warrant it. For example,
holding companies experiencing or anticipating significant growth may be
expected to maintain capital ratios including tangible capital positions well
above the minimum levels. The Federal Reserve has not, however, imposed any such
special capital requirement on the Company.
Each of the Banks is subject to similar risk-based and leverage capital
requirements adopted by its applicable federal banking agency. Each of the
Company's Banks was in compliance with the applicable minimum capital
requirements as of June 30, 1998.
Failure to meet capital requirements could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business, which are described below.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), among other things, identifies five capital categories for insured
depository institutions (well capitalized, adequately
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capitalized, undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires the respective Federal regulatory agencies to
implement systems for "prompt corrective action" for insured depository
institutions that do not meet minimum capital requirements within such
categories. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions, depending on the category in
which an institution is classified. Failure to meet the capital guidelines could
also subject a depository institution to capital raising requirements. An
"undercapitalized" depository institution must develop a capital restoration
plan and its parent holding company must guarantee that bank's compliance with
the plan. The liability of the parent holding company under any such guarantee
is limited to the lesser of 5% of the depository institution's assets at the
time it became "undercapitalized" or the amount needed to comply with the plan.
Furthermore, in the event of the bankruptcy of the parent holding company, such
guarantee would take priority over the parent's general unsecured creditors. In
addition, FDICIA requires the various regulatory agencies to prescribe certain
non-capital standards for safety and soundness relating generally to operations
and management, asset quality and executive compensation and permits regulatory
action against a financial institution that does not meet such standards.
As of December 31, 1997, each Bank was "well capitalized," based on the
"prompt corrective action" ratios and guidelines described above. It should be
noted, however, that a Bank's capital category is determined solely for the
purpose of applying the OCC's (or the FDIC's) "prompt corrective action"
regulations and that the capital category may not constitute an accurate
representation of the Bank's overall financial condition or prospects.
DIVIDEND RESTRICTIONS
Various federal and state statutory provisions limit the amount of
dividends the Company's affiliate banks can pay to the Company without
regulatory approval. Dividend payments by national banks are limited to the
lesser of (i) the level of undivided profits and (ii) absent regulatory
approval, an amount not in excess of net income for the current year combined
with retained net income for the preceding two years. Likewise, the approval of
the appropriate bank regulator is required for any dividend by a state-chartered
bank that is a member of the Federal Reserve System (a "state member bank") if
the total of all dividends declared by the bank in any calendar year would
exceed the total of its net profits, as defined by regulatory agencies, for such
year combined with its retained net profits for the preceding two years. In
addition, a state member bank may not pay a dividend in an amount greater than
its net profits then on hand. At June 30, 1998, $2.0 billion of the total
stockholders' equity of the affiliate banks was available for payment of
dividends to the Company without approval by the applicable regulatory
authority.
In addition, federal bank regulatory authorities have authority to prohibit
the Company's affiliate banks from engaging in an unsafe or unsound practice in
conducting their business. The payment of dividends, depending upon the
financial condition of the bank in question, could be deemed to constitute such
an unsafe or unsound practice. The ability of the Company's affiliate banks to
pay dividends in the future is currently, and could be further, influenced by
bank regulatory policies and capital guidelines.
DEPOSIT INSURANCE ASSESSMENTS
The deposits of each of the Company's affiliate banks are insured up to
regulatory limits by the FDIC and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund ("BIF") and Savings Association
Insurance Fund ("SAIF") administered by the FDIC. The FDIC has adopted
regulations establishing a permanent risk-related deposit insurance assessment
system. Under this system, the FDIC places each insured bank in one of nine risk
categories based on (a) the bank's capitalization and (b) supervisory
evaluations provided to the FDIC by the institution's primary federal regulator.
Each insured bank's insurance assessment rate is then determined by the risk
category in which it is classified by the FDIC.
Effective January 1, 1997, the annual insurance premiums on bank deposits
insured by the BIF and SAIF vary between $0.00 per $100 of deposits for banks
classified in the highest capital and supervisory evaluation categories to $0.27
per $100 of deposits for banks classified in the lowest capital and supervisory
evaluation categories.
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The Deposit Insurance Funds Act of 1996 provides for assessments to be
imposed on insured depository institutions with respect to deposits insured by
the BIF and the SAIF (in addition to assessments currently imposed on depository
institutions with respect to BIF- and SAIF-insured deposits) to pay for the cost
of Financing Corporation ("FICO") funding. The FDIC established the FICO
assessment rates effective January 1, 1997 at $0.013 per $100 annually for
BIF-assessable deposits and $0.0648 per $100 annually for SAIF-assessable
deposits. The Company's affiliate banks held approximately $10.4 billion of
SAIF-assessable deposits as of June 30, 1998. The FICO assessments do not vary
depending upon a depository institution's capitalization or supervisory
evaluations.
DEPOSITOR PREFERENCE STATUTE
Federal legislation has been enacted providing that deposits and certain
claims for administrative expenses and employee compensation against an insured
depository institution would be afforded a priority over other general unsecured
claims against such institution, including federal funds and letters of credit,
in the "liquidation or other resolution" of the institution by any receiver.
BROKERED DEPOSITS
Under FDIC regulations, no FDIC-insured depository institution can accept
brokered deposits unless it (a) is well capitalized, or (b) is adequately
capitalized and receives a waiver from the FDIC. In addition, these regulations
prohibit any depository institution that is not well capitalized from (i) paying
an interest rate on deposits in excess of 75 basis points over certain
prevailing market rates or (ii) offering "pass through" deposit insurance on
certain employee benefit plan accounts unless it provides certain notice to
affected depositors.
INTERSTATE BANKING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994 ("Riegle-Neal"), subject to certain concentration limits and other
requirements, (a) bank holding companies such as the Company are permitted, to
acquire banks and bank holding companies located in any state; (b) any bank that
is a subsidiary of a bank holding company is permitted to receive deposits,
renew time deposits, close loans, service loans and receive loan payments as an
agent for any other bank subsidiary of that holding company; and (c) banks are
permitted to acquire branch offices outside their home states by merging with
out-of-state banks, purchasing branches in other states, and establishing de
novo branch offices in other states; provided that, in the case of any such
purchase or opening of individual branches, the host state has adopted
legislation "opting in" to those provisions of Riegle-Neal; and provided that,
in the case of a merger with a bank located in another state, the host state has
not adopted legislation "opting out" of that provision of Riegle-Neal. The
Company might use Riegle-Neal to acquire banks in additional states and to
consolidate its affiliate banks under a smaller number of separate charters.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The debt securities will be unsecured (the "Debt Securities") and may be
issued in one or more series. Such Debt Securities may be either senior (the
"Senior Securities") or subordinated (the "Subordinated Securities") in priority
of payment. The Senior Securities will be issued under an Indenture dated as of
March 3, 1997, originally between BANC ONE and The Chase Manhattan Bank
("Chase"), as trustee, which was supplemented by a First Supplemental Indenture
dated as of October 2, 1998, between the Company and Chase, as trustee (as so
supplemented, the "Senior Indenture"). The Subordinated Securities will be
issued under an Indenture dated as of March 3, 1997, originally between BANC ONE
and Chase, as trustee, which was supplemented by a First Supplemental Indenture
dated as of October 2, 1998, between the Company and Chase, as trustee (as so
supplemented the "Subordinated Indenture"). The Senior Indenture and the
Subordinated Indenture are collectively referred to herein as the "Indentures".
References to the "Trustee" shall mean Chase in its capacity as trustee under
the Senior Indenture or the Subordinated Indenture, as applicable. The
statements under this caption are brief summaries of certain provisions
contained in the Indentures, do not purport to be complete and are qualified in
their entirety by reference to the applicable Indenture, copies of which are
exhibits to the Registration Statement. Whenever defined terms are used but not
defined in this Prospectus, such terms shall have the meanings given to them in
the applicable Indenture.
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions may apply to such Debt
Securities will be described in the Prospectus Supplement relating to such Debt
Securities.
Neither of the Indentures limits the aggregate principal amount of Debt
Securities which may be issued under it. Rather, each Indenture provides that
Debt Securities of any series may be issued under it up to the aggregate
principal amount which may be authorized from time to time by the Company and
may be denominated in any currency or currency unit designated by the Company.
Neither the Indentures nor the Debt Securities will limit or otherwise restrict
the amount of other indebtedness which may be incurred or the other securities
which may be issued by the Company or any of its subsidiaries.
Debt Securities of a series may be issuable in registered form without
coupons ("Registered Securities"), in bearer form with or without coupons
attached ("Bearer Securities") or in the form of one or more global securities
in registered or bearer form (each a "Global Security"). Bearer Securities, if
any, will be offered only to non-United States persons and to offices located
outside the United States of certain United States financial institutions.
Reference is made to the Prospectus Supplement for a description of the
following terms, where applicable, of each series of Debt Securities in respect
of which this Prospectus is being delivered:
- the title of such Debt Securities;
- the limit, if any, on the aggregate principal amount or aggregate
initial public offering price of such Debt Securities;
- the priority of payment of such Debt Securities;
- the price or prices (which may be expressed as a percentage of the
aggregate principal amount thereof) at which the Debt Securities will be
issued;
- the date or dates on which the principal of the Debt Securities will
be payable;
- the rate or rates (which may be fixed or variable) per annum at
which such Debt Securities will bear interest, if any, or the method of
determining the same;
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- the date or dates from which such interest, if any, on the Debt
Securities will accrue, the date or dates on which such interest, if any,
will be payable, the date or dates on which payment of such interest, if
any, will commence and the Regular Record Dates for such Interest Payment
Dates;
- the extent to which any of the Debt Securities will be issuable in
temporary or permanent global form, or the manner in which any interest
payable on a temporary or permanent global Debt Security will be paid;
- each office or agency where, subject to the terms of the applicable
Indenture, the Debt Securities may be presented for registration of
transfer or exchange;
- the place or places where the principal of (and premium, if any) and
interest, if any, on the Debt Securities will be payable;
- the date or dates, if any, after which such Debt Securities may be
redeemed or purchased in whole or in part, at the option of the Company or
mandatorily pursuant to any sinking, purchase or analogous fund or may be
required to be purchased or redeemed at the option of the holder, and the
redemption or repayment price or prices thereof;
- the terms, if any, upon which the Debt Securities may be convertible
into or exchanged for securities or indebtedness of any kind of the Company
or of any other issuer or obligor and the terms and conditions upon which
such conversion or exchange shall be effected, including the initial
conversion or exchange price or rate, the conversion period and any other
additional provisions;
- the denomination or denominations in which such Debt Securities are
authorized to be issued;
- the currency, currencies or units based on or related to currencies
for which the Debt Securities may be purchased and the currency, currencies
or currency units in which the principal of, premium, if any, and any
interest on such Debt Securities may be payable;
- any index used to determine the amount of payments of principal of,
premium, if any, and interest on the Debt Securities;
- whether any of the Debt Securities are to be issuable as Bearer
Securities and/or Registered Securities, and if issuable as Bearer
Securities, any limitations on issuance of such Bearer Securities and any
provisions regarding the transfer or exchange of such Bearer Securities
(including exchange for registered Debt Securities of the same series);
- the payment of any additional amounts with respect to the Debt
Securities;
- whether any of the Debt Securities will be issued as Original Issue
Discount Securities (as defined below);
- information with respect to book-entry procedures, if any;
- any additional covenants or Events of Default not currently set
forth in the applicable Indenture; and
- any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
If any of the Debt Securities are sold for one or more foreign currencies
or foreign currency units or if the principal of, premium, if any, or interest
on any series of Debt Securities is payable in one or more foreign currencies or
foreign currency units, the restrictions, elections, tax consequences, specific
terms and other information with respect to such issue of Debt Securities and
such currencies or currency units will be set forth in the applicable Prospectus
Supplement. A judgment for money damages by courts in the United States,
including a money judgment based on an obligation expressed in a foreign
currency, will ordinarily be rendered only in U.S. dollars. New York statutory
law provides that a court shall render a judgment or decree in the foreign
currency of the underlying obligation and that the judgment or decree shall be
converted into U.S. dollars at the exchange rate prevailing on the date of entry
of the judgment or decree.
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Debt Securities may be issued as original issue discount Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) ("Original Issue Discount Securities"), to be sold at a
substantial discount below the stated principal amount thereof due at the stated
maturity of such Debt Securities. There may not be any periodic payments of
interest on Original Issue Discount Securities. In the event of an acceleration
of the maturity of any Original Issue Discount Security, the amount payable to
the holder of such Original Issue Discount Security upon such acceleration will
be determined in accordance with the Prospectus Supplement, the terms of such
security and the Indenture, but will be an amount less than the amount payable
at the maturity of the principal of such Original Issue Discount Security.
Federal income tax considerations with respect to Original Issue Discount
Securities will be set forth in the Prospectus Supplement relating thereto.
REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued only as Registered Securities. If Bearer Securities
are issued, the United States Federal income tax consequences and other special
considerations, procedures and limitations relating to such Bearer Securities
will be described in the applicable Prospectus Supplement.
Debt Securities issued as Registered Securities will be without interest
coupons. Debt Securities issued as Bearer Securities shall have interest coupons
attached, unless issued as zero coupon securities.
Registered Securities (other than a Global Security) may be presented for
transfer (with the form of transfer endorsed thereon duly executed) or exchanged
for other Debt Securities of the same series at the office of the Note Registrar
specified according to the terms of the applicable Indenture. The Company has
agreed in each of the Indentures that, with respect to Registered Securities
having The City of New York as a place of payment, the Company will appoint a
Note Registrar or Co-Note Registrar located in The City of New York for such
transfer or exchange. Such transfer or exchange shall be made without service
charge, but the Company may require payment of any taxes or other governmental
charges as described in the applicable Indenture. Provisions relating to the
exchange of Bearer Securities for other Debt Securities of the same series
(including, if applicable, Registered Securities) will be described in the
applicable Prospectus Supplement. In no event, however, will Registered
Securities be exchangeable for Bearer Securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities. Each Global Security will be deposited
with, or on behalf of, a depositary (the "Depositary") identified in the
applicable Prospectus Supplement. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for the individual Debt Securities
which it represents, a Global Security may not be transferred except as a whole
by the Depositary for such Global Security to a nominee of such Depositary or by
a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities and certain limitations and restrictions relating to a series
of Bearer Securities in the form of one or more Global Securities will be
described in the applicable Prospectus Supplement. The Company anticipates that
the following provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and transfer
system, the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary. The underwriters or agents for such Debt
Securities will designate such accounts. Ownership of beneficial interests in a
Global Security will be limited to persons that have accounts with the
applicable Depositary ("participants") or persons that may hold interests
through participants. Ownership of beneficial interests in such Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the applicable Depositary or its nominee (with
respect to interests of
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participants) and the records of participants (with respect to interests of
persons other than participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities.
Payments of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. Neither the Company, the Trustee for such
Debt Securities, any Paying Agent, nor the Note Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Subject to certain restrictions relating to Bearer Securities, the Company
expects that the Depositary for a series of Debt Securities or its nominee, upon
receipt of any payment of principal, premium or interest in respect of a
permanent Global Security representing any of such Debt Securities will credit
participants' accounts immediately with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security for such Debt Securities as shown on the records of such Depositary or
its nominee. The Company also expects that payments by participants to owners of
beneficial interests in such Global Security held through such participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name". Such payments will be the responsibility of such participants.
With respect to owners of beneficial interests in a temporary Global Security
representing Bearer Securities, receipt by such beneficial owners of payments of
principal, premium or interest in respect thereof will be subject to additional
restrictions.
A Global Security is exchangeable for definitive Debt Securities registered
in the name of, and a transfer of a Global Security may be registered to, any
person other than the Depositary or its nominee, only if:
(i) the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days;
(ii) the Company at any time and in its sole discretion, subject to
any limitations described in the Prospectus Supplement relating to such
Debt Securities, determines not to have any Debt Securities of a series
represented by one or more Global Securities or the Company, in its
discretion, specifies with respect to the Debt Securities of a series, that
an owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company, the
Trustee and the Depositary for such Global Security, receive Debt
Securities of such series in definitive form in exchange for such
beneficial interests, subject to any limitations described in the
applicable Prospectus Supplement.
In any such instance, an owner of a beneficial interest in a Global
Security will be entitled to physical delivery in definitive form of Debt
Securities of the series represented by such Global Security equal in principal
amount to such beneficial interest and to have such Debt Securities registered
in its name (if the Debt Securities of such series are issuable as Registered
Securities). Debt Securities of such series so issued in definitive form will be
issued (a) as Registered Securities in denominations, unless otherwise specified
by the
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Company, of $1,000 and integral multiples thereof if the Debt Securities of such
series are issuable as Registered Securities, (b) as Bearer Securities in the
denomination, unless otherwise specified by the Company, of $5,000 if the Debt
Securities of such series are issuable as Bearer Securities or (c) as either
Registered or Bearer Securities, if the Debt Securities of such series are
issuable in either form. Certain restrictions may apply, however, on the
issuance of a Bearer Security in definitive form in exchange for an interest in
a Global Security.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and any interest on Registered Securities will
be made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time. In addition, at the option of the Company, payment
of any interest may be made (i) by check mailed to the address of the person
entitled thereto as such address shall appear in the applicable Note Register or
(ii) by wire transfer to an account maintained by the person entitled thereto as
specified in the applicable Note Register. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Securities will be made to the person in whose name such Debt
Security is registered at the close of business on the Regular Record Date for
such payment.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of, premium, if any, and any interest on Bearer Securities will be
payable, subject to any applicable laws and regulations, at the offices of such
Paying Agents outside the United States as the Company may designate from time
to time, at the option of the Holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of interest
on Bearer Securities will be made only against surrender of the coupon relating
to such Interest Payment Date. No payment with respect to any Bearer Security
will be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States.
CONSOLIDATION, MERGER OR SALE OF ASSETS
Each Indenture provides that the Company may, without the consent of the
holders of any of the Debt Securities outstanding under the applicable
Indenture, consolidate with, merge into or transfer its assets substantially as
an entirety to any person, provided that (i) any such successor assumes the
Company's obligations on the applicable Debt Securities and under the applicable
Indenture, (ii) after giving effect thereto, no Event of Default (as defined in
the Senior Indenture) in the case of the Senior Securities, or Default (as
defined in the Subordinated Indenture) in the case of the Subordinated
Securities, shall have happened and be continuing and (iii) certain other
conditions under the applicable Indenture are met. Accordingly, any such
consolidation, merger or transfer of assets substantially as an entirety, which
meets the conditions described above, would not create any Event of Default or
Default which would entitle holders of the Debt Securities, or the Trustee on
their behalf, to take any of the actions described below under "Senior
Securities--Events of Default, Waivers, etc." or "Subordinated
Securities--Events of Default, Waivers, etc."
LEVERAGED AND OTHER TRANSACTIONS
Each Indenture and the Debt Securities do not contain, among other things,
provisions which would afford holders of the Debt Securities protection in the
event of a highly leveraged or other transaction involving the Company which
could adversely affect the holders of Debt Securities.
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of each affected series, modifications and alterations of such Indenture may be
made which affect the rights of the holders of such Debt Securities; provided,
however, that no such modification or alteration may be made without the consent
of the holder of each Debt Security so affected which would, among other things,
(i) change the maturity of the principal of, or of any installment
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of interest (or premium, if any) on, any Debt Security issued pursuant to such
Indenture, or reduce the principal amount thereof or any premium thereon, or
change the method of calculation of interest or the currency of payment of
principal or interest (or premium, if any) on, or reduce the minimum rate of
interest thereon, or impair the right to institute suit for the enforcement of
any such payment on or with respect to any such Debt Security, or reduce the
amount of principal of an Original Issue Discount Security that would be due and
payable upon an acceleration of the maturity thereof; or (ii) reduce the
above-stated percentage in principal amount of outstanding Debt Securities
required to modify or alter such Indenture.
REGARDING CHASE
Chase is the Trustee under both the Senior Indenture and the Subordinated
Indenture. Chase serves as trustee for certain subordinated debt securities
issued by the Company under indentures originally dated as of July 1, 1986, July
15, 1992, April 30, 1993, May 17, 1995 and December 1, 1995. Chase also serves
as the institutional or property trustee under declarations of trust for three
statutory business trusts formed under the laws of the State of Delaware and
sponsored by the Company. In connection with those transactions, Chase also
serves as the debt trustee under indentures originally dated as of November 15,
1996 and as of January 1, 1997, with respect to junior subordinated debentures
of the Company purchased by such trusts and is the also the guarantee trustee
under each of three guarantee agreements dated as of December 3, 1996, December
5, 1996 and January 31, 1997, respectively, from the Company to the applicable
trust guaranteeing certain payments to such trust. Chase has a principal
corporate trust office at 450 West 33rd Street, New York, New York 10001.
Chase Manhattan Bank Delaware ("Chase Delaware"), an affiliate of Chase,
serves as trustee for subordinated debt securities issued by the Company under
an indenture originally dated March 1, 1989. Chase Delaware also serves as the
Delaware trustee for the three Delaware business trusts described in the
preceding paragraph.
The Company and its affiliates have normal banking relationships with
Chase, Chase Delaware and their affiliates in the ordinary course of business.
SENIOR SECURITIES
The Senior Securities will be direct, unsecured obligations of the Company
and will rank pari passu with all outstanding unsecured senior indebtedness of
the Company.
EVENTS OF DEFAULT, WAIVERS, ETC.
An Event of Default with respect to Senior Securities of any series is
defined in the Senior Indenture as
(i) default in the payment of principal of or premium, if any, on any
of the Senior Securities of that series outstanding under the Senior
Indenture when due;
(ii) default in the payment of interest on any of the Senior
Securities of that series outstanding under the Senior Indenture when due
and continuance of such default for 30 days;
(iii) default in the performance of any other covenant of the Company
in the Senior Indenture with respect to Senior Securities of such series
and continuance of such default for 90 days after written notice;
(iv) certain events of bankruptcy, insolvency or reorganization of the
Company; and
(v) any other event that may be specified in a Prospectus Supplement
with respect to any series of Senior Securities.
If an Event of Default with respect to any series of Senior Securities for
which there are Senior Securities outstanding under the Senior Indenture occurs
and is continuing, either the applicable Trustee or the holders of not less than
25% in aggregate principal amount of the Senior Securities of such series
outstanding may declare the principal amount (or if such Senior Securities are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of all Senior Securities of that
series to
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be immediately due and payable. The holders of a majority in aggregate principal
amount of the Senior Securities of any series outstanding under the Senior
Indenture may waive an Event of Default resulting in acceleration of such Senior
Securities, but only if all Events of Default with respect to Senior Securities
of such series have been remedied and all payments due (other than those due as
a result of acceleration) have been made.
If an Event of Default occurs and is continuing, the applicable Trustee
may, in its discretion, and at the written request of holders of not less than a
majority in aggregate principal amount of the Senior Securities of any series
outstanding under the Senior Indenture and upon reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request
and subject to certain other conditions set forth in the Senior Indenture shall,
proceed to protect the rights of the holders of all the Senior Securities of
such series. Prior to acceleration of maturity of the Senior Securities of any
series outstanding under the Senior Indenture, the holders of a majority in
aggregate principal amount of such Senior Securities may waive any past default
under the Senior Indenture except a default in the payment of principal of,
premium, if any, or interest on the Senior Securities of such series.
The Senior Indenture provides that upon the occurrence of an Event of
Default specified in clauses (i) or (ii) of the first paragraph under "-- Events
of Defaults, Waivers, etc.", the Company will, upon demand of the applicable
Trustee, pay to it, for the benefit of the holder of any such Senior Security,
the whole amount then due and payable on such Senior Securities for principal,
premium, if any, and interest. The Senior Indenture further provides that if the
Company fails to pay such amount forthwith upon such demand, such Trustee may,
among other things, institute a judicial proceeding for the collection thereof.
The Senior Indenture also provides that notwithstanding any other provision
of the Senior Indenture, the holder of any Senior Security of any series shall
have the right to institute suit for the enforcement of any payment of principal
of, premium, if any, and interest on such Senior Securities when due and that
such right shall not be impaired without the consent of such holder.
The Company is required to file annually with the applicable Trustee a
written statement of officers as to the existence or non-existence of defaults
under the Senior Indenture or the Senior Securities.
SUBORDINATED SECURITIES
The Subordinated Securities will be direct, unsecured obligations of the
Company and, unless otherwise specified in the Prospectus Supplement relating to
a particular series of Subordinated Securities offered thereby, will be subject
to the subordination provisions described below.
SUBORDINATION
It is the intent of the Company that Subordinated Securities issued by the
Company be treated as capital for calculation of regulatory capital ratios. The
Federal Reserve has issued interpretations of its capital regulations
indicating, among other things, that subordinated debt of bank holding companies
issued on or after September 4, 1992 is includable in capital for calculation of
regulatory capital ratios only if the subordination of the debt meets certain
criteria and if the debt may be accelerated only for bankruptcy, insolvency and
similar matters (the "Subordination Interpretations"). Accordingly, the
Subordinated Indenture contains subordination and acceleration provisions for
the Subordinated Securities which are intended to be consistent with the
Subordination Interpretations. Subordinated debt of the Company (including any
of its predecessor corporations) issued after September 4, 1992, which meets the
Subordination Interpretations are referred to herein as "New Subordinated
Securities". Unless otherwise specified in the Prospectus Supplement relating to
a particular series of Subordinated Securities offered thereby, Subordinated
Securities offered pursuant to this Prospectus will constitute New Subordinated
Securities. See "Events of Default, Defaults, Waivers, etc." below.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of,
premium, if any, and interest on the Subordinated Securities is to be
subordinated in right of payment, to the extent provided in the Subordinated
Indenture, to the prior
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payment in full of all Senior Indebtedness. In certain events of bankruptcy or
insolvency, the payment of the principal of and interest on the Subordinated
Securities will, to the extent provided in the Subordinated Indenture, also be
effectively subordinated in right of payment to the prior payment in full of all
General Obligations (as defined below).
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization, the holders of Senior Indebtedness
will first be entitled to receive payment in full of all amounts due or to
become due before the holders of the Subordinated Securities will be entitled to
receive any payment in respect of the principal of, premium, if any, or interest
on the Subordinated Securities. If upon any such payment or distribution of
assets there remain, after giving effect to such subordination provisions in
favor of the holders of Senior Indebtedness, any amounts of cash, property or
securities available for payment or distribution in respect of the Subordinated
Securities ("Excess Proceeds") and if, at such time, any creditors in respect of
General Obligations have not received payment in full of all amounts due or to
become due on or in respect of such General Obligations, then such Excess
Proceeds shall first be applied to pay or provide for the payment in full of
such General Obligations before any payment or distribution may be made in
respect of the Subordinated Securities. The other New Subordinated Securities
issued prior to the date of this Prospectus contain similar provisions
subordinating any payment or distribution on such New Subordinated Securities to
the payment of amounts due or to become due on or in respect of general
obligations of the Company.
In addition, no payment may be made of the principal of, premium, if any,
or interest on the Subordinated Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Subordinated Securities,
at any time when (i) there is a default in the payment of the principal of,
premium, if any, interest on or otherwise in respect of any Senior Indebtedness
or (ii) any event of default with respect to any Senior Indebtedness has
occurred and is continuing, or would occur as a result of such payment on the
Subordinated Securities or any redemption, retirement, purchase or other
acquisition of any of the Subordinated Securities, permitting the holders of
such Senior Indebtedness to accelerate the maturity thereof. Except as described
above, the obligation of the Company to make payment of the principal of,
premium, if any, or interest on the Subordinated Securities will not be
affected.
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of a distribution of assets upon any dissolution,
winding up, liquidation or reorganization, certain creditors of the Company who
are not holders of Senior Indebtedness or of the Subordinated Securities may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than holders of the Subordinated Securities. By reason of the
subordination of payments and distributions on the New Subordinated Securities
to creditors in respect of general obligations, in the event of a distribution
of assets upon any dissolution, winding up, liquidation or reorganization,
holders of Old Subordinated Securities (as defined herein) may recover less,
ratably, than creditors in respect of general obligations and may recover more,
ratably, than the holders of New Subordinated Securities.
Subject to payment in full of all Senior Indebtedness, the holders of
Subordinated Securities will be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to Senior Indebtedness. Subject to payment
in full of all General Obligations, the holders of the New Subordinated
Securities will be subrogated to the rights of the creditors in respect of
General Obligations to receive payments or distributions of cash, property or
securities of the Company applicable to such creditors in respect of General
Obligations.
"Senior Indebtedness" for purposes of the Subordinated Indenture is the
principal of, premium, if any, and interest on (i) all of the Company's
indebtedness for money borrowed, other than subordinated securities (including
the Subordinated Securities) issued under the Subordinated Indenture, the
Company's 7.25% Subordinated Notes Due August 1, 2002, the Company's 8.74%
Subordinated Notes Due September 15, 2003, the Company's 7.00% Subordinated
Notes due July 15, 2005 (the "July 2005 Notes"), the Company's 9.875%
Subordinated Notes Due March 1, 2009, the Company's 10.00% Subordinated Notes
Due August 15, 2010, the Company's 7.75% Subordinated Debentures due on July 15,
2025 (the "July 2025 Debentures"), the Company's 7.625% Subordinated Debentures
due October 15, 2026 (the "2026 Debentures"), the
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Company's 9 7/8% Subordinated Notes Due July 1999, the Company's 9% Subordinated
Notes Due June 15, 1999, the Company's 9 7/8% Subordinated Notes Due August 15,
2000, the Company's 11 1/4% Subordinated Notes Due February 20, 2001, the
Company's 10 1/4% Subordinated Notes Due May 1, 2001, the Company's 9 1/4%
Subordinated Notes Due November 15, 2001, the Company's 8 7/8% Subordinated
Notes Due March 15, 2002, the Company's 8 1/4% Subordinated Notes Due June 15,
2002, the Company's 9 1/5% Subordinated Notes Due December 17, 2001, the
Company's 7 5/8% Subordinated Notes Due January 15, 2003 (the "January 2003
Notes"), the Company's 6 7/8% Subordinated Notes Due June 15, 2003 (the "June
2003 Notes"), the Company's Floating Rate Subordinated Notes Due July 28, 2003
(the "July 2003 Notes"), the Company's 6 3/8% Subordinated Notes Due January 30,
2009 (the "January 2009 Notes"), the Company's 7 1/8% Subordinated Notes Due
2007 (the "2007 Notes"), the Company's 7 1/4% Subordinated Debentures Due 2004
(the "2004 Notes"), the Company's 8.10% Subordinated Notes Due 2002, the
Company's 7.40% Subordinated Debenture due May 10, 2023 (the "2023 Debentures"),
the Company's Floating Rate Subordinated Notes Due 2005, the Company's 6 1/8%
Subordinated Notes Due February 15, 2006 (the "February 2006 Notes") and the
subordinated notes issued pursuant to FCN's Medium-Term Note Program, Series G
(the "MTN Notes") (collectively, all of the foregoing notes and debentures are
hereinafter referred to as the "Existing Subordinated Indebtedness"), whether
outstanding on the date of execution of the Subordinated Indenture or thereafter
created, assumed or incurred, except such indebtedness as is by its terms
expressly stated to be not superior in right of payment to the subordinated
securities issued under the Subordinated Indenture or the Existing Subordinated
Indebtedness or to rank pari passu with the subordinated securities issued under
the Subordinated Indenture or the Existing Subordinated Indebtedness; and (ii)
any deferrals, renewals or extensions of any such Senior Indebtedness. The term
"indebtedness for money borrowed" as used in the prior sentence includes,
without limitation, any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, and any deferred obligation for
the payment of the purchase price of property or assets. There is no limitation
on the issuance of additional Senior Indebtedness of the Company.
Subordinated securities (including the Subordinated Securities) issued
under the Subordinated Indenture, the January 2003 Notes, the June 2003 Notes,
the July 2003 Notes, the July 2005 Notes, the February 2006 Notes, the January
2009 Notes, the 2007 Notes, the 2023 Debentures, the July 2025 Debentures, the
October 2026 Debentures and the MTN Notes all constitute New Subordinated
Securities; all other Existing Subordinated Indebtedness constitutes "Old
Subordinated Securities".
The Subordinated Securities rank and will rank pari passu with the Existing
Subordinated Indebtedness, subject to the obligations of the holders of
Subordinated Securities (and, generally, holders of other New Subordinated
Securities) to pay over to creditors in respect of general obligations any
proceeds remaining after payments and distributions to holders of Senior
Indebtedness. Thus, in the event of a distribution of assets of the Company upon
any dissolution, winding up, liquidation or reorganization, the holders of the
New Subordinated Securities (including holders of the Subordinated Securities
offered hereby) may receive less, ratably, than holders of Old Subordinated
Securities. The Subordinated Securities rank and will rank senior to Junior
Subordinated Indebtedness (as defined herein) of the Company.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Subordinated Securities offered thereby, "General
Obligations" means all obligations of the Company to make payment on account of
claims in respect of derivative products such as interest and foreign exchange
rate contracts, commodity contracts and similar arrangements, other than (i)
obligations on account of Senior Indebtedness, (ii) obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
Subordinated Securities and (iii) obligations which by their terms are expressly
stated not to be superior in right of payment to the Subordinated Securities or
to rank on parity with the Subordinated Securities; provided, however, that
notwithstanding the foregoing, in the event that any rule, guideline or
interpretation promulgated or issued by the Federal Reserve (or other competent
regulatory agency or authority), as from time to time in effect, establishes or
specifies criteria for the inclusion in regulatory capital of subordinated debt
of a bank holding company requiring that such subordinated debt be subordinated
to obligations to creditors in addition to those set forth above, then the term
"General Obligations" shall also include such additional obligations to
creditors, as from time to time in effect pursuant to such rules, guidelines or
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interpretations. For purposes of this definition, "claim" shall have the meaning
assigned thereto in Section 101(4) of the Bankruptcy Code of 1978, as amended to
the date of the Subordinated Indenture.
Unless otherwise specified in the Prospectus Supplement relating to a
particular series of Subordinated Securities offered thereby, "Junior
Subordinated Indebtedness", with respect to the Subordinated Securities, means
the principal of, premium, if any, and interest on all of the Company's
indebtedness for money borrowed (but excluding trade accounts payable arising in
the ordinary course of business) whether outstanding on the date of execution of
the Subordinated Indenture or thereafter created, assumed or incurred and any
deferrals, renewals or extensions of such debt, provided such debt (i) is by its
terms subordinated to the Subordinated Securities, (ii) is between or among the
Company and certain affiliated financing entities including all debt securities
and guarantees in respect of those debt securities issued to certain financing
entities or a trustee of a financing entity sponsored by the Company, (iii) is
evidenced by securities issued under one of the indentures dated either as of
November 15, 1996 or as of January 1, 1997, each between the Company and The
Chase Manhattan Bank, as trustee (unless such securities are by their terms
senior in right of payment to the securities heretofore issued under said
indentures), or (iv) is a guarantee of the Company on a subordinated basis under
certain guarantee agreements dated December 3, 1996, December 5, 1996 or January
31, 1997, relating to securities issued by certain financing entities affiliated
with the Company. The term "indebtedness for money borrowed" as used in the
prior sentence includes, without limitation, any obligation of, or any
obligation guaranteed by, the Company for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the purchase price
of property or assets.
As of June 30, 1998, the aggregate amount of Senior Indebtedness and
General Obligations of the Company was approximately $7.1 billion.
LIMITED RIGHTS OF ACCELERATION
Unless otherwise specified in the Prospectus Supplement relating to any
series of Subordinated Securities, payment of principal of the Subordinated
Securities may be accelerated only in case of the bankruptcy, insolvency or
reorganization of the Company. There is no right of acceleration in the case of
a default in the payment of principal of, premium, if any, or interest on the
Subordinated Securities or the performance of any other covenant of the Company
in the Subordinated Indenture. Payment of principal of the Old Subordinated
Securities may be accelerated in the case of the bankruptcy, insolvency or
reorganization of the Company. For certain Old Subordinated Securities, payment
of principal also may be accelerated in the case of insolvency or receivership
of The First National Bank of Chicago or NBD Bank, Detroit, Michigan.
EVENTS OF DEFAULT, DEFAULTS, WAIVERS, ETC.
An Event of Default with respect to Subordinated Securities of any series
is defined in the Subordinated Indenture as certain events involving the
bankruptcy, insolvency or reorganization of the Company and any other Event of
Default provided with respect to Subordinated Securities of that series. A
"Default" with respect to Subordinated Securities of any series is defined in
the Subordinated Indenture as
(i) an Event of Default with respect to such series,
(ii) default in the payment of the principal of or premium, if any, on
any Subordinated Security of such series when due,
(iii) default in the payment of interest upon any Subordinated
Security of such series when due and the continuance of such default for a
period of 30 days,
(iv) default in the performance of any other covenant or agreement of
the Company in the Subordinated Indenture with respect to Subordinated
Securities of such series and continuance of such default for 90 days after
written notice; or
(v) any other Default provided with respect to Subordinated Securities
of any series.
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If an Event of Default with respect to any series of Subordinated
Securities for which there are Subordinated Securities outstanding under the
Subordinated Indenture occurs and is continuing, either the applicable Trustee
or the holders of not less than 25% in aggregate principal amount of the
Subordinated Securities of such series may declare the principal amount (or if
such Subordinated Securities are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all Subordinated Securities of that series to be immediately due and payable.
The holders of a majority in aggregate principal amount of the Subordinated
Securities of any series outstanding under the Subordinated Indenture may waive
an Event of Default resulting in acceleration of such Subordinated Securities,
but only if all Defaults have been remedied and all payments due (other than
those due as a result of acceleration) have been made.
If a Default occurs and is continuing, the Trustee may in its discretion,
and at the written request of holders of not less than a majority in aggregate
principal amount of the Subordinated Securities of any series outstanding under
the Subordinated Indenture and upon reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such request and
subject to certain other conditions set forth in the Subordinated Indenture
shall, proceed to protect the rights of the holders of all the Subordinated
Securities of such series. Prior to acceleration of maturity of the Subordinated
Securities of any series outstanding under the Subordinated Indenture, the
holders of a majority in aggregate principal amount of such Subordinated
Securities may waive any past default under the Subordinated Indenture except a
default in the payment of principal of, premium, if any, or interest on the
Subordinated Securities of such series.
The Subordinated Indenture provides that in the event of a Default
specified in clauses (ii) or (iii) of the definition thereof in payment of
principal of, premium, if any, or interest on any Subordinated Security of any
series, the Company will, upon demand of the applicable Trustee, pay to it, for
the benefit of the holder of any such Subordinated Security, the whole amount
then due and payable on such Subordinated Security for principal, premium, if
any, and interest. The Subordinated Indenture further provides that if the
Company fails to pay such amount forthwith upon such demand, the applicable
Trustee may, among other things, institute a judicial proceeding for the
collection thereof.
The Subordinated Indenture also provides that notwithstanding any other
provision of the Subordinated Indenture, the holder of any Subordinated Security
of any series shall have the right to institute suit for the enforcement of any
payment of principal of, premium, if any, and interest on such Subordinated
Security on the respective Stated Maturities (as defined in the Subordinated
Indenture) expressed in such Subordinated Security and that such right shall not
be impaired without the consent of such holder.
The Company is required to file annually with the applicable Trustee a
written statement of officers as to the existence or non-existence of defaults
under the Subordinated Indenture or the Subordinated Securities.
DESCRIPTION OF DEBT WARRANTS
The Company may issue warrants for the purchase of Debt Securities ("Debt
Warrants"). Debt Warrants may be issued independently or together with any
Securities offered by any Prospectus Supplement and may be attached to or
separate from such Securities. The Debt Warrants are to be issued under warrant
agreements (each a "Debt Warrant Agreement") to be entered into between the
Company and a warrant agent which will be designated in the applicable
Prospectus Supplement (the "Debt Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of Debt Warrants (the
"Offered Debt Warrants"). The Debt Warrant Agent will act solely as an agent of
the Company in connection with the Debt Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Debt Warrants. The following summaries of certain
provisions of the form of Debt Warrant Agreement and form of certificate, if
any, representing the Debt Warrants (the "Debt Warrant Certificates"), do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Debt Warrant Agreement and the Debt
Warrant Certificates, respectively, including the definitions therein of certain
terms, which Agreement and Certificate, if any, will be filed as exhibits to or
incorporated by reference in the Registration Statement of which this Prospectus
forms a part.
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If Debt Warrants are offered, the Prospectus Supplement will describe the
terms of the Offered Debt Warrants, the Debt Warrant Agreement relating to the
Offered Debt Warrants and, if applicable, the Debt Warrant Certificates,
including the following:
- the offering price;
- the currency or currency unit in which the price for the Offered
Debt Warrants may be payable;
- the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of the Offered Debt Warrants;
- if applicable, the designation and terms of the Securities with
which the Offered Debt Warrants are issued and the number of Offered Debt
Warrants issued with each such Security;
- if the Debt Securities purchasable upon exercise of Offered Debt
Warrants are denominated in a currency or currency unit other than U.S.
dollars, the denomination of such Debt Securities and the currency or units
based on or relating to currencies (including ECU) in which the principal
of, premium, if any, and interest on such Debt Securities will be payable;
- if applicable, the date on and after which the Offered Debt Warrants
and the related Securities will be separately transferable;
- the principal amount of Debt Securities purchasable upon exercise of
an Offered Debt Warrant and the price at which, and currency or currency
units based on or relating to currencies (including ECU) in which, such
principal amount of Debt Securities may be purchased upon such exercise;
- the date on which the right to exercise the Offered Debt Warrants
shall commence and the date on which such right shall expire;
- if applicable, a discussion of certain Federal income tax,
accounting and other special considerations, procedures and limitations;
- whether the Debt Warrants will be represented by certificates or
issued in book-entry form; and
- any other terms of the Offered Debt Warrants, including terms,
procedures and limitations relating to the exchange and exercise of the
Offered Debt Warrants.
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DESCRIPTION OF CURRENCY WARRANTS
The Company may issue options, warrants or other rights relating to the
exchange of certain currencies ("Currency Warrants") which, upon exercise at a
permitted time or times in the future, entitle any holder thereof to receive the
Cash Settlement Value (as defined below) of two designated currencies. Currency
Warrants may be issued independently or together with any Securities offered by
any Prospectus Supplement and may be attached to or separate from such
Securities. The Currency Warrants are to be issued under warrant agreements
(each a "Currency Warrant Agreement") to be entered into between the Company and
a warrant agent which will be designated in the applicable Prospectus Supplement
(the "Currency Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Currency Warrants (the "Offered Currency
Warrants"). The Currency Warrant Agent will act solely as an agent of the
Company in connection with the Currency Warrants and will not assume any
obligation or relationship of agency or trust for or with any holder or
beneficial owners of Currency Warrants. The following summaries of certain
provisions of the form of Currency Warrant Agreement and the form of
certificate, if any, representing the Currency Warrants (the "Currency Warrant
Certificates") do not purport to be complete and are subject to and are
qualified in their entirety by reference to all the provisions of the Currency
Warrant Agreement and the Currency Warrant Certificates, respectively, including
the definitions therein of certain terms, which Agreement and Certificate, if
any, will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus forms a part.
The Currency Warrants will not require, or entitle, any holder thereof to
sell any foreign currency to the Company. The Company will make only a U.S.
dollar cash settlement upon exercise of a Currency Warrant and will not be
obligated to purchase or take delivery of any foreign currency from any holder
of a Currency Warrant.
The "Cash Settlement Value" of an exercised Currency Warrant will be an
amount stated in U.S. dollars which is the greater of (i) zero and (ii) an
amount equal to (a) the nominal amount of such Currency Warrant, minus (b) an
amount equal to the nominal amount of such Currency Warrant times a fraction,
the numerator of which is the Strike Price of such Currency Warrant and the
denominator of which is the Spot Rate of such Currency Warrant on the Exercise
Date. The "nominal amount" of a Currency Warrant refers to the principal amount,
expressed in U.S. dollars, of a currency (the "Base Currency") which is to be
compared to another currency (the "Second Currency") upon exercise of such
Currency Warrant. Unless otherwise specified in the applicable Prospectus
Supplement, the Base Currency shall be U.S. dollars. The "Strike Price" is the
designated rate of exchange of the Base Currency for the Second Currency which
the Company will specify in the Prospectus Supplement relating to the Offered
Currency Warrants. The "Spot Rate" refers to the floating rate of exchange of
the Base Currency for the Second Currency on any given date, as quoted by a
reference bank or banks or other institution at a designated time of day, such
source of quotations and time to be specified in the applicable Prospectus
Supplement. The "Exercise Date" refers to the effective date on which the holder
of a Currency Warrant exercises such Currency Warrant.
If Currency Warrants are offered, the Prospectus Supplement will describe
the terms of the Offered Currency Warrants, the Currency Warrant Agreement
relating to the Offered Currency Warrants and, if applicable, the Currency
Warrant Certificates, including the following:
- the aggregate number of Offered Currency Warrants;
- the nominal amount of each Offered Currency Warrant;
- the price of the Offered Currency Warrants;
- the Base Currency and the Second Currency;
- the Strike Price for the Offered Currency Warrants;
- the reference bank or banks or other institution and time of day to
be used to determine the Spot Rate;
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- the date on which the right to exercise the Offered Currency
Warrants shall begin and the date on which such right shall terminate;
- if applicable, the minimum or maximum amount of Offered Currency
Warrants which may be exercised at any one time;
- the place or places at which payment of the Cash Settlement Value is
to be made by the Company;
- whether the Offered Currency Warrants will be represented by
certificates or issued in book-entry form;
- the method by which the Offered Currency Warrants are to be
exercised;
- the Federal income tax consequences and other special
considerations, procedures and limitations applicable to such Offered
Currency Warrants; and
- any other terms of the Offered Currency Warrants, including risk
factors specifically relating to the Base Currency or Second Currency and
Currency Warrants relating to such currencies.
DESCRIPTION OF STOCK-INDEX WARRANTS
The Company may issue options, warrants or other rights which, upon
exercise at a permitted time or times in the future, entitle any holder thereof
to receive an amount of cash determined by references to increases and/or
decreases in the level of a specified stock index ("Stock-Index Warrants").
Stock-Index Warrants may be issued independently or together with other
Securities offered by any Prospectus Supplement and may be attached to or
separate from such other Securities. The Stock-Index Warrants are to be issued
under one or more warrant agreements (each a "Stock-Index Warrant Agreement") to
be entered into between the Company and a bank or trust company, as stock-index
warrant agent which will be designated in the applicable Prospectus Supplement
(the "Stock-Index Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Stock-Index Warrants (the "Offered
Stock-Index Warrants"). The Stock-Index Warrant Agent will act solely as an
agent of the Company in connection with the Stock-Index Warrants and will not
assume any obligation or relationship of agency or trust for or with any holder
or beneficial owners of Stock-Index Warrants. The following summaries of certain
provisions of the form of Stock-Index Warrant Agreement and form of certificate,
if any, representing the Stock-Index Warrants (the "Stock-Index Warrant
Certificates") do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Stock-Index Warrant Agreement and the Stock-Index Warrant Certificates,
respectively, including the definitions therein of certain terms, which
Agreement and Certificate, if any, will be filed as an exhibit to or
incorporated by reference in the Registration Statement of which this Prospectus
forms a part.
The Company may issue Stock-Index Warrants either in the form of
"Stock-Index Put Warrants" entitling the holders thereof to receive from the
Company the Stock-Index Cash Settlement Value (as described in the applicable
Prospectus Supplement) in U.S. dollars, which amount will be determined by
reference to the amount, if any, by which the Stock-Index Exercise Price (as
described in the applicable Prospectus Supplement) exceeds the closing value of
the Index on the valuation date (the "Index Value") at the time of exercise, or
in the form of "Stock-Index Call Warrants" entitling the holders thereof to
receive from the Company the Stock-Index Cash Settlement Value in U.S. dollars,
which amount will be determined by reference to the amount, if any, by which the
Index Value at the time of exercise exceeds the Stock-Index Exercise Price.
The Prospectus Supplement for the Offered Stock-Index Warrants will set
forth the formula pursuant to which the Stock-Index Cash Settlement Value will
be determined. In addition, if so specified in the applicable Prospectus
Supplement, following the occurrence of a Market Disruption Event (as defined
therein), the Stock-Index Cash Settlement Value may be determined on a different
basis than under normal exercise of a Stock-Index Warrant.
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Unless otherwise indicated in the Prospectus Supplement, a Stock-Index
Warrant will be settled only in cash and, accordingly, will not require or
entitle a holder thereof to sell, deliver, purchase or take delivery of any
shares of any underlying stock or any other securities. The holders will not be
entitled to any of the rights of the holders of any underlying stock.
If Stock-Index Warrants are offered, the Prospectus Supplement will
describe the terms of the Offered Stock-Index Warrants, the Stock-Index Warrant
Agreement relating to the Offered Stock-Index Warrants and, if applicable, the
Stock-Index Warrant Certificates, including the following:
- whether such Stock-Index Warrants are Stock-Index Put Warrants,
Stock-Index Call Warrants or both;
- the aggregate number of Offered Stock-Index Warrants;
- the offering price;
- the stock index for the Offered Stock-Index Warrants, which may be
based on one or more U.S. or foreign stocks or a combination thereof and
may be a preexisting U.S. or foreign stock index compiled and published by
a third party or an index based on one or more underlying stock or stocks
selected by the Company solely in connection with the issuance of the
Offered Stock-Index Warrants, and certain information regarding such stock
index and the underlying stock or stocks;
- the date on which the right to exercise the Offered Stock-Index
Warrants commences and the date on which such right expires;
- the procedures and conditions relating to exercise;
- the circumstances, if any, which will cause the Offered Stock-Index
Warrants to be deemed to be automatically exercised;
- the minimum number, if any, of Stock-Index Warrants to be exercised
at any one time other than upon automatic exercise and any other
restrictions on exercise;
- the maximum number, if any, of the Offered Stock-Index Warrants that
may, subject to the Company's election, be exercised by all owners (or by
any person or entity) on any day;
- the method of providing for a substitute index or otherwise
determining the amount payable in connection with the exercise of the
Offered Stock-Index Warrants if the stock index changes or ceases to be
made available by its publisher, which determination will be made by an
independent expert;
- the national securities exchange on which the Offered Stock-Index
Warrants will be listed, if any;
- whether the Offered Stock-Index Warrants will be issued in
certificated or book-entry form;
- the place or places at which payment of the Stock-Index Cash
Settlement Value is to be made by the Company;
- information with respect to book-entry procedures, if any;
- the plan of distribution of the Offered Stock-Index Warrants;
- the identity of the Stock-Index Warrant Agent;
- any provisions permitting a holder of a Stock-Index Warrant to
condition a stock-index exercise notice on the absence of certain specified
changes in the Index Value after the Stock-Index Warrant exercise date; and
- any other terms of the Offered Stock-Index Warrants, including risk
factors specifically relating to fluctuations in the applicable stock index
and possible illiquidity in the secondary market.
Prospective purchasers of Stock-Index Warrants should be aware that special
U.S. Federal income tax, accounting and other considerations may be applicable
to instruments such as Stock-Index Warrants. The Prospectus Supplement relating
to any issue of Stock-Index Warrants will describe such considerations.
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DESCRIPTION OF OTHER WARRANTS
The Company may issue other options, warrants or rights ("Other Warrants"),
if permitted under applicable law, to buy or sell debt securities of or
guaranteed by the United States, to buy or sell a commodity or a unit of a
commodity index or to buy or sell some other item or unit of an index other than
indices covered by Stock-Index Warrants (collectively, "Exercise Items"). Owners
of Other Warrants will be entitled to receive from the Company the cash
settlement value in U.S. dollars of the right to buy or sell the Exercise Items
(the "Other Warrant Cash Settlement Value"). An Owner of Other Warrants will
receive a cash payment upon exercise only if the Other Warrants have an Other
Warrant Cash Settlement Value in excess of zero at that time.
Other Warrants may be issued independently or together with other
Securities offered by any Prospectus Supplement and may be attached to or
separate from such other Securities. The Other Warrants are to be issued under
one or more other warrant agreements (the "Other Warrant Agreements") to be
entered into between the Company and a bank or trust company, as warrant agent
which will be designated in the applicable Prospectus Supplement (the "Other
Warrant Agent"), all as set forth in the Prospectus Supplement relating to the
particular issue of Other Warrants. The Other Warrant Agent will act solely as
an agent of the Company in connection with the Other Warrants and will not
assume any obligation or relationship of agency or trust for or with any holder
or beneficial owners of the Other Warrants. The following summaries of certain
provisions of the form of Other Warrant Agreement and form of certificate, if
any, representing the Other Warrants (the "Other Warrant Certificates") do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Other Warrant Agreement and the Other
Warrant Certificates, respectively, including the definitions therein of certain
terms which Agreement and Certificate, if any, will be filed as an exhibit to or
incorporated by reference in the Registration Statement of which this Prospectus
forms a part.
Unless otherwise indicated in the Prospectus Supplement, an Other Warrant
will be settled only in cash, in U.S. dollars, and accordingly, will not require
or entitle an owner thereof to sell, deliver, purchase or take delivery of any
Exercise Items.
If Other Warrants are offered, the applicable Prospectus Supplement will
describe the terms of such Other Warrants, including, where applicable, the
following:
- the title and aggregate number of such Other Warrants;
- the offering price;
- the Exercise Items that such Other Warrants represent the right to
buy or sell;
- the procedures and conditions relating to exercise;
- the date on which the right to exercise the Other Warrants shall
commence and the date such right shall expire (the "Other Warrant
Expiration Date");
- the method of determining the Other Warrant Cash Settlement Value;
- whether such Other Warrants will be issued in certificated or
book-entry form;
- whether such Other Warrants will be listed on a national securities
exchange;
- information with respect to book-entry procedures, if any;
- the identity of the Other Warrant Agent; and
- any other terms of such Other Warrants, including risk factors
relating to significant fluctuations in the market for the applicable
Exercise Item, the potential illiquidity of the secondary market and the
risk that the Other Warrants may expire worthless.
Prospective purchasers of Other Warrants should be aware that special U.S.
Federal income tax, accounting and other considerations may be applicable to
instruments such as Other Warrants. The Prospectus Supplement relating to any
issue of Other Warrants will describe such considerations.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of Preferred
Stock offered by any Prospectus Supplement will be specified in the applicable
Prospectus Supplement. If so specified in the applicable Prospectus Supplement,
the terms of any series of Preferred Stock may differ from the terms set forth
below. The description of the terms of the Preferred Stock set forth below and
in any Prospectus Supplement does not purport to be complete and is subject to
and qualified in its entirety by reference to the Certificate of Designation
relating to the applicable series of Preferred Stock, which Certificate will be
filed as an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), the Board of Directors of the Company has the
authority, without further stockholder action, to issue from time to time a
maximum of 50,000,000 shares of preferred stock, $0.01 par value, in one or more
series and for such consideration, as may be fixed from time to time by the
Board of Directors of the Company, and to fix before the issuance of any shares
of preferred stock of a particular series, the designation of such series, the
number of shares to comprise such series, the dividend rate or rates payable
with respect to the shares of such series, the redemption price or prices, if
any, and the terms and conditions of the redemption, the voting rights, any
sinking fund provisions for the redemption or purchase of the shares of such
series, the terms and conditions upon which the shares are convertible, if they
are convertible, and any other relative rights, preferences and limitations
pertaining to such series.
As of October 2, 1998, there were issued and outstanding 1,191,000 shares
of the Company's Preferred Stock with Cumulative and Adjustable Dividends,
Series B ($100 stated value) (the "Series B Preferred Stock") and 713,800 shares
of the Company's Preferred Stock with Cumulative and Adjustable Dividends,
Series C ($100 stated value) (the "Series C Preferred Stock") (collectively, the
"Existing Preferred Stock"). In addition, the Company has issued 6,000,000
preferred share purchase units ("Preferred Purchase Units") which may require
the holder of which to purchase, no later than 2023, the Company's 7 1/2%
Cumulative Preferred Stock (the "7 1/2% Preferred Stock"). See "Description of
Existing Preferred Stock and Preferred Purchase Units" herein.
As described under "Description of Depositary Shares" below, the Company
may, at its option, elect to offer depositary shares ("Depositary Shares")
evidenced by depositary receipts, each representing a fraction (to be specified
in the Prospectus Supplement relating to the particular series of Preferred
Stock) of a share of the particular series of the Preferred Stock issued and
deposited with a depositary, in lieu of offering full shares of such series of
the Preferred Stock.
Under interpretations adopted by the Federal Reserve Board, if the holders
of Preferred Stock of any series become entitled to vote for the election of
directors because dividends on such series are in arrears as described under
"Voting Rights" below, such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% or
more if it otherwise exercises a "controlling influence" over the Company) may
then be subject to regulation as a bank holding company in accordance with the
Bank Holding Company Act of 1956, as amended. In addition, at such time as such
series is deemed a class of voting securities, any other bank holding company
may be required to obtain the prior approval of the Federal Reserve Board to
acquire 5% or more of such series, and any person other than a bank holding
company may be required to obtain the prior approval of the Federal Reserve
Board to acquire 10% or more of such series.
The Preferred Stock shall have the dividend, liquidation, redemption,
voting and conversion rights set forth below unless otherwise specified in the
applicable Prospectus Supplement. Reference is made to the Prospectus Supplement
relating to the particular series of Preferred Stock offered thereby for
specific terms, including:
- the designation, stated value and liquidation preference of such
Preferred Stock and the number of shares offered;
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- the initial public offering price at which such shares will be
issued;
- the dividend rate or rates (or method of calculation), the dividend
periods, the date on which dividends shall be payable and whether such
dividends shall be cumulative or noncumulative and, if cumulative, the
dates from which dividends shall commence to cumulate;
- any redemption or sinking fund provisions;
- any conversion provisions;
- whether the Company has elected to offer Depositary Shares as
described below under "Description of Depositary Shares"; and
- any additional dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions of such
Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the applicable Prospectus Supplement, the shares
of each series of Preferred Stock will upon issuance rank on a parity in all
respects with the Company's Existing Preferred Stock, described below, and each
other then outstanding series of preferred stock of the Company. The Preferred
Stock will have no preemptive rights to subscribe for any additional securities
which may be issued by the Company. Unless otherwise specified in the applicable
Prospectus Supplement, First Chicago Trust Company of New York, or an affiliate,
will be the transfer agent and registrar for the Preferred Stock.
Because the Company is a holding company, its rights and the rights of
holders of its securities, including the holders of Preferred Stock, to
participate in the assets of any Company subsidiary upon the latter's
liquidation or recapitalization will be subject to the prior claims of such
subsidiary's creditors and preferred stockholders, except to the extent the
Company may itself be a creditor with recognized claims against such subsidiary
or a holder of preferred shares of such subsidiary.
DIVIDENDS
The holders of the Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors of the Company, out of funds legally
available therefor, dividends at such rates and on such dates as will be
specified in the applicable Prospectus Supplement. Such rates may be fixed or
variable or both. If variable, the formula used for determining the dividend
rate for each dividend period will be specified in the applicable Prospectus
Supplement. Dividends will be payable to the holders of record as they appear on
the stock books of the Company (or, if applicable, the records of the Depositary
referred to below under "Description of Depositary Shares") on such record dates
as will be fixed by the Board of Directors of the Company. Dividends may be paid
in the form of cash, Preferred Stock (of the same or a different series) or
Common Stock of the Company, in each case as specified in the applicable
Prospectus Supplement.
Dividends on any series of Preferred Stock may be cumulative or
noncumulative, as specified in the applicable Prospectus Supplement. If the
Board of Directors of the Company fails to declare a dividend payable on a
dividend payment date on any Preferred Stock for which dividends are
noncumulative ("Noncumulative Preferred Stock"), then the holders of such
Preferred Stock will have no right to receive a dividend in respect of the
dividend period relating to such dividend payment date, and the Company will
have no obligation to pay the dividend accrued for such period, whether or not
dividends on such Preferred Stock are declared or paid on any future dividend
payment dates.
The Company shall not declare or pay or set apart for payment any dividends
on any series of its preferred shares ranking, as to dividends, on a parity with
or junior to the outstanding Preferred Stock of any series unless (i) if such
Preferred Stock has a cumulative dividend ("Cumulative Preferred Stock"), full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such payment
on such Preferred Stock for all dividend periods terminating on or prior to the
date of payment of any such dividends on such other series of preferred shares
of the Company, or (ii) if such Preferred Stock is Noncumulative Preferred
Stock, full dividends for the then-current dividend
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period on such Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for such
payment.
When dividends are not paid in full upon Preferred Stock of any series and
any other shares of preferred stock of the Company ranking on a parity as to
dividends with such Preferred Stock, all dividends declared upon such Preferred
Stock and any other preferred shares of the Company ranking on a parity as to
dividends with such Preferred Stock shall be declared pro rata so that the
amount of dividends declared per share on such Preferred Stock and such other
shares shall in all cases bear to each other the same ratio that the accrued
dividends per share on such Preferred Stock (which shall not, if such Preferred
Stock is Noncumulative Preferred Stock, include any accumulation in respect of
unpaid dividends for prior dividend periods) and such other preferred shares
bear to each other.
Except as set forth in the preceding paragraph, unless full dividends on
the outstanding Cumulative Preferred Stock of any series have been paid for all
past dividend periods and full dividends for the then-current dividend period on
the outstanding Noncumulative Preferred Stock of any series have been declared
and paid or declared and a sum sufficient for the payment thereof set apart for
such payment, no dividends(other than in Common Stock of the Company or other
shares of the Company ranking junior to such Preferred Stock as to dividends and
upon liquidation) shall be declared or paid or set aside for payment, nor shall
any other distribution be made on the Common Stock of the Company or on any
other shares of the Company ranking junior to or on a parity with such Preferred
Stock as to dividends or upon liquidation. Unless full dividends on the
Cumulative Preferred Stock of any series have been paid for all past dividend
periods and full dividends for the then-current dividend period on the
Noncumulative Preferred Stock of any series have been declared and paid or
declared and a sum sufficient for the payment thereof set apart for such
payment, no Common Stock or any other shares of the Company ranking junior to or
on a parity with such Preferred Stock as to dividends or upon liquidation shall
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid or made available for a sinking fund for the redemption of any
such shares) by the Company or any subsidiary of the Company except by
conversion into or exchange for shares of the Company ranking junior to such
Preferred Stock as to dividends and upon liquidation.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or in part, at
the option of the Company, and may be subject to mandatory redemption pursuant
to a sinking fund or otherwise, in each case upon terms, at the times and at the
redemption prices specified in the applicable Prospectus Supplement and subject
to the rights of holders of other securities of the Company. Preferred Stock
redeemed by the Company will be restored to the status of authorized but
unissued preferred shares.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock is Noncumulative Preferred Stock, include any
accumulation in respect of unpaid dividends for prior dividend periods) to the
date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of such
Preferred Stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into shares of the applicable capital
stock of the Company pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
If fewer than all the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined in a
manner designated by the Board of Directors of the Company and such shares shall
be redeemed pro rata from the holders of record of such shares in proportion to
the number of such shares held by such holders (with adjustments to avoid
redemption of fractional shares) or by lot or by any other method as may be
determined by the Board of Directors of the Company.
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Notwithstanding the foregoing, if any dividends, including any
accumulation, on Cumulative Preferred Stock of any series are in arrears, no
Preferred Stock of such series shall be redeemed unless all outstanding
Preferred Stock of such series is simultaneously redeemed and the Company shall
not purchase or otherwise acquire any Preferred Stock of such series; provided,
however, that the foregoing shall not prevent the purchase or acquisition of
Preferred Stock of such series pursuant to a purchase or exchange offer provided
such offer is made on the same terms to all holders of the Preferred Stock of
such series.
Notice of redemption shall be given by mailing the same to each record
holder of the Preferred Stock to be redeemed, not less than 30 nor more than 60
days prior to the date fixed for redemption thereof, to the respective addresses
of such holders as the same shall appear on the stock books of the Company. Each
notice shall state:
(i) the redemption date;
(ii) the number of shares and series of the Preferred Stock to be
redeemed;
(iii) the redemption price;
(iv) the place or places where certificates for such Preferred Stock
are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease to accrue
on such redemption date; and
(vi) the date upon which the holder's conversion rights, if any, as to
such shares, shall terminate.
If fewer than all the shares of Preferred Stock of any series held by any
holder are to be redeemed, the notice mailed to such holder shall also specify
the number of shares of Preferred Stock to be redeemed from such holder.
If notice of redemption of any shares of Preferred Stock has been given,
from and after the redemption date for such shares (unless the Company defaults
in providing money for the payment of the redemption price of such shares),
dividends on such shares shall cease to accrue and such shares shall no longer
be deemed to be outstanding, and all rights of the holders thereof as
shareholders of the Company (except the right to receive the redemption price)
shall cease. Upon surrender in accordance with such notice of the certificates
representing any such shares (properly endorsed or assigned for transfer, if the
Board of Directors of the Company shall so require and the notice shall so
state), the redemption price set forth above shall be paid out of the funds
provided by the Company. If fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
CONVERSION RIGHTS
The Prospectus Supplement relating to a series of the Preferred Stock that
is convertible will state the terms on which shares of such series are
convertible into the Company's Common Stock, or another series of Preferred
Stock.
RIGHTS UPON LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Preferred Stock shall be entitled to
receive out of the assets of the Company available for distribution to
shareholders, before any distribution of assets is made to holders of Common
Stock or any other class or series of shares ranking junior to such Preferred
Stock upon liquidation, liquidating distributions in the amount of the
liquidation preference of such Preferred Stock plus accrued and unpaid dividends
(which shall not, if such Preferred Stock is Noncumulative Preferred Stock,
include any accumulation in respect of unpaid dividends for prior dividend
periods). If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company the amounts payable with respect to Preferred Stock of
any series and any other shares of the Company ranking as to any such
distribution on a parity with such Preferred Stock are not paid in full, the
holders of such Preferred Stock and of such other shares will share ratably in
any such distribution of assets of
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the Company in proportion to the full respective preferential amounts to which
they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of Preferred Stock of any
series will not be entitled to any further participation in any distribution of
assets by the Company.
VOTING RIGHTS
Except as indicated below or in the applicable Prospectus Supplement, or
except as expressly required by applicable law, the holders of the Preferred
Stock will not be entitled to vote. In the event the Company issues full shares
of any series of Preferred Stock, each such share will be entitled to one vote
on matters on which holders of such series of the Preferred Stock are entitled
to vote. However, as more fully described under "Description of Depositary
Shares" below, if the Company elects to issue Depositary Shares representing a
fraction of a share of a series of Preferred Stock, each such Depositary Share
will, in effect, be entitled to such fraction of a vote, rather than a full
vote, per Depositary Share. Since each full share of any series of Preferred
Stock of the Company shall be entitled to one vote, the voting power of such
series, on matters on which holders of such series and holders of other series
of Preferred Stock are entitled to vote as a single class, shall depend on the
number of shares in such series, not the aggregate stated value, liquidation
preference or initial offering price of the shares of such series of Preferred
Stock.
If the equivalent of six quarterly dividends payable on any series of
Preferred Stock are in default, the number of directors of the Company will be
increased by two and the holders of all outstanding series of Preferred Stock,
voting as a single class without regard to series, will be entitled to elect
such additional two directors until all dividends in default have been paid or
declared and set apart for payment.
The affirmative vote or consent of the holders of at least 66 2/3 percent
of the outstanding shares of Preferred Stock of any series, voting as a class,
will be required for any amendment to the Company's Certificate of Incorporation
(or any certificate supplemental thereto) that will adversely affect the powers,
preferences, privileges or rights of the Preferred Stock of such series. The
affirmative vote or consent of the holders of at least 66 2/3 percent of the
outstanding shares of Preferred Stock of any series and any other series of
preferred shares of the Company ranking on a parity with the Preferred Stock of
such series as to dividends or upon liquidation, voting as a single class
without regard to series, will be required to authorize, effect or validate the
creation, authorization or issue of any shares of any class of stock of the
Company ranking prior to the Preferred Stock of such series as to dividends or
upon liquidation, or the reclassification of any authorized stock of the Company
into any such prior shares, or the creation, authorization or issue of any
obligation or security convertible into or evidencing the right to purchase any
such prior shares.
Subject to such affirmative vote or consent of the holders of the
outstanding shares of Preferred Stock of any series, the Company may, by
resolution of its Board of Directors or as otherwise permitted by law, from time
to time alter or change the preferences, rights or powers of the Preferred Stock
of such series. The holders of the Preferred Stock of such series shall not be
entitled to participate in any such vote if, at or prior to the time when any
such alteration or change is to take effect, provision is made for the
redemption of all the Preferred Stock of such series at the time outstanding.
Nothing in this section shall be taken to require a class vote or consent in
connection with the authorization, designation, increase or issuance of any
shares of any class or series (including additional Preferred Stock of any
series) that rank junior to or on a parity with the Preferred Stock of such
series as to dividends and liquidation rights or in connection with the
authorization, designation, increase or issuance of any bonds, mortgages,
debentures or other obligations of the Company.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. If such option is
exercised, the Company will issue to the public receipts for depositary shares,
each of which will represent a fraction (to be set forth in the Prospectus
Supplement relating to a
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particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below (the "Depositary Shares").
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
between the Company and a bank or trust company selected by the Company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000 (the "Preferred Stock Depositary"). Subject to
the terms of the Deposit Agreement, each owner of a Depositary Share will be
entitled, in proportion to the applicable fraction of a share of Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Preferred Stock represented thereby (including dividend, voting, redemption,
conversion and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt will be filed as exhibits to,
or incorporated by reference in, the Registration Statement of which this
Prospectus is a part, and the following summary is qualified in its entirety by
reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Preferred Stock Depositary may, upon the written order of the Company, issue
temporary Depositary Receipts. Such temporary Definitive Receipts will be
substantially identical to (and entitle the holders thereof to all the rights
pertaining to) the definitive Depositary Receipts but will not be in definitive
form. Definitive Depositary Receipts will be prepared thereafter without
unreasonable delay, and temporary Depositary Receipts will be exchangeable for
definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the principal office of the
Preferred Stock Depositary (unless the related Depositary Shares have previously
been called for redemption), the owner of the Depositary Shares evidenced
thereby is entitled to delivery at such office, to or upon his order, of the
number of whole shares of Preferred Stock and any money or other property
represented by such Depositary Shares. Partial shares of Preferred Stock will
not be issued. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing a number of whole shares of Preferred Stock to be withdrawn, the
Preferred Stock Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of shares of Preferred Stock thus withdrawn will not thereafter be entitled to
deposit such shares under the Deposit Agreement or to receive Depositary Shares
therefor. The Company does not expect that there will be any public trading
market for withdrawn shares of Preferred Stock.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of Depositary Shares relating to such Preferred Stock in proportion to
the numbers of such Depositary Shares owned by such holders. The Preferred Stock
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any holder of Depositary Shares a fraction of one cent,
and any balance not so distributed shall be added to and treated as part of the
next sum received by the Preferred Stock Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto, unless the Preferred Stock Depositary
determines that it is not feasible to make such distribution, in which case the
Preferred Stock Depositary may, with the approval of the Company, sell such
property and distribute the net proceeds from such sale to such holders.
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REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds received
by the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The Preferred Stock Depositary shall mail notice of redemption not less than 30
nor more than 60 days prior to the date fixed for redemption to the record
holders of the Depositary Shares to be so redeemed at their respective addresses
appearing in the Preferred Stock Depositary's books. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of Preferred Stock. Whenever
the Company redeems shares of Preferred Stock held by the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same redemption
date the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the Preferred Stock
Depositary as to the exercise of the voting rights pertaining to the amount of
the Preferred Stock represented by such holder's Depositary Shares. The
Preferred Stock Depositary will endeavor, insofar as practicable, to vote the
amount of the Preferred Stock represented by such Depositary Shares in
accordance with such instructions, and the Company will agree to take all action
which may be deemed necessary by the Preferred Stock Depositary in order to
enable the Preferred Stock Depositary to do so. The Preferred Stock Depositary
will abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares representing
such Preferred Stock.
TAXATION
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the series of Preferred Stock represented by
such Depositary Shares and, accordingly, will be entitled to take into account
for Federal income tax purposes income and deductions to which they would be
entitled if they were holders of such series of Preferred Stock. In addition,
(i) no gain or loss will be recognized for Federal income tax purposes upon the
withdrawal of Preferred Stock in exchange for Depositary Shares as provided in
the Deposit Agreement, (ii) the tax basis of each share of Preferred Stock to an
exchanging owner of Depositary Shares will, upon such exchange, be the same as
the aggregate tax basis of the Depositary Shares exchanged therefor and (iii)
the holding period for shares of the Preferred Stock in the hands of an
exchanging owner of Depositary Shares who held such Depositary Shares as a
capital asset at the time of the exchange thereof for Preferred Stock will
include the period during which such person owned such Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
which materially and adversely alters the rights of the holders of Depositary
Shares will not be effective unless such amendment has been approved by the
holders of at least a
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majority of the Depositary Shares then outstanding. The Deposit Agreement may be
terminated by the Company or the Preferred Stock Depositary only if (i) all
outstanding Depositary Shares have been redeemed or (ii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of Depositary Receipts.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of the Preferred Stock Depositary in connection with the
initial deposit of the Preferred Stock and any redemption of the Preferred
Stock. Holders of Depositary Receipts will pay other transfer and other taxes
and governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from the Company which are delivered to
the Preferred Stock Depositary and which the Company is required to furnish to
the holders of the Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performance in good faith of their duties thereunder and they will
not be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished.
They may rely upon written advice of counsel or accountants, or information
provided by persons presenting Preferred Stock for deposit, holders of
Depositary Receipts or other persons believed to be competent and on documents
believed to be genuine.
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF EXISTING PREFERRED STOCK AND PREFERRED PURCHASE UNITS
The outstanding Series B Preferred Stock and Series C Preferred Stock of
the Company were issued as of October 2, 1998, as part of the Merger in exchange
for two similar series of preferred stock of FCN outstanding at the effective
time of the Merger. The two series of FCN preferred stock were originally issued
by a predecessor corporation in February 1983, and February 1984, respectively.
The dividend rate on each series is adjusted quarterly, based on a formula that
considers the interest rates for selected short- and long-term U.S. Treasury
securities prevailing at the time the rate is set. The Existing Preferred Stock
ranks prior to the Company's Common Stock, both as to dividends and upon
liquidation, but has no general voting rights (except as described under
"Description of Preferred Stock -- Voting Rights"). Each series of the Existing
Preferred Stock ranks pari passu with the other series of the Existing Preferred
Stock with respect to dividends and liquidation rights.
The Series B Preferred Stock is subject to a minimum and maximum annual
dividend rate of 6.00 percent and 12.00 percent, respectively. The annualized
dividend rate for the quarterly period ended November 30, 1998, is 6.00 percent.
Shares of this series are redeemable, at the option of the Company, at
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their stated value of $100 per share plus accrued and unpaid dividends. Shares
of this series are not convertible into other securities of the Company.
The Series C Preferred Stock is subject to a minimum and maximum annual
dividend rate of 6.50 percent and 12.50 percent, respectively. The annualized
dividend rate for the quarterly period ended November 30, 1998, is 6.50 percent.
Shares of this series are redeemable, at the option of the Company, at their
stated value of $100 per share plus accrued and unpaid dividends. Shares of this
series are not convertible into other securities of the Company.
The shares of the outstanding Existing Preferred Stock are listed on the
New York Stock Exchange. First Chicago Trust Company of New York, or an
affiliate, serves as transfer agent, registrar and dividend disbursing agent for
shares of the Existing Preferred Stock.
In addition, on May 11, 1993, the Company issued 6,000,000 Preferred
Purchase Units each of which consisted of a 30-year subordinated debenture and a
purchase contract requiring the purchase by the holder thereof on May 10, 2023
(or earlier at the Company's election) of the Company's 7 1/2% Preferred Stock
at a purchase price of $25 per share. The Company may redeem any or all of the
Preferred Purchase Units at anytime after May 10, 1998, at par, and, as a
result, some or all of the 7 1/2% Preferred Stock may not be issued by the
Company. The 7 1/2% Preferred Stock would rank prior to the Company's Common
Stock, but would have no voting rights except if the Preferred Purchase Units
were in default or the Certificate of Incorporation was proposed to be amended
in a manner adverse to the holders of the 7 1/2% Preferred Stock. The 7 1/2%
Preferred Stock would rank pari passu with each other series of Existing
Preferred Stock with respect to dividends and liquidation rights. The 7 1/2%
Preferred Stock, if issued, would not be convertible into other securities of
the Company. The shares of preferred stock which could be issued pursuant to the
purchase contracts have been reserved by the Company on its stock records.
DESCRIPTION OF PREFERRED STOCK WARRANTS
The Company may issue warrants for the purchase of Preferred Stock
("Preferred Stock Warrants"). Preferred Stock Warrants may be issued
independently or together with other Securities offered by any Prospectus
Supplement and may be attached to or separate from such other Securities. Each
series of Preferred Stock Warrants will be issued under one or more warrant
agreements (each a "Preferred Stock Warrant Agreement") to be entered into
between the Company and a bank or trust company, as preferred stock warrant
agent which will be designated in the applicable Prospectus Supplement (the
"Preferred Stock Warrant Agent"), all as set forth in the Prospectus Supplement
relating to the particular issue of Preferred Stock Warrants. The Preferred
Stock Warrant Agent will act solely as an agent of the Company in connection
with the Preferred Stock Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of Preferred Stock
Warrant Certificates or beneficial owners of Preferred Stock Warrants. The
following summaries of certain provisions of the form of Preferred Stock Warrant
Agreement and form of certificate, if any, representing the Preferred Stock
Warrants (the "Preferred Stock Warrant Certificates") do not purport to be
complete and are subject to and are qualified in their entirety by reference to,
all the provisions of the Preferred Stock Warrant Agreement and the Preferred
Stock Warrant Certificates which Agreement and Certificate will be filed as an
exhibit to or incorporated by reference in the Registration Statement of which
this Prospectus forms a part.
If Preferred Stock Warrants are offered, the applicable Prospectus
Supplement will describe the terms of such Preferred Stock Warrants, the
Preferred Stock Warrant Agreement and, if applicable, the Preferred Stock
Warrant Certificates, including the following, where applicable:
- the offering price;
- the designation, aggregate number and terms of the series of
Preferred Stock purchasable upon exercise of such Preferred Stock Warrants
and minimum number of Preferred Stock Warrants that are exercisable;
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- if applicable, the designation and terms of the Securities with
which such Preferred Stock Warrants are being offered and the number of
such Preferred Stock Warrants being offered with each such Security;
- if applicable, the date on and after which such Preferred Stock
Warrants and the related Securities will be transferable separately;
- the number and stated values of the series of Preferred Stock
purchasable upon exercise of each such Preferred Stock Warrant and the
price at which such number of shares of Preferred Stock of such series may
be purchased upon such exercise;
- the date on which the right to exercise such Preferred Stock
Warrants shall commence and the date on which such right shall expire;
- whether the Preferred Stock Warrants represented by the Preferred
Stock Warrant Certificates will be issued in registered or bearer form;
- information with respect to book-entry procedures, if any; and
- any other terms of such Preferred Stock Warrants for the purchase of
shares of Preferred Stock.
Preferred Stock Warrant Certificates may be exchanged for new Preferred
Stock Warrant Certificates of different denominations, may (if in registered
form) be presented for registration of transfer, and may be exercised at the
corporate trust office of the Preferred Stock Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of any
Preferred Stock Warrant, a holder thereof shall have no rights of a holder of
shares of the Preferred Stock purchasable upon such exercise, including the
right to receive payment of dividends, if any, on the underlying Preferred Stock
or the right to vote such underlying Preferred Stock.
Prospective purchasers of Preferred Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Preferred Stock Warrants. The Prospectus
Supplement relating to any issue of Preferred Stock Warrants will describe such
considerations.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue warrants for the purchase of Common Stock ("Common
Stock Warrants"). Common Stock Warrants may be issued independently or together
with other Securities offered by any Prospectus Supplement and may be attached
to or separate from such Securities. Each series of Common Stock Warrants will
be issued under one or more warrant agreements (each a "Common Stock Warrant
Agreement") to be entered into between the Company and a bank or trust company,
as common stock warrant agent which will be designated in the applicable
Prospectus Supplement (the "Common Stock Warrant Agent"), all as set forth in
the Prospectus Supplement relating to the particular issue of Common Stock
Warrants. The Common Stock Warrant Agent will act solely as an agent of the
Company in connection with the Common Stock Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Common Stock Warrants. The following summaries of certain
provisions of the form of Common Stock Warrant Agreement and certificate , if
any, representing Common Stock Warrants (the "Common Stock Warrant
Certificates") do not purport to be complete and are subject to and are
qualified in their entirety by reference to, all the provisions of the Common
Stock Warrant Agreement and the Common Stock Warrant Certificate which Agreement
and Certificate will be filed as an exhibit to or incorporated by reference in
the Registration Statement which this Prospectus forms a part of.
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If Common Stock Warrants are offered, the related Prospectus Supplement
will describe the terms of such Common Stock Warrants, the Common Stock Warrant
Agreement and, if applicable, the Common Stock Warrant Certificates, including
the following, where applicable:
- the offering price;
- the aggregate number of shares of Common Stock purchasable upon
exercise of such Common Stock Warrants and minimum number of Common Stock
Warrants that are exercisable;
- if applicable, the designation and terms of the Securities with
which such Common Stock Warrants are being offered and the number of such
Common Stock Warrants being offered with each such Security;
- if applicable, the date on and after which such Common Stock
Warrants and the related Securities will be transferable separately;
- the number of shares of Common Stock purchasable upon exercise of
each such Common Stock Warrant and the price at which such number of shares
of Common Stock may be purchased upon such exercise;
- the date on which the right to exercise such Common Stock Warrants
shall commence and the date on which such right shall expire;
- whether the Common Stock Warrants represented by the Common Stock
Warrant Certificates will be issued in registered or bearer form;
- information with respect to book-entry procedures, if any; and
- any other terms of such Common Stock Warrants for the purchase of
shares of Common Stock.
Common Stock Warrant Certificates may be exchanged for new Common Stock
Warrant Certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Common Stock Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Common Stock
Warrant a holder thereof shall have no rights of a holder of shares of the
Common Stock purchasable upon such exercise, including the right to receive
payments of dividends, if any, on the Common Stock purchasable upon such
exercise or to exercise any applicable right to vote.
Prospective purchasers of Common Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Common Stock Warrants. The Prospectus
Supplement relating to any issue of Common Stock Warrants will describe such
considerations.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company is authorized to issue 2,500,000,000 shares of common stock,
$0.01 par value per share (the "Common Stock"). As of October 2, 1998, there
were outstanding 1,179,702,784 shares of the Company's Common Stock.
Holders of the Company's Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors out of any funds legally
available therein provided that, so long as any shares of the Company's
preferred stock are outstanding, no dividends (other than dividends payable in
Common Stock) or other distributions (including redemptions and purchases) may
be made with respect to the Common Stock unless full cumulative dividends on the
Company's preferred stock have been made. Holders of the Company's Common Stock
are entitled upon the liquidation or winding up of the Company, after claims of
creditors and preferences of the Company's Existing Preferred Stock and any
other series of preferred stock hereafter authorized, to receive pro rata the
net assets of the Company.
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The holders of the Common Stock are entitled to one vote for each share
held and are vested with all of the voting power except as the Board of
Directors of the Company has provided with respect to the outstanding shares of
the Company's Existing Preferred Stock or may provide, in the future, with
respect to any other series of preferred stock which it may hereafter authorize.
Generally, holders of the Company's Series B Preferred Stock and Series C
Preferred Stock have no voting rights.
The shares of Common Stock have non-cumulative voting rights, which means
that the holders of more than 50% of the shares of Common Stock voting for the
election of directors can elect 100% of the directors standing for election at
any meeting if they choose to do so and, in such event, the holders of the
remaining shares voting for the election of directors will not be able to elect
any person or persons to the Board of Directors of the Company at that meeting.
The Company's Certificate of Incorporation includes specific provisions
with respect to mergers and other business combinations. In general, these
provisions require that, in the case of a proposed merger or other business
combination involving the Company and an Interested Stockholder (as defined in
the Certificate of Incorporation), the approving vote of the holders of at least
a majority of the voting power of all shares of voting stock held by persons who
are not Interested Stockholders or persons affiliated with Interested
Stockholders is required, unless the business combination has been approved by a
majority of directors not affiliated with the Interested Stockholder or unless
certain conditions regarding minimum price and procedural protections are met
with respect to each class of the Company's then outstanding voting stock. The
provisions of the Certificate of Incorporation also require that the Board of
Directors will not approve a proposal for a business combination or a tender
offer until the Board of Directors has evaluated the proposal in light of its
effect on the stockholders and employees of the Company and the communities
served by the Company. These provisions of the Certificate of Incorporation
could be used to make more difficult a change in control of the Company.
The issued and outstanding shares of the Company's Common Stock are fully
paid and nonassessable. The holders of the Company's Common Stock do not have
any preemptive rights to subscribe for additional shares of capital stock of the
Company. The holders of Common Stock have no conversion rights, the Common Stock
is not subject to redemption by either the Company or a stockholder, and there
is no restriction on the purchase by the Company of shares of Common Stock
except for certain regulatory limits.
The Company's Common Stock is listed on the New York and Chicago Stock
Exchanges. First Chicago Trust Company of New York, or an affiliate thereof, is
the transfer agent, registrar and dividend disbursing agent for the Common
Stock.
PLAN OF DISTRIBUTION
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Prospectus
Supplement will describe the method of distribution of the Securities offered
therein.
The Company may sell Securities directly, through agents designated from
time to time, through underwriting syndicates led by one or more managing
underwriters or through one or more underwriters acting alone. Each Prospectus
Supplement will set forth the terms of the Securities to which such Prospectus
Supplement relates, including the name or names of any underwriters or agents
with whom the Company has entered into arrangements with respect to the sale of
such Securities, the public offering or purchase price of such Securities and
the net proceeds to the Company from such sale, any underwriting discounts and
other items constituting underwriters' compensation, any discounts and
commissions allowed or paid to dealers, if any, any commissions allowed or paid
to agents, and the securities exchange or exchanges, if any, on which such
Securities will be listed. Dealer trading may take place in certain of the
Securities, including Securities not listed on any securities exchange.
Securities may be purchased to be reoffered to the public through
underwriting syndicates led by one or more managing underwriters, or through one
or more underwriters acting alone. The underwriter or
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underwriters with respect to each underwritten offering of Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover page of such Prospectus Supplement. Unless otherwise set
forth in the applicable Prospectus Supplement, the obligations of the
underwriters to purchase the Securities will be subject to certain conditions
precedent and each of the underwriters with respect to a sale of Securities will
be obligated to purchase all of its Securities if any are purchased. Any initial
public offering price and any discounts or concession allowed or reallowed or
paid to dealers may be changed from time to time.
Securities may be offered and sold by the Company through agents designated
by the Company from time to time. Any agent involved in the offer and sale of
any Securities will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement relating to such offering.
Unless otherwise indicated in such Prospectus Supplement, any such agent will be
acting on a reasonable efforts basis for the period of its appointment.
Offers to purchase Securities may be solicited directly by the Company and
sales thereof may be made by the Company directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale thereof. The terms of any such sales will be
described in the Prospectus Supplement relating thereto. The Company may also
issue contracts under which the counterparty may be required to purchase
Securities. Such contracts would be issued with Securities in amounts, at prices
and on terms to be set forth in a Prospectus Supplement.
The anticipated place and time of delivery of Securities will be set forth
in the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or agents to solicit offers by certain institutions to
purchase Securities from the Company pursuant to delayed delivery contracts
providing for payment and delivery at a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. Unless otherwise set forth in the applicable Prospectus Supplement,
the obligations of any purchaser under any such contract will not be subject to
any conditions except that (i) the purchase of the Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and (ii) if the Securities are also being sold to
underwriters acting as principals for their own account, the underwriters shall
have purchased such Securities not sold for delayed delivery. The underwriters
and such other persons will not have any responsibility in respect of the
validity or performance of such contracts.
Any underwriter or agent participating in the distribution of the
Securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold and any discounts or
commissions received by them from the Company and any profit realized by them on
the sale or resale of the Securities may be deemed to be underwriting discounts
and commissions under the Securities Act.
Underwriters and agents may be entitled, under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such underwriters or agents may be required to
make in respect thereof. Certain of any such underwriters and agents including
their associates, may be customers of, engage in transactions with and perform
services for, the Company and its subsidiaries in the ordinary course of
business. One or more affiliates of the Company may from time to time act as an
agent or underwriter in connection with the sale of the Securities to the extent
permitted by applicable law. The participation of any such affiliate in the
offer and sale of the Securities will comply with Rule 2720 of the Conduct Rules
of the National Association of Securities Dealers, Inc. regarding the offer and
sale of securities of an affiliate.
This Prospectus and related Prospectus Supplements may be used by one or
more affiliates of the Company in connection with offers and sales related to
secondary market transactions in the Securities to the
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extent permitted by applicable law. Any such affiliate 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.
LEGAL OPINIONS
Certain legal matters relating to the Securities offered hereby will be
passed upon for the Company by Sherman I. Goldberg, General Counsel and
Secretary of the Company, and for any underwriters, selling agents and certain
other purchasers by Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue,
New York, New York 10019. Cravath, Swaine & Moore performs legal services for
the Company from time to time.
EXPERTS
The consolidated financial statements of BANC ONE and its subsidiaries,
incorporated in this Prospectus by reference to the BANC ONE Annual Report on
Form 10-K for the year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report dated February 12, 1998 accompanying such financial statements, and are
incorporated herein by reference in reliance upon the report of such firm, which
report is given upon their authority as experts in accounting and auditing.
The consolidated financial statements of FCN included in the Annual Report
on Form 10-K for the year ended December 31, 1997, incorporated herein by
reference have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
expert in accounting and auditing in giving said report.
The supplemental consolidated financial statements of the Company appearing
in the Current Report on Form 8-K dated October 6, 1998 have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
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