<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
BANK ONE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6711 31-1597175
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
---------------
100 EAST BROAD STREET, COLUMBUS, OHIO 43271, (614) 248-5944
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
STEVEN ALAN BENNETT, ESQ.
VICE PRESIDENT, SECRETARY AND ASSISTANT TREASURER,
BANK ONE CORPORATION
100 EAST BROAD STREET
COLUMBUS, OHIO 43271-0158
(614) 248-7590
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
EDWARD D. HERLIHY, ESQ. CHARLES F. ANDREWS, ESQ. SHERMAN I. GOLDBERG, ESQ.
WACHTELL, LIPTON, ROSEN & BANC ONE CORPORATION FIRST CHICAGO NBD
KATZ DEPARTMENT OH1-0158 CORPORATION
51 WEST 52ND STREET 100 EAST BROAD STREET ONE FIRST NATIONAL PLAZA
NEW YORK, NY 10019 COLUMBUS, OH 43271-0158 CHICAGO, IL 60670
TELEPHONE: (212) 403-1000 TELEPHONE: (614) 248-6035 TELEPHONE: (312) 732-3551
Approximate date of commencement of proposed sale to the public: Upon
consummation of the transactions described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE FEE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share......... 547,000,000 $51.27 $28,046,412,037 $8,273,692
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Footnotes on following page)
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
(Footnotes from cover page)
- --------
(1) Based on an estimate of the maximum number of shares of common stock, par
value $0.01 per share, ("BANK ONE Common Stock"), of BANK ONE CORPORATION
("BANK ONE") to be issued in connection with the merger of First Chicago
NBD Corporation ("FCN") with and into BANK ONE. No registration fee is
paid in respect of the shares of BANK ONE Common Stock to be issued to
holders of the common stock, without par value, of BANC ONE CORPORATION,
an Ohio corporation ("BANC ONE") pursuant to the merger of BANC ONE with
and into BANK ONE, as such shares are not required to be registered
hereunder by virtue of Rule 145(a)(2) under the Securities and Exchange
Act of 1933, as amended.
(2) Calculated in accordance with Rule 457(f)(1) based the aggregate market
value on July 29, 1998 of the shares of common stock, par value $1.00 per
share, of FCN (the "FCN Common Stock") expected to be canceled in
connection with the merger and computed by dividing (i) the product of (A)
the average of the high and low prices of FCN Common Stock as reported on
The New York Stock Exchange, Inc. (the "NYSE") Composite Transactions List
on July 29, 1998 ($83.06) and (B) 547,000,000, representing the maximum
number of shares of FCN Common Stock expected to be canceled in connection
with the merger, by (ii) 337,654,321, representing the maximum number of
shares of BANK ONE Common Stock to be issued in connection with the
Merger.
<PAGE>
[LOGO OF BANK [LOGO OF FIRST
ONE APPEARS CHICAGO NBD
HERE] APPEARS HERE]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of BANC ONE CORPORATION and First Chicago NBD
Corporation have agreed on a merger of BANC ONE and First Chicago NBD. This
proposed transaction is a merger of equals that will create one of the
strongest financial institutions in the nation. The combined company will be an
effective competitor on many fronts, with a powerful consumer and commercial
banking presence spanning West Virginia to Arizona, great strength in corporate
banking and one of the largest credit card businesses in the country. The
combined company will have assets of $240 billion, deposits of $154 billion and
stockholders' equity of $19 billion. We are convinced that this merger will
position our two companies to grow and flourish as the financial services
business evolves and consolidates.
In the merger, BANC ONE and First Chicago NBD will combine into a new
corporation to be headquartered in Chicago and named "BANK ONE CORPORATION."
The new BANK ONE CORPORATION will be a Delaware corporation. Each share of BANC
ONE common stock that you hold will be converted automatically into a share of
common stock of the new BANK ONE CORPORATION. Each share of First Chicago NBD
common stock that you hold will be converted automatically into the right to
receive 1.62 shares of common stock of the new BANK ONE CORPORATION.
We can't complete the merger unless the stockholders of both of our companies
approve it. Each of us will hold a meeting of our stockholders to vote on this
merger proposal. YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend
your stockholder meeting, please take the time to vote by completing and
mailing the enclosed proxy card to us. If you sign, date and mail your proxy
card without indicating how you want to vote, your proxy will be counted as a
vote in favor of the merger. Not returning your card or not instructing your
broker how to vote any shares held for you in "street name" will have the same
effect as a vote against the merger.
The dates, times and places of the meetings are as follows:
FOR BANC ONE SHAREHOLDERS: FOR FIRST CHICAGO NBD STOCKHOLDERS:
September 15, 1998, 9:00 a.m., local September 15, 1998, 9:30 a.m., local
time time
Auditorium First Chicago Center
BANC ONE Corporate Center One First National Plaza
1111 Polaris Parkway Chicago, Illinois 60670
Columbus, Ohio 43240
This document provides you with detailed information about these meetings and
the proposed merger. You can also get information about our companies from
publicly available documents that our companies have filed with the Securities
and Exchange Commission. We encourage you to read this entire document
carefully.
We strongly support this combination of our companies and join with all of the
other members of our Boards of Directors in enthusiastically recommending that
you vote in favor of the merger.
/s/ John B. McCoy /s/ Verne G. Istock
John B. McCoy Verne G. Istock
Chairman and Chief Executive Chairman, President and Chief
Officer Executive Officer
BANC ONE CORPORATION First Chicago NBD Corporation
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THE SECURITIES TO BE ISSUED UNDER THIS JOINT
PROXY STATEMENT-PROSPECTUS OR DETERMINED IF THIS JOINT PROXY STATEMENT-
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 ANY OF THE
PARTIES, AND THEY ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
JOINT PROXY STATEMENT-PROSPECTUS DATED JULY 31, 1998
AND FIRST MAILED TO STOCKHOLDERS ON AUGUST 5, 1998.
<PAGE>
[LOGO OF BANK ONE APPEARS HERE]
BANC ONE CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Columbus, Ohio
July 31, 1998
TO THE SHAREHOLDERS OF
BANC ONE CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of BANC ONE
CORPORATION will be held on Tuesday, September 15, 1998, 9:00 a.m. local time,
at the auditorium in the BANC ONE Corporate Center, 1111 Polaris Parkway,
Columbus, Ohio, for the purpose of considering and voting upon the following
matters, all as set forth in the accompanying Joint Proxy Statement-Prospectus:
1. To consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Reorganization, dated as of April 10, 1998, as amended, by and among
BANC ONE, First Chicago NBD Corporation, a Delaware corporation, and BANK
ONE CORPORATION, a Delaware corporation, and the consummation of the
transactions contemplated by that agreement, pursuant to which, among other
things, BANC ONE and First Chicago NBD will each merge with and into BANK
ONE CORPORATION, in each case upon the terms and subject to the conditions
set forth in the Agreement and Plan of Reorganization, as more fully
described in the enclosed Joint Proxy Statement-Prospectus.
2. To transact such other business as may properly be brought before the
Special Meeting or any adjournments or postponements of the Special Meeting.
The close of business on July 22, 1998 has been fixed as the date of record for
those shareholders entitled to vote at the Special Meeting and any adjournments
or postponements of the Special Meeting. Accordingly, only shareholders of
record on such date are entitled to notice of, and to vote at, the Special
Meeting and any adjournments or postponements of the Special Meeting. The stock
transfer books of BANC ONE will not be closed.
By ORDER OF THE BOARD OF DIRECTORS
/s/ Steven Alan Bennett
Steven Alan Bennett
Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
[LOGO OF FIRST CHICAGO NBD APPEARS HERE]
----------------
FIRST CHICAGO NBD CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 15, 1998
----------------
TO THE STOCKHOLDERS OF
FIRST CHICAGO NBD CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of First Chicago
NBD Corporation, a Delaware corporation, will be held on Tuesday, September 15,
1998, 9:30 a.m., local time, at First Chicago Center, One First National Plaza,
Chicago, Illinois 60670, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement and
Plan of Reorganization, dated as of April 10, 1998, as amended, by and among
First Chicago NBD, BANC ONE CORPORATION, an Ohio corporation, and BANK ONE
CORPORATION, a Delaware corporation, and the consummation of the
transactions contemplated by that agreement, pursuant to which, among other
things, BANC ONE and First Chicago NBD will each merge with and into BANK
ONE CORPORATION, in each case upon the terms and subject to the conditions
set forth in the Agreement and Plan of Reorganization, as more fully
described in the enclosed Joint Proxy Statement-Prospectus.
2. To transact such other business as may properly be brought before the
Special Meeting or any adjournments or postponements of the Special Meeting.
The close of business on July 22, 1998 has been fixed as the record date for
determining stockholders entitled to vote at the special meeting of First
Chicago NBD Stockholders and any adjournments or postponements of the Special
Meeting. Accordingly, only stockholders of record on such date are entitled to
notice of, and to vote at, the Special Meeting and any adjournments or
postponements of the Special Meeting. The holders of record of First Chicago
NBD preferred stock on the record date are entitled to notice of, but will not
be entitled to vote at, the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sherman I. Goldberg
Sherman I. Goldberg
Secretary
July 31, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
<PAGE>
To find any one of the principal sections identified below,
simply bend the document slightly to expose the black tabs and
open the document to the tab which corresponds to the title of the
section you wish to read. For your convenience, we have included
an index of frequently used capitalized terms in this Joint Proxy
Statement-Prospectus in an Index of Defined Terms, which is
printed on gold paper as the last item in the Summary section of
this Joint Proxy Statement-Prospectus.
------
TABLE OF CONTENTS
------
SUMMARY
------
SPECIAL MEETINGS
------
THE MERGER
------
BUSINESS AND MANAGEMENT
------
REGULATION AND SUPERVISION
------
CAPITAL STOCK AND COMPARISON OF STOCKHOLDER RIGHTS
------
CERTAIN OTHER MATTERS
------
FINANCIAL INFORMATION
------
APPENDICES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY
The Companies........................................................... 1
The Stockholders' Meetings.............................................. 1
Record Date; Vote Required.............................................. 2
Our Reasons for the Merger.............................................. 2
Our Recommendations to Stockholders..................................... 2
The Merger.............................................................. 2
General............................................................... 2
Exchange of Shares.................................................... 3
Opinions of Financial Advisors........................................ 3
Stock Options......................................................... 4
Management and Operations after the Merger............................ 4
What We Need to do to Complete the Merger............................. 4
Termination of the Agreement; Expenses................................ 5
Waiver and Amendment.................................................. 5
Accounting Treatment.................................................. 5
Regulatory Approvals.................................................. 5
BANC ONE and First Chicago NBD Stock Option Agreements................ 6
Interests of Directors and Officers in the Merger that are Different
From Your Interests.................................................. 6
Appraisal Rights...................................................... 7
Certain Federal Income Tax Consequences............................... 7
Certain Differences in the Rights of Stockholders....................... 7
BANC ONE Second Quarter 1998 Financial Results.......................... 8
FCN Second Quarter 1998 Financial Results............................... 8
Unaudited Comparative Per Share Data.................................... 9
Selected Financial Data................................................. 11
Index of Defined Terms.................................................. 14
SPECIAL MEETINGS
BANC ONE Special Meeting.................................................. 16
General................................................................. 16
Matters to be Considered................................................ 16
Proxies................................................................. 16
Solicitation of Proxies................................................. 16
Record Date and Voting Rights........................................... 17
Recommendation of BANC ONE Board........................................ 18
FCN Special Meeting....................................................... 19
General................................................................. 19
Matters to be Considered................................................ 19
Proxies................................................................. 19
Solicitation of Proxies................................................. 19
Record Date and Voting Rights........................................... 20
Recommendation of FCN Board............................................. 21
</TABLE>
(i)
TABLE OF CONTENTS
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE MERGER
General.................................................................... 22
Background of the Merger................................................... 22
Recommendation of the BANC ONE Board and Reasons for the Merger............ 24
Recommendation of the FCN Board and Reasons for the Merger................. 26
Opinions of BANC ONE's Financial Advisors.................................. 27
Opinions of FCN's Financial Advisors....................................... 34
Structure of the Merger.................................................... 41
Conversion of Stock; Treatment of Options.................................. 41
Exchange of Certificates; Fractional Shares................................ 43
First Effective Time; Second Effective Time................................ 44
Representations and Warranties............................................. 45
Conduct of Business Pending the Merger and Other Agreements................ 45
Conditions to Consummation of the Merger................................... 48
Regulatory Approvals Required for the Merger............................... 49
Certain Federal Income Tax Consequences.................................... 52
Accounting Treatment....................................................... 53
Termination of the Merger Agreement........................................ 54
Extension, Waiver and Amendment of the Merger Agreement.................... 54
Employee Benefits and Plans................................................ 55
Stock Exchange Listing..................................................... 55
Expenses................................................................... 56
Dividends.................................................................. 56
Interests of Certain Persons in the Merger................................. 56
BANC ONE and FCN Option Agreements......................................... 58
Restrictions on Resales by Affiliates...................................... 63
FCN Dividend Reinvestment Plan............................................. 63
BUSINESS AND MANAGEMENT
Management and Operations after the Merger................................. 64
Price Range of Common Stock and Dividends.................................. 66
Information about BANC ONE and BANK ONE.................................... 68
General.................................................................. 68
Management and Additional Information.................................... 68
Information about FCN...................................................... 69
General.................................................................. 69
Management and Additional Information.................................... 69
REGULATION AND SUPERVISION
General.................................................................... 70
Liability for Bank Subsidiaries............................................ 70
Capital Requirements....................................................... 71
Dividend Restrictions...................................................... 72
Deposit Insurance Assessments.............................................. 72
Depositor Preference Statute............................................... 73
Brokered Deposits.......................................................... 73
Interstate Banking And Branching........................................... 73
CAPITAL STOCK AND COMPARISON OF SHAREHOLDER RIGHTS
Description of BANK ONE Capital Stock...................................... 74
Comparison of BANC ONE Common Stock, FCN Common Stock and BANK ONE
Common Stock............................................................. 76
</TABLE>
(ii)
TABLE OF CONTENTS
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CERTAIN OTHER MATTERS
Dissenters' Appraisal Rights............................................... 86
BANC ONE Shareholders.................................................... 86
FCN Stockholders......................................................... 88
Legal Matters.............................................................. 88
Experts.................................................................... 88
Shareholder Proposals...................................................... 88
Other Matters.............................................................. 88
Independent Public Accountants............................................. 89
Where You Can Find More Information........................................ 89
Forward-Looking Statements................................................. 91
FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Combined Financial Information............... 92
Notes to the Unaudited Pro Forma Condensed Combined Financial Information.. 99
Appendix A Agreement and Plan of Reorganization........................... A-1
Appendix B Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated.. B-1
Appendix C Opinion of Morgan Stanley & Co. Incorporated................... C-1
Appendix D Opinion of Lazard Freres & Co. LLC............................. D-1
Appendix E Opinion of Goldman, Sachs & Co................................. E-1
Appendix F Ohio Revised Code Sec. 1701.85--Dissenters' Rights............. F-1
</TABLE>
(iii)
TABLE OF CONTENTS
<PAGE>
SUMMARY
This brief summary highlights selected information from the Joint Proxy
Statement-Prospectus. It does not contain all of the information that is
important to you. You should carefully read the entire Joint Proxy Statement-
Prospectus and the other documents to which this document refers you to fully
understand the merger. See "Where You Can Find More Information" on page 89.
THE COMPANIES (PAGE 69)
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
(614) 248-5944
BANC ONE is a bank holding company registered under federal law and
incorporated in Ohio. We operate banking offices in Arizona, Colorado,
Illinois, Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West
Virginia and Wisconsin. We also own nonbank subsidiaries that engage in credit
card and merchant processing, lending to consumers to help pay educational
expenses and for cars, homes and other purchases, insurance, investing in new
companies and ventures, investment and merchant banking, trust, brokerage,
investment management, equipment leasing and providing computer and data
services to other institutions. At June 30, 1998, our total assets were $124.0
billion, our total deposits were $85.0 billion and our total stockholders'
equity was $11.6 billion.
FIRST CHICAGO NBD CORPORATION
One First National Plaza
Chicago, Illinois 60670
(312) 732-4000
First Chicago NBD is a bank holding company registered under federal law and
incorporated in Delaware. Our lead bank subsidiary is The First National Bank
of Chicago.
First Chicago NBD also owns several other bank subsidiaries: NBD Bank
(Michigan); American National Bank and Trust Company of Chicago; NBD Bank,
National Association (Indianapolis, Indiana); NBD Bank (Elkhart, Indiana); NBD
Bank (Florida); and FCC National Bank.
We engage primarily in regional banking, corporate banking, corporate
investments and credit cards. Regional banking includes the general consumer
market, private banking and investments, small business banking and middle
market banking. At June 30, 1998, our total assets were $119.8 billion, our
total deposits were $69.5 billion, and our total stockholders' equity was $8.3
billion.
THE STOCKHOLDERS' MEETINGS (PAGE 16)
BANC ONE Shareholders. The BANC ONE special meeting will be held on Tuesday,
September 15, 1998 at 9:00 a.m., local time, at the auditorium in the BANC ONE
Corporate Center, 1111 Polaris Parkway, Columbus, Ohio. At the BANC ONE special
meeting, you will be asked:
1. to approve the merger of our company with First Chicago NBD;
2. to act on any other items that may be submitted to a vote at the meeting.
First Chicago NBD Stockholders. The First Chicago NBD special meeting will be
held on Tuesday, September 15, 1998 at 9:30 a.m., local time, at the First
Chicago Center, One First National Plaza, Chicago, Illinois. At the First
Chicago NBD special meeting, you will be asked:
1. to approve the merger of our company with BANC ONE; and
2. to act on any other items that may be submitted to a vote at the special
meeting.
RECORD DATE; VOTE REQUIRED (PAGES 17 AND 20)
BANC ONE Shareholders. You can vote at the meeting of BANC ONE shareholders if
you
1
SUMMARY
<PAGE>
owned BANC ONE common stock at the close of business on July 22, 1998. You can
cast one vote for each share of BANC ONE common stock that you owned at that
time. In order to approve the merger, the holders of a majority of the shares
of BANC ONE common stock outstanding must vote in its favor. You can vote your
shares by attending the BANC ONE meeting and voting in person or you can mark
the enclosed proxy card with your vote, sign it and mail it in the enclosed
return envelope.You can revoke your proxy as late as the date of the meeting
either by sending in a new proxy or by attending the meeting and voting in
person.
First Chicago NBD Stockholders. You can vote at the meeting of First Chicago
NBD stockholders if you owned First Chicago NBD common stock at the close of
business on July 22, 1998. You will be able to cast one vote for each share of
First Chicago NBD common stock you owned at that time. In order to approve the
merger, the holders of a majority of the shares of First Chicago NBD common
stock outstanding must vote in its favor. You can vote your shares by
telephone, over the Internet, by attending the First Chicago NBD meeting and
voting in person, or by marking the enclosed proxy card with your vote,
signing it and mailing it in the enclosed return envelope. We've printed
additional instructions on how to vote by telephone and over the Internet on
the proxy card. You can revoke your proxy as late as the date of the meeting
either by sending in a new proxy, changing your vote by telephone or over the
Internet, or by attending the meeting and voting in person.
OUR REASONS FOR THE MERGER (PAGES 24 AND 26)
Our companies are proposing to merge because we believe that by combining them
we can create a stronger and more diversified company that will provide
significant benefits to our stockholders and customers alike. For instance, the
larger size of our retail banking business and our credit card business should
help us to reduce duplicate costs. We also believe that by bringing our
customers and banking products together, we can do a better job of increasing
our combined revenues than we could if we did not merge. We believe that the
merger will strengthen our position as a competitor in the financial services
business, which is rapidly changing and growing more competitive. To review our
reasons for the merger in greater detail, as well as how we came to agree on
the merger, please see pages 22 through 27.
OUR RECOMMENDATIONS TO STOCKHOLDERS (PAGES 24 AND 26)
BANC ONE Shareholders. The Board of Directors of BANC ONE believes that the
merger is fair to you and in your best interests, and unanimously recommends
that you vote "FOR" the proposal to approve the merger.
First Chicago NBD Stockholders. The Board of Directors of First Chicago NBD
believes that the merger is fair to you and in your best interests, and
unanimously recommends that you vote "FOR" the proposal to approve the merger.
THE MERGER (PAGE 22)
We've attached the Agreement and Plan of Reorganization to this document as
Appendix A. Please read the Agreement. It is the legal document that governs
the merger.
GENERAL
We propose a combination in which BANC ONE and First Chicago NBD will each
merge into a new company that will be named "BANK ONE CORPORATION." We hope to
complete this merger by the end of 1998.
EXCHANGE OF SHARES (PAGE 43)
BANC ONE Shareholders. As a BANC ONE Shareholder, each of your shares of BANC
ONE common stock will automatically become one share of the new company's
common stock. You will not need to send in your shares of BANC ONE common stock
because after the merger those shares of common stock will represent shares in
the new company.
2
SUMMARY
<PAGE>
First Chicago NBD Stockholders. As a First Chicago NBD Stockholder, each of
your shares of First Chicago NBD common stock will automatically become
exchangeable for 1.62 shares of the new company's common stock. The total
number of shares you receive will therefore be equal to 1.62 times the number
of shares of First Chicago NBD common stock you own. The new company will not
issue fractional shares. Instead, you'll receive the value of any fractional
share in cash, based on the market value of BANC ONE's common stock. Following
the merger, you will be entitled to exchange your shares of First Chicago NBD
common stock for shares of the new company's common stock by sending your First
Chicago NBD common stock share certificates and a form that we will send to you
to First Chicago Trust Company of New York, which will then exchange them for
shares of the new company's common stock. For more information on how this
exchange procedure works, see "Exchange of Certificates; Fractional Shares" on
page 43 of this document. For example, if you owned ten shares of First Chicago
NBD common stock, after the merger you will send in the letter of transmittal
and your old First Chicago NBD certificates and in exchange you will receive
sixteen shares of the new company's common stock and a check for the market
value of two-tenths of a share.
Shares of BANC ONE and First Chicago NBD are quoted on the New York Stock
Exchange. On April 9, 1998, the last trading day before we announced the
merger, BANC ONE common stock closed at $61.75 per share and First Chicago NBD
common stock closed at $94.00 per share. On July 30, 1998, BANC ONE common
stock closed at $51.88 per share and First Chicago NBD common stock closed at
$83.63 per share.
Based on the exchange ratio in the merger, which is 1.62, the market value of
the consideration that First Chicago NBD stockholders will receive in the
merger for each share of First Chicago NBD common stock would be $100.04 based
on BANC ONE's closing stock price on April 9, 1998, and $84.04 based on BANC
ONE's closing stock price on July 30, 1998. Of course, the market price of BANC
ONE will fluctuate prior to the merger, while the exchange ratio is fixed. You
should obtain current stock price quotations for BANC ONE common stock and
First Chicago NBD common stock. These quotations are available from your stock
broker, in major newspapers such as The Wall Street Journal and on the
Internet.
In addition, each share of First Chicago NBD preferred stock that is
outstanding at completion of the merger will be exchangeable for one share of
preferred stock of the new company having the same terms.
OPINIONS OF FINANCIAL ADVISORS (PAGES 28 AND 34)
BANC ONE Shareholders. Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Morgan Stanley & Co. Incorporated have each delivered to the BANC ONE Board of
Directors its opinion that, as of the date of this document, the exchange ratio
is fair to BANC ONE from a financial point of view. We have attached these
opinions to this document as Appendices B and C. You should read them
completely to understand the assumptions made, matters considered and
limitations of the review made by Merrill Lynch and Morgan Stanley in providing
these opinions.
First Chicago NBD Stockholders. Lazard Freres & Co. LLC and Goldman, Sachs &
Co. have each delivered to the First Chicago NBD Board of Directors its opinion
that, as of the date of this document, the exchange ratio is fair to the
holders of First Chicago NBD common stock from a financial point of view. We
have attached these opinions to this document as Appendices D and E. You should
read them completely to understand the assumptions made, matters considered and
limitations of the review made by Lazard Freres and Goldman Sachs in providing
these opinions.
3
SUMMARY
<PAGE>
STOCK OPTIONS (PAGE 41)
BANC ONE Stock Options. Upon completion of the merger, each option to acquire
BANC ONE common stock granted under BANC ONE's stock option plans that is
outstanding and unexercised immediately before completing the merger will
become an option to purchase the same number of shares of the new company's
common stock at the same exercise price. The option will continue to be
governed by the terms of BANC ONE's stock option plans.
First Chicago NBD Stock Options. Upon completion of the merger, each option to
acquire First Chicago NBD common stock granted under First Chicago NBD's stock
option plans that is outstanding and unexercised immediately before completing
the merger will become an option to purchase the new company's common stock.
The option will continue to be governed by the terms of First Chicago NBD's
stock option plans. The number of shares of the new company's common stock
subject to the new stock options, as well as the exercise price of those stock
options, will be adjusted to account for the exchange ratio in the merger.
MANAGEMENT AND OPERATIONS AFTER THE MERGER (PAGE 65)
The present managements of our companies will share the responsibility of
managing the resulting company. The board of directors of the new company will
initially be composed of 22 directors. Half will come from BANC ONE and half
will come from First Chicago NBD. We expect the BANC ONE directors to include
John B. McCoy, Chairman and Chief Executive Officer of BANC ONE, and Richard J.
Lehmann, President and Chief Operating Officer of BANC ONE. We expect the First
Chicago NBD directors to include Verne G. Istock, Chairman, President and Chief
Executive Officer of First Chicago NBD, and David J. Vitale, Vice Chairman of
First Chicago NBD. Mr. Istock will be Chairman of the Board of Directors of the
new company. Mr. McCoy will be President and Chief Executive Officer of the new
company. Mr. Lehmann and Mr. Vitale will each be a Vice Chairman of the new
company.
While no assurances can be made, we expect to achieve cost savings and
additional revenue opportunities in the merger that should have a beneficial
effect on our earnings per share. For example, we believe that the elimination
of overlapping operations in several parts of our businesses will allow us to
reduce our costs. We also expect to recognize a one-time charge to earnings in
the year in which we complete the merger, related to merger expenses and costs
of integrating our two companies. We think that charge will be about $1.25
billion.
WHAT WE NEED TO DO TO COMPLETE THE MERGER (PAGE 48)
The completion of the merger depends on a number of conditions being met. In
addition to our compliance with the Agreement and Plan of Reorganization, these
include:
1. Approval of the Agreement and Plan of Reorganization by both the BANC ONE
shareholders and the First Chicago NBD stockholders.
2. Approval of the merger by certain federal and state regulatory authorities.
3. Receipt by each of us of a legal opinion that, for United States federal
income tax purposes, BANC ONE, First Chicago NBD, BANK ONE CORPORATION, and
BANC ONE shareholders and First Chicago NBD stockholders who exchange their
shares for shares of BANK ONE common stock, will not recognize any gain or
loss as a result of the merger, except in connection with the payment of cash
instead of fractional shares. These opinions will be subject to various
limitations and we recommend that you read the fuller description of tax
consequences provided in this document beginning at page 52.
4. Receipt of letters from our independent accountants that the merger will
qualify for "pooling of interests" accounting treatment.
4
SUMMARY
<PAGE>
5. Approval by The New York Stock Exchange of the listing of the shares of the
new company's common stock to be issued in the merger.
6. The absence of any injunction or legal restraint blocking the merger or
government proceedings trying to block the merger.
Where the law permits, BANC ONE or First Chicago NBD could decide to complete
the merger even though one or more of these conditions hasn't been met. We
can't be certain when (or if) the conditions to the merger will be satisfied or
waived, or that the merger will be completed.
TERMINATION OF THE AGREEMENT; EXPENSES (PAGE 54)
We can agree at any time to terminate the Agreement and Plan of Reorganization
without completing the merger, even if the stockholders of both our companies
have approved it. Also, either of us can decide, without the consent of the
other, to terminate the merger agreement if:
1. Any government agency denies an approval we need to complete the merger, and
that denial has become final and nonappealable, or if any governmental entity
issues a final, non-appealable order blocking the merger.
2. The merger has not been completed by April 10, 1999, unless the failure to
complete the merger by that time is due to a violation of the Agreement and
Plan of Reorganization by the party that wants to terminate the Agreement.
3. The other party breaches our agreement (and doesn't correct the breach
promptly) in a way that would entitle the party that wants to terminate the
agreement to not complete the merger, as long as the party looking to
terminate the agreement hasn't materially breached the agreement.
4. Our stockholders do not approve the merger.
Regardless of whether the merger is completed, we will each pay our own fees
and expenses, except that we will evenly divide the costs and expenses that
we've incurred in printing and mailing this document and the registration fees
that we will have to pay to the Securities and Exchange Commission.
WAIVER AND AMENDMENT (PAGE 55)
We can agree to amend the Agreement and Plan of Reorganization, and each of us
can waive our right to require the other party to adhere to the terms and
conditions of the Agreement, where the law allows. However, we may not do so
after our stockholders approve the merger, if the amendment or waiver reduces
or changes the consideration that will be received by First Chicago NBD
stockholders or BANC ONE shareholders, unless the affected stockholders approve
the amendment or waiver.
ACCOUNTING TREATMENT (PAGE 53)
We expect the merger to qualify as a "pooling of interests." This means that,
for accounting and financial reporting purposes, we will treat our companies as
if they had always been one company.
REGULATORY APPROVALS (PAGE 50)
The merger must be approved by the Board of Governors of the Federal Reserve
System. The U.S. Department of Justice has input into this approval process.
Once the Board of Governors approves the merger, we have to wait for up to 30
days before we can complete the merger for the Department of Justice to
complete its review.
In addition, certain state and other regulatory authorities will need to
approve or be notified of the merger before we can complete it.
We have filed, or soon will file, all of the required applications or notices
with the Federal Reserve Board and these other regulatory authorities.
5
SUMMARY
<PAGE>
As of the date of this document, we haven't yet received the required
approvals. While we don't know of any reason why we would not be able to obtain
the necessary approvals in a timely manner, we can't be certain when or if we
will get them.
BANC ONE AND FIRST CHICAGO NBD STOCK OPTION AGREEMENTS (PAGE 59)
Each of BANC ONE and First Chicago NBD, at the request of the other, entered
into a stock option agreement granting the other party an option to purchase
shares of the granting party's common stock. We granted these options to each
other in order to increase the likelihood that we would complete the merger.
The option agreements could discourage other companies from trying or proposing
to combine with either of us before we complete the merger.
The most shares that can be purchased if either of the options is exercised is
19.9% of the total number of outstanding shares of the granting party's common
stock. The purchase price per share under both of the option agreements is set
at the closing price on the New York Stock Exchange for the granting party's
common stock on the last trading day before the merger was announced on April
13, 1998. BANC ONE has an option to purchase up to 19.9% of First Chicago NBD's
outstanding common stock from First Chicago NBD at a price of $94.00 per share.
First Chicago NBD has an option to purchase up to 19.9% of BANC ONE's
outstanding common stock from BANC ONE at a price of $61.75 per share. In
addition to the option to purchase common stock, under certain circumstances
the person holding the option (or the person holding shares purchased under the
option) may require the person that granted the option to repurchase the
option, and/or any shares purchased under the option, at a predetermined price.
Neither of us can exercise our option unless certain events occur. These events
are business combination or acquisition transactions relating to our companies
and certain related activities (other than the merger we are proposing in this
document) such as a merger or the sale of a substantial amount of assets or
stock. We don't know of any event that has occurred as of the date of this
document that would permit either of us to exercise our option.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT ARE DIFFERENT FROM YOUR
INTERESTS (PAGE 56)
Some of our directors and officers have interests in the merger that are
different from, or in addition to, their interests as stockholders in our
companies. These interests exist because of agreements that the officers have
with our companies, including change-of-control employment agreements, and
rights that the officers have under retention, incentive, or benefit and
compensation plans maintained by our respective companies. Some of these
agreements and plans will provide the officers with severance benefits if their
employment with the new company is terminated after the merger. In addition,
unvested stock options, restricted stock and unvested performance stock awards
granted under certain First Chicago NBD stock plans will become exercisable or
free to be sold by their holders in connection with the merger. Also, we have
agreed to work together to establish a retention and severance bonus program
that will treat similarly situated employees of our companies in a similar
fashion and will enable us to retain key personnel and provide them with
incentives for the benefit of the new company.
Also, following the merger, the new company will purchase directors' and
officers' insurance for the officers and directors of First Chicago NBD, and
will indemnify directors and officers of our companies, for events occurring
before the merger, including events that are related to the Agreement and Plan
of Reorganization. This indemnity and insurance will be in addition to the
indemnification and insurance to which the officers and directors of the new
company will be entitled while acting in that capacity at and after the merger.
Additional interests of some of our directors and executive officers are
described under "Management and Operations After the Merger" at page 65 of this
document.
6
SUMMARY
<PAGE>
The members of our Boards of Directors knew about these additional interests,
and considered them, when they approved the Agreement and Plan of
Reorganization and the merger.
APPRAISAL RIGHTS (PAGE 87)
BANC ONE Shareholders. Ohio law permits you to dissent from the merger and have
the fair value of your stock appraised by a court and paid to you in cash. In
order to do this, you must follow certain procedures, including filing certain
notices and not voting your shares in favor of the merger. You will not receive
any stock in the new company if you dissent and follow all of the required
procedures. Instead, you will only receive the value of your stock in cash. The
relevant sections of Ohio law governing this process are attached to this
document as Appendix F.
First Chicago NBD Stockholders. Delaware law does not provide you with
dissenters' appraisal rights in the merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES (PAGE 52)
BANC ONE Shareholders. We expect that the conversion of your shares of BANC ONE
common stock into shares of common stock of the new company generally will not
cause you to recognize any gain or loss for purposes of the United States
federal income tax.
First Chicago NBD Stockholders. We expect that for United States federal income
tax purposes, your exchange of shares of First Chicago NBD common stock for
shares of the new company's common stock generally will not cause you to
recognize any gain or loss. You will, however, have to recognize gain in
connection with any cash received instead of fractional shares.
Our obligation to complete the merger depends on our receipt of legal opinions
about the federal income tax treatment of our companies and our stockholders.
These opinions won't bind the Internal Revenue Service, which could take a
different view.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN BANC ONE SHAREHOLDERS AND CERTAIN
FIRST CHICAGO NBD STOCKHOLDERS, INCLUDING THE BANC ONE SHAREHOLDERS WHO DISSENT
FROM THE MERGER. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU
CAN BE COMPLICATED. THEY WILL DEPEND ON YOUR SPECIFIC SITUATION AND ON
VARIABLES NOT WITHIN OUR CONTROL. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A
FULL UNDERSTANDING OF THE MERGER'S TAX CONSEQUENCES.
CERTAIN DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS (PAGE 75)
The rights of BANC ONE shareholders are currently governed by the General
Corporation Law of the State of Ohio, the Amended Articles of Incorporation of
BANC ONE and the Code of Regulations of BANC ONE. The rights of First Chicago
NBD stockholders are currently governed by the Delaware General Corporation
Law, the First Chicago NBD Restated Certificate of Incorporation and the First
Chicago NBD by-laws. Upon our completing the merger, you will become
stockholders of the new company, and your rights will be governed by the
Delaware Law and by the new company's certificate of incorporation and by-laws.
They are similar to First Chicago NBD's Restated Certificate of Incorporation
and by-laws, except that the new company will not have a classified Board of
Directors.
7
SUMMARY
<PAGE>
BANC ONE SECOND QUARTER 1998 FINANCIAL RESULTS
On July 21, 1998, BANC ONE announced unaudited results of its operations for
the three and six months ended June 30, 1998. The following unaudited financial
results are derived from the unaudited consolidated financial statements for
the three and six month periods ended June 30, 1998 and 1997. Such financial
statements, in the opinion of BANC ONE management, contain the adjustments, all
of which are normal and recurring in nature, necessary to present fairly BANC
ONE's consolidated financial position, results of operations, and changes in
cash flows.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
(MILLIONS, EXCEPT PER SHARE DATA) (MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest income......... $2,486 $2,540 $4,966 $5,040
Income before income
tax(1)................. 708 112 1,515 740
Net income(1)........... 487 49 1,036 460
Net income per common
share (basic)(1)....... $0.69 $0.06 $1.47 $0.66
Net income per common
share (diluted)(1)..... $0.68 $0.06 $1.45 $0.65
Weighted average common
shares outstanding
(diluted).............. 715.3 692.6 716.0 712.4
</TABLE>
- --------
(1) Includes pre-tax merger and restructuring related charges of $182 million
and $467 million for the three and six months ended June 30, 1998 and 1997,
respectively.
At June 30, 1998, BANC ONE had consolidated total assets of $124.0 billion,
consolidated total deposits of $85.0 billion and consolidated total
stockholders' equity of $11.6 billion.
FCN SECOND QUARTER 1998 FINANCIAL RESULTS
On July 13, 1998, FCN announced unaudited results of its operations for the
three and six months ended June 30, 1998. The following unaudited financial
results are derived from the unaudited consolidated financial statements for
the three and six month periods ended June 30, 1998 and 1997. Such financial
statements, in the opinion of FCN management, contain the adjustments, all of
which are normal and recurring in nature, necessary to present fairly FCN's
consolidated financial position, results of operations, and changes in cash
flows.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
(MILLIONS, EXCEPT PER SHARE DATA) (MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest income......... $1,911 $1,860 $3,775 $3,594
Income before income
tax.................... 609 564 1,182 1,132
Net income.............. 408 378 791 758
Net income per common
share (basic).......... $1.41 $1.22 $2.73 $2.41
Net income per common
share (diluted)........ $1.38 $1.20 $2.68 $2.37
Weighted average common
shares outstanding
(diluted).............. 292.6 310.9 292.8 315.9
</TABLE>
At June 30, 1998, FCN had consolidated total assets of $119.8 billion,
consolidated total deposits of $69.5 billion and consolidated total
stockholders' equity of $8.3 billion.
8
SUMMARY
<PAGE>
UNAUDITED COMPARATIVE PER SHARE DATA
The following table shows information about our income per share, dividends per
share and book value per share, and similar information reflecting the merger
(which we refer to as "pro forma" information). In presenting the comparative
pro forma information for certain time periods, we assumed that we had been
merged throughout those periods.
We also assumed that we will treat our companies as if they had always been
combined for accounting and financial reporting purposes (a method known as
"pooling of interests" accounting). The information listed as "equivalent pro
forma" was obtained by multiplying the pro forma amounts by the exchange ratio
of 1.62. We present this information to reflect the fact that First Chicago NBD
stockholders will receive more than one share of the new company's common stock
for each share of First Chicago NBD common stock exchanged in the merger. We
expect that we will incur reorganization and restructuring expenses as a result
of combining our companies. We also anticipate that the merger will provide the
new company with financial benefits that include reduced operating expenses and
the opportunity to earn more revenue. The pro forma information, while helpful
in illustrating the financial characteristics of the new company under one set
of assumptions, doesn't attempt to predict or suggest future results.
The information in the following table is based on the historical financial
information that we've presented in our prior Securities and Exchange
Commission filings. We have incorporated this material into this document by
reference. See "Where You Can Find More Information" on page 89.
9
SUMMARY
<PAGE>
SELECTED UNAUDITED COMPARATIVE PER SHARE DATA
OF BANC ONE AND FIRST CHICAGO NBD
<TABLE>
<CAPTION>
AS OF OR FOR THE
YEARS ENDED
AS OF OR FOR THE DECEMBER 31,
THREE MONTHS ENDED ------------------
MARCH 31, 1998 1997 1996 1995
------------------ ------ ----- -----
<S> <C> <C> <C> <C>
BANC ONE (1)
Income from continuing operations per
common share (basic):
Historical............................ $ .80 $ 2.04 $2.60 $2.26
Pro forma............................. .81 2.49 2.66 2.21
Income from continuing operations per
common share (dilutive):
Historical............................ $ .79 $ 1.99 $2.52 $2.20
Pro forma............................. .79 2.44 2.59 2.16
Cash dividends declared per common
share:
Historical............................ $ .38 $ 1.38 $1.24 $1.13
Pro forma............................. .38 1.38 1.24 1.13
Book value per common share:
Historical............................ $16.10 $15.89
Pro forma(3).......................... 15.64 16.18
FIRST CHICAGO NBD (2)
Income from continuing operations per
common share (basic):
Historical............................ $ 1.32 $ 4.99 $4.44 $3.48
Equivalent pro forma.................. 1.31 4.03 4.31 3.58
Income from continuing operations per
common share (dilutive):
Historical............................ $ 1.30 $4.90 $4.33 $3.41
Equivalent pro forma.................. 1.28 3.95 4.20 3.50
Cash dividends declared per common
share:
Historical............................ $ .44 $ 1.64 $1.48 $1.35
Equivalent pro forma.................. .62 2.24 2.01 1.83
Book value per common share:
Historical............................ $27.21 $26.87
Equivalent pro forma.................. 25.34 26.21
</TABLE>
- --------
(1) Gives effect to all stock dividends on BANC ONE common stock, including the
10% stock dividend paid on February 26, 1998.
(2) The equivalent pro forma amounts are computed by multiplying the related
pro forma amounts for BANC ONE by a factor of 1.62 to reflect the exchange
ratio in the merger.
(3) Pro forma book value per common share for March 31, 1998 includes the
after-tax impact of currently estimated merger-related and restructuring
charges of $1.25 billion. Total pro forma common stockholders' equity at
March 31, 1998 and December 31, 1997 was $17.345 billion and $18.011
billion, respectively. The number of pro forma shares of common stock of
BANC ONE assumed outstanding at March 31, 1998 and December 31, 1997 were
1.109 billion and 1.113 billion, respectively.
10
SUMMARY
<PAGE>
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each of us
and also show similar pro forma information reflecting the merger. The pro
forma information reflects the "pooling of interests" method of accounting.
We expect that we will incur reorganization and restructuring expenses as a
result of combining our companies. We also anticipate that the merger will
provide the combined company with financial benefits that include reduced
operating expenses and the opportunity to earn more revenue. The pro forma
information, while helpful in illustrating the financial characteristics of the
new company under one set of assumptions, doesn't attempt to predict or suggest
future results.
The information in the following tables is based on historical financial
information that we've presented in our prior Securities and Exchange
Commission filings. All of the summary financial information we provide in the
following tables should be read in connection with this historical financial
information and with the more detailed financial information we provide in this
document, which you can find beginning at page 93. This historical financial
information has also been incorporated into this document by reference. See
"Where You Can Find More Information" on page 90. BANC ONE's audited historical
financial statements were audited by PricewaterhouseCoopers LLP, independent
certified public accountants, and First Chicago NBD's audited historical
financial statements were audited by Arthur Andersen LLP, independent certified
public accountants.
11
SUMMARY
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF BANC ONE AND FIRST CHICAGO NBD
<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS
ENDED MARCH 31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
----------------- -------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- -------
(MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income
and other income:
BANC ONE.............. $ 3,438 $ 3,131 $ 13,219 $ 12,099 $ 10,363 $ 8,762 $ 8,194
First Chicago NBD..... 2,603 2,413 10,098 10,117 10,681 8,529 8,016
Income from continuing
operations: (1)
BANC ONE.............. $ 518 $ 382 $ 1,306 $ 1,673 $ 1,445 $ 1,188 $ 1,263
First Chicago NBD..... 383 380 1,525 1,436 1,150 1,221 1,290
Income from continuing
operations per common
share (basic):
BANC ONE (2).......... $ .80 $ .60 $ 2.04 $ 2.60 $ 2.26 $ 1.82 $ 2.04
First Chicago NBD..... 1.32 1.19 4.99 4.44 3.48 3.65 3.94
Income from continuing
operations per common
share (diluted):
BANC ONE (2).......... $ .79 $ .58 $ 1.99 $ 2.52 $ 2.20 $ 1.80 $ 2.02
First Chicago NBD..... 1.30 1.17 4.90 4.33 3.41 3.58 3.79
Historical cash
dividends declared per
common share:
BANC ONE (2).......... $ .38 $ .345 $ 1.38 $ 1.24 $ 1.13 $ 1.03 $ 0.88
First Chicago NBD..... .44 .40 1.64 1.48 1.35 1.23 1.08
Total assets (end of
period):
BANC ONE.............. $116,321 $111,837 $115,901 $112,154 $ 97,889 $ 95,283 $89,497
First Chicago NBD..... 114,804 109,133 114,096 104,619 122,002 112,763 93,140
Long-term borrowings
(end of period):
BANC ONE.............. $ 11,591 $ 7,571 $ 11,066 $ 6,828 $ 4,331 $ 2,939 $ 2,292
First Chicago NBD (3). 10,294 8,514 10,088 8,454 8,163 7,246 5,250
Total stockholders'
equity (end of period):
BANC ONE.............. $ 10,466 $ 9,634 $ 10,376 $ 9,868 $ 9,051 $ 8,252 $ 7,748
First Chicago NBD..... 8,006 8,785 7,960 9,007 8,450 7,809 7,499
</TABLE>
- --------
(1) Includes pretax restructuring and merger-related charges of $467 million in
1997 for BANC ONE and $267 million in 1995 for First Chicago NBD.
(2) Gives effect to all stock dividends on BANC ONE common stock, including the
10% stock dividend paid on February 26, 1998.
(3) Includes trust preferred capital securities totaling $996 million at March
31, 1998. Of the total, $748 million were issued in the fourth quarter of
1996 with the remaining $248 million issued in the first quarter of 1997.
12
SUMMARY
<PAGE>
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA OF BANC ONE AND
FIRST CHICAGO NBD
The following unaudited selected pro forma financial data combine BANC ONE's
historical results with First Chicago NBD's historical results, in each case as
of or for the three months ended March 31, 1998 and 1997 and as of or for the
fiscal years ended December 31, 1997, 1996 and 1995. The unaudited pro forma
condensed combined statements of income information gives effect to the merger
as if it had occurred on January 1, 1995. The unaudited pro forma condensed
combined balance sheet information gives effect to the merger as if it occurred
on the date of the information presented.
See "Where You Can Find More Information" and "Unaudited Pro Forma Condensed
Combined Financial Information."
<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS AS OF OR FOR THE YEAR
ENDED MARCH 31, ENDED DECEMBER 31,
----------------- --------------------------
1998 1997 1997 1996 1995
-------- -------- -------- -------- --------
(MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Pro Forma Condensed Combined
Statement of Income
Total interest income and other
income.......................... $ 6,041 $ 5,544 $ 23,317 $22,216 $21,044
Income from continuing
operations...................... 901 762 2,831 3,109 2,595
Income from continuing operations
per common share:
Basic.......................... .81 .66 2.49 2.66 2.21
Diluted........................ .79 .64 2.44 2.59 2.16
Cash dividends declared per com-
mon share....................... .38 .345 1.38 1.24 1.13
Pro Forma Condensed Combined
Balance Sheet
Total assets (end of period)..... $231,125 $220,970 $229,997 $216,773 $219,891
Long term borrowings (end of pe-
riod)........................... 21,885 16,085 21,154 15,282 12,494
Total stockholders' equity (end
of period) (1).................. 17,635 18,419 18,336 18,875 17,501
</TABLE>
- --------
(1) Pro forma total stockholders' equity for March 31, 1998 includes the after-
tax impact of currently estimated merger-related and restructuring charges
of $1.25 billion.
13
SUMMARY
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
7 1/2% Preferred Stock........ 76
Acquisition Transaction....... 60
affiliates.................... 68
Agreement..................... 16
Article Eleventh.............. 81
Article Thirteenth............ 79
Average Bonus................. 56
BANC ONE...................... 16
BANC ONE Articles............. 45
BANC ONE Benefit Plans........ 55
BANC ONE Board................ 16
BANC ONE Common Stock......... 16
BANC ONE Demand............... 86
BANC ONE Option............... 58
BANC ONE Option Agreement..... 58
BANC ONE Option Plans......... 42
BANC ONE Option Shares........ 59
BANC ONE Record Date.......... 17
BANC ONE Regulations.......... 17
BANC ONE Shareholders......... 16
BANC ONE Special Meeting...... 16
Bank.......................... 72
BANK ONE...................... 16
BANK ONE Board................ 22
BANK ONE By-Laws.............. 41
BANK ONE Capital Stock........ 22
BANK ONE Certificate.......... 41
BANK ONE Common Stock......... 22
BANK ONE Preferred Stock...... 22
BANK ONE Series B Preferred... 22
BANK ONE Series C Preferred... 22
BHCA.......................... 50
BIF........................... 73
broker non-votes.............. 17
Business Combination.......... 80
Change of Control Agreements.. 56
Chapter 1704 Transaction...... 81
Closing Date.................. 44
Code.......................... 25
Commission.................... 22
Common Pleas Court............ 87
control share acquisition..... 81
CRA........................... 50
Default....................... 71
Delaware Law.................. 20
Dissenting BANC ONE
Shareholders................. 42
Dissenting Shares............. 41
Documents..................... 29
DOJ........................... 50
DPC Shares.................... 41
EPS........................... 30
Exchange Agent................ 43
Exchange Fund................. 43
Exchange Ratio................ 22
Exercise Termination Event.... 61
Expected Synergies............ 28
fair cash value............... 87
Fairness Opinions............. 28
FCCNB......................... 69
FCN........................... 16
FCN Benefit Plans............. 55
FCN Board..................... 19
FCN By-Laws................... 20
FCN Capital Stock............. 22
FCN Certificate............... 20
FCN Common Stock.............. 19
FCN ESPSP..................... 55
FCN Option.................... 58
FCN Option Agreement.......... 58
FCN Option Shares............. 59
FCN Preferred Stock........... 22
FCN Record Date............... 20
FCN Series B Preferred........ 22
FCN Series C Preferred........ 22
FCN Special Meeting........... 19
FCN Stock Plans............... 43
FCN Stockholders.............. 19
FCN/BANK ONE By-Laws.......... 77
FCN/BANK ONE Certificate...... 77
FDIC.......................... 51
FDICIA........................ 50
Federal Reserve Act........... 50
Federal Reserve Board......... 45
FICO.......................... 73
First Commerce Merger......... 47
First Effective Time.......... 22
First Step Merger............. 22
GAAP.......................... 29
Goldman Sachs................. 23
Holder........................ 60
IBES.......................... 25
in danger of default.......... 71
Indemnified Parties........... 58
Indemnitee.................... 83
Initial Triggering Event...... 60
</TABLE>
14
SUMMARY
<PAGE>
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Interested Shareholder......... 81
interested shares.............. 81
interested stockholder......... 79
Interested Stockholder......... 79
IRS............................ 52
Issuer......................... 59
Issuer Common Stock............ 59
Issuer Option.................. 59
Issuer Option Agreement........ 59
Issuer Option Repurchase Price. 61
Issuer Option Share Repurchase
Price......................... 61
Issuer Option Shares........... 59
Issuing Public Corporation..... 81
Lazard Freres.................. 23
Lazard-Goldman Peer Group...... 37
leverage ratio................. 71
market/offer price............. 61
Meetings....................... 19
Merger......................... 22
Merrill Lynch.................. 23
Merrill Lynch Opinion.......... 28
Merrill-Morgan Peer Group...... 32
Morgan Stanley................. 23
Morgan Stanley Opinion......... 28
New Benefit Plans.............. 46
NYSE........................... 17
OCC............................ 51
Ohio Control Share Statute...... 81
Ohio Law........................ 17
Option Agreements............... 58
Optionee........................ 59
Owner........................... 61
Ownership Factor................ 39
Parity Shares................... 75
Preferred Purchase Units........ 76
Registration Statement.......... 89
Repurchase Event................ 62
Requisite Regulatory Approvals.. 49
Riegle-Neal..................... 73
SAIF............................ 73
Second Effective Time........... 22
Second Step Merger.............. 22
Securities Act.................. 63
state member bank............... 72
Subsequent Triggering Event..... 61
Substitute Option............... 62
Surviving Corporation........... 22
Synergies....................... 36
Tier 1.......................... 71
Tier 2.......................... 71
Tier 3.......................... 71
total capital................... 71
Trust Account Shares............ 41
Unrelated Directors............. 80
</TABLE>
15
SUMMARY
<PAGE>
SPECIAL MEETINGS
BANC ONE SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed by BANC ONE
CORPORATION, an Ohio corporation ("BANC ONE"), to the holders ("BANC ONE
SHAREHOLDERS") of the common stock, without par value, of BANC ONE (the "BANC
ONE COMMON STOCK") on or about August 5, 1998, and is accompanied by the
notice of the Special Meeting of Shareholders of BANC ONE (the "BANC ONE
SPECIAL MEETING") and a form of proxy that is solicited by the Board of
Directors of BANC ONE (the "BANC ONE BOARD") for use at the BANC ONE Special
Meeting to be held on Tuesday, September 15, 1998, at 9:00 a.m., local time,
in the auditorium of the BANC ONE Corporate Center, 1111 Polaris Parkway,
Columbus, Ohio, and at any adjournments or postponements thereof.
MATTERS TO BE CONSIDERED
At the BANC ONE Special Meeting, BANC ONE Shareholders will be asked to
consider and vote on the proposal to approve an Agreement and Plan of
Reorganization, dated as of April 10, 1998, as amended (the "AGREEMENT"), by
and among BANC ONE, First Chicago NBD Corporation, a Delaware corporation
("FCN"), and BANK ONE CORPORATION, a Delaware corporation ("BANK ONE"), and
the transactions contemplated thereby, and on such other matters as may
properly be submitted to a vote at the BANC ONE Special Meeting. The BANC ONE
Shareholders may also be asked to vote upon a proposal to adjourn or postpone
the BANC ONE Special Meeting, which adjournment or postponement could be used
for the purpose, among others, of allowing additional time for the soliciting
of additional votes to approve the Agreement and the transactions contemplated
thereby.
PROXIES
The accompanying form of proxy is for use at the BANC ONE Special Meeting if
a BANC ONE Shareholder will be unable or does not wish to attend in person.
The proxy may be revoked by a BANC ONE Shareholder at any time before it is
exercised, by submitting to the Secretary of BANC ONE written notice of
revocation or a properly executed proxy of a later date, or by attending the
BANC ONE Special Meeting and electing to vote in person. Written notices of
revocation and other communications with respect to the revocation of BANC ONE
proxies should be addressed to BANC ONE CORPORATION, 100 East Broad Street,
Columbus, Ohio 43271, Attention: Corporate Secretary. All shares represented
by valid proxies received pursuant to this solicitation, and not revoked
before they are exercised, will be voted in the manner specified therein. If
no specification is made, the proxies will be voted in favor of the matters to
be voted upon at the BANC ONE Special Meeting, including approval of the
Agreement and the transactions contemplated thereby, but no proxy that has
been voted against approval of the Agreement and the transactions contemplated
thereby will be voted in favor of any adjournment or postponement of the BANC
ONE Special Meeting for the purpose of soliciting additional proxies.
SOLICITATION OF PROXIES
The entire cost of soliciting the proxies from the BANC ONE Shareholders
will be borne by BANC ONE; provided, however, that FCN and BANC ONE have each
agreed to pay one half of the printing costs of this Joint Proxy Statement-
Prospectus and related materials. In addition to the solicitation of the
proxies by mail, BANC ONE will request banks, brokers and other record holders
to send proxies and proxy material to the beneficial owners of the stock and
secure their voting instructions, if necessary. BANC ONE will reimburse such
record holders for their reasonable expenses in so doing. BANC ONE has also
made arrangements with Georgeson & Company Inc. to assist it in soliciting
proxies from banks, brokers and nominees, and has agreed to pay $12,500 plus
expenses for such services. If necessary, BANC ONE may also use several of its
regular employees, who will not be specially compensated, to solicit proxies
from shareholders, either personally or by telephone, telegram, facsimile or
special delivery letter.
16
THE MEETINGS
<PAGE>
RECORD DATE AND VOTING RIGHTS
Pursuant to the provisions of the General Corporation Law of the State of
Ohio (the "OHIO LAW"), the Code of Regulations of BANC ONE (the "BANC ONE
REGULATIONS") and the rules of the New York Stock Exchange Inc. (the "NYSE"),
July 22, 1998 has been fixed as the record date for determination of BANC ONE
Shareholders entitled to notice of and to vote at the BANC ONE Special Meeting
(the "BANC ONE RECORD DATE"). Accordingly, only holders of shares of BANC ONE
Common Stock of record that are such holders at the close of business on the
BANC ONE Record Date will be entitled to notice of and to vote at the BANC ONE
Special Meeting. The number of outstanding shares of BANC ONE Common Stock
entitled to vote at the BANC ONE Special Meeting is 704,907,724. On the BANC
ONE Record Date, there were approximately 142,393 holders of BANC ONE Common
Stock. Shares of BANC ONE Common Stock present in person at the BANC ONE
Special Meeting but not voting, and shares of BANC ONE Common Stock for which
BANC ONE has received proxies but with respect to which holders of such shares
have abstained, will be counted as present at the BANC ONE Special Meeting for
purposes of determining the presence or absence of a quorum for the
transaction of business. Brokers who hold shares of BANC ONE Common Stock in
nominee or "street" name for customers who are the beneficial owners of such
shares are prohibited from giving a proxy to vote shares held for such
customers with respect to the matters to be voted upon at the BANC ONE Special
Meeting without specific instructions from such customers. Shares represented
by proxies returned by a broker holding such shares in "street" name will be
counted for purposes of determining whether a quorum exists, even if such
shares are not voted in matters where discretionary voting by the broker is
not allowed ("BROKER NON-VOTES").
Each share of BANC ONE Common Stock entitles its holder to one vote. The
affirmative vote of a majority of the outstanding shares of BANC ONE Common
Stock is required to approve the Agreement and the transactions contemplated
thereby.
BECAUSE APPROVAL OF THE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY
REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES OF BANC ONE COMMON STOCK, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE
THE SAME EFFECT AS VOTES AGAINST APPROVAL OF THE AGREEMENT. ACCORDINGLY, THE
BANC ONE BOARD URGES BANC ONE SHAREHOLDERS TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
As of the BANC ONE Record Date, directors and executive officers of BANC ONE
beneficially owned 5,020,450 shares of BANC ONE Common Stock or less than 1%
of the shares entitled to vote at the BANC ONE Special Meeting. It is
currently expected that each such director and executive officer of BANC ONE
will vote the shares of BANC ONE Common Stock beneficially owned by him or her
for approval of the Agreement and the transactions contemplated thereby. In
addition, as of the BANC ONE Record Date, FCN and the directors and executive
officers of FCN beneficially owned 47,226 shares of BANC ONE Common Stock, or
less than 1% of the shares entitled to be voted at the BANC ONE Special
Meeting. As of the BANC ONE Record Date, the banking and trust subsidiaries of
BANC ONE, as fiduciaries, custodians or agents, held a total of 40,922,832
shares of BANC ONE Common Stock, representing approximately 5.8% of the shares
entitled to vote at the BANC ONE Special Meeting. These entities maintained
sole or shared voting power with respect to 19,845,949 of such shares of BANC
ONE Common Stock. Also, as of the BANC ONE Record Date, the banking, trust and
investment management subsidiaries of FCN, as fiduciaries, custodians or
agents, held a total of 1,232,864 shares of BANC ONE Common Stock,
representing less than 1% of the shares entitled to vote at the BANC ONE
Special Meeting. These entities maintained sole or shared voting power with
respect to 1,171,715 shares of BANC ONE Common Stock.
Additional information with respect to beneficial ownership of BANC ONE
Common Stock by persons and entities owning more than 5% of such stock and
more detailed information with respect to beneficial ownership of BANC ONE
Common Stock by directors and executive officers of BANC ONE is incorporated
by reference to the 1997 Annual Report on Form 10-K of BANC ONE. See "Where
You Can Find More Information."
17
THE MEETINGS
<PAGE>
RECOMMENDATION OF BANC ONE BOARD
The BANC ONE Board has unanimously approved the Agreement and the
transactions contemplated thereby. The BANC ONE Board believes that the
Agreement and the transactions contemplated thereby are in the best interests
of BANC ONE and BANC ONE Shareholders and recommends that the BANC ONE
Shareholders vote "FOR" approval of the Agreement and the transactions
contemplated thereby. See "The Merger--Recommendation of the BANC ONE Board
and Reasons for the Merger."
18
THE MEETINGS
<PAGE>
FCN SPECIAL MEETING
GENERAL
This Joint Proxy Statement-Prospectus is first being mailed by FCN to the
holders ("FCN STOCKHOLDERS") of common stock, $1.00 par value per share, of
FCN (the "FCN COMMON STOCK") on or about August 5, 1998, and is accompanied by
the notice of the FCN Special Meeting and a form of proxy that is solicited by
the Board of Directors of FCN (the "FCN BOARD") for use at the special meeting
of FCN Stockholders (the "FCN SPECIAL MEETING" and, with the BANC ONE Special
Meeting, the "MEETINGS"), to be held on Tuesday, September 15, 1998, at 9:30
a.m., local time, at the First Chicago Center, One First National Plaza,
Chicago, Illinois, and at any adjournments or postponements thereof.
MATTERS TO BE CONSIDERED
The purpose of the FCN Special Meeting is to take action with respect to the
approval of the Agreement and the transactions contemplated thereby and on
such other matters as may be properly submitted to a vote at the FCN Special
Meeting. FCN Stockholders may also be asked to vote upon a proposal to adjourn
or postpone the FCN Special Meeting, which adjournment or postponement could
be used for the purpose, among others, of allowing additional time for the
soliciting of additional votes to approve the Agreement and the transactions
contemplated thereby.
PROXIES
The accompanying form of proxy is for use at the FCN Special Meeting if a
FCN Stockholder will be unable to attend in person. The proxy may be revoked
by the FCN Stockholder at any time before it is exercised by submitting to the
Secretary of FCN written notice of revocation, a properly executed proxy of a
later date or by attending the FCN Special Meeting and electing to vote in
person. Written notices of revocation and other communications with respect to
the revocation of FCN proxies should be addressed to First Chicago NBD
Corporation, One First National Plaza, Chicago, Illinois 60670, Attention:
Sherman I. Goldberg, Secretary. All shares represented by valid proxies
received pursuant to this solicitation, and not revoked before they are
exercised, will be voted in the manner specified therein. If no specification
is made, the proxies will be voted in favor of approval of the Agreement and
the transactions contemplated thereby. The FCN Board is unaware of any other
matters that may be presented for action at the FCN Special Meeting. If other
matters do properly come before the FCN Special Meeting, however, it is
intended that shares represented by proxies in the accompanying form will be
voted or not voted by the persons named in the proxies in their discretion,
provided that no proxy that is voted against approval and adoption of the
Agreement will be voted in favor of any adjournment or postponement of the FCN
Special Meeting for the purpose of soliciting additional proxies.
SOLICITATION OF PROXIES
The entire cost of soliciting the proxies from the FCN Stockholders will be
borne by FCN; provided, however, that BANC ONE and FCN have each agreed to pay
one-half of the printing costs of this Joint Proxy Statement-Prospectus and
related materials. In addition to the solicitation of the proxies by mail, FCN
will request banks, brokers and other record holders to send proxies and proxy
material to the beneficial owners of the stock and secure their voting
instructions, if necessary. FCN will reimburse such record holders for their
reasonable expenses in so doing. FCN has also made arrangements with Georgeson
& Company Inc. to assist it in soliciting proxies from banks, brokers and
nominees and has agreed to pay approximately $12,500 plus expenses for such
services. If necessary, FCN may also use several of its regular employees, who
will not be specially compensated, to solicit proxies from FCN Stockholders,
either personally or by telephone, telegram, facsimile or special delivery
letter.
19
THE MEETINGS
<PAGE>
RECORD DATE AND VOTING RIGHTS
Pursuant to the provisions of the Delaware General Corporation Law (the
"DELAWARE LAW"), the by-laws, as amended, of FCN (the "FCN BY-LAWS") and the
rules of the NYSE, July 22, 1998 has been fixed as the record date for
determination of FCN Stockholders entitled to notice of and to vote at the FCN
Special Meeting (the "FCN RECORD DATE"). Accordingly, only FCN Stockholders of
record at the close of business on the FCN Record Date will be entitled to
notice of and to vote at the FCN Special Meeting. At the close of business on
the FCN Record Date, there were 288,104,261 shares of FCN Common Stock
outstanding held by approximately 34,425 holders of record. The presence, in
person or by proxy, of shares of FCN Common Stock representing a majority of
such shares outstanding and entitled to vote on the FCN Record Date is
necessary to constitute a quorum at the FCN Special Meeting. Each share of FCN
Common Stock outstanding on the FCN Record Date entitles its holder to one
vote.
Shares of FCN Common Stock present in person at the FCN Special Meeting but
not voting, and shares of FCN Common Stock for which FCN has received proxies
but with respect to which holders of such shares have abstained, will be
counted as present at the FCN Special Meeting for purposes of determining the
presence or absence of a quorum for the transaction of business. Brokers who
hold shares of FCN Common Stock in nominee or "street" name for customers who
are the beneficial owners of such shares are prohibited from giving a proxy to
vote shares held for such customers with respect to the matters to be
considered and voted upon at the FCN Special Meeting without specific
instructions from such customers. Broker non-votes will be counted for
purposes of determining whether a quorum exists.
Under the Delaware Law and the FCN Restated Certificate of Incorporation, as
amended (the "FCN CERTIFICATE"), approval of the Agreement and the
transactions contemplated thereby requires the affirmative vote of the holders
of a majority of the outstanding shares of FCN Common Stock entitled to vote
at the FCN Special Meeting.
BECAUSE APPROVAL AND ADOPTION OF THE AGREEMENT REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF FCN COMMON STOCK
ENTITLED TO VOTE AT THE FCN SPECIAL MEETING, ABSTENTIONS AND BROKER NON-VOTES
WILL HAVE THE SAME EFFECT AS VOTES AGAINST SUCH APPROVAL AND ADOPTION.
ACCORDINGLY, THE FCN BOARD URGES FCN STOCKHOLDERS TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE.
As of the FCN Record Date, directors and executive officers of FCN
beneficially owned approximately 8,415,010 shares of FCN Common Stock,
entitling them to exercise approximately 3% of the voting power of the FCN
Common Stock entitled to vote at the FCN Special Meeting. It is currently
expected that each such director and executive officer of FCN will vote the
shares of FCN Common Stock beneficially owned by him or her for approval of
the Agreement and the transactions contemplated thereby. In addition, as of
the FCN Record Date, directors and executive officers of BANC ONE beneficially
owned approximately 452 shares of FCN Common Stock, or significantly less than
1% of the shares entitled to be voted at the FCN Special Meeting. As of the
FCN Record Date, the banking, trust and investment management subsidiaries of
FCN, as fiduciaries, custodians or agents, held a total of 9,296,233 shares of
FCN Common Stock. These entities maintained sole or shared voting power with
respect to 7,971,099 of such shares of FCN Common Stock. In addition, as of
the FCN Record Date, the banking and trust subsidiaries of BANC ONE, as
fiduciaries, custodians or agents, held a total of 1,346,483 shares of FCN
Common Stock. These entities maintained sole or shared voting power with
respect to 641,686 of such shares of FCN Common Stock.
Additional information with respect to beneficial ownership of FCN Common
Stock by persons and entities owning more than 5% of such stock and more
detailed information with respect to
20
THE MEETINGS
<PAGE>
beneficial ownership of FCN Common Stock by directors and executive officers of
FCN is incorporated by reference to the 1997 Annual Report on Form 10-K of FCN.
See "Where You Can Find More Information."
RECOMMENDATION OF FCN BOARD
The FCN Board has unanimously approved the Agreement and the transactions
contemplated thereby. The FCN Board believes that the Agreement and the
transactions contemplated thereby are in the best interests of FCN and FCN
Stockholders and recommends that the FCN Stockholders vote "FOR" approval of
the Agreement and the transactions contemplated thereby. See "The Merger--
Recommendation of the FCN Board and Reasons for the Merger."
21
THE MEETINGS
<PAGE>
THE MERGER
The following summary of the material terms and provisions of the Agreement
and the Option Agreements is qualified in its entirety by reference to the
Agreement and the Option Agreements (as defined herein). The Agreement is
attached as Appendix A to this Joint Proxy Statement-Prospectus. The Option
Agreements are attached as exhibits to the Current Reports on Form 8-K, dated
April 10, 1998 and filed with the Securities and Exchange Commission (the
"COMMISSION") on April 14, 1998, of each of BANC ONE and FCN.
GENERAL
The BANC ONE Board, the FCN Board and the Board of Directors (the "BANK ONE
BOARD") of BANK ONE have each unanimously approved the Agreement, which
provides for the merger of BANC ONE with and into BANK ONE (the "FIRST STEP
MERGER") at the effective time of the First Step Merger (the "FIRST EFFECTIVE
TIME"), with BANK ONE as the surviving corporation in the First Step Merger,
and the merger of FCN with and into BANK ONE (the "SECOND STEP MERGER" and,
together with the First Step Merger, the "MERGER") immediately thereafter at
the effective time of the Second Step Merger (the "SECOND EFFECTIVE TIME"),
with BANK ONE (also referred to herein as the "SURVIVING CORPORATION") as the
Surviving Corporation in the Second Step Merger. With certain limited
exceptions described below, each share of BANC ONE Common Stock outstanding at
the First Effective Time will be converted into one share of the common stock,
without par value, of BANK ONE ("BANK ONE COMMON STOCK"), and each share of
FCN Common Stock outstanding at the Second Effective Time will be converted
into the right to receive 1.62 (the "EXCHANGE RATIO") shares of BANK ONE
Common Stock. Each outstanding share of FCN Preferred Stock with Cumulative
and Adjustable Dividends, Series B, without par value ($100 stated value)
("FCN SERIES B PREFERRED"), outstanding at the Second Effective Time will be
converted into the right to receive one share of Preferred Stock with
Cumulative and Adjustable Dividends, Series B, without par value ($100 stated
value) of BANK ONE ("BANK ONE SERIES B PREFERRED"), and each share of FCN
Preferred Stock with Cumulative and Adjustable Dividends, Series C, without
par value ($100 stated value) ("FCN SERIES C PREFERRED" and, with FCN Series B
Preferred, the "FCN PREFERRED STOCK," the FCN Preferred Stock and FCN Common
Stock are sometimes together referred to herein as the "FCN CAPITAL STOCK")
outstanding at the Second Effective Time will be converted into the right to
receive one share of BANK ONE Preferred Stock with Cumulative and Adjustable
Dividends, Series C, without par value ($100 stated value) ("BANK ONE SERIES C
PREFERRED" and, together with the BANK ONE Series B Preferred, the "BANK ONE
PREFERRED STOCK"; the BANK ONE Preferred Stock and BANK ONE Common Stock are
sometimes together referred to herein as the "BANK ONE CAPITAL STOCK"). Shares
of BANK ONE Common Stock issued and outstanding immediately prior to the First
Effective Time will be canceled, and shares of BANK ONE Common Stock issued
and outstanding immediately prior to the Second Effective Time, including
those into which shares of BANC ONE Common Stock are converted in the First
Step Merger, will remain issued and outstanding after the Second Step Merger.
This section of the Joint Proxy Statement-Prospectus describes certain
aspects of the Merger, including the material provisions of the Agreement and
the Option Agreements (as defined herein). Certain capitalized terms used
herein without definition shall have the meanings ascribed to them in the
Agreement or the Option Agreements.
BACKGROUND OF THE MERGER
The managements of BANC ONE and FCN have, over time, regularly considered
the possibility of acquisitions and strategic combinations with a variety of
financial institutions and their potential strategic fit with such
institutions based on the businesses conducted thereby, their management and
employee cultures and the geographic location and breadth of their businesses.
22
THE MERGER
<PAGE>
In February 1998, Mr. Istock contacted Mr. McCoy and indicated that he would
be interested in discussing the possibility of a strategic combination of BANC
ONE and FCN. Mr. Istock and Mr. McCoy met informally on several occasions over
the following weeks to hold exploratory discussions regarding a possible
business combination. During these informal meetings, Messrs. Istock and McCoy
preliminarily determined that such a combination could be beneficial for each
of BANC ONE and FCN and their respective shareholders in view of the
characteristics of the companies' businesses and franchises (including each
company's strong banking and credit card franchises), the accelerating trend
toward consolidation in BANC ONE's and FCN's businesses and in the financial
services industry generally and the larger and more diversified financial
institution that would be created. As a result of these meetings, Mr. Istock
and Mr. McCoy jointly developed an outline of some of the key terms of such a
potential business combination. During March 1998, at the request of Messrs.
McCoy and Istock, a limited number of additional members of the senior
managements of BANC ONE and FCN met to discuss issues relating to a potential
business combination between the two companies and to further develop the
potential terms and structure of such a transaction. No definitive agreement
concerning such terms was reached as a result of these preliminary meetings.
Thereafter, discussions with respect to the terms of a potential transaction
continued between Messrs. Istock and McCoy and certain members of their senior
management teams, and Messrs. Istock and McCoy from time to time informally
advised certain members of the FCN Board and the BANC ONE Board, respectively,
of the status of such discussions. In early April 1998 BANC ONE retained
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MERRILL LYNCH") and
Morgan Stanley & Co. Incorporated ("MORGAN STANLEY") as its financial
advisors, and in late March FCN retained Lazard Freres & Co. LLC ("LAZARD
FRERES") and Goldman, Sachs & Co. ("GOLDMAN SACHS") as its financial advisors,
in each case in connection with a potential business combination involving
BANC ONE and FCN. Each of BANC ONE and FCN also retained Wachtell, Lipton,
Rosen & Katz to advise it, in conjunction with its respective internal
counsel, in connection with the proposed business combination. On March 25,
1998, BANC ONE and FCN entered into a customary confidentiality agreement with
respect to a potential business combination.
Thereafter, through April 9, 1998, Mr. Istock and other members of FCN's
senior management continued discussions with Mr. McCoy and other members of
BANC ONE's senior management concerning the proposed transaction, and each
party's senior management team and advisors commenced due diligence
investigations of the other party's business. In connection with the due
diligence investigations conducted prior to the execution of the Agreement,
each of BANC ONE and FCN provided to the other party and its financial
advisors internal budget information for each company's respective 1998 fiscal
year. None of such information was prepared with a view toward public
disclosure and none of such information, as referenced below, has been updated
since the date of the Agreement. In addition, such information did not take
into account any of the synergies or charges expected to result from the
Merger, any other Merger-related adjustments, the suspension of FCN's common
stock repurchase program or the impact of BANC ONE's then-pending acquisition
of First Commerce Corporation. The FCN 1998 budget information reflected the
following results for FCN at or for the year ended December 31, 1998: net
income per share of $5.45, book value per share of $28.57; tangible book value
per share of $27.79; return on assets of 1.42%; and return on equity of 20.0%.
The BANC ONE 1998 budget information reflected the following results for BANC
ONE at or for the year ended December 31, 1998: net income per share of $3.57,
book value per share of $17.81; tangible book value per share of $15.95;
return on assets of 2.01%; and return on equity of 21.76%. There can be no
certainty that the results set forth or reflected in the 1998 budget
information will be achieved or that actual results will not vary materially
from the estimated results derived therefrom. For more information concerning
the factors that could affect actual results, see "Forward Looking
Statements."
23
THE MERGER
<PAGE>
During this period, senior managements of FCN and BANC ONE negotiated the
terms of the Agreement and the Option Agreements, including the structural and
financial terms of the Merger. During this period, the Exchange Ratio was
determined on the basis of arm's-length negotiation between the parties.
At a regularly scheduled meeting of the FCN Board on April 10, 1998, Mr.
Istock and senior management of FCN reviewed the reasons for and the potential
benefits of the Merger in light of FCN's due diligence review of BANC ONE's
business; FCN's legal advisors reviewed the terms of the Agreement and Option
Agreements and advised the members of the FCN Board of the legal standards
applicable to their consideration of the Agreement and the Option Agreements;
and FCN's financial advisors made a presentation regarding the financial terms
and fairness, from a financial point of view, of the Exchange Ratio to holders
of FCN Common Stock. After discussion and consideration of the factors
discussed under "--Recommendation of the FCN Board and Reasons for the
Merger," the members of the FCN Board present at the meeting unanimously
approved and authorized the execution of the Agreement and the Option
Agreements (see "--BANC ONE and FCN Option Agreements"). Mr. Charles T.
Fisher, a director of FCN who was unable to attend the April 10 meeting,
subsequently indicated his approval and ratification of the actions taken by
the FCN Board at the meeting.
At a special meeting of the BANC ONE Board on the same date, Mr. McCoy and
senior management of BANC ONE reviewed the reasons for and the potential
benefits of the Merger in light of BANC ONE's due diligence review of FCN's
business; BANC ONE's legal advisors reviewed the terms of the Agreement and
Option Agreements and advised the members of the BANC ONE Board of the legal
standards applicable to their consideration of the Agreement and the Option
Agreements; and BANC ONE's financial advisors made a presentation regarding
the financial terms and fairness, from a financial point of view, of the
Exchange Ratio to BANC ONE. After discussion and consideration of the factors
discussed below under "--Recommendation of the BANC ONE Board and Reasons for
the Merger," the BANC ONE Board unanimously approved and authorized the
execution of the Agreement and the Option Agreements (see "--BANC ONE and FCN
Option Agreements").
The Agreement and the Option Agreements were entered into on April 10, 1998.
RECOMMENDATION OF THE BANC ONE BOARD AND REASONS FOR THE MERGER
THE BANC ONE BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, BANC ONE AND THE BANC ONE SHAREHOLDERS. ACCORDINGLY, THE BANC
ONE BOARD HAS UNANIMOUSLY APPROVED THE AGREEMENT AND UNANIMOUSLY RECOMMENDS
THAT THE BANC ONE SHAREHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER.
The BANC ONE Board believes that the consummation of the Merger presents a
unique opportunity to create a premier national financial services company as
well as one of the largest banking institutions in the United States and the
strongest banking institution headquartered in the Midwest region of the
United States.
In reaching its decision to approve the Agreement and the Option Agreements,
the BANC ONE Board consulted with BANC ONE management, as well as with its
financial and legal advisors, and considered a variety of factors, including
the following:
(i) The BANC ONE Board's familiarity with and review of BANC ONE's
business, operations, financial condition, earnings and prospects.
(ii) The anticipated effectiveness of the Merger in implementing and
accelerating BANC ONE's strategy to be a national financial services
provider and the benefits associated with FCN's strong consumer banking,
middle market banking, credit card and corporate banking and investment
franchises, the depth of its management team and the quality of its
operations.
24
THE MERGER
<PAGE>
(iii) The business, operations, financial condition, earnings and
prospects of each of BANC ONE and FCN. In making its determination, the
BANC ONE Board took into account the results of BANC ONE's due diligence
review of FCN's business.
(iv) The scale, scope and strength of the banking operations of the
combined company, in that the combined company would be the number 1 or 2
retail bank (ranked by deposits) in 8 states with approximately 2,000
offices and approximately 8,650 ATMs serving approximately 8 million
households, would rank third nationally among banks in mutual fund assets
with approximately $39 billion under management, would be a leading
consumer lender nationally, the leading commercial lender in the Midwest
and among the top commercial lenders nationally.
(v) The competitive advantage that the combined company would have as a
credit card issuer through the combination of two of the country's largest
card operations and strongest card brands into a single franchise that is
expected to be the second largest in the United States, with over $60
billion in managed domestic assets and 56 million customers.
(vi) The improved stability of the combined company's businesses and
earnings relative to BANC ONE on a stand-alone basis made possible by the
Merger, as a result of substantially greater asset and line-of-business
diversification.
(vii) The anticipated financial impact of the proposed transaction on the
combined company's future financial performance, including, without
limitation, the accretive impact on BANC ONE's earnings per share beginning
in 1999. The foregoing information with respect to earnings per share is
based on consensus "street" earnings estimates published by Institutional
Brokers Estimate System ("IBES") for both BANC ONE and FCN. IBES is a data
service that monitors and publishes compilations of earnings estimates
produced by selected research analysts regarding companies of interest to
institutional shareholders. The combined company's ability to achieve such
results depends on various factors, a number of which will be beyond its
control, including the regulatory environment, economic conditions,
unanticipated changes in business conditions and inflation. There can,
however, be no assurance in this regard. See "Forward-Looking Statements."
(viii) The expectation that the Merger would result in synergies for the
combined company's operations, including an advantageous cost structure
relative to competitors and to BANC ONE on a stand-alone basis, as well as
the possibility of enhancing revenues through substantial cross-selling
opportunities. The BANC ONE Board noted that, although no assurances could
be given that any particular level of cost synergies will be achieved, the
managements of BANC ONE and FCN had identified potential pre-tax synergies
in the form of cost savings of approximately $930 million annually, and
revenue enhancements of approximately $275 million annually, which could be
fully achieved in the first three years following consummation of the
Merger. See "Management and Operations after the Merger."
(ix) The structure of the Merger and the terms of the Agreement and the
Option Agreements, which were reciprocal in nature, including the fact that
the fixed Exchange Ratio provides certainty as to the number of shares of
BANK ONE Common Stock to be issued in the Merger and that the Merger is
intended to qualify as a reorganization under Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and for "pooling of
interests" accounting treatment.
(x) The proposed arrangements with members of management of BANC ONE and
FCN, including that Mr. Istock would serve as Chairman of the Board of the
combined company after the Merger, Mr. McCoy would serve as President and
Chief Executive Officer of the combined company after the Merger and
Messrs. Lehmann and Vitale would each serve as a Vice Chairman of the
combined company after the Merger, and that Messrs. Istock, McCoy, Lehmann
and Vitale would be members of the Board of Directors of the combined
company following the Merger. See "Management and Operations after the
Merger."
25
THE MERGER
<PAGE>
(xi) The oral opinions of Merrill Lynch and Morgan Stanley that, as of
April 10, 1998, the Exchange Ratio was fair from a financial point of view
to BANC ONE. See "--Opinions of BANC ONE's Financial Advisors."
(xii) The belief of BANC ONE's senior management and the BANC ONE Board
that BANC ONE and FCN share a compatible business culture and that their
managements possess complementary skills and expertise. In this regard, the
BANC ONE Board took into account the fact that the managements of both BANC
ONE and FCN had demonstrated the ability to successfully integrate
substantial acquisitions in a timely manner.
(xiii) The likelihood of the Merger being approved by the appropriate
regulatory authorities. See "--Regulatory Approvals Required for the
Merger." In this connection, the BANC ONE Board considered that a modest
amount of divestitures of certain assets or deposit liabilities could be
required in connection with the Merger.
The foregoing discussion of the information and factors considered by the
BANC ONE Board is not intended to be exhaustive but includes all material
factors considered by the BANC ONE Board. In reaching its determination to
approve and recommend the Merger, the BANC ONE Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors. The BANC ONE Board is
unanimous in its recommendation that BANC ONE Shareholders vote for approval
and adoption of the Agreement.
RECOMMENDATION OF THE FCN BOARD AND REASONS FOR THE MERGER
THE FCN BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS
OF, FCN AND THE FCN STOCKHOLDERS. ACCORDINGLY, THE FCN BOARD HAS UNANIMOUSLY
APPROVED THE AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT FCN STOCKHOLDERS VOTE
FOR THE APPROVAL AND ADOPTION OF THE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE MERGER.
The FCN Board believes that the consummation of the Merger presents a unique
opportunity to create a premier national financial services company as well as
one of the largest banking institutions in the United States and the strongest
banking institution headquartered in the Midwest region of the United States.
In reaching its decision to approve the Agreement and the Option Agreements,
the FCN Board consulted with FCN management, as well as with its financial and
legal advisors, and considered a number of factors, including the following:
(i) The FCN Board's familiarity with and review of FCN's business,
operations, financial condition, earnings and prospects.
(ii) The anticipated effectiveness of the Merger in implementing and
accelerating FCN's strategy to be a national financial services provider
and the benefits associated with BANC ONE's strong consumer banking,
commercial banking, credit card and consumer finance franchises, the depth
of its management team and the quality of its operations.
(iii) The business, operations, financial condition, earnings and
prospects of each of BANC ONE and FCN. In making its determination, the FCN
Board took into account the results of FCN's due diligence review of BANC
ONE's business.
(iv) The scale, scope and strength of the banking operations of the
combined company, in that the combined company would be the number 1 or 2
retail bank (ranked by deposits) in 8 states with approximately 2,000
offices and approximately 8,650 ATMs serving approximately 8 million
households, would rank third nationally among banks in mutual fund assets
with approximately $39 billion under management, would be a leading
consumer lender nationally, the leading commercial lender in the Midwest
and among the top commercial lenders nationally.
26
THE MERGER
<PAGE>
(v) The competitive advantage that the combined company would have as a
credit card issuer through the combination of two of the country's largest
card operations and strongest card brands into a single franchise that is
expected to be the second largest in the United States, with over $60
billion in managed assets and approximately 56 million customers.
(vi) The improved stability of the combined company's businesses and
earnings relative to FCN on a stand-alone basis made possible by the
Merger, as a result of substantially greater geographic, asset and line-of-
business diversification.
(vii) The anticipated financial impact of the proposed transaction on the
combined company's future financial performance and on FCN Stockholders,
including, without limitation, that the transaction is expected to be
immediately accretive to FCN's earnings and cash dividends per share. The
foregoing information with respect to earnings per share is based on
consensus "street" earnings estimates published by IBES for both BANC ONE
and FCN. The combined company's ability to achieve such results depends on
various factors, a number of which will be beyond its control, including
the regulatory environment, economic conditions, unanticipated changes in
business conditions and inflation. There can, however, be no assurance in
this regard.
(viii) The expectation that the Merger would result in synergies for the
combined company's operations, including an advantageous cost structure
relative to competitors and to FCN on a stand-alone basis, as well as the
possibility of enhancing revenues through substantial cross-selling
opportunities. The FCN Board noted that, although no assurances could be
given that any particular level of cost synergies will be achieved, the
managements of BANC ONE and FCN had identified potential pre-tax synergies
in the form of cost savings of approximately $930 million annually, and
revenue enhancements of approximately $275 million annually, which could be
fully achieved in the first three years following consummation of the
Merger. See "Management and Operations after the Merger."
(ix) The structure of the Merger and the terms of the Agreement and the
Option Agreements, which were reciprocal in nature, including the fact
that, based on the market prices of BANC ONE Common Stock and FCN Common
Stock on the date preceding execution of the Agreement, the fixed Exchange
Ratio provides FCN Stockholders with a premium to the market price of FCN
Common Stock, and also provides FCN Stockholders with the opportunity to
benefit from increases in the market price of BANC ONE Common Stock prior
to the consummation of the Merger (with a corresponding risk relating to
decreases in such market price) and that the Merger is intended to qualify
as a reorganization under Section 368(a) of the Code and for "pooling of
interests" accounting treatment.
(x) The proposed arrangements with members of management of BANC ONE and
FCN, including that Mr. Istock would serve as Chairman of the combined
company after the Merger, Mr. McCoy would serve as President and Chief
Executive Officer of the combined company after the Merger and Messrs.
Lehmann and Vitale would each serve as a Vice Chairman of the combined
company after the Merger, and that Messrs. Istock, McCoy, Lehmann and
Vitale would be members of the Board of Directors of the combined company
following the Merger. The FCN Board also considered the fact that certain
members of the FCN Board and the management of FCN could be expected to
receive certain benefits as a result of the Merger under existing
employment and compensation arrangements of FCN. See "--Interests of
Certain Persons in the Merger" and "Management and Operations after the
Merger."
(xi) The oral opinions of Lazard Freres and Goldman Sachs that, as of
April 10, 1998, the Exchange Ratio was fair from a financial point of view
to the FCN Stockholders. See "--Fairness Opinions FCN's Financial
Advisors."
(xii) The belief of FCN's senior management and of the FCN Board that
BANC ONE and FCN share a compatible culture and that their managements
possess complementary skills and
27
THE MERGER
<PAGE>
expertise. In this regard, the FCN Board took into account the fact that
the managements of BANC ONE and FCN had demonstrated the ability to
successfully integrate substantial acquisitions in a timely manner.
(xiii) The likelihood of the Merger being approved by the appropriate
regulatory authorities. See "--Regulatory Approvals Required for the
Merger." In this connection, the FCN Board considered that a modest amount
of divestitures of certain assets or deposit liabilities could be required
in connection with the Merger.
The foregoing discussion of the information and factors considered by the FCN
Board is not intended to be exhaustive but includes all material factors
considered by the FCN Board. In reaching its determination to approve and
recommend the Merger, the FCN Board did not assign any relative or specific
weights to the foregoing factors, and individual directors may have given
differing weights to different factors. The FCN Board is unanimous in its
recommendation that FCN Stockholders vote for approval and adoption of the
Agreement. For a discussion of the interests of the executive officers and
directors of FCN in the Merger, see "--Interests of Certain Persons in the
Merger."
OPINIONS OF BANC ONE'S FINANCIAL ADVISORS
BANC ONE retained Merrill Lynch and Morgan Stanley to act as its financial
advisors in connection with a possible business combination with FCN. On April
10, 1998, Merrill Lynch and Morgan Stanley each rendered to the BANC ONE Board,
respectively, their written opinions that, as of such date and based upon and
subject to the factors and assumptions set forth in the Fairness Opinions, the
Exchange Ratio was fair from a financial point of view to BANC ONE. Each of
Merrill Lynch and Morgan Stanley subsequently delivered to the BANC ONE Board
written opinions dated, as of the date of this Joint Proxy Statement--
Prospectus (the "MERRILL LYNCH OPINION" and the "MORGAN STANLEY OPINION,"
respectively and, together, the "FAIRNESS OPINIONS").
THE FULL TEXT OF EACH OF THE FAIRNESS OPINIONS, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY EACH OF MERRILL LYNCH AND MORGAN STANLEY, ARE ATTACHED AS
APPENDICES B AND C, RESPECTIVELY, TO THIS JOINT PROXY STATEMENT-PROSPECTUS AND
ARE INCORPORATED HEREIN BY REFERENCE. THE SUMMARY OF THE FAIRNESS OPINIONS SET
FORTH IN THIS JOINT PROXY STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXTS OF SUCH OPINIONS. HOLDERS OF BANC ONE COMMON STOCK
ARE URGED TO AND SHOULD READ SUCH OPINIONS CAREFULLY AND IN THEIR ENTIRETY. THE
FAIRNESS OPINIONS WERE PROVIDED TO THE BANC ONE BOARD FOR ITS INFORMATION AND
ARE DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE
EXCHANGE RATIO TO BANC ONE, DO NOT ADDRESS THE MERITS OF THE UNDERLYING
DECISION BY BANC ONE TO ENGAGE IN THE MERGER AND DO NOT CONSTITUTE
RECOMMENDATIONS TO ANY BANC ONE SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD
VOTE ON THE MERGER.
The summaries set forth below do not purport to be complete descriptions of
the analyses underlying each of the Merrill Lynch Opinion and the Morgan
Stanley Opinion or the presentation made by Merrill Lynch and Morgan Stanley to
the BANC ONE Board but summarizes the material analyses performed and presented
thereby. The preparation of a fairness opinion is a complex analytic process
involving various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, neither Merrill Lynch nor Morgan Stanley attributed any particular
weight to any analysis or factor that it considered, but rather made
qualitative judgments as to the significance and relevance of each analysis and
factor. Accordingly, each of Merrill Lynch and Morgan Stanley believe that its
analyses must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, would create an incomplete view of
the process underlying the preparation of the Fairness Opinions.
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THE MERGER
<PAGE>
The Merrill Lynch Opinion. In arriving at the Merrill Lynch Opinion, Merrill
Lynch, among other things, (i) reviewed certain publicly available business and
financial information relating to BANC ONE and FCN that Merrill Lynch deemed to
be relevant, (ii) reviewed certain information relating to the respective
businesses, earnings, assets, liabilities and prospects of BANC ONE and FCN
furnished to Merrill Lynch by the senior management of BANC ONE and FCN as well
as the amount and timing of the cost savings and related expenses expected to
result from the Merger furnished to Merrill Lynch by senior management of BANC
ONE (the "EXPECTED SYNERGIES"), (iii) conducted discussions with members of
senior management of BANC ONE and FCN concerning the matters described in
clauses (i) and (ii) above, including the respective businesses, prospects,
regulatory condition and contingencies of BANC ONE and FCN before and after
giving effect to the Merger and the Expected Synergies, (iv) reviewed the
market prices and valuation multiples for the BANC ONE Common Stock and the FCN
Common Stock and compared them with those of certain publicly traded companies
which Merrill Lynch deemed to be relevant, (v) reviewed the results of
operations of BANC ONE and FCN and compared them with those of certain publicly
traded companies which Merrill Lynch deemed to be relevant, (vi) compared the
proposed financial terms of the Merger with the financial terms of certain
other transactions which Merrill Lynch deemed to be relevant, (vii) reviewed
the potential pro forma impact of the Merger, (viii) reviewed the Agreement and
(ix) reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary under the circumstances,
including Merrill Lynch's assessment of general economic, market and monetary
conditions.
In preparing the Merrill Lynch Opinion, Merrill Lynch assumed and relied on
the accuracy and completeness of all information supplied or otherwise made
available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch,
or publicly available, and Merrill Lynch did not assume any responsibility for
independently verifying such information or undertake an independent evaluation
or appraisal of the assets or liabilities of BANC ONE or FCN nor has Merrill
Lynch been furnished any such evaluation or appraisal. Merrill Lynch is not an
expert in the evaluation of allowances for loan losses, and neither made an
independent evaluation of the adequacy of the allowance for loan losses of BANC
ONE or FCN, nor reviewed any individual credit files relating to BANC ONE or
FCN, and, as a result, Merrill Lynch has assumed that the aggregate allowances
for loan losses for both BANC ONE and FCN are adequate to cover such losses and
will be adequate on a pro forma basis for the combined entity. In addition,
Merrill Lynch did not assume any obligation to conduct, nor did Merrill Lynch
conduct, any physical inspection of the properties or facilities of BANC ONE or
FCN. With respect to the financial forecast information and the Expected
Synergies furnished to or discussed with Merrill Lynch by BANC ONE or FCN,
Merrill Lynch assumed that they had been reasonably prepared and reflect the
best currently available estimates and judgments of the senior management of
each of BANC ONE and FCN as to the future financial performance of BANC ONE,
FCN or the combined entity, as the case may be. Merrill Lynch further assumed
that the Merger will be accounted for as a "pooling of interests" under
generally accepted accounting principles ("GAAP") and that it will qualify as a
tax-free reorganization for United States federal income tax purposes.
The Merrill Lynch Opinion is necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. For the purpose of rendering the Merrill Lynch Opinion, Merrill
Lynch assumed that the Merger will be consummated substantially in accordance
with the terms set forth in the Agreement, including in all respects material
to its analysis, that the representations and warranties of each party in the
Agreement and all related documents and instruments (collectively, the
"DOCUMENTS") contained therein are true and correct, that each party to the
Documents will perform all of the covenants and agreements required to be
performed by such party under such Documents, and that all conditions to
consummation of the Merger will be satisfied without waiver thereof. Merrill
Lynch also assumed that in the course of obtaining the necessary regulatory or
other consents or approvals (contractual or otherwise) for the Merger, no
restrictions, including any divestiture requirements or amendments or
modifications, will
29
THE MERGER
<PAGE>
be imposed that will have a material adverse effect on the contemplated
benefits of the Merger, including the Expected Synergies. The Merrill Lynch
Opinion is not an expression of an opinion as to the prices at which the shares
of the combined company will trade following the consummation of the Merger.
Merrill Lynch has in the past provided financial advisory, investment banking
and other services to BANC ONE and FCN, and received customary fees for the
rendering of such services. In the ordinary course of its securities business,
Merrill Lynch may actively trade debt and/or equity securities of BANC ONE and
FCN and their respective affiliates for its own account and the account of its
customers, and Merrill Lynch therefore may from time to time hold a long or
short position in such securities.
The Morgan Stanley Opinion. In connection with the Morgan Stanley Opinion,
Morgan Stanley, among other things, (i) reviewed certain publicly available
financial statements and other information of BANC ONE and FCN, respectively,
(ii) reviewed certain internal financial statements and other financial and
operating data concerning BANC ONE and FCN prepared by the managements of BANC
ONE and FCN, respectively, (iii) discussed the past and current operations and
financial condition and the prospects of BANC ONE and FCN with senior
executives of BANC ONE and FCN, respectively, (iv) reviewed the reported prices
and trading activity for the BANC ONE Common Stock and the FCN Common Stock,
(v) compared the financial performance of BANC ONE and FCN and the prices and
trading activity of the BANC ONE Common Stock and the FCN Common Stock with
that of certain other comparable publicly-traded companies and their
securities, (vi) discussed the results of regulatory examinations of BANC ONE
and FCN with senior managements of the respective companies, (vii) discussed
with senior managements of BANC ONE and FCN First Call consensus earnings per
share estimates for each company and the strategic objectives of the Merger and
their estimates of the synergies and other benefits of the Merger for the
combined company, (viii) analyzed the pro forma impact of the Merger on the
combined company's earnings per share ("EPS"), consolidated capitalization and
financial ratios, (ix) reviewed the financial terms, to the extent publicly
available, of certain comparable merger transactions, (x) participated in
discussions and negotiations among representatives of BANC ONE and FCN and
their financial and legal advisors, (xi) reviewed the Agreement and certain
related documents and (xii) performed such other analyses and considered such
other factors as Morgan Stanley deemed appropriate.
In rendering the Morgan Stanley Opinion, Morgan Stanley assumed and relied
upon without verification the accuracy and completeness of the information
reviewed by Morgan Stanley for the purposes of such opinion. With respect to
the financial projections, including the estimates of cost savings and other
synergies expected to result from the Merger, Morgan Stanley assumed that they
had been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of BANC ONE and
FCN. Morgan Stanley did not make any independent valuation or appraisal of the
assets or liabilities of BANC ONE or FCN, nor was Morgan Stanley furnished with
any such appraisals. Morgan Stanley is not an expert in the evaluation of
allowances for loan losses, and neither made an independent evaluation of the
adequacy of the allowances for loan losses of BANC ONE or FCN, nor reviewed any
individual credit files relating to BANC ONE or FCN. In addition, Morgan
Stanley assumed the Merger will be consummated substantially in accordance with
the terms set forth in the Agreement. Morgan Stanley further assumed that the
Merger will be accounted for as a "pooling of interests" under GAAP and that it
will qualify as a tax-free reorganization for United States federal income tax
purposes. In addition, Morgan Stanley assumed that in connection with the
receipt of all necessary regulatory approvals for the Merger, no restrictions
will be imposed that would have a material adverse effect on the consolidated
benefits expected to be derived in the Merger. The Morgan Stanley Opinion is
necessarily based upon economic, market and other conditions as in effect on,
and the information made available to Morgan Stanley as of, the date of such
opinion. The Morgan Stanley Opinion is not an expression of an opinion as to
the prices at which the shares of BANC ONE Common Stock will trade following
the announcement of the Merger or the price at which shares of the combined
company will trade following the consummation of the Merger.
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THE MERGER
<PAGE>
In the ordinary course of its business, Morgan Stanley and its affiliates
may actively trade the debt and equity securities of BANC ONE and FCN for
their own account or for the account of customers and may, from time to time,
hold a long or short position in, and buy and sell, securities of BANC ONE or
FCN. Morgan Stanley will receive a fee for its services as one of the
financial advisors of BANC ONE in connection with this transaction. See "--
Terms of Engagement." In the past, Morgan Stanley and its affiliates have
provided financial advisory and financing services for BANC ONE and FCN and
have received fees for the rendering of these services.
Presentation to the Board. In performing their analyses, Merrill Lynch and
Morgan Stanley made numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Merrill Lynch, Morgan Stanley, BANC
ONE or FCN. Any estimates contained in the analyses performed by Merrill Lynch
and Morgan Stanley are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
such businesses or securities might actually be sold. Accordingly, such
analyses and estimates are inherently subject to substantial uncertainty. In
addition, the fairness opinions dated as of April 10, 1998 were among several
factors taken into consideration by the BANC ONE Board in making its
determination to approve the Agreement and the Merger. Consequently, the
analyses described below should not be viewed as determinative of the decision
of the BANC ONE Board or BANC ONE's management with respect to the fairness of
the Exchange Ratio.
Based upon the closing price of BANC ONE Common Stock on April 9, 1998 of
$61.75 (last trading day prior to Merrill Lynch's and Morgan Stanley's
presentation to the BANC ONE Board), the Exchange Ratio results in an implied
price of $100.04 per share of FCN Common Stock, representing a premium of
approximately 6% to the closing price of FCN Common Stock as of April 9, 1998.
After giving effect to the Merger, BANC ONE Shareholders would have a fully
diluted ownership interest of approximately 59.9% in the pro forma combined
company, based on the Exchange Ratio.
The following is a brief summary of the material analyses presented by
Merrill Lynch and Morgan Stanley to the BANC ONE Board in connection with the
rendering of the fairness opinions dated as of April 10, 1998.
Dividend Discount Analysis--FCN. Merrill Lynch and Morgan Stanley performed
a dividend discount analysis to estimate a range of present values per share
of FCN Common Stock assuming FCN continued to operate as a stand-alone entity.
This range was determined by adding (i) the present value of the estimated
future dividend stream that FCN could generate, and (ii) the present value of
the "terminal value" of FCN Common Stock at the end of year 2003. To determine
a projected dividend stream, Merrill Lynch and Morgan Stanley assumed a
constant tangible common equity to tangible asset ratio of 6.5%. Merrill Lynch
and Morgan Stanley used FCN management's earnings estimate for 1998 (which was
materially consistent with the First Call consensus earnings per share
estimate for FCN of $5.42), the First Call consensus earnings per share
estimate for FCN of $6.01 for 1999 and the First Call estimated long-term
earnings growth rate as of April 7, 1998 of 10% for the years 2000 through
2004 to form the basis for the dividends. The "terminal value" of FCN Common
Stock at the end of the period was determined by applying three market price-
to-cash earnings (defined as net income plus after-tax amortization of
intangibles) multiples (15.0x, 16.0x and 17.0x) to year 2004 projected
earnings. The dividend stream and "terminal values" were discounted to present
values using discount rates of 13.0%, 14.0% and 15.0%, which Merrill Lynch and
Morgan Stanley viewed as the appropriate range of discount rates for a company
with FCN's risk characteristics. Based on the above assumptions, the stand-
alone value of the FCN Common Stock ranged from $78.79 to $95.04 per share.
This analysis is not necessarily indicative of actual values or actual future
results and does not purport to reflect the prices at which any securities may
trade at the present or at any time in the future. Dividend discount analysis
is a widely used valuation methodology, but the results
31
THE MERGER
<PAGE>
of such methodology are highly dependent upon the numerous assumptions that
must be made, including earnings growth rates, dividend payout rates, terminal
values and discount rates.
Dividend Discount Analysis--BANC ONE. Merrill Lynch and Morgan Stanley
performed a dividend discount analysis to estimate a range of present values
per share of BANC ONE Common Stock assuming BANC ONE continued to operate as a
stand-alone entity. This range was determined by adding (i) the present value
of the estimated future dividend stream that BANC ONE could generate, and (ii)
the present value of the "terminal value" of BANC ONE Common Stock at the end
of year 2003. To determine a projected dividend stream, Merrill Lynch and
Morgan Stanley assumed a constant tangible common equity to tangible asset
ratio of 8.0%. Merrill Lynch and Morgan Stanley used BANC ONE management's
earnings estimate for 1998 (which was materially consistent with the First
Call consensus earnings per share estimate for BANC ONE of $3.59), the First
Call consensus earnings per share estimate for BANC ONE of $4.18 for 1999 and
the First Call estimated long-term earnings growth rate of 12% for the years
2000 through 2004 to form the basis for the dividends. The "terminal value" of
BANC ONE Common Stock at the end of the period was determined by applying
three market price-to-cash earnings multiples (15.0x, 16.0x and 17.0x) to year
2004 projected earnings. The dividend stream and "terminal values" were
discounted to present values using discount rates of 13.0%, 14.0% and 15.0%,
which Merrill Lynch and Morgan Stanley viewed as the appropriate range of
discount rates for a company with BANC ONE's risk characteristics. Based on
the above assumptions, the stand-alone value of the BANC ONE Common Stock
ranged from $61.79 to $74.71 per share. This analysis is not necessarily
indicative of actual values or actual future results and does not purport to
reflect the prices at which any securities may trade at the present or at any
time in the future. Dividend discount analysis is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.
Contribution Analysis. Merrill Lynch and Morgan Stanley reviewed the
relative contributions of BANC ONE (pro forma for the pending acquisition of
First Commerce Corporation) and FCN to the combined company based on financial
data as of December 31, 1997 and the BANC ONE Common Stock Price of $61.75 as
of April 9, 1998. Merrill Lynch and Morgan Stanley compared the pro forma
equity ownership interests of BANC ONE and FCN of 59.9% and 40.1%,
respectively, with BANC ONE's and FCN's percentage contributions to (i) total
assets of 52.4% and 47.6%, respectively, (ii) total loans (gross) of 56.3% and
43.7%, respectively, (iii) total deposits of 55.4% and 44.6%, respectively,
(iv) common equity of 59.0% and 41.0%, respectively, (v) tangible common
equity of 57.3% and 42.7%, (vi) fully diluted market capitalization (based on
stated shares outstanding and options accounted for under the treasury stock
method based on the market price as of April 9, 1998) of 61.7% and 38.3%,
respectively, (vii) 1998 estimated net income (based on First Call earnings
estimates adjusted for assumed share repurchases) of 62.1% and 37.9%,
respectively, and (vii) 1999 estimated net income (based on First Call
earnings estimates adjusted for assumed share repurchases) of 63.7% and 36.3%,
respectively.
Comparison of Selected Comparable Companies. Merrill Lynch and Morgan
Stanley compared selected operating and stock market results of BANC ONE and
FCN to the publicly available corresponding data of certain other companies
(pro forma for pending acquisitions) which Merrill Lynch and Morgan Stanley
deemed to be relevant, including NationsBank Corporation, First Union
Corporation, Norwest Corporation, Wells Fargo & Co., Fleet Financial Group,
Inc., National City Corporation, PNC Bank Corporation, Wachovia Corporation,
U.S. Bancorp, Mellon Bank Corporation, Sun Trust Bank Inc. and BankBoston
Corporation (collectively the "MERRILL-MORGAN PEER GROUP"). The comparison
showed, among other things, that based on financial data as of December 31,
1997 and earnings estimates from First Call as of April 9, 1998, (i) BANC
ONE's and FCN's market prices to 52-week high were 94.1% and 99.2%,
respectively, compared with the mean for the Merrill-Morgan Peer Group of
98.3%, (ii) BANC ONE's and FCN's market prices as multiples of book value were
3.84x
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and 3.55x, respectively, compared with the mean for the Merrill-Morgan Peer
Group of 3.60x, (iii) BANC ONE's and FCN's market prices as multiples of
tangible book value were 4.32x and 3.74x, respectively, compared with the mean
for the Merrill-Morgan Peer Group of 5.12x, (iv) BANC ONE's and FCN's market
prices per share as multiples of 1998 estimated EPS (calculated in accordance
with GAAP) were 17.15x and 17.31x, respectively, compared with the mean for the
Merrill-Morgan Peer Group of 19.03x, (v) BANC ONE's and FCN's market prices per
share as multiples of 1999 estimated EPS (calculated in accordance with GAAP)
were 14.77x and 15.61x, respectively, compared with the mean for the Merrill-
Morgan Peer Group of 16.66x, (vi) BANC ONE's and FCN's market prices per share
as multiples of 1998 estimated cash EPS were 16.39x and 16.47x, respectively,
compared with the mean for the Merrill-Morgan Peer Group of 17.32x, and (vii)
BANC ONE's and FCN's market prices per share as multiples of 1999 estimated
cash EPS were 14.20x and 14.93x, respectively, compared with the mean for the
Merrill-Morgan Peer Group of 15.36x.
Pro Forma Financial Impact. Based on projections provided by BANC ONE and
FCN, Merrill Lynch and Morgan Stanley analyzed the pro forma per share impact
of the Merger on a variety of measures including, among other things, earnings
per share, book value per share and tangible book value per share. The analysis
was based on the assumption that the combined companies would realize projected
synergies within the time periods specified by BANC ONE and FCN. The analysis
assumed management's estimates as to the amount of fully phased-in pre-tax
synergies of $1,205 million and the timing thereof. The analysis also assumed
management's estimate of pre-tax merger and reorganization charges. Adjustments
were also made for assumed deposit divestitures and share reissuance based on
management's estimates.
The analyses performed (using each of 12.5% and 10% annual growth rates in
FCN's earnings per share) indicated that, on a per share basis, the Merger
would be accretive to BANC ONE's estimated EPS in 2000 and thereafter.
The analysis performed also indicated that the Merger would be dilutive to
BANC ONE's book value and tangible book value per share at the assumed closing
of the Merger of December 31, 1998 based on management's estimate.
Review of Selected Merger-of-Equals Transactions. Merrill Lynch and Morgan
Stanley reviewed the terms, to the extent publicly available, of six selected
merger-of-equals transactions in the banking industry. None of the selected
merger-of-equals transactions reviewed was identical to the Merger and,
accordingly, an analysis of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and
operational characteristics of the companies involved in the selected merger-
of-equals transactions and other factors that could affect the acquisition of
the transactions selected compared to the Merger.
Implied Multiple Analysis. Merrill Lynch and Morgan Stanley performed an
implied multiple analysis of each of BANC ONE and FCN on a stand-alone basis
and the combined company on a pro forma basis. Based on information from the
managements of BANC ONE and FCN, (i) the market price as a multiple of fully
diluted book value was 3.84x for BANC ONE, 3.55x for FCN and 3.78x for the pro
forma combined company and (ii) the market price as a multiple of fully diluted
tangible book value was 4.32x for BANC ONE, 3.74x for FCN and 3.97x for the pro
forma combined company. The market price per share as a multiple of last twelve
months EPS was 21.52x for BANC ONE, 19.19x for FCN and 20.42x for the pro forma
combined company. Based on earnings estimates from First Call as of April 9,
1998, (i) the market price per share as a multiple of estimated EPS was 17.15x
for BANC ONE, 17.31x for FCN and 18.42x for the pro forma combined company in
1999, and (ii) the market price per share as a multiple of estimated EPS was
14.77x for BANC ONE, 15.61x for FCN and 16.62x for the pro forma combined
company in 2000.
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Historical Premium Study. Merrill Lynch and Morgan Stanley reviewed the
premium to the FCN Common Stock market value that would have resulted by
exchanging 1.62 shares of the BANC ONE Common Stock for each share of the FCN
Common Stock over the period commencing on April 8, 1997 and ending April 7,
1998 using the closing prices on each day during the period. Merrill Lynch and
Morgan Stanley observed that such premium averaged 8% over the period and was
6% on April 7, 1998.
Peer Group Stock Return Analysis. Merrill Lynch and Morgan Stanley analyzed
the growth rates of the stock prices (adjusted for stock splits and the
reinvestment of dividends in stock) of the Merrill-Morgan Peer Group as
compared to BANC ONE and FCN, based on six-month, one-year, three-year and
five-year growth rates. The mean and median of the six-month growth rates for
the Merrill-Morgan Peer Group were 69.7% and 69.0%, respectively, compared to
80.7% and 54.3% for BANC ONE and FCN, respectively. The mean and median of the
one-year growth-rates for the Merrill-Morgan Peer Group were 57.7% and 58.2%,
respectively, compared to 75.5% and 74.3% for BANC ONE and FCN, respectively.
The mean and median of the three-year growth rates for the Merrill-Morgan Peer
Group were 44.8% and 43.7%, respectively, compared to 40.5% and 46.2% for BANC
ONE and FCN, respectively. The mean and median of the five-year growth rates
for the Merrill-Morgan Peer Group were 27.3% and 28.1%, respectively, compared
to 17.1% and 25.8% for BANC ONE and FCN, respectively.
Terms of Engagement. BANC ONE retained Merrill Lynch and Morgan Stanley
based upon their experience and expertise. Merrill Lynch and Morgan Stanley
are internationally recognized investment banking and advisory firms. Merrill
Lynch and Morgan Stanley, as part of their investment banking businesses, are
continuously engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other
purposes.
Pursuant to a letter agreement between BANC ONE and Merrill Lynch dated as
of April 6, 1998 and a letter agreement between BANC ONE and Morgan Stanley
dated as of April 7, 1998, BANC ONE agreed to pay each of Merrill Lynch and
Morgan Stanley for financial advisory services rendered through the closing of
the Merger (i) a fee of $100,000, payable upon the execution of each of the
letter agreements, (ii) a fee of $3 million payable at the signing of the
Agreement and (iii) a fee of $10 million payable if and when the Merger is
consummated. Any fees previously paid to each of Merrill Lynch and Morgan
Stanley under the provisions of the letter agreements described in clauses (i)
and (ii) above will be deducted from any fee to which Merrill Lynch and Morgan
Stanley are entitled pursuant to clause (iii). BANC ONE also agreed to
reimburse each of Merrill Lynch and Morgan Stanley for certain expenses
incurred in connection with their activities under the letter agreements. BANC
ONE further agreed to indemnify each of Merrill Lynch and Morgan Stanley and
their respective affiliates for certain liabilities related to or arising out
of their respective engagements.
OPINIONS OF FCN'S FINANCIAL ADVISORS
FCN retained Lazard Freres and Goldman Sachs to act as FCN's financial
advisors in connection with the Merger and related matters based upon their
qualifications, expertise and reputation, as well as Lazard Freres' and
Goldman Sachs' prior investment banking relationships and familiarity with
FCN. At the April 10, 1998 meeting of the FCN Board, Lazard Freres and Goldman
Sachs each rendered an oral opinion to the FCN Board that, as of such date,
the Exchange Ratio was fair, from a financial point of view, to FCN
Stockholders. Each of Lazard Freres and Goldman Sachs subsequently delivered
to the FCN Board written opinions dated as of the date of this Joint Proxy
Statement-Prospectus. No limitations were imposed by FCN with respect to the
investigations made or the procedures followed by Lazard Freres and Goldman
Sachs in rendering their opinions.
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THE FULL TEXTS OF THE OPINIONS OF LAZARD FRERES AND GOLDMAN SACHS, DATED AS
OF THE DATE OF THIS JOINT PROXY STATEMENT-PROSPECTUS, WHICH SET FORTH, AMONG
OTHER THINGS, ASSUMPTIONS MADE, MATTERS CONSIDERED, AND LIMITS ON THE REVIEW
UNDERTAKEN BY LAZARD FRERES AND GOLDMAN SACHS, ARE ATTACHED HERETO AS
APPENDICES D AND E, RESPECTIVELY, AND ARE INCORPORATED HEREIN BY REFERENCE. THE
FCN STOCKHOLDERS ARE URGED TO, AND SHOULD, READ EACH OPINION IN ITS ENTIRETY.
THE SUMMARY SET FORTH IN THIS JOINT PROXY STATEMENT-PROSPECTUS OF THE OPINIONS
OF LAZARD FRERES AND GOLDMAN SACHS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FULL TEXT OF THE OPINIONS ATTACHED HERETO.
OPINION OF LAZARD FRERES
The FCN Board requested Lazard Freres' opinion as to the fairness, from a
financial point of view, to the FCN Stockholders, of the Exchange Ratio. In
connection with its opinion, Lazard Freres:
(i) Reviewed the financial terms and conditions of the Agreement;
(ii) Analyzed certain historical business and financial information
relating to FCN and BANC ONE;
(iii) Reviewed various financial forecasts and other data provided to
Lazard Freres by FCN and BANC ONE with respect to the businesses and
prospects of FCN and BANC ONE, respectively, the strategic objectives of
each, and possible financial benefits which might be realized following the
Merger;
(iv) Participated in discussions with members of the senior managements
of FCN and BANC ONE with respect to the businesses and prospects of FCN and
BANC ONE, respectively, the strategic objectives of each, and possible
financial benefits which might be realized following the Merger;
(v) Reviewed public information with respect to certain other bank
holding companies, the securities of which are publicly traded;
(vi) Reviewed the financial terms of certain comparable business
combinations involving financial services companies;
(vii) Reviewed the historical stock prices and trading volumes of shares
of FCN Common Stock and BANC ONE Common Stock; and
(viii) Conducted such other financial studies, analyses and
investigations as it deemed appropriate.
Lazard Freres relied upon the accuracy and completeness of the financial and
other information provided by FCN and BANC ONE and reviewed by Lazard Freres
for purposes of its opinion, and did not assume any responsibility for any
independent verification of such information. With respect to financial
forecasts, including projected cost savings and revenue enhancements, Lazard
Freres assumed that they had been reasonably prepared on bases reflecting the
best currently available estimates and judgments of management of FCN and BANC
ONE as to the future financial performance of FCN, BANC ONE and BANK ONE, and
Lazard Freres assumed that such forecasts and projections will be realized in
the amounts and at the times contemplated thereby. Lazard Freres assumed no
responsibility for and expressed no view as to such forecasts and projections
or the assumptions on which they were based. Lazard Freres is not an expert in
the evaluation of loan portfolios or the allowances for loan losses with
respect thereto and assumed with FCN's consent that such allowances for FCN and
BANC ONE are in the aggregate adequate to cover such losses. In addition,
Lazard Freres did not review individual credit files nor did it make an
independent appraisal of the assets and liabilities of FCN or BANC ONE or any
of their subsidiaries and it had not been furnished with any such evaluation or
appraisal. FCN informed Lazard Freres and Lazard Freres assumed, with FCN's
consent, that the Merger will be recorded as a "pooling of interests" in
accordance with GAAP.
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<PAGE>
Further, Lazard Freres' opinion was necessarily based on economic, monetary,
market and other conditions as in effect on, and the information made
available to Lazard Freres as of, the date thereof.
In rendering its opinion, Lazard Freres assumed that the Merger will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by FCN and that obtaining the necessary
regulatory approvals for the Merger will not have an adverse effect on FCN,
BANC ONE or BANK ONE.
Lazard Freres is acting as investment banker to FCN in connection with the
Merger and will receive fees for its services, a substantial portion of which
are contingent upon the closing of the Merger. Also, Lazard Freres from time
to time provided investment banking and financial advisory services to FCN and
BANC ONE for which it previously received fees.
The FCN Board did not authorize Lazard Freres to solicit, and Lazard Freres
did not solicit, any indications of interest from any third party with respect
to the purchase of all or part of FCN. Further, Lazard Freres' opinion was
limited to the fairness, from a financial point of view, to the FCN
Stockholders of the Exchange Ratio and did not address FCN's underlying
business decision to undertake the Merger and not engage in a sale of control.
In addition, Lazard Freres' opinion did not address the future trading value
of BANK ONE Common Stock or the future acquisition value of BANK ONE.
Moreover, the opinion of Lazard Freres was directed to the FCN Board and did
not constitute a recommendation to any stockholder as to how to vote with
respect to the Merger.
OPINION OF GOLDMAN SACHS
The FCN Board requested Goldman Sachs' opinion as to the fairness from a
financial point of view to the FCN Stockholders of the Exchange Ratio.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with FCN having acted as its financial advisor in connection with,
and having participated in certain of the negotiations leading to, the
Agreement. Goldman Sachs provides a full range of financial advisory and
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including
derivative securities, of FCN or BANC ONE for its own account and for the
accounts of customers.
In connection with its opinion, Goldman Sachs reviewed, among other things,
the Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K
of FCN and BANC ONE for the five years ended December 31, 1997; certain
interim reports to stockholders and Quarterly Reports on Form 10-Q of FCN and
BANC ONE; certain other communications from FCN and BANC ONE to their
respective stockholders; and certain internal financial analyses and forecasts
of FCN and BANC ONE prepared by their respective managements including
forecasts of certain net cost savings and revenue enhancements (the
"SYNERGIES") expected to be achieved as a result of the Merger. Goldman Sachs
also held discussions with members of the senior management of FCN and BANC
ONE regarding the strategic rationale for, and the potential benefits of, the
transaction contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, Goldman Sachs reviewed the reported price and trading
activity for FCN Common Stock and BANC ONE Common Stock, compared certain
financial and stock market information for FCN and BANC ONE with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations
in the commercial banking industry specifically and in other financial
services industries generally and performed such other studies and analyses as
it considered appropriate.
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THE MERGER
<PAGE>
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, Goldman
Sachs assumed, with the FCN Board's consent, that the financial forecasts,
including, without limitation, the Synergies and projections regarding under-
performing and non-performing assets and net charge-offs had been reasonably
prepared on a basis reflecting the best currently available judgments and
estimates of FCN and BANC ONE and that such projections will be realized in the
amounts and at the times contemplated thereby. Goldman Sachs is not an expert
in the evaluation of loan and lease portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and assumed, with
the FCN Board's consent, that such allowances for each of FCN and BANC ONE are
in the aggregate adequate to cover all such losses. Similarly, Goldman Sachs
assumed, with the FCN Board's consent and without independent analysis, that
the obligations of FCN and BANC ONE pursuant to derivatives, swaps, foreign
exchange, financial instruments and off-balance sheet lending-related financial
instruments will not have an adverse effect which would be relevant to its
analysis. In addition, Goldman Sachs did not review individual credit files nor
did it make an independent evaluation or appraisal of the assets and
liabilities of FCN or BANC ONE or any of their subsidiaries, and it had not
been furnished with any such evaluation or appraisal. Goldman Sachs' opinion as
to the fairness of the Exchange Ratio addressed the ownership position in BANK
ONE to be received by the FCN Stockholders pursuant to the Exchange Ratio on
the terms set forth in the Agreement and did not address the future trading or
acquisition value for the stock of BANK ONE. In addition, Goldman Sachs'
opinion does not address the relative merits of the Merger and alternative
business strategies. In that regard, Goldman Sachs was not requested to, and
did not, solicit third party indications of interest in acquiring all or part
of FCN or in engaging in a business combination or any other strategic
transaction with FCN. Goldman Sachs also assumed, with the FCN Board's consent,
that the Merger will be accounted for as a "pooling of interests" under GAAP
and that obtaining any necessary regulatory approvals and third party consents
for the Merger or otherwise will not have an adverse effect on FCN or BANC ONE
or BANK ONE pursuant to the Merger.
Goldman Sachs' advisory services and the opinion expressed by it were
provided for the information and assistance of the FCN Board in connection with
its consideration of the transaction contemplated by the Agreement and such
opinion did not constitute a recommendation as to how any FCN Stockholder
should vote with respect to such transaction.
SUMMARY OF FINANCIAL ANALYSES
The following is a brief summary of the material financial analyses presented
to the FCN Board on April 10, 1998 by Lazard Freres and Goldman Sachs in
connection with their oral opinions as of such date:
(a) Comparative Financial and Market Performance Analysis. In performing
a comparative market performance analysis, Lazard Freres and Goldman Sachs
analyzed certain operating performance statistics of FCN, BANC ONE and the
pro forma combined company relative to BankAmerica Corporation, The Chase
Manhattan Corporation, First Union Corporation, Fleet Financial Group,
Inc., Keycorp, NationsBank Corporation, National City Corporation, Norwest
Corporation, PNC Bank Corp. and U.S. Bancorp (the "LAZARD-GOLDMAN PEER
GROUP").
Lazard Freres and Goldman Sachs analyzed the relative financial
performance and stock market valuation of FCN and BANC ONE by comparing
certain financial and market trading information of FCN and of BANC ONE
with the Lazard-Goldman Peer Group. In addition, Lazard Freres and Goldman
Sachs analyzed the relative financial performance of the pro forma combined
company by comparing certain financial information of the pro forma
combined company with the Lazard-Goldman Peer Group. Historical financial
information used in connection with this analysis was as of, and for the
twelve months ended, December 31, 1997. Market information used in this
analysis was as of April 9, 1998.
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Among the financial information compared was (i) return on average
assets, which was 1.38% for FCN, 1.59% for BANC ONE, 1.49% for the pro
forma combined company, and an average of 1.44% and a median of 1.47% for
the Lazard-Goldman Peer Group, (ii) return on average equity, which was
17.7% for FCN, 18.2% for BANC ONE, 18.0% for the pro forma combined
company, and an average of 18.5% and a median of 18.6% for the Lazard-
Goldman Peer Group, (iii) the ratio of market price to earnings per share
for the latest twelve months, which was 19.4x for FCN, 22.8x for BANC ONE,
and an average of 20.3x and a median of 19.7x for the Lazard-Goldman Peer
Group, (iv) the ratios of market price to the median IBES projection of
earnings per share for 1998 and 1999, which were 17.2x and 15.5x,
respectively, for FCN, 17.2x and 14.9x, respectively, for BANC ONE and an
average of 17.5x and 15.3x, respectively, and a median of 17.0x and 15.5x,
respectively, for the Lazard-Goldman Peer Group, (v) the IBES consensus
estimate of long term growth, which was 9.8% for FCN, 13.1% for BANC ONE,
and an average of 11.6% and a median of 11.8% for the Lazard-Goldman Peer
Group, (vi) market price to book value, which was 3.50x for FCN, 3.90x for
BANC ONE, and an average of 3.60x and a median of 3.36x for the Lazard-
Goldman Peer Group, and (vii) market price to tangible book value, which
was 3.70x for FCN, 4.41x for BANC ONE, and an average of 4.62x and a median
of 4.27x for the Lazard-Goldman Peer Group.
(b) Historical Exchange Ratio Analysis. Lazard Freres and Goldman Sachs
reviewed the ratio of the closing prices per share of FCN Common Stock to
BANC ONE Common Stock over various time periods during the past five years.
The analysis showed that such ratio ranged (i) from 0.930x to 1.710x (with
an average of 1.263x and a median of 1.274x) over the five-year period
ending April 9, 1998, (ii) from 1.122x to 1.710x (with an average of 1.361x
and a median of 1.334x) over the three-year period ending April 9, 1998,
(iii) from 1.341x to 1.710x (with an average of 1.499x and a median of
1.490x) over the one-year period ending April 9, 1998, (iv) from 1.341x to
1.621x (with an average of 1.449x and a median of 1.439x) over the three-
month period ending April 9, 1998, and (v) from 1.361x to 1.522x (with an
average of 1.425x and a median of 1.418x) over the one-month period ending
April 9, 1998. The foregoing ratios can be compared to the Exchange Ratio
of 1.620 shares of BANK ONE Common Stock for each share of FCN Common
Stock.
(c) Contribution Analysis. Lazard Freres and Goldman Sachs analyzed the
contribution of each of FCN and BANC ONE to the market capitalization and
certain balance sheet and income statement items for the pro forma combined
company (before adjustments attributable to the Merger). Projections of net
income to common shareholders for purposes of this analysis were based on
IBES median earnings per share estimates. The contribution analysis was as
of December 31, 1997 for balance sheet items and the implied exchange
ratios were calculated on the basis of fully diluted shares outstanding for
FCN and BANC ONE as of March 31, 1998. The analysis produced relative
contributions by FCN to (i) the managed assets of the pro forma combined
company of 43.5%, implying an exchange ratio of 1.861x, (ii) managed loans
of the pro forma combined company of 38.7%, implying an exchange ratio of
1.521x, (iii) core deposits of the pro forma combined company of 38.9%,
implying an exchange ratio of 1.536x, and (iv) common equity of the pro
forma combined company of 41.3%, implying an exchange ratio of 1.696x. The
analysis further produced relative contributions by FCN to the net income
available to common shareholders of the pro forma combined company of 43.1%
for the twelve months ended December 31, 1997, 38.1% for 1998, and 36.7%,
for the projected year 1999, implying exchange ratios of 1.832x, 1.485x and
1.397x, respectively. Furthermore, the market capitalization of FCN
represented a contribution of 38.7% of pro forma combined market
capitalization, implying an exchange ratio of 1.522x (based on the April 9,
1998 market prices of FCN Common Stock and BANC ONE Common Stock). The
foregoing analysis indicated an average relative contribution of FCN to the
pro forma company of 39.9%, implying an average exchange ratio of 1.606x
and a median relative contribution of 38.8%, implying a median exchange
ratio of 1.529x. The Exchange
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Ratio in the Merger is 1.620 shares of BANK ONE Common Stock for each share
of FCN Common Stock, which will result in the FCN Stockholders owning 40.2%
of the BANK ONE Common Stock.
(d) Analysis of Other Merger of Equals Transactions. Lazard Freres and
Goldman Sachs analyzed other merger of equals transactions in the United
States financial services industry over the period from 1991 that they
considered relevant. The merger of equals transactions analyzed were:
Travelers Group/Citicorp, Dean Witter, Discover & Co./Morgan Stanley Group
Inc., Chemical Banking Corporation/The Chase Manhattan Corporation, NBD
Bancorp Inc./First Chicago Corporation, BB&T Financial Corporation/Southern
National Corporation, Society Corporation/KeyCorp, Comerica
Incorporated/Manufacturers National Corporation, and Chemical Banking
Corporation/Manufacturers Hanover Corporation. This analysis indicated that
the exchange ratio received by shareholders of a combining entity situated
similarly to FCN one day, one week and one month prior to the public
announcement of the transaction represented an average percentage above
market value of 5.6%, 6.9%, and 5.9%, respectively, and a median percentage
above market value of 4.8%, 4.6% and 3.9%, respectively. The Exchange Ratio
received by the FCN Stockholders one day, one week and one month prior to
the public announcement of the Merger represents a percentage above market
value of FCN Common Stock of 6.4%, 11.7%, and 23.3%, respectively. The
analysis further showed that the ratio of (i) the ownership of the combined
entity by the common shareholders of a combining entity situated similarly
to FCN (the "OWNERSHIP FACTOR") to latest twelve months net income to
common equity was an average of 1.04x and a median of 1.02x, as compared to
0.93x for the Merger, (ii) the Ownership Factor to current fiscal year net
income to common equity (based on research analysts' estimates at the time
of the announcement of a transaction) was an average of 1.05x and a median
of 0.95x, as compared to 1.05x for the Merger, and (iii) the Ownership
Factor to market capitalization was an average of 1.04x and a median of
1.03x, as compared to 1.04x for the Merger.
(e) Summary Pro Forma Analyses. Lazard Freres and Goldman Sachs analyzed
the impact of the Merger on certain profitability, capital adequacy and per
share data for 1998, 1999, 2000 and 2001. This analysis was based upon IBES
estimates and assumed realization of expense savings, revenue enhancements,
pre-tax restructuring charges, asset and deposit dispositions and other
Merger adjustments at the times and in the amounts projected by the
managements of FCN and BANC ONE (which estimates of expense savings and
revenue enhancements included growth at a rate of 7.0% per annum starting
in 2001). This analysis showed that on a FCN per share equivalent basis,
the Merger will be accretive (i) with respect to fully diluted earnings per
share (excluding non-recurring items and restructuring charge) by 3.3% in
1998, 11.5% in 1999, 19.1% in 2000 and 23.7% in 2001, (ii) with respect to
dividends per share by 38.7% in 1998, 43.3% in 1999, 52.7% in 2000 and
58.2% in 2001, and (iii) with respect to book value per share by 1.7% at
December 31, 1998, 8.2% at December 31, 1999, 15.6% at December 31, 2000
and 23.6% at December 31, 2001. This analysis also showed (i) a return on
average assets for the pro forma combined company (excluding non-recurring
items and restructuring charge) of 1.71%, 1.97%, 2.20% and 2.39%,
respectively, compared to 1.37%, 1.43%, 1.47% and 1.51%, respectively, for
FCN on a stand-alone basis, (ii) a return on average managed assets for the
pro forma combined company (excluding non-recurring items and restructuring
charge) of 1.45%, 1.67%, 1.87% and 2.03%, respectively, compared to 1.28%,
1.27%, 1.33% and 1.37%, respectively, for FCN on a stand-alone basis, (iii)
a return on average common equity for the pro forma combined company
(excluding non-recurring items and restructuring charge) of 26.0%, 22.2%,
22.9% and 22.8%, respectively, compared to 20.1%, 20.9%, 21.5% and 22.1%,
respectively, for FCN on a stand-alone basis, and (iv) a ratio of total
tangible common equity to total tangible managed assets for the pro forma
combined company of 6.70%, 7.39%, 8.16% and 8.98%, respectively, as
compared to 6.06%, 6.13%, 6.19% and 6.24%, respectively, for FCN on a
stand-alone basis.
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THE MERGER
<PAGE>
(f) Discounted Cash Flow Analysis. Using IBES earnings and growth
estimates, terminal values per share ranging from 17.0x to 19.0x, FCN's
projected 2002 earnings and discount rates ranging from 11.0% to 14.0%,
Lazard Freres and Goldman Sachs estimated that the net present value of a
share of FCN Common Stock on a stand-alone basis would fall within a range
of $80.19 to $100.95. Lazard Freres and Goldman Sachs also performed a
discounted cash flow analysis, using the same exit multiples and discount
rates, for the pro forma combined company using the earning estimates and
assumptions referred to above under "--Summary Pro Forma Analyses." This
analysis indicated a net present value range for the pro forma combined
company on a FCN per share equivalent basis of $101.69 to $127.70. The
discounted cash flow analysis did not purport to be indicative of actual
future results and did not purport to reflect the prices at which shares of
FCN Common Stock or BANC ONE Common Stock may trade. It was included
because it is a widely used valuation methodology, but the results of such
methodology are highly dependent upon the numerous assumptions, including
earning growth rates, dividend payout rates, terminal values and discount
rates and multiples.
The foregoing summary does not purport to be a complete description of the
analyses performed by Lazard Freres and Goldman Sachs, but describes the
material analyses performed thereby. In addition, Lazard Freres and Goldman
Sachs believe that their analyses must be considered as a whole and that
selecting portions of such analyses and the factors considered by it, without
considering all such analyses and factors, could create an incomplete view of
the process underlying the analyses and the opinions. The preparation of a
financial adviser's opinion is a complex process involving subjective judgments
and is not necessarily susceptible to partial analyses or summary description.
In their analyses, Lazard Freres and Goldman Sachs also took into account their
assessment of general economic, market, and financial conditions and their
experience in similar transactions, as well as their experience in securities
valuation and their knowledge of the banking industry generally. With respect
to the comparative financial and market performance and merger of equals
transaction analyses summarized above, no public company utilized as a
comparison is identical to FCN or BANC ONE and such analyses necessarily
involve complex considerations and judgments concerning the differences in
financial and operating characteristics of the companies and other factors that
could affect the acquisition or public trading values of the companies
concerned. Any estimates contained in Lazard Freres' and Goldman Sachs'
analyses are not necessarily indicative of future results or values, which may
be significantly more or less favorable than such estimates. Estimates of
values of companies do not purport to be appraisals or necessarily reflect the
prices at which companies or their securities actually may be sold. None of the
analyses performed by Lazard Freres and Goldman Sachs was assigned a greater
significance by Lazard Freres or Goldman Sachs than any other.
The forecasts and projections reviewed by Lazard Freres and Goldman Sachs in
connection with the rendering of their respective opinions were prepared by the
respective managements of FCN and BANC ONE. Neither FCN nor BANC ONE publicly
discloses internal management projections of the type provided to Lazard Freres
and Goldman Sachs in connection with the preparation of their opinions. Such
forecasts and projections were not prepared with a view towards public
disclosure. In addition, such forecasts and projections were based on numerous
variables and assumptions which are inherently uncertain, including, without
limitation, factors related to general economic and competitive conditions.
Accordingly, actual results could vary significantly from those contemplated by
such projections. Lazard Freres and Goldman Sachs have assumed no
responsibility for the accuracy of such information. The earnings per share
estimates provided in such projections were materially consistent with IBES
consensus 1998 earnings per share estimates for BANC ONE of $3.60 and for FCN
of $5.45.
Lazard Freres and Goldman Sachs are internationally recognized investment
banking firms that regularly engage in the valuation of businesses and their
securities in connection with mergers and acquisitions.
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THE MERGER
<PAGE>
FCN and Lazard Freres have entered into an agreement relating to the
financial advisory services being provided by Lazard Freres in connection with
the Merger. In such agreement, FCN has agreed to pay Lazard Freres (a) an
initial fee of $500,000, payable in cash upon execution of such agreement
(which has been paid) and (b) an additional fee of $16,000,000, payable if and
when the Merger is consummated. FCN also has agreed to reimburse Lazard Freres
for all its out-of-pocket expenses incurred in connection with its engagement
and to indemnify Lazard Freres and certain related parties against certain
liabilities, including liabilities under the federal securities laws.
FCN has also entered into a separate agreement with Goldman Sachs relating to
the financial advisory services being provided by Goldman Sachs in connection
with the Merger. In such agreement, FCN has agreed to pay Goldman Sachs (a) an
initial fee of $500,000, payable in cash upon execution of such agreement
(which has been paid) and (b) an additional fee of $13,000,000, payable if and
when the Merger is consummated. FCN also has agreed to reimburse Goldman Sachs
for all its out-of-pocket expenses incurred in connection with its engagement
and to indemnify Goldman Sachs and certain related parties against certain
liabilities, including liabilities under the federal securities laws.
STRUCTURE OF THE MERGER
The First Step Merger. Subject to the terms and conditions of the Agreement
and in accordance with the Ohio Law and the Delaware Law, at the First
Effective Time, BANC ONE will merge with and into BANK ONE. BANK ONE will be
the surviving corporation in the First Step Merger, and will continue its
corporate existence under the laws of the State of Delaware. At the First
Effective Time, the separate corporate existence of BANC ONE will terminate. As
a result of the First Step Merger, the Certificate of Incorporation of BANK ONE
(the "BANK ONE CERTIFICATE") and the By-Laws of BANK ONE (the "BANK ONE BY-
LAWS"), as more fully described under "BANK ONE Capital Stock and Comparison of
Shareholder Rights," will be in the form contemplated by the Agreement, which
form is substantially similar to the FCN Certificate and By-Laws, respectively,
except that the BANK ONE Certificate will provide that the name of the
corporation is "BANK ONE CORPORATION," will provide for a board of directors in
which directors are elected annually and which is not classified, will
authorize for issuance 2.5 billion shares of BANK ONE Common Stock and 50
million shares of BANK ONE Preferred Stock and will contain revised provisions
with respect to indemnity of directors, officers and others to reflect the
current provisions of the Delaware Law. Additionally, the BANK ONE Certificate
and the BANK ONE By-Laws will provide for a board of directors comprised of
between 11 and 30 members. The form of BANK ONE Certificate is set forth as
Exhibit 3.1 to the Registration Statement (as defined herein), and the form of
BANK ONE By-Laws is set forth as Exhibit 3.2 to the Registration Statement, and
the description of such documents herein is qualified in its entirety by
reference to such Exhibits. See "Where You Can Find More Information."
The Second Step Merger. Subject to the terms and conditions of the Agreement
and in accordance with the Delaware Law, at the Second Effective Time, which
will occur immediately following the First Effective Time, FCN will merge with
and into BANK ONE. BANK ONE will be the surviving corporation in the Second
Step Merger, and will continue its corporate existence under the laws of the
State of Delaware under the name "BANK ONE CORPORATION." At the Second
Effective Time, the separate corporate existence of FCN will terminate. The
BANK ONE Certificate will be the certificate of incorporation of the Surviving
Corporation in the Second Step Merger, and the BANK ONE By-Laws will be the By-
Laws of the Surviving Corporation in the Second Step Merger.
CONVERSION OF STOCK; TREATMENT OF OPTIONS
The First Step Merger. At the First Effective Time, each share of BANC ONE
Common Stock outstanding, other than such shares in respect of which
dissenters' rights shall have been properly demanded in accordance with Section
1701.85 of the Ohio Law ("DISSENTING SHARES") and shares held
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THE MERGER
<PAGE>
in BANC ONE's treasury or held by BANC ONE or BANK ONE or any subsidiary
thereof (except, in both cases, for shares held, directly or indirectly, in
trust accounts, managed accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties ("TRUST ACCOUNT SHARES")
or in respect of a debt previously contracted ("DPC SHARES")), will be
automatically converted, without the need to exchange any such share, into one
share of BANK ONE Common Stock.
Each outstanding share of BANC ONE Common Stock owned by BANK ONE, or by BANC
ONE or its wholly owned subsidiaries (other than Trust Account Shares or DPC
Shares), or by BANC ONE as treasury stock, will be canceled at the First
Effective Time and will cease to exist, and no BANK ONE Common Stock or other
consideration will be delivered in exchange therefor. Each share of BANK ONE
Common Stock issued and outstanding immediately prior to the First Effective
Time will be canceled and retired and will resume the status of authorized and
unissued shares of BANK ONE Common Stock, and no shares of BANK ONE Common
Stock or other securities of BANK ONE will be issued in respect of such shares.
Notwithstanding any other provision of the Agreement, Dissenting Shares will
not be converted into BANK ONE Common Stock. Holders of Dissenting Shares
("DISSENTING BANC ONE SHAREHOLDERS") will be entitled to payment of the
appraised value of such Dissenting Shares in accordance with the provisions of
Section 1701.85 of the Ohio Law, provided that if any Dissenting BANC ONE
Shareholder subsequently delivers a written withdrawal of such holder's demand
for appraisal of such shares, or if any holder fails to establish such holder's
entitlement to dissenters' rights as provided in Section 1701.85 of the Ohio
Law, such holder or holders will forfeit the right to appraisal of such shares
of BANC ONE Common Stock and each of such shares will thereupon be deemed to
have been converted into BANK ONE Common Stock on the terms provided in the
Agreement. See "Dissenters' Appraisal Rights."
Each stock option to acquire BANC ONE Common Stock granted under BANC ONE's
stock option plans (the "BANC ONE OPTION PLANS") that is outstanding and
unexercised immediately prior to the First Effective Time will be converted
automatically at the First Effective Time into, and will become, a stock option
to purchase BANK ONE Common Stock, and will continue to be governed by the
terms of the BANC ONE Option Plans. The BANC ONE Option Plans will be assumed
by BANK ONE. In each case, the number of shares of BANK ONE Common Stock
subject to the BANK ONE option will be equal to the number of shares of BANC
ONE Common Stock subject to the BANC ONE option, and the exercise price per
share of BANK ONE Common Stock subject to the BANK ONE option will be equal to
the exercise price per share of BANC ONE Common Stock under the BANC ONE
option. The duration and other terms of each such BANK ONE option will be
substantially the same as the prior BANC ONE option.
The Second Step Merger. At the Second Effective Time, each share of FCN
Common Stock outstanding, other than shares held in FCN's treasury or held by
BANK ONE or FCN or any subsidiary thereof (except, in both cases, for Trust
Account Shares or DPC Shares), will be converted into the right to receive a
number of shares of BANK ONE Common Stock equal to the Exchange Ratio (1.62),
subject to customary antidilution adjustments as provided in the Agreement and
described below. Because the Exchange Ratio is fixed and because the market
prices of BANC ONE Common Stock (prior to the First Effective Time) and BANK
ONE Common Stock (from and after the First Effective Time) are subject to
fluctuation, the value of the shares of BANK ONE Common Stock that holders of
FCN Common Stock will receive in the Merger may increase or decrease prior to
and following the Merger.
Each outstanding share of FCN Common Stock owned by BANK ONE or its
subsidiaries or FCN or its subsidiaries (other than Trust Account Shares or DPC
Shares) or by FCN as treasury stock will be canceled at the Second Effective
Time and will cease to exist, and no BANK ONE Common Stock
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THE MERGER
<PAGE>
or other consideration will be delivered in exchange therefor. All shares of
BANK ONE Common Stock that are owned by FCN (except for Trust Account Shares or
DPC Shares) will become treasury stock of BANK ONE. Except for the foregoing,
shares of BANK ONE Common Stock issued and outstanding immediately prior to the
Second Effective Time will remain issued and outstanding immediately after
consummation of the Second Step Merger.
Each share of FCN Series B Preferred issued and outstanding immediately prior
to the Second Effective Time will be exchangeable for one share of BANK ONE
Series B Preferred. See "--Exchange of Certificates; Fractional Shares." The
terms of the BANK ONE Series B Preferred will be substantially the same as the
terms of the FCN Series B Preferred. Each share of FCN Series C Preferred
issued and outstanding immediately prior to the Second Effective Time will be
exchangeable for one share of BANK ONE Series C Preferred. See "--Exchange of
Certificates; Fractional Shares." The terms of the BANK ONE Series C Preferred
will be substantially the same as the terms of the FCN Series C Preferred. See
"BANK ONE Capital Stock and Comparison of Shareholder Rights--Description of
BANK ONE Capital Stock."
Each stock option to acquire FCN Common Stock granted under FCN's stock
option and incentive plans (collectively, the "FCN STOCK PLANS") outstanding
and unexercised immediately prior to the Second Effective Time will be
converted automatically at the Second Effective Time into, and will become, a
stock option to purchase BANK ONE Common Stock and will continue to be governed
by the terms of the FCN Stock Plans. The FCN Stock Plans will be assumed by
BANK ONE. In each case, (i) the number of shares of BANK ONE Common Stock
subject to the BANK ONE option will be equal to the product of the number of
shares of FCN Common Stock subject to the FCN option and the Exchange Ratio,
rounded to the nearest whole share, and (ii) the exercise price per share of
BANK ONE Common Stock subject to the BANK ONE option will be equal to the
exercise price per share of FCN Common Stock under the FCN option divided by
the Exchange Ratio, rounded down to the nearest whole cent. The duration and
other terms of each such BANK ONE option will be substantially the same as the
prior FCN option. In any event, options that are incentive stock options under
the Code shall be adjusted in the manner prescribed thereby.
If, prior to the Second Effective Time, the outstanding shares of FCN Common
Stock or BANC ONE Common Stock (or, following the consummation of the First
Step Merger, the outstanding shares of BANK ONE Common Stock) are increased,
decreased, changed into or exchanged for a different number or kind of shares
or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization (other than solely as a result of the First
Step Merger), an appropriate and proportionate adjustment will be made to the
Exchange Ratio.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
At or prior to the Second Effective Time, BANK ONE will deposit, or cause to
be deposited, with First Chicago Trust Company of New York, or another bank or
trust company reasonably acceptable to each of BANC ONE and FCN (the "EXCHANGE
AGENT"), for the benefit of the holders of certificates of FCN Common Stock,
certificates representing the shares of BANK ONE Common Stock, BANK ONE
Preferred Stock and cash in lieu of any fractional shares (such certificates
and cash, together with any dividends or distributions with respect thereto,
being referred to herein as the "EXCHANGE FUND") to be issued pursuant to the
Agreement in exchange for outstanding shares of FCN Common Stock and FCN
Preferred Stock.
As soon as is practicable after the Second Effective Time, a form of
transmittal letter will be mailed by the Exchange Agent to the holders of FCN
Common Stock and FCN Preferred Stock. The form of transmittal letter will
contain instructions with respect to the surrender of certificates representing
FCN Common Stock and FCN Preferred Stock.
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THE MERGER
<PAGE>
FCN COMMON STOCK OR FCN PREFERRED STOCK CERTIFICATES SHOULD NOT BE RETURNED
WITH THE ENCLOSED PROXY AND SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT
UNLESS AND UNTIL THE FCN STOCKHOLDER RECEIVES A LETTER OF TRANSMITTAL FOLLOWING
THE SECOND EFFECTIVE TIME.
Until the certificates representing FCN Common Stock or FCN Preferred Stock,
as the case may be, are surrendered for exchange after the Second Effective
Time, holders of such certificates will accrue but will not be paid dividends
or other distributions declared after the Second Effective Time with respect to
BANK ONE Common Stock or BANK ONE Preferred Stock into which their shares have
been converted. When such certificates are surrendered, any unpaid dividends or
other distributions will be paid, without interest. After the Second Effective
Time, there will be no transfers on the stock transfer books of FCN of shares
of FCN Common Stock or FCN Preferred Stock issued and outstanding immediately
prior to the Second Effective Time. If certificates representing shares of FCN
Common Stock or FCN Preferred Stock are presented after the Second Effective
Time, they will be canceled and exchanged for the relevant certificate
representing the applicable shares of BANK ONE Common Stock or BANK ONE
Preferred Stock.
No fractional shares of BANK ONE Common Stock will be issued to any holder of
FCN Common Stock upon consummation of the Merger. For each fractional share
that would otherwise be issued, BANK ONE will pay cash in an amount equal to
such fraction multiplied by the average of the closing sale prices of BANC ONE
Common Stock on the NYSE as reported by The Wall Street Journal for the five
trading days immediately preceding the date of the Second Effective Time. No
interest will be paid or accrued on the cash in lieu of fractional shares
payable to holders of such certificates.
None of BANC ONE, FCN or BANK ONE, nor any other person, will be liable to
any former holder of FCN Common Stock or FCN Preferred Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
If a certificate for FCN Common Stock or FCN Preferred Stock has been lost,
stolen or destroyed, the Exchange Agent will issue the consideration properly
payable in accordance with the Agreement upon receipt of appropriate evidence
as to such loss, theft or destruction, appropriate evidence as to the ownership
of such certificate by the claimant, and appropriate and customary
indemnification.
Shares of BANC ONE Common Stock that are converted into shares of BANK ONE
Common Stock in the First Step Merger will be so converted automatically at the
First Effective Time, and holders thereof will not be required to exchange
certificates representing such shares of BANC ONE Common Stock or otherwise
take any action as a result of the consummation of the First Step Merger. THERE
IS NO NEED FOR BANC ONE SHAREHOLDERS TO SUBMIT THEIR SHARE CERTIFICATES TO BANC
ONE, FCN, BANK ONE, THE EXCHANGE AGENT OR TO ANY OTHER PERSON IN CONNECTION
WITH THE MERGER.
For a description of the BANK ONE Common Stock and a description of the
differences between the rights of the holders of BANC ONE Common Stock and FCN
Common Stock, on the one hand, and holders of BANK ONE Common Stock, on the
other, see "Capital Stock and Comparison of Shareholder Rights."
FIRST EFFECTIVE TIME; SECOND EFFECTIVE TIME
The First Effective Time will be as set forth in the certificate of merger
that will be filed with the Secretary of State of the State of Ohio and the
certificate of merger that will be filed with the Secretary of State of the
State of Delaware on the closing date of the Merger (the "CLOSING DATE"). The
Second Effective Time will be as set forth in the certificate of merger that
will be filed with the Secretary of State of the State of Delaware on the
Closing Date. The Closing Date will occur on a date to be specified by the
parties, which date shall be no later than five business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur of
the conditions precedent to the Merger set forth in Article VIII of the
Agreement. BANC ONE and FCN each anticipate that the Merger
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THE MERGER
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will be consummated during the fiscal quarter ending December 31, 1998.
However, the consummation of the Merger could be delayed if there is a delay
in obtaining the Requisite Regulatory Approvals (as defined herein). There can
be no assurances as to if or when such approvals will be obtained or that the
Merger will be consummated. If the Merger is not effected on or before April
10, 1999, the Agreement may be terminated by either BANC ONE or FCN, unless
the failure to effect the Merger by such date is due to the failure of the
party seeking to terminate the Agreement to perform or observe the covenants
and agreements of such party set forth therein. See "--Conditions to
Consummation of the Merger" and "--Regulatory Approvals Required for the
Merger."
REPRESENTATIONS AND WARRANTIES
The Agreement contains representations and warranties of BANC ONE and BANK
ONE, on the one hand, and FCN, on the other, as to, among other things: (i)
the corporate organization and existence of each party and its subsidiaries
(including that each is duly organized, validly existing and in good standing
with the corporate power and authority to own or lease its properties and
assets and to carry on its business as currently conducted); (ii) the
capitalization of each party (including the number of shares of capital stock
authorized, the number of shares and rights to acquire shares outstanding and
the number of shares reserved for issuance); (iii) ownership of all
outstanding shares of capital stock by each party of its subsidiaries; (iv)
the corporate power and authority of each party to execute and deliver the
Agreement and to consummate the transactions contemplated thereby; (v) the
compliance of the Agreement with (a) the certificate or articles of
incorporation and by-laws or code of regulations, as applicable, of each
party, (b) applicable law, and (c) certain material agreements, including the
absence of events of default or acceleration thereunder; (vi) absence of any
required governmental and third-party approvals other than those specified in
the Agreement; (vii) the timely filing of required regulatory reports; (viii)
each party's financial statements and filings with the Commission (including
that such information is a fair presentation of the financial condition and
results of operations thereof and is in compliance with GAAP); (ix) the
absence of certain changes in each party's business since December 31, 1997;
(x) the absence of material legal proceedings and injunctions; (xi) the filing
and accuracy of each party's tax returns; (xii) each party's employee benefit
plans and related matters (including operation and administration of such
plans in accordance with applicable law); (xiii) each party's compliance with
applicable law; (xiv) the validity of, and the absence of material defaults
under, certain contracts; (xv) agreements between each party and regulatory
agencies; (xvi) the absence of certain activities prohibited by the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD") and the
compliance with law of the trust activities of banking subsidiaries; (xvii)
title to and accounting for investment securities; (xviii) the use of interest
rate risk management instruments such as swaps and options; (xix) the absence
of undisclosed liabilities; (xx) insurance; (xxi) the absence of environmental
liabilities; (xxii) in the case of FCN, the inapplicability to the Merger of
the Delaware takeover law or Article Thirteenth (as defined herein) of the FCN
Certificate; (xxiii) in the case of BANC ONE, the inapplicability to the
Merger of the Ohio takeover law or Article Tenth of the Amended Articles of
Incorporation of BANC ONE (the "BANC ONE ARTICLES"); (xxiv) "Year 2000" risk
management plan and the absence of notices of deficiency from regulators with
respect thereto; (xxv) in the case of BANC ONE and BANK ONE, the absence of
any material business activity of BANK ONE prior to the First Effective Time;
and (xxvi) qualification of the Merger as a reorganization under 368(a) of the
Code and for "pooling of interests" accounting treatment.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Pursuant to the Agreement, prior to the Second Effective Time each of BANC
ONE and FCN have agreed to, and to cause their respective subsidiaries to, (i)
conduct its business in the usual, regular and ordinary course consistent with
past practice, (ii) use reasonable best efforts to maintain and preserve
intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key employees and
(iii) take no action which would adversely
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THE MERGER
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affect or delay the ability of either BANC ONE or FCN to obtain any Requisite
Regulatory Approvals or to perform its covenants and agreements under the
Agreement or the Option Agreements.
BANC ONE and FCN have also agreed to use their best efforts to promptly
prepare and file all necessary documentation to effect all applications,
notices, petitions and filings, and to obtain and to cooperate in obtaining
permits, consents, approvals and authorizations of all third parties and
governmental entities necessary or advisable to consummate the transactions
contemplated by the Agreement and to comply with the terms and conditions of
all such permits, consents, approvals and authorizations. BANC ONE and FCN have
each agreed upon request to furnish to the other party all information
concerning themselves and their subsidiaries, directors, officers and
stockholders and such other matters as may be necessary or advisable in
connection with the Merger. BANC ONE and FCN have further agreed, subject to
the terms and conditions of the Agreement, to use their best efforts to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
subsidiaries and to consummate the Merger. BANC ONE also agreed to cause the
shares of BANK ONE Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the First
Effective Time. BANC ONE and FCN also agreed that the employee benefit plans in
place at the Second Effective Time with respect to employees of BANC ONE and
FCN, as the case may be, will remain in effect for such employees until such
time as the combined company adopts new benefit plans covering employees of
both parties who continue to be employed by the combined company (the "NEW
BENEFIT PLANS"). BANC ONE and FCN have indicated their intention to develop New
Benefit Plans as soon as practicable after consummation of the Merger, which,
among other things, (i) treat similarly situated employees on a substantially
equivalent basis, taking into account all relevant factors, including, without
limitation, duties, geographic location, tenure, qualifications and abilities,
and (ii) do not discriminate between employees of the combined company who were
covered by FCN Benefit Plans (as defined herein), on the one hand, and those
covered by BANC ONE Benefit Plans (as defined herein), on the other, at the
Second Effective Time. BANC ONE and FCN also reached certain agreements with
respect to directors' and officers' indemnification and insurance, and with
respect to dividends. See "--Interests of Certain Persons in the Merger."
Each of BANC ONE and FCN has further agreed to give the other party access to
all of its properties, books, contracts, commitments and records and to furnish
information concerning its businesses, properties and personnel, subject to the
restrictions and for the purposes set forth in the Agreement.
BANC ONE and BANK ONE have agreed to take, prior to the First Effective Time,
such action as required to amend the BANK ONE Certificate to authorize
sufficient shares of BANK ONE Common Stock and BANK ONE Preferred Stock to
complete the transactions contemplated hereby.
BANC ONE and FCN have agreed that they will, before the First Effective Time,
coordinate with the other party with respect to the issuance of, and pursuant
thereto shall issue, shares of BANC ONE Common Stock or FCN Common Stock, as
may be appropriate, in such manner, and limited to such number, as is necessary
to reduce the aggregate number of "tainted treasury shares" of such parties to
a number that is consistent with the accounting of the Merger as a "pooling of
interests" under GAAP.
In addition, except as expressly contemplated by the Agreement or specified
in a schedule thereto, or as contemplated by the Option Agreements, each of
BANC ONE and FCN has agreed that without the consent of the other party, it and
its subsidiaries will not, among other things:
(i) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness
of BANC ONE or any of its subsidiaries to BANC
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ONE or any of its subsidiaries, on the one hand, or of FCN or any of its
subsidiaries to FCN or any of its subsidiaries, on the other hand), assume,
guarantee, endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other entity, or
make any loan or advance;
(ii) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock (except, (a) in the case
of FCN, for regular quarterly cash dividends at a rate not in excess of
$.44 per share of FCN Common Stock and regular quarterly cash dividends on
the FCN Preferred Stock outstanding as of the date of the Agreement at the
rate set forth in the applicable certificate of designation, (b) in the
case of BANC ONE, for regular quarterly cash dividends on BANC ONE Common
Stock at a rate not in excess of $.38 per share of BANC ONE Common Stock
and regular quarterly cash dividends on the BANC ONE Preferred Stock
outstanding as of the date of the Agreement at the rates set forth in the
BANC ONE Articles for such BANC ONE Preferred Stock, (c) for dividends paid
by any of the subsidiaries of each of BANC ONE and FCN to BANC ONE or FCN
or any of their subsidiaries, respectively, and dividends paid in the
ordinary course of business by any subsidiaries (whether or not wholly
owned) of each of FCN and BANC ONE, and (d) in the case of BANC ONE, for
the redemption of all of the shares of BANC ONE Series C $3.50 Cumulative
Convertible Preferred Stock outstanding as of the date of the Agreement as
described in the BANC ONE Annual Report on Form 10-K for the fiscal year
ended December 31, 1997); grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any shares of
its capital stock (except for options converted in connection with BANC
ONE's acquisition of First Commerce Corporation, a Louisiana corporation
(the "FIRST COMMERCE MERGER"), and for regular periodic grants of options
to purchase stock made in the ordinary course of business consistent with
past practice pursuant to the BANC ONE Option Plans and the FCN Stock
Plans); or issue any additional shares of capital stock except pursuant to
(1) the exercise of stock options or warrants outstanding as of April 10,
1998 and options issued thereafter in compliance with the Agreement, (2)
the Option Agreements, (3) in the case of BANC ONE, the consummation of the
First Commerce Merger, (4) in the case of FCN, in connection with the FCN
Dividend Reinvestment and Stock Purchase Plan and the FCN Employee Stock
Purchase and Savings Plan in the ordinary course of business and consistent
with past practice, and in connection with the Asset Purchase Agreement,
dated as of November 18, 1997, as amended, between FCN and Roney & Co.,
L.L.C.;
(iii) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity
other than a subsidiary, or cancel, release or assign any indebtedness to
any such person or any claims held by any such person, except in the
ordinary course of business consistent with past practice or pursuant to
contracts or agreements in force at the date of the Agreement;
(iv) except for transactions in the ordinary course of business
consistent with past practice or pursuant to contracts or agreements in
force at the date of the Agreement, make any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other individual,
corporation or other entity other than a subsidiary;
(v) except for transactions in the ordinary course of business consistent
with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts,
other than renewals of contracts and leases without material adverse
changes of terms;
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(vi) increase in any manner the compensation or fringe benefits of any of
its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment agreement with or for the
benefit of any employee other than in the ordinary course of business
consistent with past practice or accelerate the vesting of, or the lapsing
of restrictions with respect to, any stock options or other stock-based
compensation;
(vii) solicit, encourage or authorize any individual, corporation or
other entity to solicit from any third party any inquiries or proposals
relating to the disposition of its business or assets, or the acquisition
of its voting securities, or the merger of it or any of its subsidiaries
with any corporation or other entity other than as provided by the
Agreement (and each party will promptly notify the other of all of the
relevant details relating to all inquiries and proposals which it may
receive relating to any of such matters);
(viii) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(ix) take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code, provided that
the Agreement will not limit the ability of BANC ONE or FCN to exercise its
rights under the FCN Option Agreement (as defined herein) or the BANC ONE
Option Agreement (as defined herein), as the case may be;
(x) amend its Certificate or Articles of Incorporation, as the case may
be, or its By-Laws or Regulations, as the case may be;
(xi) other than in prior consultation with the other party, restructure
or materially change its investment securities portfolio or its gap
position, through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
(xii) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in the
Agreement being or becoming untrue in any material respect at any time
prior to the Second Effective Time, or in any of the conditions to the
Merger set forth in the Agreement not being satisfied or in a violation of
any provision of the Agreement, except, in every case, as may be required
by applicable law;
(xiii) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP; or
(xiv) agree to, or make any commitment to, take any of the actions listed
above.
CONDITIONS TO CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject to the satisfaction
or waiver, where permissible, of the following conditions at or prior to the
First Effective Time:
(i) the Agreement and the transactions contemplated thereby shall have
been adopted and approved by the respective requisite affirmative votes of
the holders of BANC ONE Common Stock and FCN Common Stock entitled to vote
thereon;
(ii) the shares of BANK ONE Common Stock and BANK ONE Preferred Stock
that are to be issued to FCN Stockholders upon consummation of the Merger
shall have been authorized for listing on the NYSE, subject to official
notice of issuance;
(iii) the Requisite Regulatory Approvals shall have been obtained and
will remain in full force and effect and all statutory waiting periods with
respect to such approvals will have expired;
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(iv) the Registration Statement (as defined herein) of which this Joint
Proxy Statement-Prospectus forms a part shall have become effective and no
stop order suspending the effectiveness will have been issued and no
proceedings for that purpose will have been initiated or threatened by the
Commission;
(v) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions
contemplated by the Agreement shall be in effect and no statute, rule,
regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any court, administrative agency or commission
or other governmental authority or instrumentality which prohibits or makes
illegal consummation of the Merger;
(vi) BANC ONE and FCN each shall have received an opinion of Wachtell,
Lipton, Rosen & Katz, in form and substance reasonably satisfactory to BANC
ONE and FCN, dated as of the Closing Date, substantially to the effect
that, on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Second Effective Time: (a) each of the First Step Merger and the Second
Step Merger will constitute a reorganization under Section 368(a) of the
Code; BANC ONE and BANK ONE will each be a party to the reorganization in
respect of the First Step Merger; and BANK ONE and FCN will each be a party
to the reorganization in respect of the Second Step Merger; (b) no gain or
loss will be recognized by BANC ONE or BANK ONE as a result of the First
Step Merger, or by BANK ONE or FCN as a result of the Second Step Merger;
(c) no gain or loss will be recognized by BANC ONE Shareholders who receive
solely BANK ONE Common Stock for their BANC ONE Common Stock pursuant to
the First Step Merger; and (iv) no gain or loss will be recognized by the
stockholders of FCN who exchange their FCN Capital Stock solely for BANK
ONE Capital Stock pursuant to the Second Step Merger (except with respect
to cash received in lieu of a fractional share interest in BANK ONE Capital
Stock);
(vii) BANC ONE and FCN shall have received a letter from their respective
independent accountants, respectively, addressed to BANC ONE or FCN, as the
case may be, to the effect that the Merger will qualify for "pooling of
interests" accounting treatment;
(viii) the representations and warranties of the other party to the
Agreement shall be true and correct in all material respects as of the date
of the Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on the Closing Date, provided that for purposes of this condition,
such representations and warranties will be deemed to be true and correct
unless the failure or failures of such representations and warranties to be
so true and correct, individually or in the aggregate, and without giving
effect to any qualification as to materiality set forth in such
representations and warranties, would have a material adverse effect (as
such term is defined in the Agreement) on such party; and
(ix) each party shall have performed in all material respects all
obligations required to be performed by it under the Agreement at or prior
to the Closing Date.
In addition, the obligation of FCN to consummate the Second Step Merger is
subject to the additional condition that the First Effective Time shall have
occurred and the First Step Merger shall have been consummated.
No assurance can be provided as to if or when the Requisite Regulatory
Approvals necessary to consummate the Merger will be obtained or whether all
of the other conditions precedent to the Merger will be satisfied or waived by
the party permitted to do so. If the Merger is not effected on or before April
10, 1999, the Merger Agreement may be terminated by either BANC ONE or FCN,
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unless the failure to effect the Merger by such date is due to the failure of
the party seeking to terminate the Merger Agreement to perform or observe
covenants and agreements of such party set forth therein.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
BANC ONE and FCN have agreed to use their best efforts to obtain all
regulatory approvals required to consummate the transactions contemplated by
the Agreement (together with the expiration of any statutory waiting periods in
respect thereof, the "REQUISITE REGULATORY APPROVALS"), which include approval
from the Federal Reserve Board and various state regulatory authorities, and
either intend to complete the filing of applications and notifications to
obtain such Requisite Regulatory Approvals promptly after the date of this
Joint Proxy Statement-Prospectus or have completed the filing of such
applications and notifications prior to such date. The Merger cannot proceed in
the absence of the Requisite Regulatory Approvals. There can be no assurance
that such Requisite Regulatory Approvals will be obtained, and, if obtained,
there can be no assurance as to the date of any such approvals or the absence
of any litigation challenging such approvals. There can likewise be no
assurance that the United States Department of Justice ("DOJ") or any state
attorney general will not attempt to challenge the Merger on antitrust grounds,
or, if such a challenge is made, as to the result thereof.
BANC ONE and FCN are not aware of any other material governmental approvals
or actions that are required prior to the parties' consummation of the Merger
other than those described below. It is presently contemplated that if any such
additional governmental approvals or actions are required, such approvals or
actions will be sought. There can be no assurance, however, that any such
additional approvals or actions will be obtained.
Federal Reserve Board. The Merger is subject to approval by the Federal
Reserve Board pursuant to Sections 3 and 4 of the Bank Holding Company Act of
1956, as amended (the "BHCA"), and Sections 25 and 25(a) of the Federal Reserve
Act, as amended (the "FEDERAL RESERVE ACT"). BANC ONE and FCN filed the
required application and notification with the Federal Reserve Board for
approval of the Merger on June 4, 1998. Assuming Federal Reserve Board
approval, the Merger may not be consummated until 30 days after such approval,
during which time the DOJ may challenge the Merger on antitrust grounds and
seek the divestiture of certain assets and liabilities. With the approval of
the Federal Reserve Board and the DOJ, the waiting period may be reduced to no
less than 15 days.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes that would result in a monopoly, or that would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United States; or may
have the effect in any section of the United States of substantially lessening
competition, or tending to create a monopoly, or resulting in a restraint of
trade, unless the Federal Reserve Board finds that the anti-competitive effects
of the transaction are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served.
In addition, in reviewing a transaction under the applicable statutes, the
Federal Reserve Board will consider the financial and managerial resources of
the companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of, or in addition to, consideration of the
above factors, it is anticipated that the Federal Reserve Board will consider
the regulatory status of BANC ONE and FCN, current and projected economic
conditions in the Midwest and the overall capital and safety and soundness
standards established by the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") and the regulations promulgated thereunder.
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THE MERGER
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In addition, under the Community Reinvestment Act of 1977, as amended (the
"CRA"), the Federal Reserve Board must take into account the record of
performance of each of BANC ONE and FCN in meeting the credit needs of the
entire community, including low and moderate income neighborhoods, served by
each company. Each of BANC ONE's and FCN's banking subsidiaries has either an
outstanding or satisfactory CRA rating with the appropriate federal regulator.
None of BANC ONE's or FCN's banking subsidiaries received any negative comments
from its respective federal regulator in its last CRA examination relating to
such ratings that were material and remain unresolved.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the Merger to the Office of the Comptroller of the Currency
(the "OCC"), the Federal Deposit Insurance Corporation (the "FDIC") and the
appropriate state regulatory authorities. These agencies have 30 days to submit
their views and recommendations to the Federal Reserve Board. The Federal
Reserve Board is required to hold a public hearing in the event it receives a
written recommendation of disapproval of the application from any of these
agencies within such 30-day period. Furthermore, the BHCA and Federal Reserve
Board regulations require publication of notice of, and the opportunity for
public comment on, the application submitted by BANC ONE and FCN for approval
of the Merger, and authorize the Federal Reserve Board to hold a public hearing
in connection therewith if the Federal Reserve Board determines that such a
hearing would be appropriate. Any such hearing or comments provided by third
parties could prolong the period during which the application is subject to
review by the Federal Reserve Board. On July 22, 1998, the Federal Reserve
Board announced that it would hold a one-day public hearing concerning the
Merger on August 13, 1998.
As noted above, the Merger may not be consummated until 30 days after Federal
Reserve Board approval, during which time the DOJ may challenge the Merger on
antitrust grounds and seek the divestiture of certain assets and liabilities.
With the approval of the Federal Reserve Board and the DOJ, the waiting period
may be reduced to no less than 15 days. The commencement of an antitrust action
by the DOJ would stay the effectiveness of Federal Reserve Board approval of
the Merger unless a court specifically orders otherwise. In reviewing the
Merger, the DOJ could analyze the Merger's effect on competition differently
than the Federal Reserve Board, and thus it is possible that the DOJ could
reach a different conclusion than the Federal Reserve Board regarding the
Merger's competitive effects. Failure of the DOJ to object to the Merger may
not prevent the filing of antitrust actions by private persons or state
attorneys general.
In general, the Federal Reserve Board and the DOJ will examine the impact of
the Merger on competition in various product and geographic markets, including
competition for deposits and loans, especially loans to small and middle market
businesses.
BANC ONE's and FCN's rights to exercise their respective options under the
Option Agreements are also subject to the prior approval of the Federal Reserve
Board, to the extent that the exercise of their respective options under the
Option Agreements would result in BANC ONE or FCN, as the case may be, owning
more than 5% of the outstanding shares of FCN Common Stock or BANC ONE Common
Stock, respectively. In considering whether to approve BANC ONE's or FCN's
right to exercise its respective option, including its respective right to
purchase more than 5% of the outstanding shares of FCN Common Stock or BANC ONE
Common Stock, as the case may be, the Federal Reserve Board would generally
apply the same statutory criteria it would apply to its consideration of
approval of the Merger.
State Regulatory Authorities. Applications or notifications have been or will
be filed with various state financial institution regulatory and insurance
authorities in connection with acquisitions or changes in control of
subsidiaries of BANC ONE and FCN that may be deemed to result from the
consummation of the Merger. In addition, the Merger may be reviewed by the
attorneys general in
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the various states in which BANC ONE and FCN own banking subsidiaries. Such
authorities may be empowered under the applicable state laws and regulations
to investigate and/or disapprove the Merger under the circumstances and based
upon the review set forth in applicable state laws and regulations. There can
be no assurance that one or more state attorneys general will not file an
antitrust action to enjoin the Merger.
Other Requisite Approvals, Notices and Consents. Certain other approvals,
notices or consents may be required from certain regulatory authorities in
connection with the changes, as a result of the Merger, in the ownership of
certain businesses that are controlled by FCN, including the NYSE, certain
other securities exchanges, the National Association of Securities Dealers,
Inc. and certain other self-regulatory agencies.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated United States federal
income tax consequences of the Merger to BANC ONE Shareholders and holders of
FCN Capital Stock, including FCN Stockholders, who hold such stock as a
capital asset. The summary is based on the Code, Treasury regulations
thereunder, and administrative rulings and court decisions in effect as of the
date hereof, all of which are subject to change at any time, possibly with
retroactive effect. This summary is not a complete description of all of the
consequences of the Merger and, in particular, may not address United States
federal income tax considerations applicable to stockholders subject to
special treatment under United States federal income tax law (including, for
example, non-United States persons, financial institutions, dealers in
securities, insurance companies, tax-exempt entities, holders who acquired
their shares of BANC ONE Common Stock or FCN Capital Stock pursuant to the
exercise of an employee stock option or right or otherwise as compensation and
holders who hold BANC ONE Common Stock or FCN Capital Stock as part of a
hedge, straddle or conversion transaction). In addition, no information is
provided herein with respect to the tax consequences of the Merger under
applicable foreign, state or local laws.
BANC ONE SHAREHOLDERS AND FCN STOCKHOLDERS ARE URGED TO CONSULT WITH THEIR
TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE MERGER TO THEM.
General. In connection with the filing of the Registration Statement, each
of BANC ONE and FCN has received an opinion of Wachtell, Lipton, Rosen & Katz,
counsel to BANC ONE and FCN, dated the date hereof, addressing the United
States federal income tax consequences of the Merger described below. Such
opinion has been rendered on the basis of facts, representations and
assumptions set forth or referred to in such opinion that are consistent with
the expected state of facts existing at the First Effective Time and the
Second Effective Time, as applicable. In rendering this opinion, Wachtell,
Lipton, Rosen & Katz has required and relied upon factual representations
contained in certificates of officers of BANC ONE, FCN and BANK ONE. The
opinion is to the effect that, for United States federal income tax purposes:
(i) Each of the First Step Merger and the Second Step Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Code, BANC ONE and BANK ONE will each be a party to the reorganization in
respect of the First Step Merger, and BANK ONE and FCN will each be a party
to the reorganization in respect of the Second Step Merger;
(ii) No gain or loss will be recognized by BANC ONE or BANK ONE as a
result of the First Step Merger, or by BANK ONE or FCN as a result of the
Second Step Merger;
(iii) No gain or loss will be recognized by the BANC ONE Shareholders who
receive solely BANK ONE Common Stock for their BANC ONE Common Stock
pursuant to the First Step Merger; and
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(iv) No gain or loss will be recognized by the holders of FCN Capital
Stock who exchange their FCN Capital Stock solely for BANK ONE Capital
Stock pursuant to the Second Step Merger (except with respect to cash
received in lieu of a fractional share interest in BANK ONE Capital Stock).
The respective obligations of BANC ONE and FCN to consummate the Merger are
conditioned upon the receipt of a further opinion of Wachtell, Lipton, Rosen &
Katz, dated the Closing Date and as further described under "--Conditions to
Consummation of the Merger." In the event that either BANC ONE or FCN fails to
receive such opinion, BANC ONE or FCN determines to waive the condition to its
obligation to consummate the Merger relating thereto and the material federal
income tax consequences to BANC ONE Shareholders or FCN Stockholders, as the
case may be, are different from those described above, BANC ONE or FCN, as the
case may be, will resolicit the BANC ONE Shareholders or the FCN Stockholders,
respectively, prior to proceeding with consummation of the Merger. None of the
tax opinions to be delivered to the parties in connection with the Merger as
described herein are binding on the Internal Revenue Service (the "IRS") or
the courts, and the parties do not intend to request a ruling from the IRS
with respect to the Merger. Accordingly, there can be no assurance that the
IRS will not challenge the conclusions reflected in such opinions or that a
court will not sustain such challenge.
The receipt of a cash payment in respect of Dissenting Shares by a
Dissenting BANC ONE Shareholder will be a taxable event for United States
federal income tax purposes, and any such shareholder should consult with his
or her tax advisor with respect to the tax impact of such a cash payment in
his or her individual situation. Based upon the current ruling position of the
IRS, cash received by an FCN Stockholder in lieu of a fractional share
interest in BANK ONE Common Stock will be treated as received in redemption of
such fractional share interest, and an FCN Stockholder should generally
recognize capital gain or loss for United States federal income tax purposes
measured by the difference between the amount of cash received and the portion
of the tax basis of the share of FCN Common Stock allocable to such fractional
share interest. Such gain or loss should be a long-term capital gain or loss
if the holding period for such share of FCN Common Stock is greater than one
year at the Second Effective Time. In the case of individual FCN Stockholders,
such capital gain will be taxed at a maximum rate of 28% if such FCN
Stockholder's holding period is more than one year but not more than 18
months, and at a maximum rate of 20% if such holding period is more than
18 months. The holding period of a share of BANK ONE Common Stock received in
the Second Step Merger (including a fractional share interest deemed received
and redeemed as described above) will include the holder's holding period in
the FCN Common Stock surrendered in exchange therefor.
Information Reporting and Backup Withholding. Payments in respect of FCN
Capital Stock may be subject to information reporting to the IRS and to a 31%
backup withholding tax. Backup withholding will not apply, however, to a
payment to a holder of FCN Capital Stock or other payee if such stockholder or
payee completes and signs the substitute Form W-9 that will be included as
part of the transmittal letter, or otherwise proves to the combined company
and the Exchange Agent that it is exempt from backup withholding.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "pooling of
interests" transaction under GAAP. Under such method of accounting, FCN
Stockholders and BANC ONE Shareholders will be deemed to have combined their
existing voting common stock interests by virtue of the conversion of shares
of BANC ONE Common Stock into (in the case of BANC ONE Shareholders), or the
exchange of their shares of FCN Common Stock for (in the case of FCN
Stockholders), shares of BANK ONE Common Stock. Accordingly, the book value of
the assets, liabilities and stockholders' equity of each of BANC ONE and FCN,
as reported on its respective consolidated balance sheet, will be carried over
to the consolidated balance sheet of the combined company and no goodwill will
be created. The combined company will be able to include in its consolidated
income the consolidated income of both companies for the entire fiscal year in
which the Merger occurs; however, certain expenses incurred to effect the
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Merger must be treated as current charges against income rather than
adjustments to the balance sheet. Historically, BANC ONE and FCN have both
undertaken stock repurchase programs, resulting in ownership of treasury
shares. Under the "pooling of interests" method of accounting, such shares, if
considered "tainted" under applicable accounting principles, combined with
intercorporate common stock holdings, fractional shares in lieu of which cash
is issued and Dissenting Shares, must be less than 10 percent of the shares
expected to be issued in the Merger. BANC ONE and FCN expect to meet this 10
percent de minimis test by the effective date of the Merger. BANC ONE and FCN
have rescinded their respective stock repurchase programs on May 14, 1997 and
April 10, 1998, respectively. However, in order to avoid disruption of an
orderly market for BANC ONE shares, on January 21, 1998, the BANC ONE Board
authorized the purchase from a Board member of up to 2,800,000 shares at a
discount from market of $.50, which transaction was completed January 22,
1998.
It is a condition to consummation of the Merger that BANC ONE and FCN
receive a letter from their respective independent accountants to the effect
that the Merger will be accounted for as a "pooling of interests." See "--
Conditions to Consummation of the Merger."
The unaudited pro forma financial information contained in this Joint Proxy
Statement-Prospectus has been prepared using the "pooling of interests"
accounting method to account for the Merger. See "Summary--Unaudited
Comparative Per Share Data" and "Unaudited Pro Forma Condensed Combined
Financial Information."
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement provides that the Merger may be terminated at any time
prior to the First Effective Time, whether before or after approval by holders
of BANC ONE Common Stock and FCN Common Stock:
(i) by mutual consent of BANC ONE and FCN in a written instrument, if the
Board of Directors of each so determines by a vote of a majority of the
members of its entire Board of Directors;
(ii) by either the BANC ONE Board or the FCN Board if any governmental
entity which must grant a Requisite Regulatory Approval has denied approval
of the Merger and such denial has become final and non-appealable or any
governmental entity of competent jurisdiction has issued a final non-
appealable order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by the Merger Agreement;
(iii) by either the BANC ONE Board or the FCN Board if the Merger is not
consummated on or before April 10, 1999, unless the failure of the Second
Effective Time to occur by such date is due to the failure of the party
seeking to terminate the Merger Agreement to perform or observe the
covenants and agreements of such party set forth therein;
(iv) by either the BANC ONE Board or the FCN Board (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in the Merger Agreement) if
there has been a material breach of any of the covenants or agreements or
any of the representations or warranties set forth in the Merger Agreement
on the part of FCN, in the case of a termination by BANC ONE, or BANC ONE
or BANK ONE, in the case of a termination by FCN, which breach,
individually or together with other such breaches, would constitute, if
occurring or continuing on the Closing Date, the failure of the conditions
described in paragraph (viii) under "--Conditions to Consummation of the
Merger," which breach is not cured within 45 days following written notice
to the party committing such breach, or which breach, by its nature, cannot
be cured prior to the Second Effective Time; or
(v) by either BANC ONE or FCN if any approval of the stockholders of BANC
ONE or FCN required for consummation of the Second Step Merger, or the
approval of the BANC ONE Shareholders required for the consummation of the
First Step Merger, shall have not been obtained by reason of the failure to
obtain the required vote at a duly held meeting of stockholders or any
adjournment or postponement thereof.
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Whether or not the Merger is consummated, all fees and expenses incurred in
connection with the Merger and the transactions contemplated thereby will be
paid by the party incurring such expenses, except that the costs and expenses
of printing and mailing this Joint Proxy Statement-Prospectus, and all filing
and other fees paid to the Commission in connection with the Merger, will be
borne equally by BANC ONE and FCN.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Extension and Waiver. At any time prior to the Second Effective Time, BANC
ONE and FCN, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties contained in the
Agreement or in any document delivered pursuant to the Agreement and (iii)
waive compliance with any of the agreements or conditions contained in the
Agreement; except that after any approval of the transactions contemplated by
the Agreement by the respective stockholders of BANC ONE or FCN, there may not
be, without further approval of such stockholders, any extension or waiver of
the Agreement which reduces the amount or changes the form of the
consideration to be delivered to the FCN Stockholders or into which shares of
BANC ONE Common Stock will be converted pursuant to the First Step Merger,
other than as contemplated by the Agreement.
Amendment. Subject to compliance with applicable law, the Agreement may be
amended by BANC ONE, FCN and BANK ONE, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by BANC ONE Shareholders or
FCN Stockholders, except that after any approval of the transactions
contemplated by the Merger Agreement by the BANC ONE Shareholders or FCN
Stockholders, there may not be, without further approval of such stockholders,
any amendment of the Agreement which changes the amount or the form of the
consideration to be delivered to the holders of FCN Common Stock or into which
shares of BANC ONE Common Stock will be converted pursuant to the First Step
Merger, other than as contemplated by the Merger Agreement.
EMPLOYEE BENEFITS AND PLANS
From and after the Second Effective Time, unless otherwise mutually
determined, the employee or director benefit plans, arrangements or agreements
maintained, or contributed to, as of the date of the Agreement, by FCN and
certain affiliates and disclosed to BANC ONE in connection with the execution
and delivery of the Agreement (the "FCN BENEFIT PLANS") and by BANC ONE and
certain affiliates and disclosed to FCN in connection with the execution and
delivery of the Agreement (the "BANC ONE BENEFIT PLANS"), in each case as in
effect as of the date of the Agreement, will remain in effect with respect to
employees of FCN or BANC ONE (or their subsidiaries) covered by such plans at
the Second Effective Time and may cover, and awards thereunder may be provided
to, such additional employees of the combined company as shall be determined
by the combined company in accordance with the terms therewith after the
Second Effective Time, until such time as BANK ONE, subject to applicable law,
the terms of the Agreement and the terms of such plans, adopts New Benefit
Plans. In the Agreement, FCN and BANC ONE have agreed that, prior to the
Closing Date, they will cooperate in reviewing, evaluating and analyzing the
BANC ONE Benefit Plans and FCN Benefit Plans with a view towards developing
appropriate New Benefit Plans for the employees covered thereby subsequent to
the Merger. Such New Benefit Plans will (i) treat similarly situated employees
on a substantially equivalent basis, taking into account all relevant factors,
including, without limitation, duties, geographic location, tenure,
qualifications and abilities, and (ii) not discriminate between employees of
the Surviving Corporation who were covered by FCN Benefit Plans, on the one
hand, and those covered by BANC ONE Benefit Plans, on the other hand, at the
Second Effective Time.
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BANK ONE is obligated under the Agreement to honor in accordance with their
terms all BANC ONE Benefit Plans, FCN Benefit Plans and other employee benefit
plans, contracts, arrangements, commitments or understandings, except that BANK
ONE may amend, modify or terminate any BANC ONE Benefit Plans, FCN Benefit
Plans, or other employee benefit plans, contracts, arrangements, commitments or
understandings, in accordance with their terms and applicable law.
The Second Step Merger will constitute a "change of control" under certain
FCN Stock Plans. As a consequence, in connection with the Merger, certain stock
options awarded under such plans will become fully vested and exercisable,
certain restricted stock awards issued under such plans will become fully
vested and transferable, and certain performance shares granted under such
plans will be deemed earned at the maximum performance level. See "--Interests
of Certain Persons in the Merger."
It is not anticipated that the Merger will affect FCN's current offering
under the FCN Employee Stock Purchase and Savings Plan (the "FCN ESPSP"). See
"--Interests of Certain Persons in the Merger."
STOCK EXCHANGE LISTING
BANC ONE has agreed to cause the shares of BANK ONE Common Stock and BANK ONE
Preferred Stock to be issued in the Merger to be approved for listing on the
NYSE. It is a condition to the consummation of the Merger that such shares of
BANK ONE Common Stock and BANK ONE Preferred Stock be authorized for listing on
the NYSE, subject to official notice of issuance.
EXPENSES
The Agreement provides that each of BANC ONE, FCN and BANK ONE will pay its
own expenses in connection with the Merger and the transactions contemplated
thereby, provided that BANC ONE and FCN will divide equally the payment of all
printing costs, filing fees and registration fees paid to the Commission in
connection with the Merger.
DIVIDENDS
The Agreement provides that BANC ONE and FCN will coordinate the declaration
and payment of dividends in respect of BANC ONE Common Stock and/or FCN Capital
Stock and any shares of BANK ONE Capital Stock any such holder receives in
exchange therefor in the Merger with the intent that holders thereof will not
receive two dividends for a single quarter or fail to receive one dividend
which they would otherwise receive in the absence of the Merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of BANC ONE's and FCN's management and the BANC ONE Board and
FCN Board may be deemed to have certain interests in the Merger that are in
addition to their interests as BANC ONE Shareholders or FCN Stockholders
generally. The BANC ONE and FCN Boards were aware of these interests and
considered them, among other matters, in approving the Agreement and the
transactions contemplated thereby.
The directors, officers and principal stockholders of FCN and their
associates may have had in the past, and expect to have in the future,
transactions in the ordinary course of business with BANC ONE and its
subsidiaries and affiliates. The directors, officers and principal stockholders
of BANC ONE and their associates may have had in the past, and expect to have
in the future, transactions in the ordinary course of business with FCN and its
subsidiaries and affiliates. Such transactions were, and are expected to be, on
substantially the same terms as those prevailing at the time for comparable
transactions with others.
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Change of Control Agreements. Change of control severance agreements are in
effect between FCN and certain key executive officers of FCN, including Messrs.
Istock and Vitale, Thomas H. Jeffs II, Vice Chairman of FCN, and Andrew J.
Paine, Jr., Executive Vice President of FCN. These executive change of control
agreements (the "CHANGE OF CONTROL AGREEMENTS") were effective as of July 11,
1995, and provide, generally, that if an executive officer terminates his
employment for any reason during the 30-day period which begins one year after
a Change of Control (as defined in the Change of Control Agreements), or if,
during the three years following a Change of Control, the executive's
employment is terminated (other than for cause (as defined in the Change of
Control Agreements) or due to death or disability) or the executive terminates
employment for good reason (as defined in the Change of Control Agreements),
the executive will be entitled to receive a severance payment consisting of:
(i) the executive's base salary through the date of termination, (ii) a
proportionate bonus based upon the average bonus paid to the executive with
respect to the three fiscal years prior to the date of the Change of Control
(the "AVERAGE BONUS"), (iii) two and one-half times the sum of the executive's
base salary and the Average Bonus, and (iv) unpaid deferred compensation and
vacation pay. The Second Step Merger will constitute a Change of Control for
purposes of the Change of Control Agreements. In addition to the severance
payment, upon a covered termination following a Change of Control, the
executive will be entitled to a payment having an actuarial present value equal
to the additional pension benefits under FCN's qualified and supplemental
retirement plans that the executive would have received had the executive
remained employed for 30 months after the date of termination. The factors that
provide the basis for calculating the severance payments and additional service
credit payments vary over time, and consequently can only be determined as of
the specific date upon which any such payments accrue. If payments were to be
made at the Second Effective Time, the total of such payments and additional
service credit payments to each of Messrs. Istock, Jeffs, Vitale and Paine
would be approximately $5,788,896, $3,873,386, $7,463,312, and $2,438,413,
respectively. FCN will also provide the executive with continued medical and
welfare benefits coverage for 30 months after the date of termination and with
outplacement services and the continuation of certain other employment-related
perquisites for one year after termination. If any amounts payable to an
executive under the Change of Control Agreement or otherwise would subject such
executive to the excise tax under section 4999 of the Code, FCN will make a
payment to the executive such that after the payment of all income and excise
taxes, the executive will be in the same after-tax position as if no excise tax
under section 4999 had been imposed, provided that, if such payments (excluding
additional amounts payable due to the excise tax) are not at least $50,000 in
excess of the greatest amount that could be paid without giving rise to the
excise tax, no additional payments will be made with respect to the excise tax,
and the payments otherwise due to the executive will be reduced to an amount
necessary to prevent the application of the excise tax. Pursuant to the terms
of FCN's Personal Pension Account Plan and Supplemental Personal Pension
Account Plan, the Second Step Merger will cause the accrued benefits of all
participants in such plans, including certain executive officers, to become
fully and immediately vested without regard to length of service.
Stock-Based Rights. The Agreement provides that, at the Second Effective
Time, each outstanding stock option to acquire shares of FCN Common Stock
granted under the FCN Stock Plans will cease to represent the right to acquire
shares of FCN Common Stock and will be converted into and become a right with
respect to BANK ONE Common Stock, and the FCN Stock Plans will be assumed by
BANK ONE. Pursuant to the terms of certain FCN Stock Plans, in connection with
the transaction contemplated by the Agreement, the stock options and restricted
stock awards held by employees of FCN, including certain executive officers and
non-employee directors of FCN, will become fully vested and exercisable and all
restrictions on any such awards will lapse. The number of nonexercisable stock
options to acquire shares of FCN Common Stock held by Messrs. Istock, Jeffs,
Vitale and Paine and the other executive officers of FCN as a group that will
become fully vested and exercisable as a result of the transactions
contemplated by the Agreement are 219,531 (with a weighted average exercise
price of $66.77), 66,000 (with a weighted average exercise price of $59.29),
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56,000 (with a weighted average exercise price of $64.24), 21,000 (with a
weighted average exercise price of $58.34) and 245,817 (with a weighted average
exercise price of $64.89), respectively. The number of shares of restricted
stock (not including performance shares granted as restricted stock) which will
fully vest and become transferable at the Second Effective Time held by Messrs.
Istock, Jeffs, Vitale and Paine and the other executive officers of FCN as a
group are 11,522, 10,772, 0, 750 and 3,150, respectively. Pursuant to the terms
of certain FCN Stock Plans, in connection with the Second Step Merger, the
performance shares granted thereunder will be deemed earned and payable based
on deemed achievement of the maximum performance criteria specified therein.
The number of performance shares held by Messrs. Istock, Jeffs, Vitale and
Paine and the other executive officers of FCN as a group that are not expected
to be earned as of the Second Effective Time and that will accordingly become
earned and payable as a result of the Second Step Merger are 156,218, 60,843,
57,819, 18,375 and 243,092, respectively.
Director Stock Plan. Pursuant to the terms of the FCN Stock Plan for non-
officer directors of FCN, such directors are permitted to have their annual
cash retainer from FCN paid in FCN Common Stock, options on FCN Common Stock or
FCN Common Stock stock units instead of in cash. At the Second Effective Time,
4,842 stock options (with a weighted average exercise price of $87.47) held by
directors under the plan will become fully exercisable.
FCN ESPSP. As it is currently anticipated by BANC ONE and FCN that the Merger
will be completed in the fourth quarter of 1998, FCN employees, including the
executive officers of FCN, participating in the current offering under the FCN
ESPSP will be eligible to purchase shares of FCN Common Stock on September 30,
1998 pursuant to the original terms of such offering. Should the Merger be
completed prior to September 30, 1998, the consummation of the Second Step
Merger will be deemed a "purchase date" under such plan, and each participant
in the plan, including certain executive officers of FCN, will have the right
to elect to receive a distribution of the cash in such participant's savings
account or to use the cash to purchase shares of BANK ONE Common Stock at a
purchase price adjusted to reflect the Exchange Ratio.
Retention. In the Agreement, BANC ONE and FCN have agreed to coordinate in
establishing a key employee retention program, consistent with the companies'
strategy for the Merger, in order to provide for equitable treatment of
similarly situated employees of each company, and to retain and provide
appropriate incentives to key personnel for the benefit of the combined
company. As part of this program, BANC ONE and FCN expect to cause the
Surviving Corporation to issue options on BANK ONE Common Stock to certain key
personnel. As of the date of this Joint Proxy Statement-Prospectus, BANC ONE
and FCN had not finally identified the recipients of benefits, payments or
awards under this program, or the amounts of such benefits, payments or awards
to specific recipients. BANC ONE and FCN intend that such benefits, payments or
awards, including grants of stock options, will be mutually determined by the
appropriate committees of the respective Boards of Directors of each company.
Indemnification; Directors and Officers Insurance. The Agreement provides
that, in the event of any threatened or actual claim or proceeding in which any
person who is or has been a director, officer or employee of FCN, BANC ONE,
BANK ONE, any of their respective subsidiaries or any of their predecessors
(the "INDEMNIFIED PARTIES") is, or is threatened to be, made a party based in
whole or in part on, or pertaining to, (i) the fact that such person was a
director, officer or employee of FCN, BANC ONE, BANK ONE, any of their
respective subsidiaries or any of their predecessors, or (ii) the Agreement,
the Option Agreements or the transactions contemplated thereby, BANK ONE will,
subject to the conditions set forth in the Agreement, indemnify such person to
the fullest extent permitted by law against any liability or expense incurred
in connection with any such claim or proceeding. The Agreement provides that
BANK ONE's obligation to indemnify any Indemnified Party will continue for a
period of at least six years following the Second Effective Time, provided
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that rights to indemnification in respect of any claim asserted or made within
such period will continue until final disposition of such claim. The Agreement
further provides that BANK ONE will, subject to the conditions set forth in the
Agreement, use its best efforts to cause the persons serving as officers and
directors of FCN immediately prior to the Merger to be covered for a period of
at least six years following the Second Effective Time by FCN's directors' and
officers' liability insurance policy (or any equivalent substitute therefor),
provided that BANK ONE will not be required to expend more than 200% of the
current amount expended by FCN to procure such insurance.
BANK ONE will also adopt, as of the Second Effective Time, the policy of FCN
in respect of directors' and officers' insurance as in effect on the date of
the Agreement.
BANC ONE AND FCN OPTION AGREEMENTS
Concurrently with the execution of the Agreement, BANC ONE executed and
delivered a stock option agreement, dated April 10, 1998 (the "BANC ONE OPTION
AGREEMENT"), pursuant to which BANC ONE granted FCN an option to purchase BANC
ONE Common Stock from BANC ONE under the conditions set forth below (the "BANC
ONE OPTION"). At the same time, FCN executed and delivered a stock option
agreement, dated April 10, 1998 (the "FCN OPTION AGREEMENT" and, together with
the BANC ONE Option Agreement, the "OPTION AGREEMENTS"), pursuant to which FCN
granted to BANC ONE an option to purchase FCN Common Stock from FCN under the
conditions set forth below (the "FCN OPTION"). BANC ONE and FCN approved and
entered into the Option Agreements to induce each other to enter into the
Agreement.
Except as otherwise noted below, the terms and conditions of the BANC ONE
Option Agreement and the FCN Option Agreement are identical in all material
respects. For purposes of this section, except as otherwise noted, (i) the BANC
ONE Option Agreement or the FCN Option Agreement, as the case may be, is
sometimes referred to as the "ISSUER OPTION AGREEMENT," (ii) BANC ONE, as
issuer of the BANC ONE Common Stock, and FCN, as issuer of the FCN Common
Stock, upon the exercise of the BANC ONE Option and the FCN Option,
respectively, are sometimes individually referred to as the "ISSUER," (iii)
BANC ONE and FCN, as the holder of the FCN Option and the BANC ONE Option,
respectively, are sometimes individually referred to as the "OPTIONEE," (iv)
the BANC ONE Option or the FCN Option, as the case may be, is sometimes
referred to as the "ISSUER OPTION" and (v) the BANC ONE Common Stock and the
FCN Common Stock, as the case may be, is referred to as "ISSUER COMMON STOCK."
The Option Agreements are intended to increase the likelihood that the Merger
will be consummated in accordance with the terms of the Agreement.
Consequently, certain aspects of the Option Agreements may have the effect of
discouraging persons who might now or at any other time prior to the Second
Effective Time be interested in acquiring all of or a significant interest in
BANC ONE or FCN from considering or proposing such an acquisition, even if, in
the case of FCN, such persons were prepared to offer to pay consideration to
the FCN Stockholders that had a higher current market price than the shares of
BANK ONE Common Stock to be received per share of FCN Common Stock pursuant to
the Agreement. The acquisition of BANC ONE or FCN could cause the BANC ONE
Option or the FCN Option, as the case may be, to become exercisable. The
existence of the Issuer Options could significantly increase the cost to a
potential acquiror of acquiring either Issuer compared to its cost had the
Option Agreements and the Agreement not been entered into. Such increased cost
might discourage a potential acquiror from considering or proposing an
acquisition or might result in a potential acquiror proposing to pay a lower
per share price to acquire such Issuer than it might otherwise have proposed to
pay. Moreover, following consultation with their respective independent
accountants, FCN and BANC ONE believe that the exercise or repurchase of either
of the Issuer Options is likely to prohibit any other acquiror of an Issuer
from accounting for any acquisition of such Issuer using the "pooling of
interests" accounting method for a period of two years.
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The BANC ONE Option Agreement provides for the purchase by FCN of up to
128,122,944 shares (the "BANC ONE OPTION SHARES" or the "ISSUER OPTION SHARES,"
as the case may be) of BANC ONE Common Stock at an exercise price of $61.75 per
share, payable in cash. The BANC ONE Option Shares, if issued pursuant to the
BANC ONE Option Agreement, will in no event exceed 19.9% of the BANC ONE Common
Stock issued and outstanding without giving effect to the issuance of any BANC
ONE Common Stock subject to the BANC ONE Option.
The FCN Option Agreement provides for the purchase by BANC ONE of up to
57,150,376 shares (the "FCN OPTION SHARES" or the "ISSUER OPTION SHARES," as
the case may be) of FCN Common Stock at an exercise price of $94.00 per share,
payable in cash. The FCN Option Shares, if issued pursuant to the FCN Option
Agreement, will in no event exceed 19.9% of the FCN Common Stock issued and
outstanding without giving effect to the issuance of any FCN Common Stock
subject to the FCN Option.
The number of shares of Issuer Common Stock subject to the applicable Issuer
Option will be increased or decreased, as appropriate, to the extent that
additional shares of Issuer Common Stock are either (i) issued or otherwise
become outstanding (other than pursuant to an exercise of an Issuer Option or
as permitted under the Agreement) or (ii) redeemed, repurchased, retired or
otherwise cease to be outstanding after April 10, 1998, such that, after such
issuance, the number of Issuer Option Shares will continue to equal 19.9% of
the Issuer Common Stock then issued and outstanding without giving effect to
the issuance of any Issuer Common Stock subject to such Issuer Option. In the
event of any change in, or distributions in respect of, the number of shares of
Issuer Common Stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, subdivision, conversion, exchange of shares,
distribution on or in respect of such Issuer Common Stock that would be
prohibited by the Agreement, or similar transaction, the type and number of
Issuer Option Shares purchasable upon exercise of the applicable Issuer Option,
and the applicable option price will also be adjusted in such a manner as will
fully preserve the economic benefits of the Option.
Each Issuer Option Agreement provides that the Optionee or any other holder
or holders of the Issuer Option (as used in this section, collectively, the
"HOLDER") may exercise the Issuer Option, in whole or in part, subject to
regulatory approval, if both an Initial Triggering Event (as defined herein)
and a Subsequent Triggering Event (as defined herein) has occurred prior to the
occurrence of an Exercise Termination Event (as defined below); provided that
the Holder has sent to the Issuer written notice of such exercise within 90
days following such Subsequent Triggering Event (subject to extension as
provided in each Issuer Option Agreement). The terms Initial Triggering Event
and Subsequent Triggering Event generally relate to attempts by one or more
third parties to acquire a significant interest in the Issuer. Any exercise of
the Issuer Option will be deemed to occur on the date such notice is sent.
For purposes of each Issuer Option Agreement:
(i) The term "INITIAL TRIGGERING EVENT" means the occurrence of any of
the following events or transactions after April 10, 1998: (a) the Issuer
or any subsidiary of the Issuer, without the Optionee's prior written
consent, enters into an agreement to engage in, or the Issuer's Board of
Directors recommends that shareholders of the Issuer approve or accept, an
Acquisition Transaction (as defined herein) with any person or group (other
than as contemplated by the Agreement); (b) the Issuer, without the
Optionee's prior written consent, authorizes, recommends, proposes or
publicly announces its intention to authorize, recommend or propose to
engage in an Acquisition Transaction, or the Issuer's Board of Directors
publicly withdraws or modifies, or publicly announces its intention to
withdraw or modify, in any manner adverse to the Optionee, its
recommendation that its shareholders approve the Agreement in anticipation
of engaging in an Acquisition Transaction; (c) any person, other than the
Optionee, any subsidiary of the Optionee or any Issuer subsidiary acting in
a fiduciary capacity in the ordinary course of
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business acquires beneficial ownership, or the right to acquire beneficial
ownership, of 10% or more of the outstanding shares of Issuer Common Stock;
(d) any person other than the Optionee or any subsidiary of the Optionee
made a bona fide proposal to the Issuer or its shareholders by public
announcement or written communication that becomes the subject of public
disclosure to engage in an Acquisition Transaction; (e) the Issuer breaches
any covenant or obligation in the Agreement after any person, other than
the Optionee or any subsidiaries of the Optionee, has proposed an
Acquisition Transaction, and such breach (1) would entitle the Optionee to
terminate the Agreement and (2) is not remedied prior to the date of the
Optionee's notice to the Issuer of the exercise of the Option; or (f) any
person other than the Optionee or any subsidiary of the Optionee, other
than in connection with a transaction to which the Optionee has given its
prior written consent, files an application or notice with the Federal
Reserve Board, or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
(ii) For purposes of each Issuer Option Agreement, the term "ACQUISITION
TRANSACTION" means (a) a merger or consolidation, or any similar
transaction with the Issuer or any of its Significant Subsidiaries (as
defined in Rule 1-02 of Regulation S-X of the Commission); (b) a purchase,
lease or other acquisition or assumption of all or substantially all of the
assets or deposits of the Issuer or any of its Significant Subsidiaries;
(c) a purchase or other acquisition of securities representing 10% or more
of the voting power of the Issuer; or (d) any substantially similar
transaction, provided, however, that in no event will any merger,
consolidation, purchase or similar transaction involving only the Issuer
and one or more of its subsidiaries or involving only any two or more of
such subsidiaries, be deemed to be an Acquisition Transaction, provided
that any such transaction is not entered into in violation of the terms of
the Agreement.
(iii) The term "SUBSEQUENT TRIGGERING EVENT" means the occurrence of
either of the following events or transactions after April 10, 1998: (a)
the acquisition by any person of beneficial ownership of 20% or more of the
then-outstanding shares of Issuer Common Stock; or (b) the occurrence of
the Initial Triggering Event described above in clause (i)(a), except that
the percentage referred to in clause (ii)(c) of the definition of
"Acquisition Transaction" set forth above will be 20%.
Each Issuer Option will expire upon the occurrence of an "EXERCISE
TERMINATION EVENT," which includes: (i) the Second Effective Time; (ii)
termination of the Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of an Initial Triggering Event,
except in the case of the termination of the Agreement by the Optionee as a
result of an uncured material breach by the Issuer of any of its
representations, warranties, covenants or agreements unless the breach by the
Issuer is non-volitional; or (iii) the date that is 12 months after the
termination of the Agreement if such termination occurs after the occurrence of
an Initial Triggering Event or is a termination by the Optionee as a result of
an uncured material breach by the Issuer of any of its representations,
warranties, covenants or agreements unless the breach by the Issuer is non-
volitional (provided that, if an Initial Triggering Event continues or occurs
beyond such termination of the Agreement and prior to the passage of such 12-
month period, the Issuer Option will terminate 12 months from the expiration of
the last Initial Triggering Event to expire, but in no event more than 18
months after such termination of the Agreement).
As of the date of this Joint Proxy Statement-Prospectus, to the knowledge of
BANC ONE and FCN, no Initial Triggering Event or Subsequent Triggering Event
has occurred.
Immediately prior to the occurrence of a Repurchase Event (as defined
herein), (i) following a request of a Holder, delivered prior to an Exercise
Termination Event, the Issuer (or any successor thereto) will repurchase the
Issuer Option from the Holder at a price (the "ISSUER OPTION REPURCHASE PRICE")
equal to the amount by which (a) the market/offer price (as defined herein)
exceeds (b) the option price, multiplied by the number of shares for which the
Issuer Option may then be exercised
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and (ii) at the request of the owner of Issuer Option Shares from time to time
(the "OWNER"), delivered within 90 days of such occurrence (or such later
period as provided in Section 10 of each of the Option Agreements), the Issuer
will repurchase such number of the Issuer Option Shares from the Owner as the
Owner will designate at a price (the "ISSUER OPTION SHARE REPURCHASE PRICE")
equal to the market/offer price multiplied by the number of Option Shares so
designated.
The term "MARKET/OFFER PRICE" means the highest of (i) the price per share of
Issuer Common Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Issuer Common Stock to be paid by any third
party pursuant to an agreement with Issuer, (iii) the highest closing price for
shares of Issuer Common Stock within the six-month period immediately preceding
the date the Holder gives notice of the required repurchase of the Issuer
Option or the Owner gives notice of the required repurchase of Issuer Option
Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of the Issuer's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of
the Issuer as determined by a nationally recognized investment banking firm
selected by the Holder or the Owner, as the case may be, and the Issuer,
divided by the number of shares of Issuer Common Stock outstanding at the time
of such sale. In determining the market/offer price, the value of consideration
other than cash will be determined by a nationally recognized investment
banking firm selected by the Holder or Owner, as the case may be, and the
Issuer. However, if the Issuer at any time after delivery of a notice of
repurchase as described in this paragraph is prohibited under applicable law or
regulation from delivering to the Holder and/or the Owner, as appropriate, the
Issuer Option Repurchase Price and the Issuer Option Share Repurchase Price,
respectively, in full, the Holder or Owner may revoke its notice of repurchase
of the Issuer Option or the Issuer Option Shares, either in whole or to the
extent of the prohibition, whereupon, in the latter case, the Issuer will
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Issuer Option Repurchase Price or the Issuer Option Share
Repurchase Price that the Issuer is not prohibited from delivering and (ii)
deliver, as appropriate, (a) to the Holder, a new Issuer Option Agreement
evidencing the right of the Holder to purchase that number of shares of the
Issuer Common Stock obtained by multiplying the number of shares of the Issuer
Common Stock for which the surrendered Issuer Option Agreement was exercisable
at the time of delivery of the notice of repurchase by a fraction, the
numerator of which is the Issuer Option Repurchase Price less the portion
thereof theretofore delivered to the Holder and the denominator of which is the
Issuer Option Repurchase Price, and (b) to the Owner, a certificate for the
Issuer Option Shares it is then so prohibited from repurchasing. A "REPURCHASE
EVENT" is deemed to have occurred (i) upon the consummation of an Acquisition
Transaction or (ii) upon the acquisition by any person of the beneficial
ownership of 50% or more of the then-outstanding Issuer Common Stock, provided
that a Subsequent Triggering Event has occurred prior to an Exercise
Termination Event.
In the event that, prior to an Exercise Termination Event, the Issuer enters
into any agreement (i) to consolidate with or merge into any person, other than
the Optionee or one of its subsidiaries, such that Issuer is not the continuing
or surviving corporation of such consolidation or merger; (ii) to permit any
person, other than the Optionee or one of its subsidiaries, to merge into the
Issuer and the Issuer is the continuing or surviving corporation, but, in
connection with such consolidation or merger, the outstanding shares of the
Issuer Common Stock are changed into or exchanged for stock or other securities
of any other person or cash or any other property, or the then outstanding
shares of Issuer Common Stock after such merger will represent less than 50% of
the outstanding voting shares and voting share equivalents of the merged
corporation; or (iii) to sell or otherwise transfer all or substantially all of
its assets to any person, other than the Optionee or any of its subsidiaries,
then, and in each such case, the agreement governing such transaction must
provide that, upon consummation of such transaction and upon terms and
conditions set forth in the Issuer Option Agreement, the Option will be
converted into, or exchanged for, an option having substantially the same terms
as the Option (the "SUBSTITUTE OPTION") to purchase securities, at the election
of the
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Holder, of either the acquiring person or any person that controls the
acquiring person. At the request of the Holder of the Substitute Option, the
issuer of the Substitute Option will repurchase it at a price, and subject to
such other terms and conditions, as set forth in the Issuer Option Agreement.
Within 90 days after the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Date (subject to extension as provided
in the Issuer Option Agreement), the Optionee may request the Issuer to
prepare, file and keep current with respect to the Option Shares, a
registration statement with the Commission. The Issuer is required to use its
reasonable best efforts to cause such registration statement to become
effective and then to remain effective for 180 days or such shorter time as
may be reasonably necessary to effect such sales or other disposition of
Option Shares. The Optionee has the right to demand two such registrations.
Neither the Issuer nor the Optionee may assign any of its rights and
obligations under the Issuer Option Agreements or the Issuer Option to any
other person without the express written consent of the other party, except
that, if a Subsequent Triggering Event occurs prior to an Exercise Termination
Event, the Optionee, subject to the terms of the Issuer Option Agreement, may
assign, in whole or in part, its rights and obligations thereunder, within 90
days (subject to extension as provided in the Issuer Option Agreement) of such
Subsequent Triggering Event; provided that, until the date 15 days after the
date on which the Federal Reserve Board approves an application by the
Optionee to acquire the Issuer Option Shares, the Optionee may not assign its
rights under the Issuer Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the
right to purchase in excess of 2% of the voting shares of the Issuer, (iii) an
assignment to a single party for the purpose of conducting a widely dispersed
public distribution on the Optionee's behalf, or (iv) any other manner
approved by the Federal Reserve Board.
Certain rights and obligations of the Optionee and the Issuer under the
Option Agreement are subject to receipt of required regulatory approvals. The
approval of the Federal Reserve Board is required for the acquisition by the
Optionee of more than 5% of the outstanding shares of Issuer Common Stock.
Accordingly, each Optionee has included in the application with the Federal
Reserve Board a request for approval of the right of the Optionee to exercise
its rights under the Issuer Option Agreement, including its right to purchase
more than 5% of the outstanding shares of Issuer Common Stock. See "--
Regulatory Approvals Required for the Merger."
RESTRICTIONS ON RESALES BY AFFILIATES
The issuance of shares of BANK ONE Common Stock to FCN Stockholders and the
issuance of shares of BANK ONE Preferred Stock to holders of FCN Preferred
Stock in the Merger have been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"). The shares of BANK ONE Common Stock and BANK
ONE Preferred Stock issued in the Merger may be traded freely and without
restriction by those stockholders not deemed to be "affiliates" of FCN as that
term is defined under the Securities Act. An affiliate of FCN, as defined by
the rules promulgated pursuant to the Securities Act, is a person who
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, FCN. Any subsequent transfer
of such shares, however, by any person who is an affiliate of FCN at the time
the Merger is submitted for vote of the holders of FCN Common Stock will,
under existing law, require either (i) the further registration under the
Securities Act of the shares of BANK ONE Capital Stock to be transferred, (ii)
compliance with Rule 145 promulgated under the Securities Act (permitting
limited sales under certain circumstances) or (iii) the availability of
another exemption from registration. The foregoing restrictions are expected
to apply to the directors and executive officers of FCN and the holders of 10%
or more of the FCN Common Stock (and to certain relatives or the spouse of any
such person and any trusts, estates, corporations or other entities in which
any such person has a 10% or greater beneficial or equity interest). Stop
transfer instructions will be given by BANK ONE to the transfer agent with
respect to the BANK ONE stock to be received by persons subject to the
restrictions described above, and the certificates for such stock will be
appropriately legended.
63
THE MERGER
<PAGE>
Commission guidelines regarding qualifying for the "pooling of interests"
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. Commission
guidelines indicate further that the "pooling of interests" method of
accounting will generally not be challenged on the basis of sales by affiliates
of the acquiring or acquired company if such affiliates do not dispose of any
of the shares of the corporation they own or shares of a corporation they
receive in connection with a merger during the period beginning 30 days before
the merger and ending when financial results covering at least 30 days of post-
merger operations of the combined entity have been published.
Each of FCN and BANC ONE has agreed in the Agreement to use its best efforts
to cause each person who is an affiliate (for purposes of Rule 145 and for
purposes of qualifying the Merger for "pooling of interests" accounting
treatment) of such party to deliver to the other party a written agreement
intended to ensure compliance with the Securities Act and preserve the ability
to treat the Merger as a "pooling of interests."
BANK ONE has agreed in the Agreement to use its best efforts to publish, not
later than 90 days after the end of the first month after the Second Effective
Time in which there are at least 30 days of post-Merger combined operations,
combined sales and net income figures as contemplated by and in accordance with
the terms of the Commission's Accounting Series Release No. 135.
FCN DIVIDEND REINVESTMENT PLAN
Pursuant to the Agreement, the FCN Dividend Reinvestment and Stock Purchase
Plan may continue through the Second Effective Time, provided that issuances
thereunder are in the ordinary course of FCN's business, consistent with past
practice.
64
THE MERGER
<PAGE>
BUSINESS AND MANAGEMENT
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Board of Directors. At the Second Effective Time, the BANK ONE Board of
Directors is expected to consist of 22 persons, including Messrs. Istock,
McCoy, Lehmann and Vitale. Of the remaining 18 persons, nine will be designated
by BANC ONE and nine will be designated by FCN. As of the date of this Joint
Proxy Statement-Prospectus, no additional directors have been designated by
either BANC ONE or FCN. BANC ONE and FCN each intend to designate the remaining
members of the BANK ONE Board of Directors shortly prior to consummation of the
Merger.
Management. The executive officers of BANK ONE will consist of certain
members of BANC ONE senior management and certain members of FCN's senior
management. At the Second Effective Time, Mr. Istock will be the Chairman of
the Board of Directors of BANK ONE, Mr. McCoy will be the President and Chief
Executive Officer of BANK ONE, and Messrs. Lehmann and Vitale will each be a
Vice Chairman of BANK ONE, such offices together forming an Office of the Chief
Executive of the combined company.
In addition, the following persons are expected to have the responsibilities
set forth at the combined company after the Merger:
<TABLE>
<CAPTION>
NAME AND CURRENT POSITION RESPONSIBILITY
- ------------------------- --------------
<S> <C>
William P. Boardman, Senior Executive Vice Acquisitions
President, BANC ONE
Sherman I. Goldberg, Executive Vice General Counsel
President, General Counsel and Secretary
of FCN
Thomas Hoaglin, Chairman and Chief Operations
Executive Officer of Banc One Services
Corporation
W.G. Jurgensen, Chairman, FCC National Bank Corporate Banking Products
David Kundert, Chairman and Chief Executive Investment Management Group
Officer, Banc One Investment Management
Group; President and Chief Executive
Officer, Banc One Investment Advisors
Corporation
Timothy P. Moen, Executive Vice President, Human Resources
FCN
Susan S. Moody, Executive Vice President, Domestic and International Markets
FCN
Robert A. O'Neill, Chief Auditor, BANC ONE Auditor
Robert A. Rosholt, Chief Financial Officer Chief Financial Officer
and Executive Vice President, FCN
Ronald G. Steinhart, Chairman and Chief Middle Market Banking
Executive Officer, Banc One Commercial
Banking Group
Kenneth T. Stevens, Chairman and Chief Retail Banking
Executive Officer, Banc One Retail Group
Richard W. Vague, Chairman and Chief Credit Card
Executive Officer, First USA Bank
Richard R. Wade, Senior Vice President, The Risk Management
First National Bank of Chicago
Donald Winkler, Chairman and Chief Consumer Finance
Executive Officer, Finance One Group
</TABLE>
Additional information about certain of such persons, including Messrs.
Istock and McCoy and the directors of BANC ONE and FCN, is contained in BANC
ONE's and FCN's respective Annual Reports on Form 10-K for the year ended
December 31, 1997, which are incorporated by reference in this Joint Proxy
Statement-Prospectus. See "Where You Can Find More Information."
65
INFORMATION ABOUT OUR COMPANIES
<PAGE>
Except for the foregoing, the positions at BANK ONE to be held by BANC ONE
management and FCN management have not yet been finally determined. From time
to time prior to consummation of the Merger, decisions may be made with respect
to the management and operations of BANK ONE following the Merger, including
the selection of executive officers and other senior management of BANK ONE.
Operations. While there can be no assurances as to the achievement of such
business and financial goals, BANC ONE and FCN currently expect to achieve
approximately $1.205 billion in annual pre-tax synergies as a result of the
Merger, to be fully realized by the end of the third year following the Second
Effective Time. Of this total, BANC ONE and FCN expect to realize approximately
$930 million in annual expense savings and approximately $275 million in
enhanced annual revenues. The expense savings will be derived principally from
cost reductions in the credit card, retail banking, commercial banking, capital
markets and indirect lending businesses of the combined company, in the
operations and technology budgets of the combined company and in its general
and administrative expenses, as well as through increased purchasing leverage
with certain suppliers to the combined company. BANC ONE and FCN expect to
achieve increased revenues principally through cross-selling opportunities
involving the credit card, retail banking and commercial banking businesses.
BANC ONE and FCN also expect that the combined company will incur a one-time
pre-tax restructuring charge of approximately $1.25 billion in the fiscal year
in which the Merger is consummated principally as a result of expenses to be
incurred in connection with personnel-related items, consolidation of
headquarters and operational facilities and the closing and divestiture of
certain banking facilities. These expenses are expected to be realized over a
12 to 18 month period following the Merger. For additional information with
respect to the estimated $1.25 billion restructuring charge, see "Unaudited Pro
Forma Condensed Combined Financial Information." The foregoing statements
constitute "forward-looking statements" for purposes of the Private Securities
Litigation Reform Act of 1995, and actual results, which are dependent on a
number of factors, many of which are beyond the control of BANC ONE and FCN,
may differ materially. See "Forward-Looking Statements."
The combined company will have its corporate headquarters in Chicago,
Illinois following the Merger.
66
INFORMATION ABOUT OUR COMPANIES
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
BANC ONE. BANC ONE Common Stock is, and the BANK ONE shares offered hereby
are expected to be, listed on the NYSE and traded under the symbol "ONE." The
following table sets forth, for the periods indicated, the high and low
reported closing sale prices per share of BANC ONE Common Stock on the NYSE
Composite Transactions Tape and cash dividends declared per share of BANC ONE
Common Stock. The cash dividend and stock price information has been adjusted
to reflect all stock dividends and stock splits on BANC ONE Common Stock,
including the 10% stock dividends on BANC ONE Common Stock paid on February
26, 1998 and March 6, 1996.
<TABLE>
<CAPTION>
PRICE RANGE
OF COMMON
STOCK
------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1996
First Quarter................................... $35.00 $29.04 $.31
Second Quarter.................................. 34.32 29.89 .31
Third Quarter................................... 37.62 28.41 .31
Fourth Quarter.................................. 43.53 36.71 .31
1997
First Quarter .................................. $44.77 $35.80 $.345
Second Quarter.................................. 45.57 35.57 .345
Third Quarter................................... 52.10 43.24 .345
Fourth Quarter.................................. 54.37 43.01 .345
1998
First Quarter .................................. $63.94 $44.66 $.38
Second Quarter ................................. 65.63 54.94 .38
Third Quarter (through July 30, 1998)........... 61.25 51.69 .38
</TABLE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of BANC ONE and its subsidiaries,
applicable government regulations and other factors deemed relevant by the
BANC ONE Board. As described under "Regulation and Supervision--Dividend
Restrictions," various state and federal laws limit the ability of affiliate
banks to pay dividends to BANC ONE. The Agreement restricts the cash dividends
payable on BANC ONE Common Stock pending consummation of the Merger. See "The
Merger--Conduct of Business Pending the Merger and Other Agreements."
FCN. FCN Common Stock is quoted on the NYSE Composite Transactions Tape
under the symbol "FCN." FCN Common Stock is also quoted on the Chicago Stock
Exchange, Inc. and the Pacific Exchange, Inc. The following table sets forth
the high and low closing sales prices for FCN Common Stock for the periods
indicated, as quoted in the NYSE Composite Transactions Tape, and the
quarterly cash dividends per share declared, for the periods indicated.
<TABLE>
<CAPTION>
PRICE RANGE
OF COMMON
STOCK
------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1996
First Quarter................................... $44.25 $34.75 $.36
Second Quarter.................................. 45.50 38.63 .36
Third Quarter................................... 45.25 36.63 .36
Fourth Quarter.................................. 58.88 45.00 .40
1997
First Quarter .................................. $63.63 $51.50 $.40
Second Quarter.................................. 65.63 50.50 .40
Third Quarter................................... 78.81 60.75 .40
Fourth Quarter.................................. 85.88 67.13 .44
1998
First Quarter .................................. $91.63 $71.06 $.44
Second Quarter.................................. 101.00 86.38 .44
Third Quarter (through July 30, 1998)........... 97.50 83.00 .44
</TABLE>
67
INFORMATION ABOUT OUR COMPANIES
<PAGE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of FCN and its subsidiaries, applicable
government regulations and other factors deemed relevant by the FCN Board. As
described under "Regulation and Supervision--Dividend Restrictions," various
state and federal laws limit the ability of affiliate banks to pay dividends to
FCN. Similar restrictions will apply to dividends of the combined company and
its subsidiaries. BANC ONE and FCN have not yet finally determined the dividend
policy of the combined company. The Agreement restricts the cash dividends
payable on FCN Common Stock pending consummation of the Merger. See "The
Merger--Conduct of Business Pending the Merger and Other Agreements."
68
INFORMATION ABOUT OUR COMPANIES
<PAGE>
INFORMATION ABOUT BANC ONE AND BANK ONE
GENERAL
Banc One. BANC ONE is a multi-bank holding company that, at December 31,
1997, operated banking offices in Arizona, Colorado, Illinois, Indiana,
Kentucky, Louisiana, Ohio, Oklahoma, Texas, Utah, West Virginia and Wisconsin.
BANC ONE also owns nonbank subsidiaries that engage in credit card and merchant
processing, consumer and education finance, mortgage banking, insurance,
venture capital, investment and merchant banking, trust, brokerage, investment
management, equipment leasing and data processing. At June 30, 1998, BANC ONE
had consolidated total assets of $124.0 billion, consolidated total deposits of
$85.0 billion and consolidated total stockholders' equity of $11.6 billion. At
such date, no single affiliate bank accounted for more than 20% of BANC ONE's
consolidated total assets.
Since its formation in 1968, BANC ONE has acquired over 100 banking
institutions. On June 12, 1998, BANC ONE completed its acquisition of First
Commerce Corporation, a bank holding company headquartered in New Orleans,
Louisiana, thereby acquiring assets of approximately $9.4 billion. BANC ONE
continues to explore other opportunities to acquire banks and nonbank companies
permitted by the BHCA. Discussions are continually being carried on relating to
such acquisitions. It is not presently known whether, or on what terms, such
discussions will result in further acquisitions. It is the policy of BANC ONE
not to comment on such discussions or possible acquisitions until a definitive
agreement with respect thereto has been reached.
BANC ONE is a legal entity separate and distinct from its affiliate banks and
its nonbank subsidiaries (collectively, the "AFFILIATES"). Accordingly, the
right of BANC ONE, and thus the right of BANC ONE'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 BANC ONE in its capacity as a creditor may be
recognized. The principal sources of BANC ONE's revenues are dividends and fees
from its affiliates. See "Regulation and Supervision--Dividend Restrictions"
for a discussion of the restrictions on the affiliate banks' ability to pay
dividends to BANC ONE.
BANC ONE is incorporated in Ohio and has functioned as a multi-bank holding
company since 1968. Its executive offices are located at 100 East Broad Street,
Columbus, Ohio 43271, and its telephone number is (614) 248-5944.
BANK ONE. BANK ONE is a wholly owned subsidiary of BANC ONE organized in 1998
under the laws of the State of Delaware to effect the Merger. It has not
conducted any substantial business activities to date. The business of BANK ONE
at the consummation of the Merger will be the combined businesses of BANC ONE
and FCN immediately prior to the Merger, and BANK ONE will continue as "BANK
ONE CORPORATION" following consummation of the Merger. The executive offices of
BANK ONE are presently located at 100 East Broad Street, Columbus, Ohio 43271,
and its telephone number is (614) 248-5944. Following consummation of the
Merger, the executive offices of BANK ONE will be located at One First National
Plaza, Chicago, Illinois 60670 and its telephone number will be (312) 732-4000.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to executive compensation, various benefit plans
(including stock option plans), voting securities and the principal holders
thereof, certain relationships and related transactions and other related
matters as to BANC ONE is incorporated by reference or set forth in BANC ONE's
Annual Report on Form 10-K for the year ended December 31, 1997, incorporated
herein by reference. Stockholders desiring copies of such documents may contact
BANC ONE at its address or telephone number indicated under "Where You Can Find
More Information."
69
INFORMATION ABOUT OUR COMPANIES
<PAGE>
INFORMATION ABOUT FCN
GENERAL
FCN is a multi-bank holding company registered under the BHCA, which was
incorporated under the laws of the State of Delaware in 1972. FCN is the
surviving corporation resulting from the merger, effective December 1, 1995, of
First Chicago Corporation, a Delaware corporation and registered bank holding
company, with and into NBD Bancorp, Inc., a Delaware corporation and registered
bank holding company. FCN's lead bank is The First National Bank of Chicago.
FCN also is the parent corporation of NBD Bank (Michigan); American National
Bank and Trust Company of Chicago; FCC National Bank ("FCCNB"); NBD Bank,
National Association (Indianapolis, Indiana); NBD Bank (Elkhart, Indiana); and
NBD Bank (Florida). FCCNB is a Delaware-based national banking association
primarily engaged in the issuance of VISA and MasterCard credit cards. At June
30, 1998, FCN had total assets of approximately $119.8 billion, total deposits
of approximately $69.5 billion and total stockholders' equity of approximately
$8.3 billion.
Through its banking subsidiaries, FCN provides consumer and corporate banking
products and services. In addition, FCN, directly or indirectly, owns the stock
of various nonbank companies engaged in businesses related to banking and
finance.
In addition to its equity investment in subsidiaries, FCN, directly or
indirectly, raises funds principally to finance the operations of its nonbank
subsidiaries. A substantial portion of FCN's annual income typically has been
derived from dividends from its subsidiaries, and from interest on loans, some
of which are subordinated, to its subsidiaries.
On May 8, 1998, FCN completed its purchase of Roney & Co., L.L.C., a regional
full-service investment firm.
FCN continually evaluates its business operations and organizational
structures, and routinely explores opportunities to (i) acquire financial
institutions and other financial services-related businesses and assets, and
(ii) enter into strategic alliances to expand the scope of its services and its
customer base. In addition, FCN occasionally sells assets, or exits businesses
or markets, determined not to be consistent with its overall business strategy.
During 1997, FCN completed its previously announced exit from the stand-alone
domestic institutional custody and master trust businesses. In December 1997,
it sold ANB Investment Management and Trust Company, a subsidiary engaged
primarily in institutional passive investment management activities. FCN, in
1997, also announced strategic alliances with Tokio Marine and Fire Insurance
Company Ltd., Robert W. Baird & Co. and The Hartford Financial Services Group.
In February 1998, FCN announced that it would combine its stock transfer
business with that of Boston EquiServe Limited Partnership.
FCN engages primarily in four lines of business--regional banking, which
includes the general consumer market, private banking and investments, small
business banking and middle market banking; corporate banking; corporate
investments; and credit card. Each of these businesses is conducted through
FCN's bank and nonbank subsidiaries.
Because FCN is a holding company, its rights and the rights of its creditors
to participate in the assets of any subsidiary upon the subsidiary's
liquidation or recapitalization would be subject to the prior claims of such
subsidiary's creditors except to the extent that FCN may itself be a creditor
with recognized claims against the subsidiary.
FCN's executive offices are located at One First National Plaza, Chicago,
Illinois 60670, and the telephone number is (312) 732-4000.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to executive compensation, various benefit plans
(including stock option plans), voting securities and the principal holders
thereof, certain relationships and related transactions and other related
matters as to FCN is incorporated by reference or set forth in FCN's Annual
Report on Form 10-K for the year ended December 31, 1997, incorporated herein
by reference. Stockholders desiring copies of such documents may contact FCN at
its address or telephone number indicated under "Where You Can Find More
Information."
70
INFORMATION ABOUT OUR COMPANIES
<PAGE>
REGULATION AND SUPERVISION
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 BANC ONE and
FCN. 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 BANC ONE and FCN or their respective
subsidiaries may have a material effect on the business of BANC ONE and FCN, as
the case may be. The framework described in this section will also generally be
applicable to BANK ONE following the Merger.
GENERAL
As a bank holding company, each of BANC ONE and FCN is subject to regulation
under the BHCA, and to inspection, examination and supervision by the Federal
Reserve Board. 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
Board'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 Board to be closely related to banking.
Various governmental requirements, including Sections 23A and 23B of the
Federal Reserve Act, as amended, limit borrowings by each of BANC ONE and FCN
and its nonbank subsidiaries from its affiliate banks, and also limit various
other transactions between each of BANC ONE and FCN and its nonbank
subsidiaries, on the one hand, and its affiliate banks, on the other. For
example, Section 23A of the Federal Reserve Act 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
of the Federal Reserve Act also generally requires that a bank's loans to its
nonbank affiliates be secured, and Section 23B of the Federal Reserve Act
generally requires that a bank's transactions with its nonbank affiliates be on
arm's length terms.
Each of BANC ONE's and FCN's affiliate national banking associations are
subject to regulation primarily by the OCC and, secondarily, by the FDIC and
the Federal Reserve Board. Each of BANC ONE's and FCN'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. BANC ONE, FCN and
their respective subsidiaries also are affected by the fiscal and monetary
policies of the federal government and the Federal Reserve Board, and by
various other governmental requirements and regulations.
LIABILITY FOR BANK SUBSIDIARIES
Under current Federal Reserve Board policy, 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 bank holding
company may not have the resources to provide it. In addition, Section 55 of
the National Bank Act 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.
71
INFORMATION ABOUT OUR COMPANIES
<PAGE>
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 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 BANC ONE's and FCN's banks are FDIC-insured depositary
institutions. Also, if 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
Each of BANC ONE and FCN is subject to risk-based 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 institution'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 a limited amount of cumulative perpetual preferred stock and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill, certain identifiable intangible assets and certain other assets,
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.
Each of BANC ONE and FCN, 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
(including certain off-balance-sheet items, such as standby letters of credit),
respectively. At March 31, 1998, each of BANC ONE and FCN met both
requirements, with Tier 1 and total capital equal to 8.74% and 13.57% (in the
case of BANC ONE) and 7.8% and 11.4% (in the case of FCN) of its total risk-
weighted assets, respectively.
The Federal Reserve Board, 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 Board 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 and meets certain other
requirements, or of 3% plus an additional cushion of at least 100 to 200 basis
points if the holding company does not meet these requirements. At March 31,
1998, BANC ONE's leverage ratio was 8.26% and FCN's leverage ratio was 7.6%.
The Federal Reserve Board 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 strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"tangible Tier I capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
72
INFORMATION ABOUT OUR COMPANIES
<PAGE>
Each of the Banks is subject to similar risk-based and leverage capital
requirements adopted by its applicable federal banking agency. Each of BANC
ONE's and FCN's banks was in compliance with the applicable minimum capital
requirements as of March 31, 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 under
"--FDICIA."
FDICIA. FDICIA, among other things, identifies five capital categories for
insured depository institutions (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized) and requires federal bank regulatory agencies to implement
systems for "prompt corrective action" for insured depository institutions that
do not meet minimum capital requirements, based on these categories. FDICIA
imposes progressively more restrictive constraints on operations, management
and capital distributions, depending on the category in which an institution is
classified. Unless a bank is "well capitalized," it is subject to restrictions
on its ability to offer brokered deposits and on certain other aspects of its
operations. An "undercapitalized" bank must develop a capital restoration plan
and its parent holding company must guarantee the bank's compliance with the
plan up to the lesser of 5% of the bank's assets at the time it became
undercapitalized and the amount needed to comply with the plan.
As of December 31, 1997, each bank subsidiary of BANC ONE and FCN (each, a
"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
BANC ONE's and FCN's affiliate banks can pay to BANC ONE or FCN, as the case
may be, 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 March 31,
1998, $1.7 billion and $1.2 billion of the total stockholders' equity of its
affiliate banks was available for payment of dividends to BANC ONE and FCN,
respectively, without approval by the applicable regulatory authority.
In addition, federal bank regulatory authorities have authority to prohibit
BANC ONE's and FCN'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 BANC ONE's and FCN'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 BANC ONE's and FCN's affiliate banks are insured up
to regulatory limits by the FDIC and, accordingly, are subject to deposit
insurance assessments to maintain the
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Bank Insurance Fund (the "BIF") and the 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 (i) the bank's capitalization and (ii) 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 the 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.
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 FICO assessments do not vary depending upon a depository
institution's capitalization or supervisory evaluations. BANC ONE's and FCN's
affiliate banks held approximately $6.0 billion and $3.2 billion, respectively
of SAIF-assessable deposits as of March 31, 1998.
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 (i) is well capitalized, or (ii) is adequately
capitalized and receives a waiver from the FDIC. In addition, these regulations
prohibit any depository institution that is not well capitalized from (a)
paying an interest rate on deposits in excess of 75 basis points over certain
prevailing market rates or (b) offering "pass through" deposit insurance on
certain employee benefit plan accounts unless it provides certain notice to
affected depositors.
INTERSTATE BANKING AND BRANCHING
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("RIEGLE-NEAL"), subject to certain concentration limits and other
requirements, (i) bank holding companies such as BANC ONE and FCN are permitted
to acquire banks and bank holding companies located in any state; (ii) 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
(iii) 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 combined company might use Riegle-Neal to acquire banks in
additional states and to consolidate its bank subsidiaries under a smaller
number of separate charters.
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CAPITAL STOCK AND
COMPARISON OF SHAREHOLDER RIGHTS
As a result of the conversion of shares of BANC ONE Common Stock to shares of
BANK ONE Common Stock at the First Effective Time, BANC ONE Shareholders will
become BANK ONE stockholders. As a result of the conversion of shares of FCN
Common Stock and FCN Preferred Stock to shares of BANK ONE Common Stock and
BANK ONE Preferred Stock, respectively, at the Second Effective Time, FCN
Stockholders will become BANK ONE stockholders. The rights of BANK ONE
stockholders will be governed by the Delaware Law, the BANK ONE Certificate and
the BANK ONE By-Laws. BANC ONE is incorporated under the Ohio Law, and each of
FCN and BANK ONE is incorporated under the Delaware Law.
The following is a description of BANK ONE Capital Stock, including the BANK
ONE Common Stock to be issued in the Merger, reflecting the anticipated state
of affairs at the First Effective Time, and a summary of the material
differences between the rights of holders of FCN Common Stock and BANC ONE
Common Stock, on the one hand, and BANK ONE Common Stock, on the other hand.
With respect to BANC ONE Shareholders, these differences arise in part from the
differences between the Delaware Law and the Ohio Law. Additional differences
arise from the governing instruments of BANC ONE and FCN (in the case of FCN,
the FCN Certificate and the FCN By-laws, and, in the case of BANC ONE, the BANC
ONE Articles and the BANC ONE Regulations) relative to the governing
instruments of BANK ONE (the BANK ONE Certificate and the BANK ONE By-Laws) as
expected to be in force at the First Effective Time. Although it is impractical
to compare all of the aspects in which the Delaware Law and the Ohio Law and
the companies' governing instruments differ with respect to shareholders'
rights, the following discussion summarizes the material significant
differences between them.
DESCRIPTION OF BANK ONE CAPITAL STOCK
General. As of the First Effective Time, the authorized capital stock of BANK
ONE will consist of 2,500,000,000 shares of BANK ONE Common Stock and
50,000,000 shares of BANK ONE preferred stock. As of the date of this Joint
Proxy Statement-Prospectus, no shares of BANK ONE preferred stock were issued
and outstanding and 100 shares of BANK ONE Common Stock were issued and
outstanding, all of which is owned directly by BANC ONE.
The following summary of the terms of BANK ONE's capital stock does not
purport to be complete and is qualified in its entirety by reference to the
applicable provisions of the Delaware Law and the form of BANK ONE Certificate
to be in effect at the First Effective Time, which is included as Exhibit 3.1
to the Registration Statement. See "Where You Can Find More Information."
Common Stock. Holders of BANK ONE Common Stock are entitled to receive
dividends out of funds legally available therefor as and if declared by the
BANK ONE Board, provided that, so long as any shares of BANK ONE preferred
stock are outstanding, no dividends (other than dividends payable in BANK ONE
Common Stock) or other distributions (including redemptions and purchases) may
be made with respect to the BANK ONE Common Stock unless full cumulative
dividends on the shares of BANK ONE preferred stock have been paid.
Holders of shares of BANK ONE Common Stock are entitled to one vote for each
share for the election of directors and on all other matters. Generally,
holders of BANK ONE Series B Preferred and BANK ONE Series C Preferred have no
voting rights.
The issued and outstanding shares of BANK ONE Common Stock are fully paid and
nonassessable. The holders of BANK ONE Common Stock are not entitled to
preemptive rights or conversion or redemption rights. The holders of BANK ONE
Common Stock do not have cumulative voting rights in the election of directors.
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In the event of the voluntary or involuntary dissolution, liquidation or
winding up of BANK ONE, holders of BANK ONE Common Stock will be entitled to
receive, pro rata, after satisfaction in full of the prior rights of creditors
(including holders of BANK ONE's indebtedness) and holders of BANK ONE
preferred stock, all the remaining assets of BANK ONE available for
distribution.
Preferred Stock. The BANK ONE Board has the authority to issue shares of
preferred stock in one or more series and to fix the designations, number of
shares, dividends, redemption rights, sinking fund requirements, liquidation
prices, conversion rights and other rights, qualifications, limitations or
restrictions as the BANK ONE Board may from time to time be permitted by law to
fix or change.
Currently, no shares of BANK ONE preferred stock are outstanding. At the
Second Effective Time, shares of BANK ONE Series B Preferred and BANK ONE
Series C Preferred will be outstanding, and the rights of the holders of such
shares will be substantially identical to the rights of the holders of FCN
Series B Preferred and FCN Series C Preferred, as the case may be. The material
terms of the FCN Series B Preferred and FCN Series C Preferred are summarized
below, and the certificates of designations of such FCN Preferred Stock are
included in Exhibit 3(A) to FCN's 1995 Annual Report on Form 10-K (File No. 1-
7127), which exhibit is incorporated herein by reference. Except as otherwise
indicated below, the following summary applies to the terms of both the BANK
ONE Series B Preferred and BANK ONE Series C Preferred.
Holders of BANK ONE Preferred Stock will be entitled to receive out of funds
legally available therefor cumulative cash dividends at the annual rate
determined by reference to the prevailing rates or average rates of specified
debt securities issued by the United States of America, determined with respect
to each quarterly period in respect of which such dividends are payable,
provided that such annual rate shall not be less than 6.00% or more than 12.00%
(in the case of the BANK ONE Series B Preferred) or not less than 6.50% or more
than 12.50% (in the case of the BANK ONE Series C Preferred) of the stated
value of $100 of such shares. Such dividends are payable on the last day of
February, May, August and November of each year.
If full cumulative dividends on outstanding shares of BANK ONE Preferred
Stock have not been paid, no dividends may be declared or paid on any shares of
BANK ONE Common Stock or any other shares of BANK ONE Capital Stock ranking
junior to shares of BANK ONE Preferred Stock. When dividends are not paid in
full on outstanding shares of BANK ONE Preferred Stock or any BANK ONE Capital
Stock ranking on parity with shares of BANK ONE Preferred Stock with respect to
dividends (such other BANK ONE Capital Stock, "PARITY SHARES"), all dividends
declared on the BANK ONE Preferred Stock and the Parity Shares will be declared
pro rata so that the amount of dividends declared per share on the BANK ONE
Preferred Stock and the Parity Shares will in all cases bear to each other the
same ratio that the accrued dividends per share on such BANK ONE Preferred
Stock and the Parity Shares bear to each other. Unless full cumulative
dividends on outstanding shares of BANK ONE Preferred Stock have been paid, no
BANK ONE Common Stock or other BANK ONE Capital Stock junior to or on parity
with the shares of BANK ONE Series B Preferred or the BANK ONE Series C
Preferred, as the case may be, may be redeemed, purchased or otherwise acquired
by BANK ONE except by conversion into or exchange for shares of BANK ONE
Capital Stock ranking junior to the BANK ONE Preferred Stock. Upon the
voluntary or involuntary dissolution, liquidation or winding up of BANK ONE,
holders of BANK ONE Series B Preferred and BANK ONE Series C Preferred will be
entitled to receive a preferential distribution of $100 per share plus accrued
and unpaid dividends, if any. BANK ONE Series C Preferred and BANK ONE Series B
Preferred will rank on a parity as to payment of dividends and with respect to
distributions upon liquidation.
Generally, unless required by law, holders of shares of BANK ONE Preferred
Stock have no voting rights. However, the approval of holders of 66 2/3% of the
outstanding shares of BANK ONE Series B Preferred or BANK ONE Series C
Preferred, as the case may be, in each case voting as a separate class, is
required in order to amend the BANK ONE Certificate to affect adversely the
rights of the holders of the BANK ONE Series B Preferred or BANK ONE Series C
Preferred, as the case
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may be, or, voting together as a single class, is required to take any action
that would result in the issuance or creation of, or an increase in the number
of authorized shares of, any class of stock of BANK ONE senior or superior,
with respect to dividends or distributions upon liquidation, to the BANK ONE
Preferred Stock. Holders of BANK ONE Preferred Stock, voting as a single class
without regard to series, also have the right to elect two additional directors
to the BANK ONE Board during any period in which dividends on BANK ONE
Preferred Stock are cumulatively in arrears for the equivalent of six quarterly
dividend payments until all such dividends in default have been paid.
On matters with respect to which the BANK ONE Preferred Stock will be
entitled to vote as described above, each full share of each series of BANK ONE
Preferred Stock will be entitled to one vote on matters on which holders of
such series are entitled to vote. Since each full share of any series of BANK
ONE Preferred Stock will 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 BANK ONE Preferred Stock are entitled to vote as a single class, will depend
upon the number of shares of such series, not the aggregate stated value,
liquidation preference or initial offering price of the shares of a series.
The holders of shares of BANK ONE Preferred Stock will not have any rights to
convert such shares into shares of any other capital stock of BANK ONE.
The shares of each of BANK ONE Series B Preferred and BANK ONE Series C
Preferred to be issued in connection with the Second Step Merger may be
redeemed, in whole or in part, by BANK ONE at its election, in each case for a
redemption price of $100 per share plus accrued and unpaid dividends to the
date fixed for redemption.
The BANK ONE Preferred Stock will not be subject to the operation of a
sinking fund.
First Chicago Trust Company of New York (or an affiliate) will be the
transfer agent, registrar and dividend disbursing agent for the BANK ONE
Preferred Stock. The shares of BANK ONE Series B Preferred and BANK ONE Series
C Preferred will be listed on the NYSE.
In addition to the foregoing, BANK ONE, by operation of the Second Step
Merger, will assume the rights and obligations of FCN in connection with
certain preferred purchase units issued by FCN in 1993 (the "PREFERRED PURCHASE
UNITS"). Each Preferred Purchase Unit consists of a 30-year subordinated
debenture and a purchase contract requiring the purchase by the holder thereof
on May 10, 2023 (or earlier at FCN's (or, after the Second Effective Time, BANK
ONE's) election) of 7 1/2% Preferred Stock of FCN, (or after the Second
Effective Time, of BANK ONE) (the "7 1/2% PREFERRED STOCK"). The purchase price
of such preferred stock is $25 per share. The Preferred Purchase Units may be
redeemed at any time 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 BANK ONE. The 7 1/2%
Preferred Stock would rank prior to FCN Common Stock or BANK ONE Common Stock,
as the case may be, but would have no voting rights except if the Preferred
Purchase Units were in default or if the BANK ONE Certificate were 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 FCN
Preferred Stock or BANK ONE Preferred Stock, as the case may be, with respect
to dividends and liquidation rights. The 7 1/2% Preferred Stock, if issued,
would not be convertible into other securities of BANK ONE. The shares of 7
1/2% Preferred Stock which could be issued pursuant to the Preferred Purchase
Units have been reserved by FCN on its stock records and will be reserved by
BANK ONE on its stock records after the Second Effective Time.
COMPARISON OF BANC ONE COMMON STOCK, FCN COMMON STOCK AND BANK ONE COMMON STOCK
The BANK ONE Certificate and BANK ONE By-Laws at consummation of the Merger
will be substantially similar to the FCN Certificate and the FCN By-Laws,
respectively, with the differences described in this section and otherwise in
this Joint Proxy Statement-Prospectus. Accordingly, for
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convenience of the reader, the BANK ONE Certificate and the FCN Certificate,
and the BANK ONE By-Laws and the FCN By-Laws, are sometimes referred to herein
as the "FCN/BANK ONE CERTIFICATE" and the "FCN/BANK ONE BY-LAWS," respectively.
BANC ONE Shareholders and FCN Stockholders are urged to read the full text of
the proposed BANK ONE Certificate and BANK ONE By-Laws, which are set forth as
exhibits to the Registration Statement, and the description of the material
provisions of the BANK ONE Certificate and the BANK ONE By-Laws set forth
herein is qualified in its entirety by reference to such exhibits. See "Where
You Can Find More Information."
Amendment of Charter Documents. The Delaware Law requires approval by holders
of a majority of the voting power of FCN Common Stock or BANK ONE Common Stock,
as the case may be, in order to amend the FCN Certificate or the BANK ONE
Certificate, respectively. In addition, the FCN/BANK ONE Certificate provides
that the vote of the holders of 80% of the voting power of the corporation,
voting as a single class, is required to amend the provisions of the FCN/BANK
ONE Certificate with respect to the Board of Directors (Article Eleventh), the
calling of special meetings of stockholders and stockholder action by written
consent (Article Twelfth) or the vote required to approve certain business
combinations (Article Thirteenth).
To amend an Ohio corporation's articles of incorporation, the Ohio Law
requires the approval of shareholders holding two-thirds of the voting power of
the corporation, or, in cases in which class voting is required, of
shareholders holding two-thirds of the voting power of such class, unless
otherwise specified in such corporation's articles of incorporation. The BANC
ONE Articles specify that the holders of a majority of the voting power of BANC
ONE, or, when appropriate, any class of shareholders, may amend the BANC ONE
Articles, except that amendments to the "control share acquisition" and "fair
price" provisions require the affirmative vote of 85% of the total voting
power.
See "--Mergers, Acquisitions and Certain Other Transactions."
Amendment and Repeal of By-laws and Regulations. Under the Delaware Law,
holders of a majority of the voting power of a corporation and, when provided
in the certificate of incorporation, the directors of the corporation, have the
power to adopt, amend and repeal the by-laws of a corporation. The FCN/BANK ONE
Certificate grants the corporation's board of directors such power.
The Ohio Law provides that only shareholders of a corporation have the power
to amend and repeal a corporation's code of regulations. The BANC ONE
Regulations may only be amended by the affirmative vote of a majority of the
voting power represented by the outstanding voting stock of BANC ONE present in
person or by proxy at an annual or special meeting called for such purpose.
Removal of Directors. The Delaware Law provides that directors may be removed
from office, with or without cause, by the holders of a majority of the voting
power of all outstanding voting stock, unless the corporation has a classified
board and its certificate of incorporation otherwise provides. The FCN
Certificate does provide for a classified board and that directors may only be
removed for cause.
The BANK ONE Certificate will not provide for a classified board. Therefore
directors of BANK ONE may be removed with or without cause, by the requisite
affirmative vote of stockholders. In addition, without a classified board, BANK
ONE directors will serve one-year terms and the entire BANK ONE Board will be
elected annually.
The Ohio Law provides that, unless the governing documents of a corporation
provide otherwise, directors may be removed, with or without cause, by the
affirmative vote of the holders of a majority of the voting power of the
corporation with respect to the election of directors, except that, unless all
the directors or all the directors of a particular class are removed, no
individual director may be removed if the votes of a sufficient number of
shares are cast against such director's removal which, if cumulatively voted at
an election of all the directors, or all the directors of a particular class,
as the case may be, would be sufficient to elect at least one director. BANC
ONE does not have a classified board, with the result that directors serve for
one-year terms and the entire BANC ONE Board is elected annually. To qualify
for election to the BANC ONE Board, an individual must own a substantial number
of shares of BANC ONE capital stock, and must not also serve as a director or
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officer of or in any other management relationship for any financial
institution that is in competition with BANC ONE or any of its subsidiaries.
Directors of BANC ONE may be removed, with or without cause, by the affirmative
vote of a majority of the voting power present at a meeting of BANC ONE
shareholders.
Vacancies on the Board. The Delaware Law provides that, unless the governing
documents of a corporation provide otherwise, vacancies and newly created
directorships resulting from a resignation or any increase in the authorized
number of directors elected by all of the stockholders having the right to vote
as a single class may be filled by a majority of the directors then in office.
The FCN/BANK ONE Certificate provides that newly created directorships
resulting from any increase in the number of directors and any vacancies on the
board of directors resulting from death, resignation, disqualification, removal
or other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum, or by a
sole remaining director. The FCN Certificate provides that any director of any
class elected to fill a vacancy resulting from an increase in the number of
directors shall have a term that shall coincide with the remaining term of that
class. A director shall hold office until the next annual meeting for the year
in which his or her term expires and until such director's successor shall have
been elected or qualified.
The Ohio Law provides that, unless the governing documents of a corporation
provide otherwise, vacancies on the board of directors may be filled by a
majority of the remaining directors of a corporation. The BANC ONE Regulations
provide that, except in cases where a director is removed and such director's
successor is elected by the shareholders, the remaining directors may, by a
vote of a majority of their number, fill any vacancy for the unexpired term.
Right to Call Special Meetings of Shareholders. The Delaware Law permits
special meetings of stockholders to be called by the board of directors and
such other persons, including stockholders, as the certificate of incorporation
or by-laws may provide. The Delaware Law does not require that stockholders be
given the right to call special meetings. The FCN/BANK ONE Certificate provides
that special meetings of stockholders of the corporation may be called only by
the board of directors pursuant to a resolution approved by a majority thereof.
Under the Ohio Law, the holders of at least 25% of the outstanding shares of
a corporation, unless the corporation's code of regulations specifies another
percentage, which may in no case be greater than 50%, the directors, by action
at a meeting or a majority of the directors acting without a meeting, the
chairman of the board, the president or, in case of the president's death or
disability, the vice president authorized to exercise the authority of the
president have the authority to call special meetings of shareholders. The BANC
ONE Regulations expressly provide that special meetings of BANC ONE
shareholders may be called by the BANC ONE Chief Executive Officer or, in cases
of the BANC ONE Chief Executive Officer's absence from the United States, death
or disability, such other officer, who is also a member of the BANC ONE Board,
who is authorized in such circumstances to exercise the authority of the BANC
ONE Chief Executive Officer, or by the directors by action at a meeting or a
majority of the directors acting without a meeting, or by shareholders holding
50% or more of the voting power of the then-outstanding shares entitled to vote
in an election of directors, taken together as a single class.
Shareholder Action Without a Meeting. The Delaware Law provides that, unless
otherwise provided in the certificate of incorporation, any action that may be
taken at a meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if the holders of common stock having not less
than the minimum number of votes otherwise required to approve such action at a
meeting of stockholders consent in writing. The FCN/BANK ONE Certificate
provides that any action required or permitted to be taken by the stockholders
must be effected at an annual or special meeting of stockholders, duly called
and held with prior notice and a vote, and may not be effected by any consent
in writing by such stockholders. The affirmative vote of at least 80% of the
voting power of the corporation is required to amend this provision of the
FCN/BANK ONE Certificate.
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Under the Ohio Law, any action that may be taken by shareholders at a meeting
may be taken without a meeting with the unanimous written consent of all
shareholders entitled to vote thereat.
Class Voting. The Delaware Law requires voting by separate classes only with
respect to amendments to a corporation's certificate of incorporation that
adversely affect the holders of those classes or that increase or decrease the
aggregate number of authorized shares or the par value of the shares of any of
those classes.
Under the Ohio Law, holders of a particular class of shares are entitled to
vote as a separate class if the rights of that class are affected in certain
respects by mergers, consolidations or amendments to the articles of
incorporation.
Cumulative Voting. Under the Delaware Law, stockholders do not have the right
to cumulate their votes in the election of directors unless such right is
granted in the certificate of incorporation. The FCN/BANK ONE Certificate does
not grant such rights.
Under the Ohio Law, unless the articles of incorporation are amended to
eliminate cumulative voting for directors following their initial filing with
the Secretary of State of the State of Ohio, each shareholder has the right to
vote cumulatively in the election of directors if certain notice requirements
are satisfied. The BANC ONE Articles have been amended to eliminate the rights
of the BANC ONE Shareholders to vote cumulatively in the election of directors.
Provisions Affecting Business Combinations; Fair Price Provisions. Section
203 of the Delaware Law provides generally that any person who acquires 15% or
more of a corporation's voting stock (thereby becoming an "INTERESTED
STOCKHOLDER") may not engage in a wide range of "business combinations" with
the corporation for a period of three years following the date the person
became an interested stockholder, unless (i) the board of directors of the
corporation has approved, prior to that acquisition date, either the business
combination or the transaction that resulted in the person becoming an
interested stockholder, (ii) upon consummation of the transaction that resulted
in the person becoming an interested stockholder, that person owns at least 85%
of the corporation's voting stock outstanding at the time the transaction
commenced (excluding shares owned by persons who are directors and also
officers and shares owned by employee stock plans in which participants do not
have the right to determine confidentially whether shares will be tendered in a
tender or exchange offer), or (iii) the business combination is approved by the
board of directors and authorized by the affirmative vote (at an annual or
special meeting and not by written consent) of at least 66-2/3% of the
outstanding voting stock not owned by the interested stockholder. These
restrictions on interested stockholders do not apply under certain
circumstances, including, but not limited to, the following (i) if the
corporation's original certificate of incorporation contains a provision
expressly electing not to be governed by Section 203 of the Delaware Law, or
(ii) if the corporation, by action of its stockholders, adopts an amendment to
its by-laws or certificate of incorporation expressly electing not to be
governed by such section. Neither the FCN/BANK ONE Certificate nor the FCN/BANK
ONE By-laws contain a provision electing not to be governed by such section.
Article Thirteenth of the FCN/BANK ONE Certificate ("ARTICLE THIRTEENTH")
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 corporation and an
"INTERESTED STOCKHOLDER" (as deemed therein to include, among other things, the
beneficial owner of 10% or more of the voting power of the outstanding voting
power of the corporation), 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 to approve such transaction, unless the business
combination has been approved by a majority of directors not affiliated with
the Interested Stockholder or unless certain
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conditions regarding minimum price and procedural protections are met with
respect to each class of the corporation's then outstanding voting stock. The
provisions of the FCN/BANK ONE Certificate also require that the corporation's
board of directors will not approve a proposal for a business combination or a
tender offer until such board of directors has evaluated the proposal in light
of its effect on the stockholders and employees of the corporation and the
communities served thereby.
The BANC ONE Articles also include a "fair price" provision that is designed
to provide reasonable assurances to shareholders that in the event any
shareholder or group of shareholders acquires 20% or more of BANC ONE's voting
stock and then seeks to acquire all or part of the remaining voting stock
through a merger or other transaction which would force a change or termination
of the other shareholders' ownership interests (a "BUSINESS COMBINATION"), such
other shareholders must receive consideration at least equivalent to the
highest price paid by the acquiror in acquiring its 20% stock interest, unless
the Business Combination is approved either (i) by a majority of directors who
are unrelated to the acquiror or (ii) by the affirmative vote of 75% of all the
votes entitled to be cast by all holders of voting stock and 67% of the votes
entitled to be cast by all holders of voting stock held by shareholders other
than the acquiror.
This provision operates by requiring that, after an acquiror emerges, any
Business Combination that has the effect of requiring shareholders to surrender
their shares must satisfy one of the following conditions:
(i) Fair Consideration to Shareholders. The terms of the Business
Combination must provide for payment of consideration which is at least
equivalent to the highest price paid to other shareholders by the acquiror
in acquiring its 20% stock position and must be approved by shareholders as
otherwise required by applicable law; or
(ii) Unrelated Director Approval. The Business Combination must be
approved as fair to shareholders by a majority of the directors who are not
affiliated with the acquiror and who were directors before the acquiror
acquired its 20% stock position or who were nominated or elected to succeed
such directors by the other unaffiliated directors ("UNRELATED DIRECTORS")
and must be approved by shareholders as otherwise required by applicable
law; or
(iii) Special Shareholder Vote. The Business Combination must be approved
by the shareholder vote described above.
Article Tenth of the BANC ONE Articles, which contains this provision, may be
amended by a vote of 85% of the votes entitled to be cast by all holders of
voting stock, unless the amendment is approved unanimously by the Unrelated
Directors, in which case only majority shareholder approval would be required.
Chapter 1704 of the Ohio Law prohibits an Issuing Public Corporation (as
defined below) from engaging in a Chapter 1704 Transaction (as defined herein)
with an Interested Shareholder (as defined herein) for a period of three years
following the date on which the person becomes an Interested Shareholder
unless, prior to such date, the directors of the Issuing Public Corporation
approve either the Chapter 1704 Transaction or the acquisition of shares
pursuant to which such person became an Interested Shareholder. After the
initial three-year moratorium has expired, an Issuing Public Corporation may
engage in a Chapter 1704 Transaction if (i) the acquisition of shares pursuant
to which the person became an Interested Shareholder received the prior
approval of the board of directors of the Issuing Public Corporation, (ii) the
Chapter 1704 Transaction is approved by the affirmative vote of the holders of
shares representing at least two-thirds of the voting power of the Issuing
Public Corporation and by the holders of at least a majority of voting shares
that are not beneficially owned by an Interested Shareholder or an affiliate or
associate of an Interested Shareholder or (iii) the Chapter 1704 Transaction
meets certain statutory tests designed to ensure that it be economically fair
to all shareholders.
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For this purpose, an "ISSUING PUBLIC CORPORATION" is any Ohio corporation
with 50 or more shareholders that has its principal place of business,
principal executive offices or substantial assets within the State of Ohio.
BANC ONE currently is an Issuing Public Corporation. An "INTERESTED
SHAREHOLDER" is any person who is the beneficial owner of a sufficient number
of shares to allow such person, directly or indirectly, alone or with others,
including affiliates and associates, to exercise or direct the exercise of 10%
of the voting power of the Issuing Public Corporation. A "CHAPTER 1704
TRANSACTION" includes any merger, consolidation, combination or majority share
acquisition between or involving an Issuing Public Corporation and an
Interested Shareholder or an affiliate or associate of an Interested
Shareholder. A Chapter 1704 Transaction also includes certain transfers of
property, dividends and issuance or transfers of shares, from or by an Issuing
Public Corporation or a subsidiary of an Issuing Public Corporation, to, with
or for the benefit of an Interested Shareholder or an affiliate or associate of
an Interested Shareholder unless such transaction is in the ordinary course of
business of the Issuing Public Corporation on terms no more favorable to the
Interested Shareholder than those acceptable to third parties as demonstrated
by contemporaneous transactions. Finally, Chapter 1704 Transactions include
certain transactions that (i) increase the proportionate share ownership of an
Interested Shareholder, (ii) result in the adoption of a plan or proposal for
the dissolution, winding up of the affairs or liquidation of the Issuing Public
Corporation if such plan is proposed by or on behalf of the Interested
Shareholder or (iii) pledge or extend the credit or financial resources of the
Issuing Public Corporation to or for the benefit of the Interested Shareholder.
Control Share Acquisitions. Under the Section 1701.831 of the Ohio Law (the
"OHIO CONTROL SHARE STATUTE"), unless the articles of incorporation or code of
regulations of a corporation otherwise provide, any control share acquisition
of an "issuing public corporation" can only be made with the prior approval of
the corporation's shareholders. A control share acquisition for purposes of
Section 1701.831 of the Ohio Law is defined as any acquisition of shares of a
corporation that, when added to all other shares of that corporation owned by
the acquiring person, would enable that person to exercise levels of voting
power in any of the following ranges: at least 20% but less than 33-1/3%; at
least 33-1/3% but less than 50%; or 50% or more. The BANC ONE Articles provide
that the Ohio Control Share Statute or any successor provision will only apply
to BANC ONE in the event that there is a final determination by a court of
competent jurisdiction that the provisions of Article Eleventh of the BANC ONE
Articles ("ARTICLE ELEVENTH") do not apply to a particular control share
acquisition under Article Eleventh or if the provisions of Article Eleventh
cease to be included in the BANC ONE Articles.
Article Eleventh incorporates, to a large extent, the provisions of the Ohio
Control Share Statute. Article Eleventh sets forth procedures for obtaining
shareholder consent of control share acquisitions, subject to the right of the
BANC ONE Board to screen out proposals that do not meet certain standards set
forth in Article Eleventh. Article Eleventh defines a "CONTROL SHARE
ACQUISITION" as any acquisition, directly or indirectly, of shares of BANC ONE
which, when added to all other shares of BANC ONE owned or controlled by the
acquiror, would entitle the acquiror, alone or with others, to exercise or
direct the exercise of voting power in BANC ONE in the election of directors
within any of the following ranges of voting power: (i) one-fifth or more but
less than one-third; (ii) one-third or more but less than a majority; and (iii)
a majority or more. A bank, broker, nominee, trustee or other person who
acquires shares in the ordinary course of business for the benefit of others in
good faith and not for the purpose of circumventing Article Eleventh shall be
deemed to have voting power only of shares in respect of which such person
would be able to exercise or direct the exercise of votes without further
instruction from others at a meeting of shareholders called under Article
Eleventh. A control share acquisition that meets certain criteria set forth in
Article Eleventh, as determined by the BANC ONE Board, must be presented to a
meeting of the BANC ONE Shareholders and approved by the affirmative vote of
the holders of both (i) a majority of the voting power represented at the
meeting and (ii) a majority of that portion of such voting power excluding any
"INTERESTED SHARES" (those shares held by the acquiring person, executive
officers of BANC ONE and employees of BANC ONE who are also directors). Article
Eleventh may be amended by a vote of 85% of the votes entitled to be cast by
all holders of voting stock.
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Neither the Delaware Law nor the FCN/BANK ONE Certificate contains a
comparable provision.
Mergers, Acquisitions and Certain Other Transactions. The Delaware Law
requires approval of mergers, consolidations and dispositions of all or
substantially all of a corporation's assets (other than so-called "parent-
subsidiary" mergers) by a majority of the voting power of the corporation,
unless the certificate of incorporation specifies a different percentage. Other
than as described above under "--Provisions Affecting Business Combinations;
Fair Price Provisions," the FCN/BANK ONE Certificate does not provide for a
different percentage. The Delaware Law does not require stockholder approval
for majority share acquisitions or for combinations involving the issuance of
less than 20% of the voting power of the corporation, except for "business
combinations" subject to Section 203 of the Delaware Law.
Under the Ohio Law, a merger or consolidation by an Ohio corporation
generally requires the affirmative vote of holders of shares representing at
least two-thirds of the voting power of the corporation unless the
corporation's articles of incorporation provide for approval by a different
proportion not less than a majority. The BANC ONE Articles generally require
approval of a majority of the outstanding shares for such transactions.
Constituencies Provisions. Section 1701.59 of the Ohio Law permits a
director, in determining what such director reasonably believes to be in the
best interests of the corporation, to consider, in addition to the interests of
the corporation's shareholders, any of the following: (i) the interests of the
corporation's employees, suppliers, creditors, and customers, (ii) the economy
of the state and nation, (iii) community and societal considerations and (iv)
the long-term as well as short-term interests of the corporation and its
shareholders, including the possibility that these interests may be best served
by the continued independence of the corporation.
The Delaware Law contains no comparable provision. Article Thirteenth of the
FCN/BANK ONE Certificate requires the corporation's board of directors, in
connection with its approval of business combinations involving an Interested
Stockholder or of any tender or exchange offer by a person other than the
corporation for the corporation's capital stock, to consider all factors that
it deems relevant, which may include, among other things, the potential social
and economic impact of the transaction on the communities in which the
corporation and its subsidiaries operate or are located and upon the
corporation, its subsidiaries, and their employees, depositors, and loan and
other customers.
Rights of Dissenting Shareholders. Under the Delaware Law, appraisal rights
are available to dissenting stockholders in connection with certain mergers or
consolidations. However, unless the certificate of incorporation otherwise
provides, the Delaware Law does not provide for appraisal rights (i) with
respect to shares of a corporation that are listed on a national securities
exchange or designated as a national market systems security on an interdealer
quotations system by the National Association of Securities Dealers, Inc. or
held of record by more than 2,000 stockholders (as long as the stockholders
receive in the merger shares of the surviving corporation or of any other
corporation the shares of which are listed on a national securities exchange or
designated as a national market systems security on an interdealer quotations
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 stockholders) or (ii) if the corporation is the
surviving corporation and no vote of its stockholders is required for the
merger. The FCN/BANK ONE Certificate does not provide otherwise. See
"Dissenters' Appraisal Rights." The Delaware Law does not provide appraisal
rights to stockholders who dissent from the sale of all or substantially all of
a corporation's assets or an amendment to the corporation's certificate of
incorporation, although a corporation's certificate of incorporation may so
provide.
Under the Ohio Law, dissenting shareholders are entitled to appraisal rights
in connection with the lease, sale, exchange, transfer or other disposition of
all or substantially all of the assets of a
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corporation and in connection with certain amendments to the corporation's
articles of incorporation. Shareholders of an Ohio corporation being merged
into or consolidated with another corporation are also entitled to appraisal
rights. In addition, shareholders of an acquiring corporation are entitled to
appraisal rights in any merger, combination or majority share acquisition in
which such shareholders are entitled to voting rights. The Ohio Law provides
shareholders of an acquiring corporation with voting rights if the acquisition
involves the transfer of shares of the acquiring corporation entitling the
recipients thereof to exercise one-sixth or more of the voting power of such
acquiring corporation immediately after the consummation of the transaction.
See "Dissenters' Appraisal Rights."
Under the Delaware Law, among other procedural requirements, a stockholder's
written demand for appraisal of shares must be received before the taking of
the vote on the matter giving rise to appraisal rights.
Under the Ohio Law, a shareholder's written demand must be delivered to the
corporation not later than ten days after the taking of the vote on the matter
giving rise to appraisal rights.
Dividends. Both the Delaware Law and the Ohio Law provide that dividends may
be paid in cash, property or shares of a corporation's capital stock. The
Delaware Law provides that a corporation may pay dividends out of any surplus,
and, if it has no surplus, out of any net profits for the fiscal year in which
the dividend was declared or for the preceding fiscal year (provided that such
payment will not reduce capital below the amount of capital represented by all
classes of shares having a preference upon the distribution of assets). The
Ohio Law provides that a corporation may pay dividends out of surplus and must
notify its shareholders if a dividend is paid out of capital surplus.
Preemptive Rights of Shareholders. The Delaware Law provides that no
stockholder shall have any preemptive rights to purchase additional securities
of the corporation unless the certificate of incorporation expressly grants
such rights. The FCN/BANK ONE Certificate does not provide for preemptive
rights.
The Ohio Law provides that, subject to certain limitations and conditions
contained in the Ohio Law and unless the articles of incorporation provide
otherwise, shareholders shall have preemptive rights to purchase additional
securities of the corporation. The BANC ONE Articles expressly eliminate any
preemptive rights.
Director Liability and Indemnification. The Delaware Law allows a Delaware
corporation to include in its certificate of incorporation, and the FCN
Certificate contains, a provision eliminating the liability of a director for
monetary damages for a breach of such director's fiduciary duties as a
director, except liability (i) for any breach of the director's duty of loyalty
to the corporation's stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or knowing violation of law, (iii) under
Section 174 of the Delaware Law (which deals generally with unlawful payments
of dividends, stock repurchases and redemptions), and (iv) for any transaction
from which the director derived an improper personal benefit. The FCN
Certificate provides that a director, officer, employee or agent (collectively,
"INDEMNITEE") of the corporation shall be indemnified thereby against all
expenses, liability and loss reasonably incurred or suffered by such Indemnitee
in connection with his or her activities as a director, officer, employee or
agent of the corporation or another corporation, partnership, joint venture,
trust or other enterprise, if the Indemnitee held such position at the request
of the corporation. The Delaware Law requires that an Indemnitee, in order to
be indemnified, must have acted in good faith and in a manner reasonably
believed to be not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, did not have reasonable cause to
believe that his or her conduct was unlawful. The FCN Certificate provides that
any such indemnification, unless ordered by a court, will be made by the
corporation only as authorized in a specific case upon a determination that
such indemnification is proper because the Indemnitee has met the applicable
standard of conduct, and that such determination will be made
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(a) by the FCN Board by a majority vote of a quorum consisting of disinterested
directors or (b) if such a quorum is not obtainable or if such a quorum so
directs, by independent counsel in a written opinion or (c) by the FCN
Stockholders. The FCN Certificate provides that expenses incurred in defending
an action, suit or proceeding may be paid by FCN in advance of the final
disposition thereof upon receipt of an undertaking from the Indemnitee to repay
such amount unless it is ultimately determined that the indemnitee is entitled
to indemnification by FCN. The FCN Certificate and the Delaware Law also
provide that the indemnification provisions of such FCN Certificate and the
statute are not exclusive of any other right which a person seeking
indemnification may have or later acquire under any statute, provision of the
FCN Certificate and Bylaws, agreement, vote of stockholders or disinterested
directors, or otherwise. In addition, the FCN Certificate and the Delaware Law
provide that the corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation has the
power to indemnify such person against such expense, liability or loss under
the Delaware Law.
Similarly, the BANK ONE Certificate contains a provision eliminating the
liability of a director for monetary damages for a breach of such director's
fiduciary duties as a director in the same circumstances, and subject to the
same limitations, as set forth in the FCN Certificate. The BANK ONE Certificate
provides that BANK ONE will indemnify each Indemnitee to the full extent
permitted by the Delaware Law or any other applicable laws as presently or
hereinafter in effect against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such Indemnitee in connection therewith. The BANK ONE Certificate
also authorizes BANK ONE to enter into agreements with any person providing for
indemnification greater or different than that provided therein. The BANK ONE
Certificate provides that expenses incurred by a director, officer or employee
in defending an action, suit or proceeding shall be paid by BANK ONE upon
receipt of an undertaking by or on behalf of such person that he will repay
such amount if it is ultimately determined that he is not entitled to be
indemnified by BANK ONE. The BANK ONE Certificate and the Delaware Law also
provide that the indemnification provisions of the BANK ONE Certificate and the
statute are not exclusive of any other right to which a person seeking
indemnification and advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested directors or
otherwise. While the BANK ONE Certificate does not expressly provide for the
power to maintain insurance with respect to any expense liability or loss, the
Delaware Law authorizes BANK ONE to do so.
There is no comparable provision under the Ohio Law limiting the liability of
officers, employees or agents of the corporation, and the BANC ONE Articles
contain no such provision. However, Ohio Law has codified the traditional
business judgment rule. Ohio Law provides that the business judgment
presumption of good faith may only be overcome by clear and convincing evidence
that an action or failure to act was undertaken with deliberate intent to cause
injury to the corporation or with reckless disregard for the best interests of
the corporation. Further, Ohio Law provides specific statutory authority for
directors to consider, in addition to the interests of the corporation's
shareholders, other factors such as the interests of the corporation's
employees, suppliers, creditors and customers; the economy of the state and
nation; community and societal considerations; the long-term and short-term
interests of the corporation and its shareholders; and the possibility that
these interests may be best served by the continued independence of the
corporation. See "-- Constituencies Provisions." Under the Ohio Law, Ohio
corporations are permitted to indemnify directors, officers, employees and
agents within prescribed limits and must indemnify them under certain
circumstances. The Ohio Law does not authorize payment by a corporation of
judgments against a director, officer, employee or agent after a finding of
negligence or misconduct in a derivative suit absent a court order.
Indemnification is required, however, to the extent such person succeeds on the
merits. In all other cases, if it is determined that a director, officer,
employee or agent acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
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indemnification is discretionary, except as otherwise provided by a
corporation's articles of incorporation, code of regulations or by contract,
except with respect to the advancement of expenses of directors (as discussed
in the next paragraph). The statutory right to indemnification is not exclusive
in Ohio, and Ohio corporations may, among other things, purchase insurance to
indemnify those persons. The Ohio Law provides that a director (but not an
officer, employee, or agent) is entitled to mandatory advancement of expenses,
including attorneys' fees, incurred in defending any action, including
derivative actions, brought against the director, provided that the director
agrees to cooperate with the corporation concerning the matter and to repay the
amount advanced if it is proved by clear and convincing evidence that such
director's act or failure to act was done with deliberate intent to cause
injury to the corporation or with reckless disregard for the corporation's best
interests. The BANC ONE Regulations provide that BANC ONE may indemnify
directors, officers, employees and agents to the fullest extent permitted by
law against costs incurred in connection with any threatened, pending or
completed claim, action, suit or proceeding because of such person's service as
a director, officer, employee or agent of BANC ONE. BANC ONE has entered into
indemnification contracts with its directors and certain of its officers that,
among other things, provide the contracting director or officer with certain
procedural and substantive rights to indemnification. Such indemnification
rights apply to acts or omissions of such persons, whether such acts or
omissions occurred before or after the effective date of the contract.
Shareholder Rights Plans. None of BANC ONE, FCN or BANK ONE has implemented a
shareholder rights plan, but, subject to the terms of the Agreement, any of
such corporations could do so without further action of its shareholders.
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CERTAIN OTHER MATTERS
DISSENTERS' APPRAISAL RIGHTS
BANC ONE SHAREHOLDERS
Section 1701.84 of the Ohio Law provides that all BANC ONE Shareholders
entitled to vote on the Merger may exercise dissenters' rights with respect to
the Merger. The following is a summary of the principal steps a BANC ONE
Shareholder must take to perfect dissenters' rights under Section 1701.85 of
the Ohio Law. This summary does not purport to be complete and is qualified in
its entirety by reference to Section 1701.85 of the Ohio Law, a copy of which
is attached as Appendix F to this Joint Proxy Statement-Prospectus. Any BANC
ONE Shareholder contemplating the exercise of dissenters' rights is urged to
review carefully such provisions and to consult an attorney, since dissenters'
rights will be lost if the procedural requirements under Section 1701.85 of the
Ohio Law are not fully and precisely satisfied. To perfect dissenters' rights,
a BANC ONE Shareholder must satisfy each of the following conditions:
(i) No Vote in Favor of the Merger Proposal. Shares of BANC ONE Common
Stock held by the Dissenting BANC ONE Shareholder must not be voted at the
BANC ONE Special Meeting in favor of the Merger. See "BANC ONE Special
Meeting--Matters to Be Considered." This requirement will be satisfied if a
proxy is signed and returned with instructions to vote against the Merger
or to abstain from such vote, if no proxy is returned and no vote is cast
at the BANC ONE Special Meeting in favor of the Merger, or, if the
Dissenting BANC ONE Shareholder revokes a proxy, and thereafter abstains
from voting with respect to the Merger or votes against the Merger at the
BANC ONE Special Meeting. A vote in favor of the Merger at the BANC ONE
Special Meeting constitutes a waiver of dissenters' rights. A proxy that is
returned signed but on which no voting preference is indicated will be
voted in favor of the Merger and will constitute a waiver of dissenters'
rights. A Dissenting BANC ONE Shareholder may revoke his or her proxy at
any time before its exercise by filing with BANC ONE an instrument revoking
it or a duly executed proxy bearing a later date, or by attending and
giving notice of the revocation of the proxy in open meeting (although
attendance at the BANC ONE Special Meeting will not in and of itself
constitute revocation of a proxy). See "BANC ONE Special Meeting--Proxies."
(ii) Filing Written Demand. Not later than ten days after the taking of
the vote on the Merger, a Dissenting BANC ONE Shareholder must deliver to
BANC ONE a written demand (the "BANC ONE DEMAND") for payment of the fair
cash value of such shareholder's Dissenting Shares. The BANC ONE Demand
should be delivered to BANC ONE at 100 East Broad Street, Columbus, Ohio
43271, Attention: Corporate Secretary. It is recommended, although not
required, that the BANC ONE Demand be sent by registered or certified mail,
return receipt requested. Voting against the Merger will not itself
constitute a demand. BANC ONE will not send any further notice to BANC ONE
Shareholders as to the date on which such ten-day period expires.
The BANC ONE Demand must identify the name and address of the holder of
record of the Dissenting Shares covered thereby, the number of Dissenting
Shares covered thereby and the amount claimed as the fair cash value
thereof. A beneficial owner must, in all cases, have the record holder
submit the BANC ONE Demand in respect of such owner's Dissenting Shares.
The BANC ONE Demand must be signed by the shareholder of record (or by the
duly authorized representative of the shareholder) exactly as the
shareholder's name appears on the shareholder records of BANC ONE. A BANC
ONE Demand with respect to Dissenting Shares owned jointly by more than one
person must identify and be signed by all of the shareholders of record.
Any person signing a BANC ONE Demand on behalf of a partnership or
corporation or in any other representative capacity (such as an attorney-
in-fact, executor, administrator, trustee or guardian) must indicate the
nature of the representative capacity and, if requested, must furnish
written proof of this capacity and such person's authority to sign the
demand.
Because only BANC ONE Shareholders of record on the BANC ONE Record Date
may exercise dissenters' rights, any person who beneficially owns shares
that are held of record by a
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broker, fiduciary, nominee or other holder and who wishes to exercise
dissenters' rights must instruct the record holder of the Dissenting Shares
to satisfy the conditions outlined above. If a record holder does not
satisfy, in a timely manner, all of the conditions outlined in this
section, "Dissenters' Appraisal Rights," the dissenters' rights for all of
the shares held by that shareholder will be lost.
From the time the BANC ONE Demand is given until either the termination
of the rights and obligations arising from such BANC ONE Demand or the
purchase of the Dissenting Shares related thereto by BANC ONE, all rights
accruing to the holder of the Dissenting Shares, including voting and
dividend or distribution rights, will be suspended. If any dividend or
distribution is paid on shares of BANC ONE Common Stock during the
suspension, an amount equal to the dividend or distribution which would
have been payable on such Dissenting Shares, but for such suspension, shall
be paid to the holder of record of the Dissenting Shares as a credit upon
the fair cash value thereof. If the right to receive the fair cash value is
terminated otherwise than by the purchase of the Dissenting Shares by BANC
ONE, all rights will be restored to the Dissenting BANC ONE Shareholder and
any distribution that would have been made to the holder of record of the
Dissenting Shares, but for the suspension, will be made at the time of the
termination.
(iii) Petitions to Be Filed in Court. Within three months after the
service of the BANC ONE Demand, if BANC ONE and the Dissenting BANC ONE
Shareholder do not reach an agreement on the fair cash value of such
shareholder's Dissenting Shares, the Dissenting BANC ONE Shareholder or
BANC ONE may file a complaint in the Court of Common Pleas of Franklin
County, Ohio (the "COMMON PLEAS COURT"), or join or be joined in an action
similarly brought by another Dissenting BANC ONE Shareholder, for a
judicial determination of the fair cash value (as defined herein) of such
shareholder's Dissenting Shares. BANC ONE does not intend to file any
complaint for a judicial determination of the fair cash value of any
Dissenting Shares.
Upon motion of the complainant, the Common Pleas Court will hold a hearing
to determine whether the Dissenting BANC ONE Shareholder is entitled to be
paid the fair cash value of such shareholder's Dissenting Shares. If the
Common Pleas Court finds that the Dissenting BANC ONE Shareholder is so
entitled, it may appoint one or more appraisers to receive evidence by
which to recommend a decision on the amount of such value. The Common Pleas
Court is required to make a finding as to the fair cash value of the
Dissenting Shares and to render a judgment against BANC ONE for the payment
thereof, with interest at such rate and from such date as the Common Pleas
Court considers equitable. Costs of the proceedings, including reasonable
compensation to the appraiser or appraisers to be fixed by the Common Pleas
Court, are to be apportioned or assessed as the Common Pleas Court
considers equitable. Payment of the fair cash value of the Dissenting
Shares is required to be made within 30 days after the date of final
determination of such value or the First Effective Time, whichever is
later, only upon surrender to BANC ONE of the certificates representing the
Dissenting Shares for which payment is made.
"FAIR CASH VALUE" is the amount which a willing seller, under no compulsion
to sell, would be willing to accept, and which a willing buyer, under no
compulsion to purchase, would be willing to pay, but in no event may the fair
cash value exceed the amount specified in the BANC ONE Demand. The fair cash
value is to be determined as of the date prior to the day of the vote on the
Merger. In computing this value, any appreciation or depreciation in the market
value of the Dissenting Shares resulting from the Merger is excluded.
The dissenters' rights of any Dissenting BANC ONE Shareholder will terminate
if, among other things, (i) such Dissenting BANC ONE Shareholder has not
complied with Section 1701.85 of the Ohio Law (unless the BANC ONE Board waives
compliance), (ii) the Merger is abandoned or otherwise not carried out or such
Dissenting BANC ONE Shareholder withdraws its BANC ONE Demand with the consent
of the BANC ONE Board, or (iii) no agreement has been reached between BANC ONE
and the Dissenting BANC ONE Shareholder with respect to the fair cash value of
such shareholder's Dissenting Shares and no complaint has been timely filed in
the Common Pleas Court.
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FCN STOCKHOLDERS
FCN Stockholders will not be entitled to dissenters' appraisal rights under
Delaware law or any other statute in connection with the Merger. See "BANK ONE
Capital Stock and Comparison of Shareholder Rights--Comparison of BANC ONE
Common Stock, FCN Common Stock and BANK ONE Common Stock--Rights of Dissenting
Shareholders."
LEGAL MATTERS
The validity of the BANK ONE Capital Stock to be issued in connection with
the Merger will be passed upon by Wachtell, Lipton, Rosen & Katz.
EXPERTS
The consolidated financial statements of BANC ONE and its subsidiaries
incorporated in this Joint Proxy Statement-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 L.L.P., 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, given on the authority of said firm as expert in auditing and accounting.
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.
SHAREHOLDER PROPOSALS
Stockholders of BANK ONE (or of BANC ONE, if the Merger is not consummated)
may submit proposals to be considered for shareholder action at the 1999 Annual
Meeting of stockholders of BANK ONE (or of BANC ONE, if the Merger is not
consummated) if they do so in accordance with applicable regulations of the
Commission. Any such proposals must be submitted to the Secretary of BANK ONE
(or, if the Merger has not yet been consummated at such time, the Secretary of
BANC ONE) no later than November 2, 1998 in order to be considered for
inclusion in the corporation's 1999 proxy materials.
FCN will hold a 1999 Annual Meeting of Stockholders only if the Merger is not
consummated before the time of such meeting. In the event that such a meeting
is held, any proposals of stockholders intended to be presented at the 1999
Annual Meeting must have been received by the Secretary of FCN no later than
November 27, 1998 in order to be considered for inclusion in the FCN proxy
materials relating to such meeting.
OTHER MATTERS
As of the date of this Joint Proxy Statement-Prospectus, the FCN Board and
the BANC ONE Board know of no matters that will be presented for consideration
at the FCN Special Meeting or the BANC ONE Special Meeting, respectively, other
than as described in this Joint Proxy Statement-Prospectus. If any other
matters shall properly come before either such Special Meeting or any
adjournments or postponements thereof and be voted upon, the enclosed proxies
will be deemed to confer discretionary authority on the individuals named as
proxies therein to vote the shares represented by such proxies as to any such
matters. The individuals named as proxies intend to vote or not to vote in
accordance with the recommendation of the respective managements of FCN and
BANC ONE.
89
ADDITIONAL INFORMATION
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP will be present at the BANC ONE
Special Meeting, and representatives of Arthur Andersen LLP are expected to be
present at the FCN Special Meeting. In each case, such representatives will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
WHERE YOU CAN FIND MORE INFORMATION
BANK ONE has filed with the Commission a Registration Statement under the
Securities Act that registers the distribution to FCN Stockholders of the
shares of BANK ONE Capital Stock to be issued in connection with the Merger
(the "REGISTRATION STATEMENT"). The Registration Statement, including the
attached exhibits and schedules, contain additional relevant information about
BANK ONE and BANK ONE Capital Stock. The rules and regulations of the
Commission allow us to omit certain information included in the Registration
Statement from this Joint Proxy Statement-Prospectus.
In addition, BANC ONE and FCN file reports, proxy statements and other
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 Ref-
erence
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.
The Commission also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like BANC ONE
and FCN, 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
BANC ONE and FCN at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
The Commission allows BANC ONE and FCN to "incorporate by reference"
information into this Joint Proxy Statement-Prospectus. This means that the
companies 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 Joint Proxy Statement-Prospectus,
except for any information that is superseded by information that is included
directly in this document.
This Joint Proxy Statement-Prospectus incorporates by reference the documents
listed below that BANC ONE and FCN have previously filed with the Commission.
They contain important information about our companies and their financial
condition.
<TABLE>
<CAPTION>
BANC ONE SEC FILINGS PERIOD
-------------------- ------
<S> <C>
Annual Report on Form 10-K................... Year ended December 31, 1997, as
filed March 31, 1998
Quarterly Report on Form 10-Q................ Quarter ended March 31, 1998, as
filed May 15, 1998
The description of BANC ONE Common Stock set
forth in the BANC ONE Registration Statement
filed under Section 12 of the Exchange Act
on Form 8-B on May 1, 1989, including any
amendment or report filed with the
Commission for the purpose of updating such
description
</TABLE>
90
ADDITIONAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
BANC ONE SEC FILINGS PERIOD
-------------------- ------
<S> <C>
Current Reports on Form 8-K................ Filed:
. 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
. April 22, 1998
. July 21, 1998
. July 22, 1998
. July 24, 1998 (dated July 21,
1998)
. July 24, 1998 (dated July 24,
1998)
<CAPTION>
FCN SEC FILINGS PERIOD
--------------- ------
<S> <C>
Annual Report on Form 10-K................. Year ended December 31, 1997, as
filed March 27, 1998
Quarterly Report on Form 10-Q.............. Quarter ended March 31, 1998, as
filed May 15, 1998
The description of FCN Common Stock set
forth in the registration statement filed
by NBD Bancorp, Inc. pursuant to Section
12 of the Exchange Act, including any
amendment or report filed with the
Commission for the purpose of updating
such description
Current Reports on Form 8-K................ Filed:
. January 16, 1998
. February 17, 1998
. April 14, 1998 (dated as of
April 10, 1998)
. April 14, 1998 (dated as of
April 13, 1998)
. April 21, 1998
. May 19, 1998
. July 14, 1998
</TABLE>
BANC ONE and FCN incorporate by reference additional documents that either
company may file with the Commission between the date of this Joint Proxy
Statement-Prospectus and the dates of the BANC ONE Special Meeting and the FCN
Special Meeting. 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.
BANC ONE has supplied all information contained or incorporated by reference
in this Joint Proxy Statement-Prospectus relating to BANC ONE, as well as all
pro forma financial information, and FCN has supplied all such information
relating to FCN.
You can obtain any of the documents incorporated by reference in this
document through BANC ONE or FCN, as the case may be, or from the Commission
through the Commission's web site at the address described above. Documents
incorporated by reference are available from the companies without charge,
excluding any exhibits to those documents unless the exhibit is specifically
incorporated by reference as an exhibit in this Joint Proxy Statement-
Prospectus. You can obtain documents incorporated by reference in this Joint
Proxy Statement-Prospectus by requesting them in writing or by telephone from
the appropriate company at the following addresses:
BANC ONE FCN
Investor Relations
Investor Relations First Chicago NBD
Department OH 1-0251 Corporation
BANC ONE CORPORATION One First National Plaza
100 East Broad Street Mail Suite 0460
Columbus, Ohio 43271-0251 Chicago, Illinois 60670
Telephone (614) 248-6889 Telephone (312) 732-4812
If you would like to request documents, please do so by September 8, 1998 to
receive them before the Special Meetings. 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.
91
ADDITIONAL INFORMATION
<PAGE>
We have not authorized anyone to give any information or make any
representation about the Merger or our companies that is different from, or in
addition to, that contained in this Joint Proxy Statement-Prospectus or in any
of the materials that we've incorporated into this document. Therefore, if
anyone does give you information of this sort, you should not rely on it. If
you are in a jurisdiction where offers to exchange or sell, or solicitations of
offers to exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement-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 each of BANC ONE and FCN, as
well as certain information relating to the Merger, including, without
limitation (i) statements relating to the cost savings estimated to result from
the Merger, (ii) statements relating to revenues estimated to result from the
Merger; (iii) statements relating to the restructuring charges estimated to be
incurred in connection with the Merger and (iv) statements preceded by,
followed by or that include 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 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 BANC ONE or FCN 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 BANC ONE or FCN is engaged; (h) technological
changes (including "Year 2000" data systems compliance issues) may be more
difficult or expensive than anticipated; and (i) changes may occur in the
securities markets.
See "Where You Can Find More Information."
92
ADDITIONAL INFORMATION
<PAGE>
FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
and explanatory notes are presented to show the impact on the historical
financial positions and results of operations of BANC ONE and FCN of the Merger
under the "pooling of interests" method of accounting. The unaudited pro forma
condensed combined financial information combines the historical financial
information of BANC ONE and FCN as of March 31, 1998 and for the three months
ended March 31, 1998 and 1997 and for the twelve-month periods ended December
31, 1997, 1996, and 1995, respectively. The unaudited pro forma condensed
combined statements of income give effect to the Merger as if the Merger
occurred at the beginning of each period covered by such statements of income.
The pro forma condensed combined balance sheet assumes the Merger was
consummated on March 31, 1998.
The pro forma condensed combined financial information as of March 31, 1998
and for the three months ended March 31, 1998 and 1997 and each of the three
years ended December 31, 1997, 1996 and 1995, respectively, is based on and
derived from, and should be read in conjunction with, (a) the historical
consolidated financial statements and the related notes thereto of BANC ONE,
which are incorporated by reference herein, and (b) the historical consolidated
financial statements and the related notes thereto of FCN, which are
incorporated by reference herein. See "Where You Can Find More Information."
The pro forma condensed combined financial statements do not give effect to the
anticipated cost savings or potential revenue enhancements in connection with
the Merger. See "Management and Operations After the Merger--Operations."
The pro forma financial information does not give effect to BANC ONE's
acquisition of First Commerce Corporation, as the acquisition is not material
to BANC ONE.
The pro forma data are presented for comparative purposes only and are not
necessarily indicative of the future financial position or results of
operations of the combined company or of the combined financial position or the
results of operations that would have been realized had the Merger been
consummated during the periods or as of the dates for which the pro forma data
are presented.
93
FINANCIAL INFORMATION
<PAGE>
BANC ONE CORPORATION AND SUBSIDIARIES
(SURVIVING CORPORATION TO BE NAMED
"BANK ONE CORPORATION")
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(IN MILLIONS)
(UNAUDITED)
AT MARCH 31, 1998
The following unaudited pro forma condensed combined balance sheet as of
March 31, 1998 is presented to show the impact on BANC ONE's historical
financial condition of the proposed Merger with FCN. The Merger has been
reflected under the "pooling of interests" method of accounting.
<TABLE>
<CAPTION>
PROFORMA
BANC ONE FCN ADJUSTMENTS COMBINED
-------- -------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Total cash and due from banks........ $ 6,880 $ 7,907 $ 14,787
Short-term investments............... 1,275 12,898 14,173
Trading assets....................... 1,397 3,841 5,238
Investment securities:
Securities held to maturity......... 711 711
Securities available for sale....... 16,789 11,594 28,383
-------- -------- --------
Total investment securities...... 17,500 11,594 29,094
Loans and leases (net of unearned
income and allowance for credit
losses)............................. 78,970 66,851 145,821
Other assets......................... 10,299 11,713 22,012
-------- -------- ------- --------
TOTAL ASSETS..................... $116,321 $114,804 $231,125
======== ======== ======= ========
LIABILITIES
Deposits:
Non-interest bearing................ $ 18,880 $ 20,007 $ 38,887
Interest-bearing.................... 59,036 48,163 107,199
-------- -------- ------- --------
Total deposits................... 77,916 68,170 146,086
Short-term borrowings................ 12,885 20,634 33,519
Long-term borrowings................. 11,591 10,294 21,885
Other liabilities.................... 3,463 7,700 $ 837 12,000
-------- -------- ------- --------
TOTAL LIABILITIES................ 105,855 106,798 837 213,490
-------- -------- ------- --------
STOCKHOLDERS' EQUITY
Preferred stock...................... 100 190 290
Common stock......................... 3,237 320 2,006 5,563
Capital in excess of aggregate stated
value............................... 6,690 1,960 (4,108) 4,542
Retained earnings.................... 510 7,699 (837) 7,372
Other shareholders' equity........... 124 (61) 63
Less: Treasury stock................. (195) (2,102) 2,102 (195)
-------- -------- ------- --------
Total stockholders' equity....... 10,466 8,006 (837) 17,635
-------- -------- ------- --------
TOTAL LIABILITIES AND STOCKHOLD-
ERS' EQUITY..................... $116,321 $114,804 $ 0 $231,125
======== ======== ======= ========
</TABLE>
See accompanying notes to the pro forma financial information.
94
FINANCIAL INFORMATION
<PAGE>
BANC ONE CORPORATION AND SUBSIDIARIES
(SURVIVING CORPORATION TO BE NAMED
"BANK ONE CORPORATION")
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (IN MILLIONS, EXCEPT PER SHARE
DATA)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998
The following unaudited pro forma condensed combined statements of income are
presented to show the impact on BANC ONE's historical results of operations of
the proposed merger with FCN. Such statements assume that the companies had
been combined for each period presented.
<TABLE>
<CAPTION>
BANC PROFORMA
ONE FCN COMBINED
------ ------ --------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases......................................... $2,028 $1,460 $ 3,488
Securities; including trading............................ 263 214 477
Other interest income.................................... 10 190 200
------ ------ --------
Total.................................................. 2,301 1,864 4,165
INTEREST EXPENSE
Deposits................................................. 630 558 1,188
Borrowings............................................... 350 445 795
------ ------ --------
Total.................................................. 980 1,003 1,983
NET INTEREST INCOME...................................... 1,321 861 2,182
Provision for credit losses.............................. 203 179 382
------ ------ --------
Net interest income after provision for credit losses.... 1,118 682 1,800
NONINTEREST INCOME
Credit card revenue...................................... 492 234 726
Deposit fees............................................. 184 108 292
Other noninterest income................................. 461 397 858
------ ------ --------
Total.................................................. 1,137 739 1,876
NONINTEREST EXPENSE
Salaries and employee benefits........................... 634 440 1,074
Other operating expense.................................. 859 408 1,267
------ ------ --------
Total.................................................. 1,493 848 2,341
INCOME BEFORE INCOME TAXES............................... 762 573 1,335
Income taxes............................................. 244 190 434
------ ------ --------
NET INCOME............................................... $ 518 $ 383 $ 901
====== ====== ========
NET INCOME PER COMMON SHARE
Basic.................................................... $ 0.80 $ 1.32 $ 0.81
Diluted.................................................. 0.79 1.30 0.79
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic.................................................... 643.1 288.1 1,109.9
Diluted.................................................. 655.5 293.0 1,130.2
</TABLE>
See accompanying notes to the pro forma financial information.
95
FINANCIAL INFORMATION
<PAGE>
BANC ONE CORPORATION AND SUBSIDIARIES
(SURVIVING CORPORATION TO BE RENAMED
"BANK ONE CORPORATION" AT CLOSING)
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
BANC PROFORMA
ONE FCN COMBINED
------ ------ --------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases......................................... $2,014 $1,401 $ 3,415
Securities, including trading............................ 299 172 471
Other interest income.................................... 11 161 172
------ ------ -------
Total.................................................. 2,324 1,734 4,058
INTEREST EXPENSE
Deposits................................................. 623 499 1,122
Borrowings............................................... 343 359 702
------ ------ -------
Total.................................................. 966 858 1,824
NET INTEREST INCOME...................................... 1,358 876 2,234
Provision for credit losses.............................. 272 187 459
------ ------ -------
Net interest income after provision for credit losses.... 1,086 689 1,775
NONINTEREST INCOME
Credit card revenue...................................... 288 234 522
Deposit fees............................................. 166 109 275
Other noninterest income................................. 353 336 689
------ ------ -------
Total.................................................. 807 679 1,486
NONINTEREST EXPENSES
Salaries and employee benefits........................... 568 425 993
Other operating expense.................................. 741 375 1,116
------ ------ -------
Total.................................................. 1,309 800 2,109
INCOME BEFORE INCOME TAXES............................... 584 568 1,152
Income taxes............................................. 202 188 390
------ ------ -------
NET INCOME............................................... $ 382 $ 380 $ 762
====== ====== =======
NET INCOME PER COMMON SHARE
Basic.................................................... $ 0.60 $ 1.19 $ 0.66
Diluted.................................................. 0.58 1.17 0.64
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic.................................................... 622.6 312.1 1,128.2
Diluted.................................................. 655.6 320.8 1,175.3
</TABLE>
See accompanying notes to the pro forma financial information.
96
FINANCIAL INFORMATION
<PAGE>
BANC ONE CORPORATION AND SUBSIDIARIES
(SURVIVING CORPORATION TO BE NAMED
"BANK ONE CORPORATION")
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
BANC PROFORMA
ONE FCN COMBINED
------ ------ --------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases......................................... $8,268 $5,849 $14,117
Securities, including trading............................ 1,066 743 1,809
Other interest income.................................... 49 755 804
------ ------ -------
Total.................................................. 9,383 7,347 16,730
INTEREST EXPENSE
Deposits................................................. 2,545 2,178 4,723
Borrowings............................................... 1,446 1,597 3,043
------ ------ -------
Total.................................................. 3,991 3,775 7,766
NET INTEREST INCOME...................................... 5,392 3,572 8,964
Provision for credit losses.............................. 1,211 725 1,936
------ ------ -------
Net interest income after provision for credit losses.... 4,181 2,847 7,028
NONINTEREST INCOME
Credit card revenue...................................... 1,709 904 2,613
Deposit fees............................................. 702 460 1,162
Other noninterest income................................. 1,425 1,387 2,812
------ ------ -------
Total.................................................. 3,836 2,751 6,587
NONINTEREST EXPENSE
Salaries and employee benefits........................... 2,368 1,748 4,116
Other operating expense.................................. 3,344 1,584 4,928
Merger and restructure related charges................... 337 0 337
------ ------ -------
Total.................................................. 6,049 3,332 9,381
INCOME BEFORE INCOME TAXES............................... 1,968 2,266 4,234
Income taxes............................................. 662 741 1,403
------ ------ -------
NET INCOME............................................... $1,306 $1,525 $ 2,831
====== ====== =======
NET INCOME PER COMMON SHARE
Basic.................................................... $ 2.04 $ 4.99 $ 2.49
Diluted.................................................. 1.99 4.90 2.44
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic.................................................... 632.4 301.4 1,120.7
Diluted.................................................. 655.7 307.0 1,153.0
</TABLE>
See accompanying notes to the pro forma financial information.
97
FINANCIAL INFORMATION
<PAGE>
BANC ONE CORPORATION AND SUBSIDIARIES
(SURVIVING CORPORATION TO BE NAMED
"BANK ONE CORPORATION")
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
BANC PROFORMA
ONE FCN COMBINED
------ ------ --------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases......................................... $7,477 $5,745 $13,222
Securities, including trading............................ 1,222 851 2,073
Other interest income.................................... 37 973 1,010
------ ------ -------
Total.................................................. 8,736 7,569 16,305
INTEREST EXPENSE
Deposits................................................. 2,460 2,175 4,635
Borrowings............................................... 1,137 1,774 2,911
------ ------ -------
Total.................................................. 3,597 3,949 7,546
NET INTEREST INCOME...................................... 5,139 3,620 8,759
Provision for credit losses.............................. 943 735 1,678
------ ------ -------
Net interest income after provision for credit losses.... 4,196 2,885 7,081
NONINTEREST INCOME
Credit card revenue...................................... 1,340 914 2,254
Deposit fees............................................. 654 414 1,068
Other noninterest income................................. 1,369 1,220 2,589
------ ------ -------
Total.................................................. 3,363 2,548 5,911
NONINTEREST EXPENSE
Salaries and employee benefits........................... 2,205 1,707 3,912
Other operating expense.................................. 2,857 1,564 4,421
------ ------ -------
Total.................................................. 5,062 3,271 8,333
INCOME BEFORE INCOME TAXES............................... 2,497 2,162 4,659
Income taxes............................................. 824 726 1,550
------ ------ -------
NET INCOME............................................... $1,673 $1,436 $ 3,109
====== ====== =======
NET INCOME PER COMMON SHARE
Basic.................................................... $ 2.60 $ 4.44 $ 2.66
Diluted.................................................. 2.52 4.33 2.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic.................................................... 632.5 316.8 1,145.7
Diluted.................................................. 664.3 326.7 1,193.6
</TABLE>
See accompanying notes to the pro forma financial information.
98
FINANCIAL INFORMATION
<PAGE>
BANC ONE CORPORATION AND SUBSIDIARIES
(SURVIVING CORPORATION TO BE NAMED
"BANK ONE CORPORATION")
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
BANC PROFORMA
ONE FCN COMBINED
------ ------ --------
<S> <C> <C> <C>
INTEREST INCOME
Loans and leases......................................... $6,426 $5,260 $11,686
Securities, including trading............................ 1,090 1,288 2,378
Other interest income.................................... 72 1,542 1,614
------ ------ -------
Total.................................................. 7,588 8,090 15,678
INTEREST EXPENSE
Deposits................................................. 2,427 2,581 5,008
Borrowings............................................... 910 2,301 3,211
------ ------ -------
Total.................................................. 3,337 4,882 8,219
NET INTEREST INCOME...................................... 4,251 3,208 7,459
Provision for credit losses.............................. 526 510 1,036
------ ------ -------
Net interest income after provision for credit losses.... 3,725 2,698 6,423
NONINTEREST INCOME
Credit card revenue...................................... 1,327 901 2,228
Deposit fees............................................. 545 382 927
Other noninterest income................................. 903 1,308 2,211
------ ------ -------
Total.................................................. 2,775 2,591 5,366
NONINTEREST EXPENSE
Salaries and employee benefits........................... 1,876 1,692 3,568
Other operating expense.................................. 2,451 1,576 4,027
Merger and restructure related charges................... 0 267 267
------ ------ -------
Total.................................................. 4,327 3,535 7,862
INCOME BEFORE INCOME TAXES............................... 2,173 1,754 3,927
Income taxes............................................. 728 604 1,332
------ ------ -------
NET INCOME............................................... $1,445 $1,150 $ 2,595
====== ====== =======
NET INCOME PER COMMON SHARE
Basic.................................................... $ 2.26 $ 3.48 $ 2.21
Diluted.................................................. 2.20 3.41 2.16
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic.................................................... 626.2 320.0 1,144.7
Diluted.................................................. 657.1 329.6 1,191.0
</TABLE>
See accompanying notes to the pro forma financial information.
99
FINANCIAL INFORMATION
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
NOTE 1. BASIS OF PRESENTATION
The pro forma condensed combined financial information reflects the Merger
using the "pooling of interests" method of accounting. The pro forma
information presented is not necessarily indicative of the results of
operations or the combined financial position that would have resulted had the
Merger been consummated at the beginning of the periods indicated, nor is it
necessarily indicative of the results of operations in future periods or the
future financial position of the combined entities. It is anticipated that the
Merger will be consummated in the fourth quarter of 1998, subject to
shareholder and regulatory approval.
Certain reclassifications have been included in the unaudited pro forma
condensed combined balance sheet and statements of income to conform statement
presentations.
NOTE 2. ACCOUNTING POLICIES
The accounting policies of both companies are in the process of being
reviewed. As a result of this review, certain conforming accounting adjustments
may be necessary. The nature and extent of such adjustments have not been
determined and are not expected to be significant.
NOTE 3. MERGER-RELATED EFFECTS
In connection with the Merger, the managements of BANC ONE and FCN estimate
that a one-time restructuring charge of approximately $1.25 billion ($837
million after-tax) will be incurred at the time of the consummation of the
Merger. The estimated details of this overall charge have been summarized into
the following components: $800 million in personnel-related items, $350 million
related to facilities and equipment costs and $100 million on other merger-
related transaction costs. Actions incorporated in the business combination and
restructuring plan are principally targeted for implementation over a 12-18
month period following the effective date of the Merger, currently contemplated
for the fourth quarter of 1998. There can be no assurance that the actual
restructuring charge and the details thereof will not differ materially from
the foregoing estimates.
Personnel-related items consist primarily of severance and benefits cost for
separated employees and costs associated with change in control provisions of
FCN's stock plans (currently estimated at $200 million). The benefit package to
be made available to certain affected employees has been approved by management
and communicated on a corporate-wide basis. Facilities and equipment costs
include the net cost associated with the closing and divestiture of identified
banking facilities, and from the consolidation of headquarters and operational
facilities. Other merger-related transaction costs include investment banking
fees, registration and listing fees, and various accounting, legal and other
related costs.
These amounts, including the related tax effects, have been reflected in the
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 1998 and
are not reflected in the Unaudited Pro Forma Condensed Combined Statements of
Income due to their nonrecurring nature.
NOTE 4. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been reflected in the pro forma
condensed combined financial information:
(a) Common stock ($5.00 stated value per share) and capital in excess of
aggregate stated value were adjusted by $2.006 billion to reflect the
Merger accounted for as a pooling of interests through the exchange of
465.2 million shares of BANK ONE Common Stock for 287.2 million shares of
FCN Common Stock using an exchange ratio of 1.62.
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FINANCIAL INFORMATION
<PAGE>
(b) Treasury stock and capital in excess of aggregate stated value were
adjusted by $2.102 billion to reflect the retirement of FCN treasury stock.
(c) Other liabilities and retained earnings were adjusted by $1.25
billion to reflect the recording of the merger-related charge.
(d) Other liabilities and retained earnings were adjusted by $413 million
to reflect the tax benefit associated with the Merger-related charge.
NOTE 5. ADDITIONAL TRANSACTION
The pro forma condensed combined financial information does not give effect
to BANC ONE's acquisition of First Commerce Corporation as the acquisition is
not material to BANC ONE.
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FINANCIAL INFORMATION
<PAGE>
APPENDIX A
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BANC ONE CORPORATION,
FIRST CHICAGO NBD CORPORATION
AND
BANK ONE CORPORATION
----------------
DATED AS OF APRIL 10, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
APPENDICES
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND PLAN OF REORGANIZATION
ARTICLE I
THE FIRST STEP MERGER
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1.1 The First Step Merger............................................... A-5
1.2 Effective Time...................................................... A-5
1.3 Effects of the First Step Merger.................................... A-6
1.4 Conversion of BANC ONE Common Stock................................. A-6
1.5 Newco Common Stock.................................................. A-6
1.6 Dissenting Shares................................................... A-6
1.7 Options............................................................. A-7
1.8 Certificate of Incorporation........................................ A-7
1.9 By-Laws............................................................. A-7
1.10 Board of Directors; Management...................................... A-7
ARTICLE II
THE SECOND STEP MERGER
2.1 The Second Step Merger.............................................. A-7
2.2 Effective Time...................................................... A-7
2.3 Effects of the Second Step Merger................................... A-8
2.4 Conversion of FCN Common Stock; FCN Preferred Stock................. A-8
2.5 Newco Common Stock.................................................. A-9
2.6 Options............................................................. A-9
2.7 Certificate of Incorporation........................................ A-9
2.8 By-Laws............................................................. A-10
2.9 Tax and Accounting Consequences..................................... A-10
2.10 Management Succession............................................... A-10
2.11 Board of Directors.................................................. A-10
2.12 Headquarters of Surviving Corporation............................... A-10
ARTICLE III
EXCHANGE OF SHARES
3.1 Newco to Make Shares Available...................................... A-10
3.2 Exchange of Shares.................................................. A-10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FCN
4.1 Corporate Organization.............................................. A-12
4.2 Capitalization...................................................... A-12
4.3 Authority; No Violation............................................. A-13
4.4 Consents and Approvals.............................................. A-14
4.5 Reports............................................................. A-15
4.6 Financial Statements................................................ A-15
</TABLE>
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<PAGE>
<TABLE>
<C> <S> <C>
4.7 Broker's Fees....................................................... A-15
4.8 Absence of Certain Changes or Events................................ A-16
4.9 Legal Proceedings................................................... A-16
4.10 Taxes and Tax Returns............................................... A-16
4.11 Employees........................................................... A-17
4.12 SEC Reports......................................................... A-18
4.13 Compliance with Applicable Law...................................... A-18
4.14 Certain Contracts................................................... A-18
4.15 Agreements with Regulatory Agencies................................. A-19
4.16 Other Activities of FCN and its Subsidiaries........................ A-19
4.17 Investment Securities............................................... A-20
4.18 Interest Rate Risk Management Instruments........................... A-20
4.19 Undisclosed Liabilities............................................. A-20
4.20 Insurance........................................................... A-20
4.21 Environmental Liability............................................. A-20
4.22 State Takeover Laws; FCN Certificate of Incorporation............... A-21
4.23 Year 2000........................................................... A-21
4.24 Reorganization; Pooling of Interests................................ A-21
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BANC ONE AND NEWCO
5.1 Corporate Organization.............................................. A-21
5.2 Capitalization...................................................... A-22
5.3 Authority; No Violation............................................. A-23
5.4 Consents and Approvals.............................................. A-24
5.5 Reports............................................................. A-24
5.6 Financial Statements................................................ A-25
5.7 Broker's Fees....................................................... A-25
5.8 Absence of Certain Changes or Events................................ A-25
5.9 Legal Proceedings................................................... A-26
5.10 Taxes and Tax Returns............................................... A-26
5.11 Employees........................................................... A-27
5.12 SEC Reports......................................................... A-28
5.13 Compliance with Applicable Law...................................... A-28
5.14 Certain Contracts................................................... A-28
5.15 Agreements with Regulatory Agencies................................. A-29
5.16 Other Activities of BANC ONE and its Subsidiaries................... A-29
5.17 Investment Securities............................................... A-30
5.18 Interest Rate Risk Management Instruments........................... A-30
5.19 Undisclosed Liabilities............................................. A-30
5.20 Insurance........................................................... A-30
5.21 Environmental Liability............................................. A-30
5.22 State Takeover Laws................................................. A-30
5.23 Interim Operations of Newco......................................... A-31
5.24 Year 2000........................................................... A-31
5.25 Reorganization; Pooling of Interests................................ A-31
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Conduct of Businesses Prior to the Effective Time................... A-31
6.2 Forbearances........................................................ A-31
</TABLE>
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APPENDICES
<PAGE>
ARTICLE VII
ADDITIONAL AGREEMENTS
<TABLE>
<C> <S> <C>
7.1 Regulatory Matters................................................ A-33
7.2 Access to Information............................................. A-34
7.3 Stockholders' Approvals........................................... A-35
7.4 Legal Conditions to Merger........................................ A-35
7.5 Affiliates; Publication of Combined Financial Results............. A-35
7.6 Stock Exchange Listing............................................ A-35
7.7 Employee Benefit Plans; Certain Insurance......................... A-35
7.8 Indemnification; Directors' and Officers' Insurance............... A-36
7.9 Additional Agreements............................................. A-37
7.10 Advice of Changes................................................. A-38
7.11 Dividends......................................................... A-38
7.12 Authorized Stock of Newco......................................... A-38
7.13 Pooling of Interests.............................................. A-38
ARTICLE VIII
CONDITIONS PRECEDENT
Conditions to Each Party's Obligation To Effect the Second Step
8.1 Merger............................................................ A-38
8.2 Conditions to Obligations of BANC ONE and Newco................... A-39
8.3 Conditions to Obligations of FCN.................................. A-40
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination....................................................... A-40
9.2 Effect of Termination............................................. A-41
9.3 Amendment......................................................... A-41
9.4 Extension; Waiver................................................. A-41
ARTICLE X
GENERAL PROVISIONS
10.1 Closing........................................................... A-42
10.2 Nonsurvival of Representations, Warranties and Agreements......... A-42
10.3 Expenses.......................................................... A-42
10.4 Notices........................................................... A-42
10.5 Interpretation.................................................... A-42
10.6 Counterparts...................................................... A-43
10.7 Entire Agreement.................................................. A-43
10.8 Governing Law..................................................... A-43
10.9 Severability...................................................... A-43
10.10 Publicity......................................................... A-43
10.11 Assignment; Third Party Beneficiaries............................. A-43
10.12 Certain Agreements of BANC ONE.................................... A-43
</TABLE>
Exhibit A--Form of Certificate of Incorporation of Surviving Corporation
Exhibit B--Form of Bylaws of Surviving Corporation
Exhibit C--BANC ONE Option Agreement
Exhibit D--FCN Option Agreement
Exhibit 6.5(a)(1)--Form of Affiliate Letter Addressed to BANC ONE
Exhibit 6.5(a)(2)--Form of Affiliate Letter Addressed to FCN
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APPENDICES
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 10, 1998 (this
"Agreement"), by and among BANC ONE CORPORATION, an Ohio corporation ("BANC
ONE"), BANK ONE CORPORATION, a Delaware corporation ("Newco"), and FIRST
CHICAGO NBD CORPORATION, a Delaware corporation ("FCN").
WHEREAS, the Boards of Directors of FCN, BANC ONE and Newco have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the business combination transaction provided for
herein in which (x) BANC ONE will, subject to the terms and conditions set
forth herein, merge with and into Newco (the "First Step Merger") so that
Newco is the surviving corporation in the First Step Merger, and (b)
immediately thereafter FCN will, subject to the terms and conditions set forth
herein, merge with and into Newco (the "Second Step Merger" and, together with
the First Step Merger, the "Merger"), so that Newco is the surviving
corporation (hereinafter sometimes referred to in such capacity as the
"Surviving Corporation") in the Second Step Merger; and
WHEREAS, it is the intent of the respective Boards of Directors of BANC ONE
and FCN that the Merger be structured as a "merger of equals" of BANC ONE and
FCN and that the Surviving Corporation be governed and operated on this basis;
and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, BANC ONE and FCN are entering into a BANC ONE stock option
agreement (the "BANC ONE Option Agreement") in the form attached hereto as
Exhibit C; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, BANC ONE and FCN are entering into a FCN stock option agreement
(the "FCN Option Agreement"; and together with the BANC ONE Option Agreement,
the "Option Agreements") in the form attached hereto as Exhibit D; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE FIRST STEP MERGER
1.1. The First Step Merger. Subject to the terms and conditions of this
Agreement, in accordance with the General Corporation Law of the State of Ohio
(the "OGCL") and the General Corporation Law of the State of Delaware (the
"DGCL"), at the First Effective Time, BANC ONE shall merge with and into
Newco. Newco shall be the surviving corporation in the First Step Merger, and
shall continue its corporate existence under the laws of the State of
Delaware. Upon consummation of the First Step Merger, the separate corporate
existence of BANC ONE shall terminate.
1.2. Effective Time. The First Step Merger shall become effective as set
forth in the certificate of merger which shall be filed with the Secretary of
State of the State of Ohio (the "Ohio Secretary") and the certificate of
merger which shall be filed with the Secretary of State of the State of
Delaware (the "Delaware Secretary") on the Closing Date. The term "First
Effective Time" shall be the date
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APPENDICES
<PAGE>
and time when the First Step Merger becomes effective, as set forth in the
certificates of merger referred to in this Section 1.2.
1.3. Effects of the First Step Merger. At and after the First Effective
Time, the First Step Merger shall have the effects set forth in Section
1701.82 of the OGCL and Sections 259 and 261 of the DGCL.
1.4. Conversion of BANC ONE Common Stock. (a) At the First Effective Time,
by virtue of the First Step Merger and without any action on the part of BANC
ONE, Newco or the holders of capital stock of BANC ONE or Newco, each share of
the common stock, without par value, of BANC ONE (the "BANC ONE Common Stock")
issued and outstanding immediately prior to the First Effective Time (other
than Dissenting Shares and shares of BANC ONE Common Stock held in BANC ONE's
treasury or directly or indirectly by BANC ONE or any of its wholly owned
Subsidiaries or Newco (except for Trust Account Shares and DPC shares) shall
be converted into one share (the "First Merger Exchange Ratio") of the common
stock, without par value, of Newco (the "Newco Common Stock").
(b) All of the shares of BANC ONE Common Stock converted into the right to
receive Newco Common Stock pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as
of the First Effective Time, and each certificate (each a "BANC ONE Common
Certificate") previously representing any such shares of BANC ONE Common Stock
shall thereafter represent, without the requirement of any exchange thereof,
only the number of shares of Newco Common Stock into which the shares of BANC
ONE Common Stock represented by such BANC ONE Common Certificate have been
converted pursuant to this Section 1.4.
(c) At the First Effective Time, all shares of BANC ONE Common Stock that
are owned by BANC ONE as treasury stock and all shares of BANC ONE Common
Stock that are owned, directly or indirectly, by BANC ONE or any of its wholly
owned Subsidiaries or Newco (other than shares of BANC ONE Common Stock held,
directly or indirectly, in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Newco Common Stock and FCN Common
Stock which are similarly held, whether held directly or indirectly by BANC
ONE, Newco or FCN, as the case may be, being referred to herein as "Trust
Account Shares") and other than any shares of BANC ONE Common Stock held by
BANC ONE or FCN or any of their respective Subsidiaries or Newco in respect of
a debt previously contracted (any such shares of BANC ONE Common Stock, and
shares of FCN Common Stock and Newco Common Stock which are similarly held,
whether held directly or indirectly by BANC ONE, Newco or FCN or any of their
respective Subsidiaries, being referred to herein as "DPC Shares")) shall be
cancelled and shall cease to exist and no stock of Newco or other
consideration shall be delivered in exchange therefor. All shares of Newco
Common Stock that are owned by BANC ONE or any of its wholly-owned
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Newco.
1.5. Newco Common Stock. At and after the First Effective Time, each share
of Newco Common Stock issued and outstanding immediately prior to the First
Effective Time shall be cancelled and retired and shall resume the status of
authorized and unissued shares of Newco Common Stock, and no shares of Newco
Common Stock or other securities of Newco shall be issued in respect thereof.
1.6. Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of BANC ONE Common Stock which are outstanding immediately
prior to the First Effective Time and with respect to which dissenters' rights
shall have been properly demanded in accordance with Section 1701.85 of the
OGCL ("Dissenting Shares") shall not be converted into Newco Common Stock;
instead, the holders thereof shall be entitled to payment of the appraised
value of such Dissenting Shares in accordance with the provisions of Section
1701.85 of the OGCL; provided, however, that (i) if any holder
A-6
APPENDICES
<PAGE>
of Dissenting Shares shall subsequently deliver a written withdrawal of his
demand for appraisal of such shares, or (ii) if any holder fails to establish
his entitlement to dissenters' rights as provided in Section 1701.85 of the
OGCL, such holder or holders (as the case may be) shall forfeit the right to
appraisal of such shares of BANC ONE Common Stock and each of such shares
shall thereupon be deemed to have been converted into Newco Common Stock, as
provided in Section 1.4(a) hereof.
1.7. Options. At the First Effective Time, each option granted by BANC ONE
to purchase shares of BANC ONE Common Stock which is outstanding and
unexercised immediately prior thereto shall cease to represent a right to
acquire shares of BANC ONE Common Stock and shall be converted automatically
into an option to purchase a number of shares of Newco Common Stock equal to
the number of shares of BANC ONE Common Stock subject to such option
immediately prior to the First Effective Time at an exercise price per share
of Newco Common Stock equal to the exercise price per share of BANC ONE Common
Stock in effect immediately prior to the First Effective Time and otherwise
subject to the terms of the appropriate BANC ONE Benefit Plan pursuant to
which such options have been granted (such plans collectively the "BANC ONE
Stock Plans") under which such option was issued and the agreements evidencing
grants thereunder. The adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) shall be and is intended to be
effected in a manner which is consistent with Section 424(a) of the Code. The
duration and other terms of the new option shall be the same as the original
option except that all references to BANC ONE shall be deemed to be references
to Newco.
1.8. Certificate of Incorporation. Subject to the terms and conditions of
this Agreement, at the First Effective Time, the Certificate of Incorporation
of the surviving corporation in the First Step Merger shall be substantially
in the form attached hereto as Exhibit A, with such changes thereto as shall
be mutually agreed upon by BANC ONE and FCN, until thereafter amended in
accordance with applicable law.
1.9. By-Laws. Subject to the terms and conditions of this Agreement, at the
First Effective Time, the By-Laws of the surviving corporation in the First
Step Merger shall be in substantially the form attached hereto as Exhibit B,
with such changes as may be mutually agreed upon by BANC ONE and FCN, until
thereafter amended in accordance with applicable law.
1.10. Board of Directors; Management. From and after the First Effective
Time, until duly changed pursuant hereto or in accordance with applicable law,
the directors of BANC ONE shall be the directors of Newco, and the officers of
BANC ONE shall be the officers of Newco.
ARTICLE 2
THE SECOND STEP MERGER
2.1. The Second Step Merger. Subject to the terms and conditions of this
Agreement, in accordance with the DGCL, at the Effective Time, FCN shall merge
with and into Newco. Newco shall be the Surviving Corporation in the Second
Step Merger, and shall continue its corporate existence under the laws of the
State of Delaware. Upon consummation of the Second Step Merger, the separate
corporate existence of FCN shall terminate.
2.2. Effective Time. The Second Step Merger shall become effective as set
forth in the certificate of merger (the "Certificate of Merger") which shall
be filed with the Delaware Secretary on the Closing Date. The term "Effective
Time" shall be the date and time when the Second Step Merger becomes
effective, as set forth in the Certificate of Merger.
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APPENDICES
<PAGE>
2.3. Effects of the Second Step Merger. At and after the Effective Time, the
Second Step Merger shall have the effects set forth in Sections 259 and 261 of
the DGCL.
2.4. Conversion of FCN Common Stock; FCN Preferred Stock. At the Effective
Time, by virtue of the Second Step Merger and without any action on the part
of BANC ONE, Newco, FCN or the holder of any of the following securities:
(a) Subject to Section 3.2(e), each share of the common stock, par value
$1.00 per share, of FCN (the "FCN Common Stock" and, together with the FCN
Preferred Stock, the "FCN Capital Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of FCN Capital
Stock held in FCN's treasury or directly or indirectly by BANC ONE, Newco
or FCN or any of their respective wholly owned Subsidiaries (except for
Trust Account Shares and DPC shares) shall be converted into the right to
receive 1.62 shares (the "Exchange Ratio") of Newco Common Stock (the Newco
Common Stock and the Newco New Preferred Stock (as defined Section 2.4(c))
being referred to herein as the "Newco Capital Stock")).
(b) Each share of FCN Preferred Stock with Cumulative and Adjustable
Dividends, Series B, without par value (the "FCN Series B Preferred"),
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of preferred stock with
cumulative and adjustable dividends of Newco designated as the Preferred
Stock with Cumulative and Adjustable Dividends, Series B, of Newco (the
"Newco Series B Adjustable Preferred"). The terms of the Newco Series B
Adjustable Preferred shall be substantially the same as the terms of the
FCN Series B Preferred.
(c) Each share of FCN Preferred Stock with Cumulative and Adjustable
Dividends, Series C, without par value (the "FCN Series C Preferred" and,
together with the FCN Series B Preferred, the "FCN Preferred Stock"),
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of preferred stock with
cumulative and adjustable dividends of Newco designated as the Preferred
Stock with Cumulative and Adjustable Dividends, Series C, of Newco (the
"Newco Series C Adjustable Preferred" and, together with the Newco Series B
Adjustable Preferred, the "Newco New Preferred Stock"). The terms of the
Newco Series C Adjustable Preferred shall be substantially the same as the
terms of the FCN Series C Preferred.
(d) All of the shares of FCN Common Stock converted into the right to
receive Newco Common Stock pursuant to this Article II shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist
as of the Effective Time, and each certificate (each a "Common
Certificate") previously representing any such shares of FCN Common Stock
shall thereafter represent only the right to receive (i) a certificate
representing the number of whole shares of Newco Common Stock and (ii) cash
in lieu of fractional shares into which the shares of FCN Common Stock
represented by such Common Certificate have been converted pursuant to this
Section 2.4 and Section 3.2(e). Common Certificates previously representing
shares of FCN Common Stock shall be exchanged for certificates representing
whole shares of Newco Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such Common
Certificates in accordance with Section 3.2, without any interest thereon.
If, prior to the Effective Time, the outstanding shares of FCN Common Stock
or BANC ONE Common Stock (or, following the consummation of the First Step
Merger, the outstanding shares of Newco Common Stock) shall have been
increased, decreased, changed into or exchanged for a different number or
kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in capitalization (other than solely
as a result of the First Step Merger), an appropriate and proportionate
adjustment shall be made to the Exchange Ratio and to the FCN Maximum Share
Amount.
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APPENDICES
<PAGE>
(e) At the Effective Time, all shares of FCN Common Stock that are owned
by FCN as treasury stock and all shares of FCN Common Stock that are owned,
directly or indirectly, by BANC ONE, Newco or FCN or any of their
respective wholly owned Subsidiaries (other than Trust Account Shares and
DPC Shares) shall be cancelled and shall cease to exist and no stock of
Newco or other consideration shall be delivered in exchange therefor. All
shares of Newco Common Stock that are owned by FCN or any of its wholly-
owned Subsidiaries (other than Trust Account Shares and DPC Shares) shall
become treasury stock of Newco.
(f) All of the shares of FCN Preferred Stock converted into Newco New
Preferred Stock pursuant to this Article II shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate (each a "Preferred Stock Certificate";
and together with a Common Certificate, a "Certificate") previously
representing any such shares of FCN Preferred Stock shall thereafter
represent the right to receive a certificate representing the number of
shares of corresponding Newco New Preferred Stock into which the shares of
FCN Preferred Stock represented by such Preferred Stock Certificate have
been converted pursuant to this Section 2.4. Preferred Stock Certificates
previously representing shares of FCN Preferred Stock shall be exchanged
for certificates representing shares of corresponding Newco New Preferred
Stock issued in consideration therefor upon the surrender of such Preferred
Stock Certificates in accordance with Section 3.2 hereof, without any
interest thereon.
2.5. Newco Common Stock. At and after the Effective Time, each share of
Newco Common Stock issued and outstanding immediately prior to the Closing
Date shall remain an issued and outstanding share of common stock of the
Surviving Corporation and shall not be affected by the Second Step Merger.
2.6. Options. (a) At the Effective Time, each option granted by FCN to
purchase shares of FCN Common Stock which is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares
of FCN Common Stock and shall be converted automatically into an option to
purchase shares of Newco Common Stock in an amount and at an exercise price
determined as provided below (and otherwise, in the case of options, subject
to the terms of the FCN Benefit Plans pursuant to which such options have been
issued (such plans collectively the "FCN Stock Plans") and the agreements
evidencing grants thereunder)):
(i) The number of shares of Newco Common Stock to be subject to the new
option shall be equal to the product of the number of shares of FCN
Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of Newco Common Stock resulting
from such multiplication shall be rounded to the nearest whole share;
and
(ii) The exercise price per share of Newco Common Stock under the new
option shall be equal to the exercise price per share of FCN Common
Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded down to the
nearest whole cent.
(b) The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be
and is intended to be effected in a manner which is consistent with Section
424(a) of the Code. The duration and other terms of the new option shall be
the same as the original option except that all references to FCN shall be
deemed to be references to Newco.
2.7. Certificate of Incorporation. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Certificate of Incorporation of
Newco shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended in accordance with applicable law.
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<PAGE>
2.8. By-Laws. Subject to the terms and conditions of this Agreement, at the
Effective Time, the By-Laws of Newco shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
2.9. Tax and Accounting Consequences. It is intended that the First Step
Merger and the Second Step Merger shall each constitute a reorganization
within the meaning of Section 368(a) of the Code, that this Agreement shall
constitute a "plan of reorganization" for the purposes of Sections 354 and 361
of the Code and that the Merger be accounted for as a "pooling of interests"
under generally accepted accounting principles ("GAAP").
2.10. Management Succession. At the Effective Time, Verne G. Istock shall be
Chairman of the Board of the Surviving Corporation and John B. McCoy shall be
the President and Chief Executive Officer of the Surviving Corporation.
2.11. Board of Directors. (a) From and after the Effective Time, until duly
changed in compliance with applicable law and the Certificate of Incorporation
and Bylaws of the Surviving Corporation, the Board of Directors of the
Surviving Corporation shall consist of 22 persons, including Messrs. Istock
and McCoy, 10 additional persons to be named by Mr. McCoy and the Board of
Directors of BANC ONE, and 10 additional persons to be named by Mr. Istock and
the Board of Directors of FCN.
(b) From and after the Effective Time, the representatives of BANC ONE
and FCN shall be represented in proportion to the aggregate representation
set forth above on all committees of the Board of Directors of the
Surviving Corporation.
2.12. Headquarters of Surviving Corporation. At the Effective Time, the
location of the headquarters and principal executive offices of the Surviving
Corporation shall be that of the headquarters and principal executive offices
of FCN as of the date of this Agreement.
ARTICLE III
EXCHANGE OF SHARES
3.1. Newco to Make Shares Available. At or prior to the Effective Time,
Newco shall deposit, or shall cause to be deposited, with First Chicago Trust
Company of New York, or another bank or trust company reasonably acceptable to
each of BANC ONE and FCN (the "Exchange Agent"), for the benefit of the
holders of Certificates, for exchange in accordance with this Article III,
certificates representing the shares of Newco Common Stock and Newco New
Preferred Stock, and cash in lieu of any fractional shares (such cash and
certificates for shares of Newco Common Stock and Newco New Preferred Stock,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund"), to be issued pursuant to
Section 2.4 and paid pursuant to Section 3.2(a) in exchange for outstanding
shares of FCN Capital Stock.
3.2. Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event later than five business days thereafter, the Exchange
Agent shall mail to each holder of record of one or more Certificates a letter
of transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing the
shares of Newco Common Stock, Newco New Preferred Stock and any cash in lieu
of fractional shares into which the shares of FCN Common Stock or FCN
Preferred Stock represented by such Certificate or Certificates shall have
been converted pursuant to this Agreement. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together
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with such properly completed letter of transmittal, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor, as
applicable, (i) a certificate representing that number of whole shares of
Newco Common Stock or Newco New Preferred Stock to which such holder of FCN
Common Stock or FCN Preferred Stock shall have become entitled pursuant to the
provisions of Article II and (ii) a check representing the amount of any cash
in lieu of fractional shares which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article III, and the Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on any cash in lieu of fractional shares
or on any unpaid dividends and distributions payable to holders of
Certificates.
(b) No dividends or other distributions declared with respect to Newco
Common Stock or Newco New Preferred Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article III. After the surrender of a
Certificate in accordance with this Article III, the record holder thereof
shall be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable with
respect to shares of Newco Common Stock or Newco New Preferred Stock
represented by such Certificate.
(c) If any certificate representing shares of Newco Common Stock or Newco
New Preferred Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the issuance of a certificate representing shares
of Newco Common Stock or Newco New Preferred Stock in any name other than that
of the registered holder of the Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of FCN of the shares of FCN Common Stock or FCN Preferred Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Newco Common Stock or Newco New Preferred
Stock as provided in this Article III.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Newco Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend
or distribution with respect to Newco Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Newco. In lieu of the issuance of any such fractional share, Newco shall pay
to each former stockholder of FCN who otherwise would be entitled to receive
such fractional share an amount in cash determined by multiplying (i) the
average of the closing-sale prices of BANC ONE Common Stock on the New York
Stock Exchange, Inc. (the "NYSE") as reported by The Wall Street Journal for
the five trading days immediately preceding the date of the Effective Time by
(ii) the fraction of a share (rounded to the nearest thousandth when expressed
in decimal form) of Newco Common Stock to which such holder would otherwise be
entitled to receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of FCN for 12 months after the Effective Time shall be paid to
Newco. Any former stockholders of FCN who have not theretofore complied with
this Article III shall thereafter look only to Newco for payment of the shares
of Newco Common Stock or Newco New Preferred Stock, cash in lieu of any
fractional shares and any unpaid dividends and distributions on the Newco
Common Stock or Newco New Preferred Stock deliverable in respect of each share
of FCN Common Stock or FCN Preferred Stock, as the case
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may be, such stockholder holds as determined pursuant to this Agreement, in
each case, without any interest thereon. Notwithstanding the foregoing, none
of BANC ONE, Newco, FCN, the Exchange Agent or any other person shall be
liable to any former holder of shares of FCN Common Stock or FCN Preferred
Stock for any amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if reasonably required by
Newco, the posting by such person of a bond in such amount as Newco may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the shares of
Newco Capital Stock and any cash in lieu of fractional shares deliverable in
respect thereof pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FCN
Except as disclosed in the FCN disclosure schedule delivered to BANC ONE
concurrently herewith (the "FCN Disclosure Schedule") FCN hereby represents
and warrants to BANC ONE as follows:
4.1. Corporate Organization. (a) FCN is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
FCN has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on FCN. As used
in this Agreement, the term "Material Adverse Effect" means, with respect to
BANC ONE, FCN or the Surviving Corporation, as the case may be, a material
adverse effect on (i) the business, operations, results of operations or
financial condition of such party and its Subsidiaries taken as a whole or
(ii) the ability of such party to consummate the transactions contemplated
hereby. As used in this Agreement, the word "Subsidiary" when used with
respect to any party, means any bank, corporation, partnership, limited
liability company, or other organization, whether incorporated or
unincorporated, which is consolidated with such party for financial reporting
purposes. FCN is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). True and complete
copies of the Restated Certificate of Incorporation (the "FCN Certificate of
Incorporation") and By-Laws of FCN, as in effect as of the date of this
Agreement, have previously been made available by FCN to BANC ONE.
(b) Each FCN Subsidiary (i) is duly organized and validly existing as a
bank, corporation, partnership or limited liability company under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in
good standing in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified
would have a Material Adverse Effect on FCN and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of FCN accurately reflect in all material respects all
corporate actions held or taken since January 1, 1996 of its stockholders and
Board of Directors (including committees of the Board of Directors of FCN).
4.2. Capitalization. (a) The authorized capital stock of FCN consists of (i)
750,000,000 shares of FCN Common Stock, of which, as of March 31, 1998,
287,187,823 shares were issued and outstanding
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and 32,321,153 shares were held in treasury, and (ii) 10,000,000 shares of FCN
Preferred Stock, of which, as of the date hereof, (A) 1,191,000 shares were
designated, issued and outstanding as FCN Series B Preferred, (B) 713,800
shares were designated, issued and outstanding as FCN Series C Preferred, (C)
160,000 shares were designated and no shares were issued and outstanding as
8.45% Cumulative Preferred Stock, Series E, stated value $625 per share, and
(D) 40,000 shares were designated and no shares were issued and outstanding as
5 3/4% Cumulative Convertible Preferred Stock, Series B, stated value $5,000
per share. All of the issued and outstanding shares of FCN Capital Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except pursuant to the
terms of (i) the FCN Option Agreement, (ii) options issued pursuant to the FCN
Stock Plans, (iii) the FCN 7 1/2% preferred purchase units due May 10, 2023
and (iv) the Asset Purchase Agreement, dated as of November 18, 1997, between
FCN and Roney & Co., L.L.C. (the "Roney Agreement"), FCN does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of FCN Capital Stock or any other equity securities of
FCN or any securities representing the right to purchase or otherwise receive
any shares of FCN Common Stock or FCN Preferred Stock (collectively, including
the items contemplated by clauses (i) through (iv) of this sentence, the "FCN
Rights"). As of the date of this Agreement, no shares of FCN Capital Stock are
reserved for issuance, except for 57,150,376 shares of FCN Common Stock
reserved for issuance upon exercise of the FCN Option Agreement, shares of FCN
Common Stock reserved for issuance in connection with FCN Employee Stock
Purchase and Savings Plan (the "ESPSP"), shares of FCN Common Stock reserved
for issuance in connection with the FCN Dividend Reinvestment Plan, 13,100,000
shares of FCN Common Stock reserved for issuance upon the exercise of stock
options pursuant to the FCN Stock Plans and shares of FCN Common Stock
reserved for issuance in connection with the Roney Agreement. Since December
31, 1997, FCN has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other
than pursuant to the FCN Option Agreement, the ESPSP, the FCN Dividend
Reinvestment Plan, the exercise of employee stock options granted prior to
such date, the FCN Stock Performance Plan and the Roney Agreement. Assuming
compliance by BANC ONE and Newco with Articles I and II of this Agreement,
after the Effective Time, there will not be any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character by which
FCN or any of its Subsidiaries or their respective successors will be bound
calling for the purchase or issuance of any shares of the capital stock of
FCN. FCN has previously provided BANC ONE with a list of the option holders,
the date of each option to purchase FCN Common Stock granted, the number of
shares subject to each such option, the expiration date of each such option,
and the price at which each such option may be exercised under an applicable
FCN Stock Plan. In no event will the aggregate number of shares of FCN Common
Stock outstanding at the Effective Time (including all shares of FCN Common
Stock subject to FCN Rights other than the FCN Option Agreement) exceed the
number specified in Section 4.2(a) of the FCN Disclosure Schedule.
(b) FCN owns, directly or indirectly, all of the issued and outstanding
shares of capital stock or other equity ownership interests of each of the FCN
Subsidiaries, free and clear of any liens, pledges, charges, encumbrances and
security interests whatsoever ("Liens"), and all of such shares or equity
ownership interests are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No FCN Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3. Authority; No Violation. (a) FCN has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and
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delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of FCN. The Board of Directors of FCN has directed that this
Agreement and the transactions contemplated hereby be submitted to FCN's
stockholders for approval at a meeting of such stockholders and, except for
the adoption of this Agreement by the affirmative vote of the holders of a
majority of the outstanding shares of FCN Common Stock, no other corporate
proceedings on the part of FCN are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by FCN and (assuming due authorization,
execution and delivery by BANC ONE and Newco) constitutes a valid and binding
obligation of FCN, enforceable against FCN in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by FCN nor the
consummation by FCN of the transactions contemplated hereby, nor compliance by
FCN with any of the terms or provisions hereof, will (i) violate any provision
of the FCN Certificate of Incorporation or By-Laws or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to FCN or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of FCN or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which FCN or any of its
Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have or be reasonably likely to
have a Material Adverse Effect on FCN.
4.4. Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of any required applications or
notices with any state or foreign agencies and approval of such applications
and notices (the "State Approvals"), (iii) the filing with the Securities and
Exchange Commission (the "SEC") of a joint proxy statement in definitive form
relating to the meetings of BANC ONE's shareholders and FCN's stockholders to
be held in connection with this Agreement and the transactions contemplated
hereby (the "Joint Proxy Statement") and the registration statement on Form S-
4 (the "S-4") in which the Joint Proxy Statement will be included as a
prospectus, (iv) the filing of the Certificate of Merger with the Delaware
Secretary pursuant to the DGCL, and certificate of merger with the Ohio
Secretary pursuant to the OGCL and a certificate of merger with the Delaware
Secretary pursuant to the DGCL in respect of the First Step Merger, (v) any
notices to or filings with the Small Business Administration ("SBA"), (vi) any
consents, authorizations, approvals, filings or exemptions in connection with
compliance with the applicable provisions of federal and state securities laws
relating to the regulation of broker-dealers or investment advisers, and
federal commodities laws relating to the regulation of futures commission
merchants and the rules and regulations thereunder and of any applicable
industry self-regulatory organization ("SRO"), and the rules of the NYSE, or
which are required under consumer finance, mortgage banking and other similar
laws, (vii) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in connection with
the issuance of the shares of Newco Common Stock pursuant to this Agreement
and (viii) the approval of this Agreement by the requisite vote of the
stockholders of BANC ONE and FCN, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (A) the execution
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<PAGE>
and delivery by FCN of this Agreement and (B) the consummation by FCN of the
Second Step Merger and the other transactions contemplated hereby.
4.5. Reports. FCN and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since January
1, 1996 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the SEC
and (vi) any SRO (collectively "Regulatory Agencies"), and all other reports
and statements required to be filed by them since January 1, 1996, including,
without limitation, any report or statement required to be filed pursuant to
the laws, rules or regulations of the United States, any state, or any
Regulatory Agency, and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report,
registration or statement or to pay such fees and assessments, either
individually or in the aggregate, will not have a Material Adverse Effect on
FCN. Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of FCN and its Subsidiaries, no Regulatory
Agency has initiated any proceeding or, to the best knowledge of FCN,
investigation into the business or operations of FCN or any of its
Subsidiaries since January 1, 1996, except where such proceedings or
investigation are not likely, either individually or in the aggregate, to have
a Material Adverse Effect on FCN. There is no unresolved violation, criticism,
or exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of FCN or any of its Subsidiaries which, in the
reasonable judgment of FCN, is likely, either individually or in the
aggregate, to have a Material Adverse Effect on FCN.
4.6. Financial Statements. FCN has previously made available to BANC ONE
copies of the consolidated balance sheets of FCN and its Subsidiaries as of
December 31, for the fiscal years 1996 and 1997, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
fiscal years 1995 through 1997, inclusive, as reported in FCN's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
each case accompanied by the audit report of Arthur Andersen LLP, independent
public accountants with respect to FCN. The December 31, 1997 consolidated
balance sheet of FCN (including the related notes, where applicable) fairly
presents the consolidated financial position of FCN and its Subsidiaries as of
the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of FCN and its Subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with GAAP consistently applied
during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto. The books and records of FCN and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. The reserve for possible
loan and lease losses shown on the December 31, 1997 consolidated balance
sheet of FCN is adequate in all material respects under the requirements of
GAAP to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including, without limitation,
accrued interest receivable) as of December 31, 1997.
4.7. Broker's Fees. Except as set forth in the engagement letter agreements
between FCN and each of Lazard Freres & Co. LLC and Goldman, Sachs & Co., true
and complete copies of which have previously been provided to BANC ONE,
neither FCN nor any FCN Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
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broker's fees, commissions or finder's fees in connection with the Second Step
Merger or related transactions contemplated by this Agreement or the Option
Agreements.
4.8. Absence of Certain Changes or Events. (a) Except as publicly disclosed
in FCN Reports filed prior to the date hereof, since December 31, 1997, no
event or events have occurred which have had, individually or in the
aggregate, a Material Adverse Effect on FCN.
(b) Except as publicly disclosed in FCN Reports filed prior to the date
hereof, since December 31, 1997, FCN and its Subsidiaries have carried on
their respective businesses in all material respects in the ordinary and usual
course.
(c) Since December 31, 1997, neither FCN nor any of its Subsidiaries has (i)
except for such actions as are in the ordinary course of business consistent
with past practice or except as required by applicable law, (A) increased the
wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1997, or (B) granted any severance
or termination pay, entered into any contract to make or grant any severance
or termination pay, or paid any bonuses aggregating in excess of 5% of FCN's
1997 salary and employee benefits expenses, other than customary year-end
bonuses for fiscal 1997, or (ii) suffered any strike, work stoppage, slowdown,
or other labor disturbance which is likely, either individually or in the
aggregate, to have a Material Adverse Effect on FCN.
4.9. Legal Proceedings. (a) Neither FCN nor any of its Subsidiaries is a
party to any, and there are no pending or, to the best of FCN's knowledge,
threatened, material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against FCN or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the FCN Option
Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect on FCN.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon FCN, any of its Subsidiaries or the assets of
FCN or any of its Subsidiaries which has had, or might reasonably be expected
to have, a Material Adverse Effect on FCN.
4.10. Taxes and Tax Returns. (a) Each of FCN and its Subsidiaries has duly
filed all federal, state, county, foreign and, to the best of FCN's knowledge,
local information returns and tax returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provisions for the payment of all
Taxes and other governmental charges which have been incurred or are due or
claimed to be due from it by federal, state, county, foreign or local taxing
authorities on or prior to the date of this Agreement (including, without
limitation, if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits, franchises, licenses,
sales and payrolls) other than (i) Taxes or other charges which are not yet
delinquent or are being contested in good faith and have not been finally
determined, or (ii) information returns, tax returns, Taxes or other
governmental charges the failure to file, pay or make provision for, either
individually or in the aggregate, are not likely, in the reasonable judgment
of FCN, to have a Material Adverse Effect on FCN. The income tax returns of
FCN and its Subsidiaries have been examined by the Internal Revenue Service
(the "IRS") and any liability with respect thereto has been satisfied for all
years to and including 1982, and either no material deficiencies were asserted
as a result of such examination for which FCN does not have adequate reserves
or all such deficiencies were satisfied. To the best of FCN's knowledge, there
are no material disputes pending, or claims asserted for, Taxes or assessments
upon FCN or any of its Subsidiaries for which FCN does not have adequate
reserves, nor has FCN or any of its Subsidiaries given any currently effective
waivers extending the statutory period of limitation applicable to any
federal, state, county or local income tax return for any period. In addition,
(A) proper and accurate
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amounts have been withheld by FCN and its Subsidiaries from their employees
for all prior periods in compliance in all material respects with the tax
withholding provisions of applicable federal, state and local laws, except
where failure to do so would not have a Material Adverse Effect on FCN, (B)
federal, state, county and local returns which are accurate and complete in
all material respects have been filed by FCN and its Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes, except where failure to do so would
not have a Material Adverse Effect on FCN, (C) the amounts shown on such
federal, state, local or county returns to be due and payable have been paid
in full or adequate provision therefor has been included by FCN in its
consolidated financial statements as of December 31, 1997, except where
failure to do so would not have a Material Adverse Effect on FCN and (D) there
are no Tax liens upon any property or assets of FCN or its Subsidiaries except
liens for current taxes not yet due or liens that would not have a Material
Adverse Effect on FCN. Neither FCN nor any of its Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the
Code by reason of a voluntary change in accounting method initiated by FCN or
any of its Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which has had or is
reasonably likely to have a Material Adverse Effect on FCN. Except as set
forth in the financial statements described in Section 4.6, neither FCN nor
any of its Subsidiaries has entered into a transaction which is being
accounted for as an installment obligation under Section 453 of the Code,
which would be reasonably likely to have a Material Adverse Effect on FCN.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all federal,
state, county, local, and foreign income, excise, gross receipts, gross
income, ad valorem, profits, gains, property, capital, sales, transfer, use,
payroll, employment, severance, withholding, duties, intangibles, franchise,
backup withholding, and other taxes, charges, levies or like assessments
together with all penalties and additions to tax and interest thereon.
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by FCN or any Subsidiary
of FCN under any contract, plan, program, arrangement or understanding would
be reasonably likely to have a Material Adverse Effect on FCN.
4.11. Employees. (a) The FCN Disclosure Schedule sets forth a true and
complete list of each material employee or director benefit plan, arrangement
or agreement that is maintained, or contributed to, as of the date of this
Agreement (the "FCN Benefit Plans") by FCN or any of its Subsidiaries or by
any trade or business, whether or not incorporated (a "FCN ERISA Affiliate"),
all of which together with FCN would be deemed a "single employer" within the
meaning of Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(b) FCN has heretofore made available to BANC ONE true and complete copies
of each of the FCN Benefit Plans and certain related documents, including, but
not limited to, (i) the actuarial report for such FCN Benefit Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the FCN Benefit Plans has been operated and administered in
all material respects with applicable laws, including, but not limited to,
ERISA and the Code, (ii) each of the FCN Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified,
and there are no existing circumstances or any events that have occurred that
could reasonably be expected to adversely affect the qualified status of any
such plan, (iii) with respect to each Plan which is subject to Title IV of
ERISA, the present value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as
of its latest valuation date, exceed the then current value of the assets of
such Plan allocable to such accrued benefits, (iv) no FCN Benefit Plan
provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees or
directors of FCN, its Subsidiaries or any FCN ERISA Affiliate beyond their
retirement or other termination of service, other than (A) coverage mandated
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by applicable law, (B) death benefits or retirement benefits under any
"employee pension plan" (as such term is defined in Section 3(2) of ERISA),
(C) deferred compensation benefits accrued as liabilities on the books of FCN,
its Subsidiaries or the FCN ERISA Affiliates or (D) benefits the full cost of
which is borne by the current or former employee or director (or his
beneficiary), (v) no material liability under Title IV of ERISA has been
incurred by FCN, its Subsidiaries or any FCN ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to
FCN, its Subsidiaries or any FCN ERISA Affiliate of incurring a material
liability thereunder, (vi) no FCN Benefit Plan is a "multiemployer pension
plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions or other amounts payable by FCN or its Subsidiaries as of the
Effective Time with respect to each FCN Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with GAAP and Section
412 of the Code, (viii) neither FCN, its Subsidiaries nor any FCN ERISA
Affiliate has engaged in a transaction in connection with which FCN, its
Subsidiaries or any FCN ERISA Affiliate reasonably could be subject to either
a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA
or a material tax imposed pursuant to Section 4975 or 4976 of the Code, and
(ix) to the best knowledge of FCN there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the FCN Benefit Plans or any trusts related thereto which
are, in the reasonable judgment of FCN, likely, either individually or in the
aggregate, to have a Material Adverse Effect on FCN.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any material payment
(including, without limitation, severance, unemployment compensation, "excess
parachute payment" (within the meaning of Section 280G of the Code),
forgiveness of indebtedness or otherwise) becoming due to any director or any
employee of FCN or any of its affiliates from FCN or any of its affiliates
under any FCN Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any FCN Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits to any
material extent.
4.12. SEC Reports. FCN has previously made available to BANC ONE an accurate
and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
FCN with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "FCN Reports") and prior to the
date hereof and (b) communication mailed by FCN to its stockholders since
January 1, 1996 and prior to the date hereof, and no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date shall be deemed to
modify information as of an earlier date. Since January 1, 1996, FCN has
timely filed all FCN Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act, and, as of their respective
dates, all FCN Reports complied in all material respects with the published
rules and regulations of the SEC with respect thereto.
4.13. Compliance with Applicable Law. FCN and each of its Subsidiaries hold
all material licenses, franchises, permits and authorizations necessary for
the lawful conduct of their respective businesses under and pursuant to each,
and have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to FCN or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not,
individually or in the aggregate, have a Material Adverse Effect on FCN.
4.14. Certain Contracts. (a) Neither FCN nor any of its Subsidiaries is a
party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees, other than in the ordinary course of business
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consistent with past practice, (ii) which, upon the consummation or
stockholder approval of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result
in any payment (whether of severance pay or otherwise) becoming due from BANC
ONE, FCN, the Surviving Corporation, or any of their respective Subsidiaries
to any officer or employee thereof, (iii) which is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the FCN Reports, (iv) which materially restricts
the conduct of any line of business by FCN, (v) with or to a labor union or
guild (including any collective bargaining agreement) or (vi) (including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. FCN has previously made available to BANC ONE
true and correct copies of all employment and deferred compensation agreements
which are in writing and to which FCN is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section 4.14(a),
whether or not set forth in the FCN Disclosure Schedule, is referred to herein
as an "FCN Contract", and neither FCN nor any of its Subsidiaries knows of, or
has received notice of, any violation of the above by any of the other parties
thereto which, individually or in the aggregate, would have a Material Adverse
Effect on FCN.
(b) (i) Each FCN Contract is valid and binding on FCN or any of its
Subsidiaries, as applicable, and in full force and effect, (ii) FCN and each
of its Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each FCN Contract, except where
such noncompliance, individually or in the aggregate, would not have a
Material Adverse Effect on FCN, and (iii) no event or condition exists which
constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of FCN or any of its Subsidiaries under any such
FCN Contract, except where such default, individually or in the aggregate,
would not have a Material Adverse Effect on FCN.
4.15. Agreements with Regulatory Agencies. Neither FCN nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January
1, 1996, has adopted any board resolutions at the request of any Regulatory
Agency or other Governmental Entity that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the FCN Disclosure Schedule, an "FCN
Regulatory Agreement"), nor has FCN or any of its Subsidiaries been advised
since January 1, 1996, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Regulatory Agreement.
4.16. Other Activities of FCN and its Subsidiaries.
(a) Neither of FCN nor any of its Subsidiaries that is not a bank, a bank
operating subsidiary or a bank service corporation, directly or indirectly,
engages in any activity prohibited by the Federal Reserve Board. Without
limiting the generality of the foregoing, any equity investment of FCN and
each Subsidiary that is not a bank, a bank operating subsidiary or a bank
service corporation, is not prohibited by the Federal Reserve Board.
(b) To FCN's knowledge, each FCN Subsidiary which is a bank (a "FCN Bank
Subsidiary") currently performs all personal trust, corporate trust and other
fiduciary activities ("Trust Activities") with requisite authority under
applicable law of Governmental Entities and in accordance in all material
respects with the agreed-upon terms of the agreements and instruments
governing such Trust Activities, sound fiduciary principles and applicable law
and regulation (specifically including,
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but not limited to, Section 9 of Title 12 of the Code of Federal Regulations);
there is no investigation or inquiry by any Governmental Entity pending, or to
the knowledge of FCN, threatened, against or affecting FCN, or any Significant
Subsidiary thereof relating to the compliance by FCN or any such Significant
Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X of the
SEC) with sound fiduciary principles and applicable regulations; and except
where any such failure would not have a Material Adverse Effect on FCN, each
employee of a FCN Bank Subsidiary had the authority to act in the capacity in
which he or she acted with respect to Trust Activities, in each case, in which
such employee held himself or herself out as a representative of a FCN Bank
Subsidiary; and each FCN Bank Subsidiary has established policies and
procedures for the purpose of complying with applicable laws of Governmental
Entities relating to Trust Activities, has followed such policies and
procedures in all material respects and has performed appropriate internal
audit reviews of, and has engaged independent accountants to perform audits
of, Trust Activities, which audits since January 1, 1996 have disclosed no
material violations of applicable laws of Governmental Entities or such
policies and procedures.
4.17. Investment Securities. Each of FCN and its Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practices to
secure obligations of FCN or any of its Subsidiaries. Such securities are
valued on the books of FCN in accordance with GAAP.
4.18. Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of FCN or for the account
of a customer of FCN or one of its Subsidiaries, were entered into in the
ordinary course of business and, to FCN's knowledge, in accordance with
prudent banking practice and applicable rules, regulations and policies of any
Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of FCN or
one of its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. FCN and each of its
Subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to perform
have accrued; and, to FCN's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
4.19. Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of FCN
included in the FCN December 31, 1997 Form 10-K and for liabilities incurred
in the ordinary course of business consistent with past practice, since
December 31, 1997, neither FCN nor any of its Subsidiaries has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either alone or when
combined with all similar liabilities, has had, or could reasonably be
expected to have, a Material Adverse Effect on FCN.
4.20. Insurance. FCN and its Subsidiaries have in effect insurance coverage
with reputable insurers, which in respect of amounts, premiums, types and
risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their subsidiaries
comparable in size and operations to FCN and its Subsidiaries.
4.21. Environmental Liability. Except as set forth in the FCN Disclosure
Schedule, there are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature seeking to
impose, or that could reasonably result in the imposition, on FCN of any
liability or obligation arising under common law or under any local, state or
federal environmental statute,
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regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), pending or threatened against FCN, which liability or obligation
could reasonably be expected to have a Material Adverse Effect on FCN. To the
knowledge of FCN, there is no reasonable basis for any such proceeding, claim,
action or governmental investigation that would impose any material liability
or obligation that could reasonably be expected to have a Material Adverse
Effect on FCN. FCN is not subject to any agreement, order, judgment, decree,
letter or memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any material liability or obligation that could
reasonably be expected to have a Material Adverse Effect on FCN.
4.22. State Takeover Laws; FCN Certificate of Incorporation. The Board of
Directors of FCN has approved the transactions contemplated by this Agreement
and the Option Agreements (i) for purposes of Section 203(a)(1) of the DGCL
such that the provisions of Section 203(a) of the DGCL and (ii) for purposes
of Article Thirteenth of the FCN Certificate of Incorporation such that the
provisions thereof will not apply to this Agreement or the Option Agreements
or any of the transactions contemplated hereby or thereby.
4.23. Year 2000. None of FCN or any of the FCN Subsidiaries has received, or
reasonably expects to receive, a "Year 2000 Deficiency Notification Letter"
(as such term is employed in the Federal Reserve's Supervision and Regulation
Letter No. SR 98-3(SUP), dated March 4, 1998). FCN has disclosed to BANC ONE a
complete and accurate copy of FCN's plan, including an estimate of the
anticipated associated costs, for addressing the issues ("Year 2000 Issues")
set forth in the statements of the Federal Financial Institutions Examination
Council, dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 1997, entitled "Safety and Soundness Guidelines Concerning the
Year 2000 Business Risk," as such issues affect FCN and its Subsidiaries.
Between the date of this Agreement and the Effective Time, FCN shall use
commercially practicable efforts to implement such plan.
4.24. Reorganization; Pooling of Interests. As of the date of this
Agreement, assuming compliance by BANC ONE and FCN with the covenants and
agreements set forth in Section 7.13 hereof, FCN has no reason to believe that
the Second Step Merger will not qualify as a "reorganization" within the
meaning of Section 368(a) of the Code and as a "pooling of interests" for
accounting purposes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BANC ONE AND NEWCO
Except as disclosed in the BANC ONE disclosure schedule delivered to FCN
concurrently herewith (the "BANC ONE Disclosure Schedule") BANC ONE and Newco
hereby represent and warrant to FCN as follows:
5.1. Corporate Organization. (a) BANC ONE is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio.
BANC ONE has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on BANC ONE.
BANC ONE is, and at the Effective Time Newco will be, duly registered as a
bank holding company under the BHC Act. True and complete copies of the
Restated Articles of Incorporation (the "BANC ONE Articles") and
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Regulations (the "Regulations") of BANC ONE, and of the Certificate of
Incorporation (the "Newco Certificate of Incorporation") and By-Laws of Newco,
in each case as in effect as of the date of this Agreement, have previously
been made available by BANC ONE to FCN.
(b) Each BANC ONE Subsidiary (i) is duly organized and validly existing as a
bank, corporation, partnership or limited liability company under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in
good standing in all jurisdictions (whether Federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified
would have a Material Adverse Effect on BANC ONE, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of each of BANC ONE and Newco accurately reflect in all
material respects all corporate actions held or taken since January 1, 1996
(or the date of its incorporation, in the case of Newco) of its stockholders
and Board of Directors (including committees of the Board of Directors of BANC
ONE).
5.2. Capitalization. (a) The authorized capital stock of BANC ONE consists
of 950,000,000 shares of BANC ONE Common Stock, of which, as of March 31,
1998, 643,833,890 were issued and outstanding, and 35,000,000 shares of
Preferred Stock, no par value (the "BANC ONE Preferred Stock" and, together
with the BANC ONE Common Stock, the "BANC ONE Capital Stock"), of which (i)
10,000,000 shares were designated and no shares were issued and outstanding as
Class A Preferred Stock ("BANC ONE Class A Preferred Stock"), (ii) 1,000,000
shares were designated and no shares were issued and outstanding as Class B
Preferred Stock ("BANC ONE Class B Preferred Stock") and (iii) 24,000,000
shares were designated and 1,992,046 were issued and outstanding as Series C
$3.50 Cumulative Convertible Preferred Stock, without par value, of BANC ONE
(the "BANC ONE Series C Preferred"). BANC ONE has called the BANC ONE Series C
Preferred for redemption and no shares of BANC ONE Series C Preferred will be
outstanding at the First Effective Time. As of March 31, 1998, 3,742,299
shares of BANC ONE Common Stock were held in BANC ONE's treasury. As of the
date hereof, no shares of BANC ONE Common Stock or BANC ONE Preferred Stock
were reserved for issuance, except for (i) 19,533,088 shares of BANC ONE
Common Stock issuable upon the exercise of stock options pursuant to the BANC
ONE Stock Plans, (ii) 62,599,680 shares of BANC ONE Common Stock issuable
pursuant to the Agreement and Plan of Merger, dated as of October 20, 1997, by
and between BANC ONE and First Commerce Corporation (the "First Commerce
Merger Agreement") and (iii) the shares of BANC ONE Common Stock issuable
pursuant to the BANC ONE Option Agreement. All of the issued and outstanding
shares of BANC ONE Common Stock and BANC ONE Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except for the BANC ONE Option
Agreement, the First Commerce Merger Agreement and the BANC ONE Stock Plans,
BANC ONE does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of BANC ONE Common Stock or BANC
ONE Preferred Stock or any other equity securities of BANC ONE or any
securities representing the right to purchase or otherwise receive any shares
of BANC ONE Common Stock or BANC ONE Preferred Stock (collectively, "BANC ONE
Rights"). Since December 31, 1997, BANC ONE has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than in connection with a 10% stock dividend on
the outstanding shares of BANC ONE Common Stock paid on February 26, 1998 and
pursuant to (A) the exercise of employee stock options granted prior to such
date, (B) the conversion of the BANC ONE Series C Preferred into shares of
BANC ONE Common Stock in accordance with the terms thereof, (C) the
consummation of the merger contemplated by the First Commerce Merger Agreement
and (D) pursuant to the BANC ONE Option Agreement. BANC ONE has previously
provided FCN with a list of the option holders, the date of each option to
purchase BANC ONE Common Stock granted, the number of shares subject to
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each such option and the price at which each such option may be exercised
under an applicable BANC ONE Stock Plan. In no event will the aggregate number
of shares of BANC ONE Common Stock outstanding at the First Effective Time
(including all shares of BANC ONE Common Stock subject to BANC ONE Rights
other than the BANC ONE Option Agreement) exceed the number specified in
Section 5.2(a) of the BANC ONE Disclosure Schedule.
(b) The initial authorized capital stock of Newco consists of (i) 1,000
shares of Newco Common Stock, of which (x) as of the date hereof, no shares
are issued and outstanding and (y) immediately prior to the First Effective
Time, 100 shares will be issued and outstanding, and (ii) 1,000 shares of
preferred stock, no par value per share, of which no shares are issued and
outstanding. The authorized capital stock of Newco immediately following
consummation of the First Step Merger (and prior to the Effective Time) will
be as set forth in the form of Newco Certificate of Incorporation annexed as
Exhibit A hereto. No change in such capitalization has occurred since such
date or will occur prior to the Effective Time except as provided in or
contemplated by this Agreement. At the Effective Time, no capital stock of
Newco (and no options, warrants or other rights to acquire, and no securities
convertible into or exchangeable for, any such capital stock) will be
outstanding other than capital stock, options, warrants, rights or securities
issued or converted at the effective time of the First Step Merger in respect
of BANC ONE Common Stock and any associated rights issued pursuant to and as
described in Article I of this Agreement. The shares of Newco Capital Stock to
be issued pursuant to the Merger will be duly authorized and validly issued
and, at the Effective Time, all such shares will be fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof.
(c) BANC ONE owns (and will own at the First Effective Time, in the case of
Newco), directly or indirectly, all of the issued and outstanding shares of
capital stock or other ownership interests of each of the BANC ONE
Subsidiaries and Newco, free and clear of any Liens, and all of such shares or
ownership interests are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No BANC ONE Subsidiary has or is bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such Subsidiary. Newco has,
and will have prior to the First Effective Time, no Subsidiaries or material
investments of any kind in any entity.
5.3. Authority; No Violation. (a) Each of BANC ONE and Newco has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of each of BANC
ONE and Newco. As of the First Effective Time, BANC ONE, as sole stockholder
of Newco, will have duly approved this Agreement and the transactions
contemplated hereby. The Board of Directors of BANC ONE has directed that this
Agreement and the transactions contemplated hereby be submitted to BANC ONE's
shareholders for approval at a meeting of such shareholders and, except for
(i) the adoption of this Agreement by the affirmative vote of the holders of a
majority of the outstanding shares of BANC ONE Common Stock, (ii) the issuance
to BANC ONE of shares of Newco Common Stock, (iii) the increase in the number
of shares of authorized capital stock of Newco contemplated by Section 7.12,
(iv) the filing by Newco with the Delaware Secretary of certificates of
designations with respect to the Newco New Preferred Stock and (v) the
approval by BANC ONE contemplated by the prior sentence, no other corporate
proceedings on the part of BANC ONE or Newco are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of BANC ONE
and Newco and (assuming due authorization, execution and delivery by FCN)
constitutes a valid and binding obligation of each
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of BANC ONE and Newco, enforceable against each of BANC ONE and Newco in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by BANC ONE or
Newco, nor the consummation by BANC ONE of the transactions contemplated
hereby, nor compliance by BANC ONE with any of the terms or provisions hereof,
will (i) violate any provision of the BANC ONE Articles or Regulations, or the
Newco Certificate of Incorporation or Bylaws, or (ii) assuming that the
consents and approvals referred to in Section 5.4 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to BANC ONE or any of its Subsidiaries or any
of their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the respective
properties or assets of BANC ONE or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
BANC ONE or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected, except (in the
case of clause (y) above) for such violations, conflicts, breaches or defaults
which either individually or in the aggregate will not have or be reasonably
likely to have a Material Adverse Effect on BANC ONE.
5.4. Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the State Approvals, (iii) the
filing with the SEC of the Joint Proxy Statement and the S-4, (iv) the filing
of the certificates of merger with the Ohio Secretary pursuant to the OGCL and
with the Delaware Secretary in respect of the First Step Merger, and the
Certificate of Merger with the Delaware Secretary pursuant to the DGCL, (v)
any notices to or filings with the SBA, (vi) any consent, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to the
regulation of broker-dealers or investment advisers, and federal commodities
laws relating to the regulation of futures commission merchants and the rules
and regulations thereunder and of any applicable SRO, and the rules of the
NYSE, or which are required under consumer finance, mortgage banking and other
similar laws, (vii) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of shares of Newco Common Stock pursuant to this
Agreement and (viii) the approval of this Agreement by the requisite vote of
the stockholders of BANC ONE and FCN, no consents or approvals of or filings
or registrations with any Governmental Entity or with any third party are
necessary in connection with (A) the execution and delivery by BANC ONE or
Newco Agreement and (B) the consummation of the Merger and the other
transactions contemplated hereby.
5.5. Reports. BANC ONE and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required
to be made with respect thereto, that they were required to file since January
1, 1996 with the Regulatory Agencies, and all other reports and statements
required to be filed by them since January 1, 1996, including, without
limitation, any report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, any state, or any Regulatory Agency
and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on BANC ONE. Except for
normal examinations conducted by a Regulatory Agency in the regular course of
the business of BANC ONE and its Subsidiaries, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of BANC ONE, investigation
into the business or operations of BANC ONE or any of its Subsidiaries since
January 1, 1996, except where such proceedings or investigation are not
likely, either individually or in the aggregate, to have a
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Material Adverse Effect on BANC ONE. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of BANC ONE or any of its Subsidiaries
which, in the reasonable judgment of BANC ONE, is likely, either individually
or in the aggregate, to have a Material Adverse Effect on BANC ONE.
5.6. Financial Statements. BANC ONE has previously made available to FCN
copies of the consolidated balance sheets of BANC ONE and its Subsidiaries as
of December 31, for the fiscal years 1996 and 1997, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1995 through 1997, inclusive, as reported in BANC
ONE's Annual Report on Form 10-K for the fiscal year ended December 31, 1997
filed with the SEC under the Exchange Act (the "BANC ONE 10-K"), in each case
accompanied by the audit report of Coopers & Lybrand L.L.P., independent
public accountants with respect to BANC ONE. The December 31, 1997
consolidated balance sheet of BANC ONE (including the related notes) fairly
presents the consolidated financial position of BANC ONE and its Subsidiaries
as of the date thereof, and the other financial statements referred to in this
Section 5.6 (including the related notes) fairly present the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of BANC ONE and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such
statements (including the related notes) comply in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
(including the related notes) has been prepared in all material respects in
accordance with GAAP consistently applied during the periods involved, except
in each case as indicated in such statements or in the notes thereto. The
books and records of BANC ONE and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions. The reserve for possible loan and lease losses shown on the
December 31, 1997 consolidated balance sheet of BANC ONE is adequate in all
material respects under the requirements of GAAP to provide for possible
losses, net of recoveries relating to loans previously charged off, on loans
outstanding (including, without limitation, accrued interest receivable) as of
December 31, 1997.
5.7. Broker's Fees. Except as set forth in the engagement letter agreements
between BANC ONE and each of Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated, true and complete copies
of which have previously been provided to FCN, neither BANC ONE nor any BANC
ONE Subsidiary nor any of their respective officers or directors has employed
any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the Merger or related
transactions contemplated by this Agreement or the Option Agreements.
5.8. Absence of Certain Changes or Events. (a) Except as publicly disclosed
in BANC ONE Reports filed prior to the date hereof, since December 31, 1997,
no event has occurred which has had, individually or in the aggregate, a
Material Adverse Effect on BANC ONE.
(b) Except as publicly disclosed in BANC ONE Reports filed prior to the date
hereof, since December 31, 1997, BANC ONE and its Subsidiaries have carried on
their respective businesses in all material respects in the ordinary and usual
course.
(c) Since December 31, 1997, neither BANC ONE nor any of its Subsidiaries
has (i) except for such actions as are in the ordinary course of business
consistent with past practice or except as required by applicable law, (A)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from
the amount thereof in effect as of December 31, 1997, or (B) granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonuses aggregating in excess of 5%
of BANC ONE's 1997 salary and employee benefit expenses, other than customary
year-end bonuses for fiscal 1997 or (ii) suffered any strike, work stoppage,
slowdown, or other labor disturbance
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which, in the reasonable judgment of BANC ONE is likely, either individually
or in the aggregate, to have a Material Adverse Effect on BANC ONE.
5.9. Legal Proceedings. (a) Neither BANC ONE nor any of its Subsidiaries is
a party to any and there are no pending or, to the best of BANC ONE's
knowledge, threatened, material legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of
any nature against BANC ONE or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or
the BANC ONE Option Agreement as to which there is a reasonable probability of
an adverse determination and which, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect on BANC ONE.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies or banks) imposed upon BANC ONE, any of its Subsidiaries or the
assets of BANC ONE or any of its Subsidiaries which has had, or might
reasonably be expected to have, a Material Adverse Effect on BANC ONE or the
Surviving Corporation.
5.10. Taxes and Tax Returns. (a) Each of BANC ONE and its Subsidiaries has
duly filed all federal, state, county, foreign and, to the best of BANC ONE's
knowledge, local information returns and tax returns required to be filed by
it on or prior to the date hereof (all such returns being accurate and
complete in all material respects) and has duly paid or made provisions for
the payment of all Taxes and other governmental charges which have been
incurred or are due or claimed to be due from it by federal, state, county,
foreign or local taxing authorities on or prior to the date of this Agreement
(including, without limitation, if and to the extent applicable, those due in
respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other
charges which are not yet delinquent or are being contested in good faith and
have not been finally determined, or (ii) information returns, tax returns,
Taxes or other governmental charges the failure to file, pay or make provision
for, either individually or in the aggregate, is not likely, in the reasonable
judgment of BANC ONE, to have a Material Adverse Effect on BANC ONE. The
income tax returns of BANC ONE and its Subsidiaries have been examined by the
IRS through 1992 and any liability with respect thereto has been satisfied,
and either no material deficiencies were asserted as a result of such
examination for which BANC ONE does not have adequate reserves or all such
deficiencies were satisfied. To the best of BANC ONE's knowledge, there are no
material disputes pending, or claims asserted for, Taxes or assessments upon
BANC ONE or any of its Subsidiaries for which BANC ONE does not have adequate
reserves, nor has BANC ONE or any of its Subsidiaries given any currently
effective waivers extending the statutory period of limitation applicable to
any federal, state, county or local income tax return for any period. In
addition, (A) proper and accurate amounts have been withheld by BANC ONE and
its Subsidiaries from their employees for all prior periods in compliance in
all material respects with the tax withholding provisions of applicable
federal, state and local laws, except where failure to do so would not have a
Material Adverse Effect on BANC ONE, (B) federal, state, county and local
returns which are accurate and complete in all material respects have been
filed by BANC ONE and its Subsidiaries for all periods for which returns were
due with respect to income tax withholding, Social Security and unemployment
taxes, except where failure to do so would not have a Material Adverse Effect
on BANC ONE, (C) the amounts shown on such federal, state, local or county
returns to be due and payable have been paid in full or adequate provision
therefor has been included by BANC ONE in its consolidated financial
statements as of December 31, 1997, except where failure to do so would not
have a Material Adverse Effect on BANC ONE and (D) there are no Tax liens upon
any property or assets of BANC ONE or its Subsidiaries except liens for
current taxes not yet due or liens that would not have a Material Adverse
Effect on BANC ONE. Neither BANC ONE nor any of its Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the
Code by reason of a voluntary change in accounting method initiated by BANC
ONE or any of its Subsidiaries, and the IRS has not initiated or proposed any
such adjustment or change in accounting method, in either case, which has had
or is reasonably
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likely to have a Material Adverse Effect on BANC ONE. Except as set forth in
the financial statements described in Section 5.6, neither BANC ONE nor any of
its Subsidiaries has entered into a transaction which is being accounted for
as an installment obligation under Section 453 of the Code, which would be
reasonably likely to have a Material Adverse Effect on BANC ONE.
(b) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by BANC ONE or any
Subsidiary of BANC ONE under any contract, plan, program, arrangement or
understanding would be reasonably likely to have a Material Adverse Effect on
BANC ONE.
5.11. Employees. (a) The BANC ONE Disclosure Schedule sets forth a true and
complete list of each material employee benefit plan, arrangement or agreement
that is maintained, or contributed to, as of the date of this Agreement (the
"BANC ONE Benefit Plans") by BANC ONE, any of its Subsidiaries or by any trade
or business, whether or not incorporated (a "BANC ONE ERISA Affiliate"), all
of which together with BANC ONE would be deemed a "single employer" within the
meaning of Section 4001 of ERISA.
(b) BANC ONE has heretofore made available to FCN true and complete copies
of each of the BANC ONE Benefit Plans and certain related documents,
including, but not limited to, (i) the actuarial report for such BANC ONE
Benefit Plan (if applicable) for each of the last two years, and (ii) the most
recent determination letter from the IRS (if applicable) for such BANC ONE
Benefit Plan.
(c) (i) Each of the BANC ONE Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the BANC ONE
Benefit Plans intended to be "qualified" within the meaning of Section 401(a)
of the Code is so qualified, and there are no existing circumstances or any
events that have occurred that could reasonably be expected to adversely
affect the qualified status of any such Plan, (iii) with respect to each BANC
ONE Benefit Plan which is subject to Title IV of ERISA, the present value of
accrued benefits under such BANC ONE Benefit Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such BANC ONE Benefit Plan's actuary with respect to such BANC ONE
Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such BANC ONE Benefit Plan allocable to such
accrued benefits, (iv) no BANC ONE Benefit Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees or directors of BANC ONE, its
Subsidiaries or any BANC ONE ERISA Affiliate beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law,
(B) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of BANC ONE, its Subsidiaries or
the BANC ONE ERISA Affiliates or (D) benefits the full cost of which is borne
by the current or former employee or director (or his beneficiary), (v) no
material liability under Title IV of ERISA has been incurred by BANC ONE, its
Subsidiaries or any BANC ONE ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to BANC ONE, its
Subsidiaries or any BANC ONE ERISA Affiliate of incurring a material liability
thereunder, (vi) no BANC ONE Benefit Plan is a "multiemployer pension plan"
(as such term is defined in Section 3(37) of ERISA), (vii) all contributions
or other amounts payable by BANC ONE or its Subsidiaries as of the Effective
Time with respect to each BANC ONE Benefit Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and Section 412
of the Code, (viii) neither BANC ONE, its Subsidiaries nor any BANC ONE ERISA
Affiliate has engaged in a transaction in connection with which BANC ONE, its
Subsidiaries or any BANC ONE ERISA Affiliate reasonably could be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code,
and (ix) to the best knowledge of BANC ONE there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the BANC ONE Benefit Plans or any trusts related thereto
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which are, in the reasonable judgment of BANC ONE, likely, either individually
or in the aggregate, to have a Material Adverse Effect on BANC ONE.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) (i) result in any material payment
(including, without limitation, severance, unemployment compensation, "excess
parachute payment" (within the meaning of Section 280G of the Code),
forgiveness of indebtedness or otherwise) becoming due to any director or any
employee of BANC ONE or any of its affiliates from BANC ONE or any of its
affiliates under any BANC ONE Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any BANC ONE Benefit Plan or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits to any material extent.
5.12. SEC Reports. BANC ONE has previously made available to FCN an accurate
and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
BANC ONE with the SEC pursuant to the Securities Act or the Exchange Act (the
"BANC ONE Reports") and prior to the date hereof and (b) communication mailed
by BANC ONE to its stockholders since January 1, 1996 and prior to the date
hereof, and no such registration statement, prospectus, report, schedule,
proxy statement or communication contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier
date. Since January 1, 1996, BANC ONE has timely filed all BANC ONE Reports
and other documents required to be filed by it under the Securities Act and
the Exchange Act, and, as of their respective dates, all BANC ONE Reports
complied in all material respects with the published rules and regulations of
the SEC with respect thereto.
5.13. Compliance with Applicable Law. BANC ONE and each of its Subsidiaries
hold all material licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses under and pursuant to
each, and have complied in all material respects with and are not in default
in any material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to
BANC ONE or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have a Material Adverse Effect on
BANC ONE.
5.14. Certain Contracts. (a) Neither BANC ONE nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) with respect to the employment of any directors,
officers or employees other than in the ordinary course of business consistent
with past practice, (ii) which, upon the consummation or stockholder approval
of the transactions contemplated by this Agreement will (either alone or upon
the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from BANC ONE, FCN, the
Surviving Corporation, or any of their respective Subsidiaries to any officer
or employee thereof, (iii) which is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or incorporated by
reference in the BANC ONE Reports, (iv) which materially restricts the conduct
of any line of business by BANC ONE, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan) any of the benefits of which will be increased, or the vesting
of the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. BANC ONE has previously made available to FCN
true and correct copies of all employment and deferred compensation agreements
which are in writing and to which BANC ONE is a party. Each contract,
arrangement, commitment or understanding of the type described in this Section
5.14(a), whether or not set forth in the BANC
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ONE Disclosure Schedule, is referred to herein as a "BANC ONE Contract", and
neither BANC ONE nor any of its Subsidiaries knows of, or has received notice
of, any violation of the above by any of the other parties thereto which,
individually or in the aggregate, would have a Material Adverse Effect on BANC
ONE.
(b) (i) Each BANC ONE Contract is valid and binding on BANC ONE or any of
its Subsidiaries, as applicable, and in full force and effect, (ii) BANC ONE
and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each BANC ONE
Contract, except where such noncompliance, individually or in the aggregate,
would not have a Material Adverse Effect on BANC ONE, and (iii) no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a material default on the part of BANC ONE or any of its
Subsidiaries under any such BANC ONE Contract, except where such default,
individually or in the aggregate, would not have a Material Adverse Effect on
BANC ONE.
5.15. Agreements with Regulatory Agencies. Neither BANC ONE nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1996, a recipient of any supervisory letter from, or since January
1, 1996, has adopted any board resolutions at the request of any Regulatory
Agency or other Governmental Entity that currently restricts in any material
respect the conduct of its business or that in any material manner relates to
its capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the BANC ONE Disclosure Schedule, a "BANC
ONE Regulatory Agreement"), nor has BANC ONE or any of its Subsidiaries been
advised since January 1, 1996, by any Regulatory Agency or other Governmental
Entity that it is considering issuing or requesting any such Regulatory
Agreement.
5.16. Other Activities of BANC ONE and its Subsidiaries.
(a) Neither BANC ONE nor any of its Subsidiaries that is not a bank, a bank
operating subsidiary or a bank service corporation, directly or indirectly
engages in any activity prohibited by the Federal Reserve Board. Without
limiting the generality of the foregoing, any equity investment of BANC ONE
and each Subsidiary that is not a bank, a bank operating subsidiary or a bank
service corporation, is not prohibited by the Federal Reserve Board.
(b) To BANC ONE's knowledge, each BANC ONE Subsidiary which is a bank (a
"BANC ONE Bank Subsidiary") currently performs all Trust Activities with
requisite authority under applicable law of Governmental Entities and in
accordance in all material respects with the agreed-upon terms of the
agreements and instruments governing such Trust Activities, sound fiduciary
principles and applicable law and regulation (specifically including, but not
limited to, Section 9 of Title 12 of the Code of Federal Regulations); there
is no investigation or inquiry by any Governmental Entity pending, or, to the
knowledge of BANC ONE, threatened, against or affecting BANC ONE or any
Significant Subsidiary thereof relating to the compliance by BANC ONE or any
such Significant Subsidiary with sound fiduciary principles and applicable
regulations; and except where any such failure would not have a Material
Adverse Effect on BANC ONE, each employee of a BANC ONE Bank Subsidiary had
the authority to act in the capacity in which he or she acted with respect to
Trust Activities, in each case, in which such employee held himself or herself
out as a representative of a BANC ONE Bank Subsidiary; and each BANC ONE Bank
Subsidiary has established policies and procedures for the purpose of
complying with applicable laws of Governmental Entities relating to Trust
Activities, has followed such policies and procedures in all material respects
and has performed appropriate internal audit reviews of, and has engaged
independent accountants to perform audits of, Trust Activities, which audits
since January 1, 1996 have disclosed no material violations of applicable laws
of Governmental Entities or such policies and procedures.
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5.17. Investment Securities. Each of BANC ONE and its Subsidiaries has good
and marketable title to all securities held by it (except securities sold
under repurchase agreements or held in any fiduciary or agency capacity), free
and clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practice to secure
obligations of BANC ONE or any of its Subsidiaries. Such securities are valued
on the books of BANC ONE in accordance with GAAP.
5.18. Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of BANC ONE or for the
account of a customer of BANC ONE or one of its Subsidiaries, were entered
into in the ordinary course of business and, to BANC ONE's knowledge, in
accordance with prudent banking practice and applicable rules, regulations and
policies of any Regulatory Authority and with counterparties believed to be
financially responsible at the time and are legal, valid and binding
obligations of BANC ONE or one of its Subsidiaries enforceable in accordance
with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and are in full force
and effect. BANC ONE and each of its Subsidiaries has duly performed in all
material respects all of its material obligations thereunder to the extent
that such obligations to perform have accrued; and to BANC ONE's knowledge,
there are no material breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
5.19. Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of BANC ONE
included in the BANC ONE Form 10-K and for liabilities incurred in the
ordinary course of business consistent with past practice, since December 31,
1997, neither BANC ONE nor any of its Subsidiaries has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on BANC ONE.
5.20. Insurance. BANC ONE and its Subsidiaries have in effect insurance
coverage with reputable insurers, which in respect of amounts, premiums, types
and risks insured, constitutes reasonably adequate coverage against all risks
customarily insured against by bank holding companies and their subsidiaries
comparable in size and operations to BANC ONE and its Subsidiaries.
5.21. Environmental Liability. Except as set forth in the BANC ONE
Disclosure Schedule, there are no legal, administrative, arbitral or other
proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could result in the imposition,
on BANC ONE of any liability or obligation arising under common law or under
any local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or threatened against BANC ONE,
which liability or obligation could reasonably be expected to have a Material
Adverse Effect on BANC ONE. To the knowledge of BANC ONE, there is no
reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any material liability or obligation that
could reasonably be expected to have a Material Adverse Effect on BANC ONE.
BANC ONE is not subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any material liability or obligation that could
reasonably be expected to have a Material Adverse Effect on BANC ONE.
5.22. State Takeover Laws. (a) The Board of Directors of BANC ONE has
approved the transactions contemplated by this Agreement and the Option
Agreements pursuant to (i) Section 1704 of the OGCL such that the provisions
thereof, and (ii) Article Tenth of the BANC ONE Articles such
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that the provisions thereof, will not apply to this Agreement or the Option
Agreements or any of the transactions contemplated hereby or thereby.
5.23. Interim Operations of Newco. Newco has been incorporated on behalf of
BANC ONE solely for the purposes of accomplishing the First Step Merger, has
not engaged in any other business activity and has conducted its operations
only as contemplated hereby.
5.24. Year 2000. None of BANC ONE or any of the BANC ONE Subsidiaries has
received, or reasonably expects to receive, a Year 2000 Deficiency
Notification Letter. BANC ONE has disclosed to FCN a complete and accurate
copy of BANC ONE's plan, including an estimate of the anticipated associated
costs, for addressing Year 2000 Issues as such issues affect BANC ONE and its
Subsidiaries. Between the date of this Agreement and the Effective Time, BANC
ONE shall use commercially practicable efforts to implement such plan.
5.25. Reorganization; Pooling of Interests. As of the date of this
Agreement, assuming compliance by BANC ONE and FCN with the covenants and
agreements set forth in Section 7.13 hereof, BANC ONE has no reason to believe
that the Merger will not qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and as a "pooling of interests" for accounting
purposes.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the FCN Disclosure
Schedule and the BANC ONE Disclosure Schedule) or the Option Agreements, each
of BANC ONE and FCN shall, and shall cause each of their respective
Subsidiaries to, (a) conduct its business in the usual, regular and ordinary
course consistent with past practice, (b) use reasonable best efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its key
officers and key employees and (c) take no action which would adversely affect
or delay the ability of either BANC ONE or FCN to obtain any necessary
approvals of any Regulatory Agency or other governmental authority required
for the transactions contemplated hereby or to perform its covenants and
agreements under this Agreement or the Option Agreements or to consummate the
transactions contemplated hereby or thereby.
6.2. Forbearances. During the period from the date of this Agreement to the
Effective Time, except as set forth in the BANC ONE Disclosure Schedule or the
FCN Disclosure Schedule, as the case may be, and, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, none of
BANC ONE, Newco and FCN shall, and neither BANC ONE nor FCN shall permit any
of their respective Subsidiaries to, without the prior written consent of BANC
ONE, in the case of actions proposed to be undertaken by FCN, or of FCN, in
the case of actions proposed to be undertaken by BANC ONE or Newco:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness of
FCN or any of its wholly-owned Subsidiaries to FCN or any of its Subsidiaries,
on the one hand, or of BANC ONE or any of its Subsidiaries to BANC ONE or any
of its wholly-owned Subsidiaries, on the other hand), assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make any
loan or advance (it being understood and agreed that incurrence of
indebtedness
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in the ordinary course of business shall include, without limitation, the
creation of deposit liabilities, purchases of Federal funds, sales of
certificates of deposit and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other distribution on,
or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock
(except (A) in the case of FCN, for regular quarterly cash dividends
at a rate not in excess of $0.44 per share of FCN Common Stock and
regular quarterly cash dividends on the FCN Preferred Stock
outstanding as of the date hereof at the rate set forth in the
applicable certificate of designation, (B) in the case of BANC ONE,
for regular quarterly cash dividends on BANC ONE Common Stock at a
rate not in excess of $0.38 per share of BANC ONE Common Stock and
regular quarterly cash dividends on the BANC ONE Preferred Stock
outstanding as of the date hereof at the rates set forth in the BANC
ONE Articles for such BANC ONE Preferred Stock, (C) dividends paid by
any of the Subsidiaries of each of BANC ONE and FCN to BANC ONE or FCN
or any of their Subsidiaries, respectively, and dividends paid in the
ordinary course of business consistent with past practice by any
subsidiaries (whether or not wholly owned) of each of BANC ONE and
FCN) and (D) in the case of BANC ONE, for the redemption of all of the
shares of BANC ONE Series C Preferred Stock outstanding as of the date
hereof as described in the BANC ONE 10-K;
(iii) grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its
capital stock (except options converted in connection with the
transactions contemplated by the First Commerce Merger Agreement and
for regular periodic grants of options to purchase stock made in the
ordinary course of business consistent with past practice pursuant to
the BANC ONE Stock Plans and the FCN Stock Plans); or
(iv) issue any additional shares of capital stock except pursuant to (A)
the exercise of stock options or warrants outstanding as of the date
hereof and options issued thereafter in compliance with Section
6.2(b)(iii) hereof, (B) the Option Agreements, (C) in the case of BANC
ONE, the consummation of the transactions contemplated by the First
Commerce Merger Agreement or (D) in the case of FCN, (x) in the
ordinary course of business and consistent with past practice, in
connection with the ESPSP and the FCN Dividend Reinvestment Plan and
(y) the Roney Agreement;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets to any individual, corporation or other entity other than
a Subsidiary, or cancel, release or assign any indebtedness to any such person
or any claims held by any such person, except in the ordinary course of
business consistent with past practice or pursuant to contracts or agreements
in force at the date of this Agreement;
(d) except for transactions in the ordinary course of business consistent
with past practice or pursuant to contracts or agreements in force at the date
of this Agreement, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity other
than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business consistent
with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts,
other than renewals of contracts and leases without material adverse changes
of terms;
(f) increase in any manner the compensation or fringe benefits of any of its
employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees
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or become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment agreement
with or for the benefit of any employee other than in the ordinary course of
business consistent with past practice, or accelerate the vesting of, or the
lapsing of restrictions with respect to any stock options or other stock-based
compensation;
(g) solicit, encourage or authorize any individual, corporation or other
entity to solicit or encourage from any third party any inquiries or proposals
relating to the disposition of its business or assets, or the acquisition of
its voting securities, or the merger of it or any of its Subsidiaries with any
corporation or other entity other than as provided by this Agreement (and each
party shall promptly notify the other of all of the relevant details relating
to all inquiries and proposals which it may receive relating to any of such
matters);
(h) settle any claim, action or proceeding involving money damages, except
in the ordinary course of business consistent with past practice;
(i) take any action that would prevent or impede the Second Step Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of BANC ONE or
FCN to exercise its rights under the FCN Option Agreement or the BANC ONE
Option Agreement, as the case may be;
(j) amend its certificate of incorporation or articles of incorporation, as
the case may be, or its bylaws or regulations, as the case may be;
(k) other than in prior consultation with the other party to this Agreement,
restructure or materially change its investment securities portfolio or its
gap position, through purchases, sales or otherwise, or the manner in which
the portfolio is classified or reported;
(l) take any action that is intended or may reasonably be expected to result
in any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time prior to the Effective
Time, or in any of the conditions to the Merger set forth in Article VIII not
being satisfied or in a violation of any provision of this Agreement, except,
in every case, as may be required by applicable law;
(m) implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by GAAP; or
(n) agree to, or make any commitment to, take any of the actions prohibited
by this Section 6.2.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters. (a) BANC ONE and FCN shall promptly prepare and
file with the SEC the Joint Proxy Statement and BANC ONE and Newco shall
promptly prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of BANC ONE, FCN and Newco
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and BANC ONE and
FCN shall thereafter mail or deliver the Joint Proxy Statement to their
respective stockholders. BANC ONE shall also use all reasonable efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement, and FCN
shall furnish all information concerning FCN and the holders of FCN Capital
Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, to
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obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Second Step Merger), and to
comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Entities. BANC ONE and FCN shall
have the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to FCN or BANC ONE, as
the case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised of
the status of matters relating to completion of the transactions contemplated
herein.
(c) BANC ONE and FCN shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of BANC ONE, FCN
or any of their respective Subsidiaries to any Governmental Entity in
connection with the Second Step Merger and the other transactions contemplated
by this Agreement.
(d) BANC ONE and FCN shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval will not be obtained or that the receipt of
any such approval will be materially delayed.
7.2. Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of BANC ONE and
FCN, for the purposes of verifying the representations and warranties of the
other and preparing for the Merger and the other matters contemplated by this
Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of BANC ONE
and FCN shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws or federal or state
banking laws, savings and loan or savings association laws (other than reports
or documents which BANC ONE or FCN, as the case may be, is not permitted to
disclose under applicable law) and (ii) all other information concerning its
business, properties and personnel as such party may reasonably request.
Neither BANC ONE nor FCN nor any of their respective Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of BANC ONE's or FCN's, as
the case may be, customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances
in which the restrictions of the preceding sentence apply.
(b) Each of BANC ONE and FCN shall hold all information furnished by or on
behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 7.2(a) in confidence to
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the extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated March 25, 1998, between BANC ONE and FCN (the
"Confidentiality Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other
set forth herein.
7.3. Stockholders' Approvals. Each of BANC ONE and FCN shall call a meeting
of its stockholders to be held as soon as reasonably practicable for the
purpose of voting upon the requisite stockholder approvals required in
connection with this Agreement, the First Step Merger and the Second Step
Merger, and each shall use its best efforts to cause such meetings to occur on
the same date. The Board of Directors of each of BANC ONE and FCN shall
recommend to its shareholders the approval of the Merger, this Agreement and
the transactions contemplated hereby.
7.4. Legal Conditions to Merger. Each of BANC ONE and FCN shall, and shall
cause its Subsidiaries to, use their best efforts (a) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the First Step Merger and the Second Step Merger and, subject to
the conditions set forth in Article VIII hereof, to consummate the
transactions contemplated by this Agreement, and (b) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity and any other third
party which is required to be obtained by FCN or BANC ONE or any of their
respective Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement.
7.5. Affiliates; Publication of Combined Financial Results. (a) Each of BANC
ONE and FCN shall use its best efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act and for purposes of qualifying the Second Step Merger for
"pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement,
and prior to the date of the stockholders meetings called by BANC ONE and FCN
to approve this Agreement, a written agreement, in the form of Exhibit
6.5(a)(1) or (2), as applicable, hereto, providing that such person will not
sell, pledge, transfer or otherwise dispose of any shares of BANC ONE Capital
Stock, Newco Capital Stock or FCN Capital Stock held by such "affiliate" and,
in the case of the "affiliates" of FCN, the shares of Newco Capital Stock to
be received by such "affiliate" in the Second Step Merger: (i) in the case of
shares of Newco Capital Stock to be received by "affiliates" of FCN in the
Second Step Merger, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder; and (ii) except to
the extent and under the conditions permitted therein, during the period
commencing 30 days prior to the Effective Time and ending at the time of the
publication of financial results covering at least 30 days of combined
operations of Newco and FCN.
(b) The Surviving Corporation shall use its best efforts to publish as
promptly as reasonably practical, but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least 30
days of post-Merger combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
7.6. Stock Exchange Listing. BANC ONE shall cause the shares of Newco Common
Stock and the Newco New Preferred Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance,
prior to the First Effective Time.
7.7. Employee Benefit Plans; Certain Insurance. (a) From and after the
Effective Time, unless otherwise mutually determined, the FCN Benefit Plans
and BANC ONE Benefit Plans in effect as of the date of this Agreement shall
remain in effect with respect to employees of FCN or Newco (or their
Subsidiaries), respectively, covered by such plans at the Effective Time until
such time as the Surviving Corporation shall, subject to applicable law, the
terms of this Agreement and the terms
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of such plans, adopt new benefit plans with respect to employees of the
Surviving Corporation and its Subsidiaries (the "New Benefit Plans"). Prior to
the Closing Date, FCN and BANC ONE shall cooperate in reviewing, evaluating
and analyzing the BANC ONE Benefit Plans and FCN Benefit Plans with a view
towards developing appropriate New Benefit Plans for the employees covered
thereby subsequent to the Second Step Merger. It is the intention of FCN and
BANC ONE to develop New Benefit Plans, as soon as reasonably practicable after
the Effective Time, which, among other things, (i) treat similarly situated
employees on a substantially equivalent basis, taking into account all
relevant factors, including, without limitation, duties, geographic location,
tenure, qualifications and abilities, and (ii) do not discriminate between
employees of the Surviving Corporation who were covered by FCN Benefit Plans,
on the one hand, and those covered by BANC ONE Benefit Plans, on the other, at
the Effective Time.
(b) The foregoing notwithstanding, the Surviving Corporation agrees to honor
in accordance with their terms all benefits vested as of the date hereof under
the BANC ONE Benefit Plans or the FCN Benefit Plans or under other contracts,
arrangements, commitments, or understandings described in the BANC ONE
Disclosure Schedule and the FCN Disclosure Schedule.
(c) Nothing in this Section 7.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any BANC ONE
Benefit Plans, FCN Benefit Plans, or other contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
law.
(d) From and after the Effective Time, the policy of BANK ONE in respect of
directors' and officers' insurance (including but not limited to persons
covered and the scope and amount of coverage thereunder) shall be the same as
the policy of FCN in effect as of the date of this Agreement.
(e) Certain additional agreements of BANC ONE and FCN with respect to
compensation and benefits matters are set forth on Schedule 7.7(e) hereto.
7.8. Indemnification; Directors' and Officers' Insurance. (a) In the event
of any threatened or actual claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any individual
who is now, or has been at any time prior to the date of this Agreement, or
who becomes prior to the Effective Time, a director or officer or employee of
BANC ONE, FCN, BANK ONE or any of their respective Subsidiaries, including any
entity specified in the BANC ONE Disclosure or the FCN Disclosure Schedule
(the "Indemnified Parties"), is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to
(i) the fact that he is or was a director, officer or employee of BANC ONE,
FCN, BANK ONE any of their respective Subsidiaries or any entity specified in
the BANC ONE Disclosure Schedule or the FCN Disclosure Schedule or any of
their respective predecessors or (ii) this Agreement, the Option Agreements or
any of the transactions contemplated hereby or thereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto
agree to cooperate and use their best efforts to defend against and respond
thereto. It is understood and agreed that after the Effective Time, BANK ONE
shall indemnify and hold harmless, as and to the fullest extent permitted by
law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding or investigation, and in the event of
any such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted of arising before or after the Effective Time); and BANK
ONE, after consultation with an Indemnified Party, shall retain counsel and
direct the defense thereof, provided, however, that by virtue of the
obligations herein set forth, BANK ONE shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other expenses incurred
by any Indemnified Party in connection with the defense
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thereof, except that if Newco fails or elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between Newco and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Newco, and Newco shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (B)
Newco shall be obligated pursuant to this paragraph to pay for only one firm
of counsel for all Indemnified Parties, unless an Indemnified Party shall have
reasonably concluded, based on the advice of counsel and after consultation
with Newco, that in order to be adequately represented, separate counsel is
necessary for such Indemnified Party, in which case, Newco shall be obligated
to pay for such separate counsel, (C) Newco shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld) and (D) Newco shall have no obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 7.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify Newco
thereof, provided that the failure to so notify shall not affect the
obligations of Newco under this Section 7.8 except to the extent such failure
to notify materially prejudices Newco. Newco's obligations under this Section
7.8 continue in full force and effect for a period of six years from the
Effective Time (or the period of the applicable statute of limitations, if
longer); provided, however, that all rights to indemnification in respect of
any claim (a "Claim") asserted or made within such period shall continue until
the final disposition of such Claim.
(b) BANC ONE (and Newco, from and after the First Effective Time) shall use
its best efforts to cause the individuals serving as officers and directors of
FCN, its Subsidiaries or any entity specified in the FCN Disclosure Schedule
immediately prior to the Effective Time to be covered for a period of six (6)
years from the Effective Time (or the period of the applicable statute of
limitations, if longer) by the directors' and officers' liability insurance
policy maintained by FCN (provided that Newco may substitute therefor policies
of at least the same coverage and amounts containing terms and conditions
which are not less advantageous than such policy) with respect to acts or
omissions occurring prior to the Effective Time which were committed by such
officers and directors in their capacity as such; provided, however, that in
no event shall Newco be required to expend more than 200% of the current
amount expended by FCN (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto and provided further that if Newco is
unable to maintain or obtain the insurance called for by this Section 7.8(b),
Newco shall use its best efforts to obtain as much comparable insurance as
available for the Insurance Amount.
(c) In the event Newco or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Newco assume the
obligations set forth in this section.
(d) The provisions of this Section 7.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs
and representatives.
7.9. Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
FCN, on the one hand, and a Subsidiary of BANC ONE or Newco, on the other) or
to vest the surviving corporation in the First Step Merger or the Surviving
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the First Step Merger or
the Second Step Merger, as the case may be, the proper officers and directors
of each party to this Agreement and their respective Subsidiaries shall take
all such necessary action as may be reasonably requested by, and at the sole
expense of, BANC ONE.
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7.10. Advice of Changes. BANC ONE and FCN shall each promptly advise the
other party of any change or event (i) having a Material Adverse Effect on it
or (ii) which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
7.11. Dividends. After the date of this Agreement, each of BANC ONE and FCN
shall coordinate with the other the declaration of any dividends in respect of
BANC ONE Common Stock and FCN Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties hereto that
holders of BANC ONE Common Stock or FCN Common Stock shall not receive two
dividends, or fail to receive one dividend, for any quarter with respect to
their shares of BANC ONE Common Stock and/or FCN Common Stock and any shares
of Newco Capital Stock any such holder receives in exchange therefor in the
Second Step Merger.
7.12. Authorized Stock of Newco. BANC ONE and Newco shall, prior to the
First Effective Time, take such corporate, stockholder and other action as is
required to amend the Newco Certificate of Incorporation in order to authorize
sufficient shares of Newco Capital Stock to complete the transactions
contemplated hereby.
7.13. Pooling of Interests. Each of BANC ONE and FCN shall, prior to the
First Effective Time, coordinate with the other party with respect to the
issuance of, and pursuant thereto shall issue, shares of BANC ONE Common Stock
or FCN Common Stock, as may be appropriate, in such manner, and limited to
such number, as is necessary to reduce the aggregate number of "tainted
treasury shares" of such parties to a number that is consistent with the
accounting of the Merger as a "pooling of interests" under GAAP.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the Second Step
Merger. The respective obligations of the parties to effect the Second Step
Merger, and of BANC ONE and Newco to effect the First Step Merger, shall be
subject to the satisfaction at or prior to the Effective Time (and the First
Effective Time, in the case of the consummation of the First Step Merger) of
the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby, including the Second Step Merger and, in the case of
the holders of BANC ONE Common Stock, the First Step Merger, shall have
been approved and adopted by the respective requisite affirmative votes of
the holders of FCN Common Stock and BANC ONE Common Stock entitled to vote
thereon.
(b) NYSE Listing. The shares of Newco Common Stock and Newco New
Preferred Stock which shall be issued to the stockholders of FCN upon
consummation of the Merger shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
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(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the
consummation of the First Step Merger, the Second Step Merger or any of the
other transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, materially restricts or makes illegal consummation of the First
Step Merger or the Second Step Merger.
(f) Federal Tax Opinion. FCN and BANC ONE each shall have received an
opinion of Wachtell, Lipton, Rosen & Katz, in form and substance reasonably
satisfactory to BANC ONE and FCN, dated the Closing Date, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts existing
at the Effective Time:
(i) Each of the First Step Merger and the Second Step Merger will
constitute a reorganization under Section 368(a) of the Code; BANC ONE
and Newco will each be a party to the reorganization in respect of the
First Step Merger; and Newco and FCN will each be a party to the
reorganization in respect of the Second Step Merger;
(ii) No gain or loss will be recognized by BANC ONE or Newco as a
result of the First Step Merger or Newco or FCN as a result of the
Second Step Merger;
(iii) No gain or loss will be recognized by stockholders of BANC ONE
who receive solely Newco Capital Stock for their BANC ONE Capital Stock
pursuant to the First Step Merger; and
(iv) No gain or loss will be recognized by the stockholders of FCN
who exchange their FCN Capital Stock solely for Newco Capital Stock
pursuant to the Second Step Merger (except with respect to cash
received in lieu of a fractional share interest in Newco Capital
Stock).
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of BANC ONE,
Newco, FCN and others.
(g) Pooling of Interests. BANC ONE and FCN shall each have received a
letter from their respective independent accountants addressed to FCN or
BANC ONE, as the case may be, to the effect that the First Step Merger and
the Second Step Merger, taken together, will qualify for "pooling of
interests" accounting treatment.
8.2. Conditions to Obligations of BANC ONE and Newco. The obligations of
BANC ONE and Newco to effect the First Step Merger, and the obligation of
Newco to effect the Second Step Merger, are also subject to the satisfaction,
or waiver by BANC ONE or Newco, at or prior to the Effective Time, of the
following conditions:
(a) Representations and Warranties. The representations and warranties of
FCN set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, and without giving effect to any
qualification as to materiality set forth in such representations or
warranties, would have a Material Adverse Effect on FCN. BANC ONE shall
have received a certificate signed on behalf of FCN by the Chief Executive
Officer and the Chief Financial Officer of FCN to the foregoing effect.
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(b) Performance of Obligations of FCN. FCN shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and BANC ONE shall have received
a certificate signed on behalf of FCN by the Chief Executive Officer and
the Chief Financial Officer of FCN to such effect.
8.3. Conditions to Obligations of FCN. The obligation of FCN to effect the
Second Step Merger is also subject to the satisfaction or waiver by FCN at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties of
BANC ONE and BANK ONE set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date,
provided, however, that for purposes of this paragraph, such
representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be
so true and correct, individually or in the aggregate, and without giving
effect to any qualification as to materiality set forth in such
representations or warranties, would have a Material Adverse Effect on BANC
ONE. FCN shall have received a certificate signed on behalf of BANC ONE by
the Chief Executive Officer and the Chief Financial Officer of BANC ONE to
the foregoing effect.
(b) Performance of Obligations of BANC ONE. Each of BANC ONE and BANK ONE
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and FCN shall have received a certificate signed on behalf of BANC ONE by
the Chief Executive Officer and the Chief Financial Officer of BANC ONE to
such effect.
(c) Consummation of the First Step Merger. The First Effective Time shall
have occurred and the First Step Merger shall have been consummated.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time prior to the
First Effective Time, whether before or after approval of the matters
presented in connection with the Second Step Merger by the stockholders of
BANC ONE or FCN:
(a) by mutual consent of BANC ONE and FCN in a written instrument, if the
Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either the Board of Directors of BANC ONE or the Board of
Directors of FCN if any Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has
become final and nonappealable or any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
(c) by either the Board of Directors of BANC ONE or the Board of
Directors of FCN if the Second Step Merger shall not have been consummated
on or before the first anniversary of the date of this Agreement, unless
the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or
observe the covenants and agreements of such party set forth herein;
(d) by either the Board of Directors of BANC ONE or the Board of
Directors of FCN (provided that the terminating party is not then in breach
of any representation, warranty,
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covenant or other agreement contained herein) if there shall have been a
breach of any of the covenants or agreements or any of the representations
or warranties set forth in this Agreement on the part of FCN, in the case
of a termination by BANC ONE, or BANC ONE or Newco, in the case of a
termination by FCN, which breach, individually or together with other such
breaches, would constitute, if occurring or continuing on the Closing Date,
the failure of the conditions set forth in Section 8.2 or 8.3, as the case
may be, and which is not cured within 45 days following written notice to
the party committing such breach or by its nature or timing cannot be cured
prior to the Closing Date; or
(e) by either BANC ONE or FCN if any approval of the stockholders of BANC
ONE or FCN required for the consummation of the Second Step Merger, or the
approval of the shareholders of BANC ONE required for the consummation of
the First Step Merger, shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders
or at any adjournment or postponement thereof.
9.2. Effect of Termination. In the event of termination of this Agreement by
either BANC ONE or FCN as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect, and none of BANC ONE, FCN, Newco,
any of their respective Subsidiaries or any of the officers or directors of
any of them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i) Sections
7.2(b), 9.2, 10.2 and 10.3 shall survive any termination of this Agreement,
and (ii) notwithstanding anything to the contrary contained in this Agreement,
neither BANC ONE nor FCN shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
9.3. Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with Merger by the stockholders of BANC ONE
and FCN; provided, however, that after any approval of the transactions
contemplated by this Agreement by the respective stockholders of BANC ONE or
FCN, there may not be, without further approval of such stockholders, any
amendment of this Agreement which changes the amount or the form of the
consideration to be delivered hereunder to the holders of FCN Common Stock, or
into which shares of BANC ONE Capital Stock shall be converted pursuant to the
First Step Merger, other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein; provided, however, that after
any approval of the transactions contemplated by this Agreement by the
respective stockholders of BANC ONE or FCN, there may not be, without further
approval of such stockholders, any extension or waiver of this Agreement or
any portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of FCN Common Stock hereunder, or
into which shares of BANC ONE Capital Stock shall be converted pursuant to the
First Step Merger, other than as contemplated by this Agreement. Any agreement
on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party, but
such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
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ARTICLE X
GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this Agreement and the
Option Agreements, the closing of the Second Step Merger (the "Closing") will
take place at 10:00 a.m. on a date and at a place to be specified by the
parties, which shall be no later than five business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur of
the conditions set forth in Article VIII hereof, unless extended by mutual
agreement of the parties (the "Closing Date").
10.2. Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall terminate in
accordance with terms) shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by their terms
apply in whole or in part after the Effective Time.
10.3. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by BANC
ONE and FCN.
10.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a)if to BANC ONE or Newco, to:
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
Attn: General Counsel
Fax: (614) 248-2010
and
(b)if to FCN, to:
First Chicago NBD Corporation
One First National Plaza
Chicago, Illinois 60670
Attn: General Counsel
Fax: (312) 732-6393
10.5. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". No provision of this Agreement shall be construed to require FCN,
BANC ONE, Newco or any of their respective Subsidiaries or affiliates to take
any action which would violate any applicable law, rule or regulation.
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10.6. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.7. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof other than the
Option Agreements and the Confidentiality Agreement.
10.8. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law (except to the extent that mandatory provisions of
federal law or of the DGCL or OGCL are applicable).
10.9. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
10.10. Publicity. Except as otherwise required by applicable law or the
rules of the NYSE, none of BANC ONE, BANK ONE or FCN shall, or shall permit
any of its Subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, the transactions contemplated by this Agreement
without the consent of FCN, in the case of a proposed announcement or
statement by BANC ONE or BANK ONE, or BANC ONE, in the case of a proposed
announcement or statement by FCN, which consent shall not be unreasonably
withheld.
10.11. Assignment; Third Party Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 7.8, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
10.12. Certain Agreements of BANK ONE. BANK ONE hereby consents, effective
as of the First Effective Time, to be sued and served with process in the
State of Ohio and irrevocably appoints the Ohio Secretary as its agent to
accept service of process in any proceeding in the State of Ohio to enforce
against it any obligation of BANC ONE or to enforce the rights of a BANC ONE
shareholder who dissents from the First Step Merger pursuant to Section 1.6.
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<PAGE>
IN WITNESS WHEREOF, BANC ONE, FCN and Newco have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
FIRST CHICAGO NBD CORPORATION BANC ONE CORPORATION
By: /s/ Verne G. Istock By: /s/ John B. McCoy
----------------------------- -----------------------------
Chairman, President and Chairman and Chief Executive Officer
Chief Executive Officer
BANK ONE CORPORATION
By: /s/ John B. McCoy
-----------------------------
Chairman and Chief Executive Officer
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<PAGE>
APPENDIX B
[LETTERHEAD OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED]
July 31, 1998
Board of Directors
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
Members of the Board:
We understand that BANC ONE CORPORATION ("BANC ONE"), BANK ONE CORPORATION
("Newco") and First Chicago NBD Corporation ("First Chicago NBD") have entered
into an Agreement and Plan of Merger, dated as of April 10, 1998 (the
"Agreement"), pursuant to which BANC ONE is to be merged with and into Newco
and, immediately thereafter, First Chicago NBD is to be merged with and into
Newco (collectively, such mergers are referred to herein as the "Merger").
Pursuant to the Merger, each issued and outstanding share of common stock, no
par value, of BANC ONE (the "BANC ONE Shares"), other than shares with respect
to which dissenter's rights shall have been properly demanded, shares held in
treasury or shares held by BANC ONE or Newco or any affiliate of BANC ONE or
Newco will be converted into the right to receive one share of common stock,
par value $.01 per share, of Newco (the "Newco Common Stock") and each issued
and outstanding share of First Chicago NBD's common stock, par value $1.00 per
share (the "First Chicago NBD Shares"), other than shares held in treasury or
shares held by BANC ONE, Newco or First Chicago NBD or any affiliate of BANC
ONE, Newco or First Chicago NBD will be converted into the right to receive
1.62 shares (the "Exchange Ratio") of Newco Common Stock, each issued and
outstanding share of Preferred Stock with Cumulative and Adjustable Dividends,
Series B, without par value, of First Chicago NBD shall be converted into the
right to receive one share of Preferred Stock with Cumulative and Adjustable
Dividends, Series B, of Newco and each issued and outstanding Share of
Preferred Stock with Cumulative and Adjustable Dividends, Series C, without
par value, of First Chicago NBD shall be converted into the right to receive
one share of Preferred Stock with Cumulative and Adjustable Dividends, Series
C, of Newco, all as set forth in the Agreement.
You have asked us whether, in our opinion, the Exchange Ratio is fair from a
financial point of view to BANC ONE.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to BANC ONE and First Chicago NBD that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the respective businesses, earnings, assets, liabilities and prospects
of BANC ONE and First Chicago NBD furnished to us by the senior
management of BANC ONE and First Chicago NBD as well as the amount and
timing of the cost savings and related expenses expected to result from
the Merger furnished to us by senior management of BANC ONE (the
"Expected Synergies");
(3) Conducted discussions with members of senior management of BANC ONE and
First Chicago NBD concerning the matters described in clauses (1) and
(2), including the respective
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businesses, prospects, regulatory condition and contingencies of BANC ONE
and First Chicago NBD before and after giving effect to the Merger and
the Expected Synergies;
(4) Reviewed the market prices and valuation multiples for the BANC ONE
Shares and the First Chicago NBD Shares and compared them with those of
certain publicly traded companies which we deemed to be relevant;
(5) Reviewed the results of operations of BANC ONE and First Chicago NBD
and compared them with those of certain publicly traded companies which
we deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions which we deemed to be relevant;
(7) Reviewed the potential pro forma impact of the Merger;
(8) Reviewed the Agreement; and
(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary under the
circumstances, including our assessment of general economic, market and
monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have
not assumed responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of the assets or liabilities
of BANC ONE or First Chicago NBD or been furnished any such evaluation or
appraisal. We are not experts in the evaluation of allowances for loan losses,
and we have neither made an independent evaluation of the adequacy of the
allowance for loan losses of BANC ONE or First Chicago NBD, nor reviewed any
individual credit files relating to BANC ONE or First Chicago NBD, and, as a
result, we have assumed that the aggregate allowance for loan losses for both
BANC ONE and First Chicago NBD is adequate to cover such losses and will be
adequate on a pro forma basis for the combined entity. In addition, we have
not assumed any obligation to conduct, nor have we conducted, any physical
inspection of the properties or facilities of BANC ONE or First Chicago NBD.
With respect to the financial forecast information and Expected Synergies
furnished to or discussed with us by BANC ONE or First Chicago NBD, we have
assumed that they have been reasonably prepared and reflect the best currently
available estimates and judgments of the senior management of BANC ONE and
First Chicago NBD as to the future financial performance of BANC ONE, First
Chicago NBD or the combined entity, as the case may be. We have further
assumed that the Merger will be accounted for as a pooling of interests under
generally accepted accounting principles and that it will qualify as a tax-
free reorganization for United States federal income tax purposes.
Our opinion is necessarily based upon market, economic and other conditions
as in effect, and on the information made available to us as of, the date
hereof. For the purposes of rendering this opinion, we have assumed that the
Merger will be consummated substantially in accordance with the terms set
forth in the Agreement, including in all respects material to our analysis,
that the representations and warranties of each party in the Agreement and all
related documents and instruments (collectively, the "Documents") contained
therein are true and correct, that each party to the Documents will perform
all of the covenants and agreements required to be performed by such party
under such Documents, and that all conditions to the consummation of the
Merger will be satisfied without waiver thereof. We have also assumed that in
the course of obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the Merger, no restrictions,
including any divestiture requirements or amendment or modifications, will be
imposed that will have a material adverse affect on the contemplated benefits
of the Merger, including the Expected Synergies.
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We have been retained by the Board of Directors of BANC ONE to act as
financial advisor to BANC ONE in connection with the Merger and will receive a
fee for our services, a significant portion of which is contingent upon the
consummation of the Merger. In addition, BANC ONE has agreed to indemnify us
for certain liabilities arising out of our engagement. We have in the past two
years provided financial advisory, investment banking and other services to
BANC ONE and First Chicago NBD and received customary fees for the rendering
of such services. In the ordinary course of our securities business, we also
may actively trade debt and/or equity securities of BANC ONE and First Chicago
NBD and their respective affiliates for our own account and the accounts of
our customers, and we therefore may from time to time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of Directors of BANC
ONE. Our opinion does not address the merits of the underlying decision by
BANC ONE to engage in the Merger and does not constitute a recommendation to
any shareholder as to how such shareholder should vote on the proposed Merger.
We are not expressing any opinion herein as to the prices at which BANC ONE
Shares will trade following the announcement of the Merger or the prices at
which Newco Shares will trade following the consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that, as
the date hereof, the Exchange Ratio is fair from a financial point of view to
BANC ONE.
Very truly yours,
/s/ Merrill Lynch, Pierce,
Fenner & Smith Incorporated
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APPENDIX C
[LETTERHEAD OF MORGAN STANLEY & CO. INCORPORATED]
July 31, 1998
Board of Directors
Banc One Corporation
100 East Broad Street
Columbus, Ohio 43271
Members of the Board:
We understand that BANC ONE CORPORATION ("ONE"), BANK ONE CORPORATION
("Newco") and First Chicago NBD Corporation ("FCN") have entered into an
Agreement and Plan of Reorganization on April 10, 1998 (the "Merger
Agreement"), which provides, among other things, for the merger of ONE with
and into Newco and, immediately thereafter, the merger of FCN with and into
Newco (collectively, such mergers are referred to herein as the "Merger").
Pursuant to the Merger, each issued and outstanding share of common stock, no
par value, of ONE (the "ONE Common Stock"), other than shares held in treasury
or held by ONE or Newco or any affiliate of ONE or Newco or as to which
dissenters' rights have been perfected, will be converted into the right to
receive one share of common stock, par value $.01, of Newco (the "Newco Common
Stock"), each issued and outstanding share of common stock, par value $1.00
per share, of FCN (the "FCN Common Stock"), other than shares held in treasury
or held by ONE, Newco or FCN or any affiliate of ONE, Newco or FCN, will be
converted into the right to receive 1.62 shares (the "Exchange Ratio") of
Newco Common Stock, each issued and outstanding share of Preferred Stock with
Cumulative and Adjustable Dividends, Series B, no par value, of FCN will be
converted into the right to receive one share of Preferred Stock with
Cumulative and Adjustable Dividends, Series B, of Newco and each issued and
outstanding share of Preferred Stock with Cumulative and Adjustable Dividends,
Series C, no par value, of FCN will be converted into the right to receive one
share of Preferred Stock with Cumulative and Adjustable Dividends, Series C,
of Newco. The terms and conditions of the Merger are more fully set forth in
the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to ONE.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of ONE and FCN, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning ONE and FCN prepared by the managements of
ONE and FCN, respectively;
(iii) analyzed certain financial projections prepared by the managements
of ONE and FCN, respectively;
(iv) discussed the past and current operations and financial condition
and the prospects of ONE and FCN with senior executives of ONE and FCN,
respectively;
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(iv) reviewed the reported prices and trading activity for the ONE Common
Stock and the FCN Common Stock;
(v) compared the financial performance of ONE and FCN and the prices and
trading activity of the ONE Common Stock and the FCN Common Stock with that
of certain other comparable publicly-traded companies and their securities;
(vi) discussed the results of regulatory examinations of ONE and FCN with
senior managements of the respective companies;
(vii) discussed with senior managements of ONE and FCN First Call
consensus earnings per share estimates for each company and the strategic
objectives of the Merger and their estimates of the synergies and other
benefits of the Merger for the combined company;
(viii) analyzed the pro forma impact of the Merger on the combined
company's earnings per share, consolidated capitalization and financial
ratios;
(ix) reviewed the financial terms, to the extent publicly available, of
certain comparable merger transactions;
(x) participated in discussions and negotiations among representatives of
ONE and FCN and their financial and legal advisors;
(xi) reviewed the Merger Agreement and certain related documents; and
(xii) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections, including the
estimates of cost savings and other synergies expected to result from the
Merger, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performance of ONE and FCN. We have not made any independent
valuation or appraisal of the assets or liabilities of ONE or FCN, nor have we
been furnished with any such appraisals. We note that we are not experts in
the evaluation of allowances for loan losses, and we have neither made an
independent evaluation of the adequacy of the allowances for loan losses of
ONE or FCN, nor reviewed any individual credit files relating to ONE or FCN.
In addition, we have assumed the Merger will be consummated substantially in
accordance with the terms set forth in the Merger Agreement. We have further
assumed that the Merger will be accounted for as a pooling-of-interests under
generally accepted accounting principles and that it will qualify as a tax-
free reorganization for U.S. federal income tax purposes. In addition, we have
assumed that in connection with the receipt of all necessary regulatory
approvals for the Merger, no restrictions will be imposed that would have a
material adverse effect on the consolidated benefits expected to be derived in
the Merger. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of,
the date hereof.
We have acted as financial advisor to the Board of Directors of ONE in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for ONE and FCN and have received
fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of ONE and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in
any filing made by ONE with the Securities and Exchange Commission with
respect to the Merger. In addition, we express no opinion and make no
recommendation as to how the holders of ONE Common Stock should vote at the
stockholders' meeting held in connection with the
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Merger. We also express no opinion as to the prices at which ONE Common Stock
will trade following the announcement of the Merger or the prices at which
Newco Common Stock will trade following the consummation of the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to ONE.
Very truly yours,
Morgan Stanley & Co. Incorporated
/s/ William M. Weiant
By: _________________________________
William M. Weiant
Managing Director
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APPENDIX D
[LETTERHEAD OF LAZARD FRERES & CO. LLC]
July 31, 1998
The Board of Directors
First Chicago NBD Corporation
One First National Plaza
Chicago, Illinois 60670
Dear Members of the Board:
We understand that First Chicago NBD Corporation ("FCN"), BANC ONE
CORPORATION ("BANC ONE") and BANK ONE CORPORATION ("BANK ONE"), a newly-formed
wholly-owned subsidiary of BANC ONE, have entered into an Agreement and Plan
of Reorganization, dated as of April 10, 1998 (the "Agreement"), pursuant to
which FCN and BANC ONE propose to merge with and into BANK ONE (the "Merger").
As the result of the Merger, among other things, each share of common stock,
without par value, of BANC ONE ("BANC ONE Common Stock") will be converted
into one share of common stock, par value $.01 per share, of BANK ONE ("BANK
ONE Common Stock") and each share of common stock, $1.00 par value ("FCN
Common Stock") of FCN will be exchanged for 1.62 shares of BANK ONE Common
Stock (the "Exchange Ratio").
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of shares of FCN Common Stock, of the Exchange Ratio. In
connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement;
(ii) Analyzed certain historical business and financial information
relating to FCN and BANC ONE;
(iii) Reviewed various financial forecasts and other data provided to us by
FCN and BANC ONE with respect to the businesses and prospects of FCN
and BANC ONE, respectively, the strategic objectives of each, and
possible financial benefits which might be realized following the
Merger;
(iv) Participated in discussions with members of the senior managements of
FCN and BANC ONE with respect to the businesses and prospects of FCN
and BANC ONE, respectively, the strategic objectives of each, and
possible financial benefits which might be realized following the
Merger;
(v) Reviewed public information with respect to certain other bank holding
companies, the securities of which are publicly traded;
(vi) Reviewed the financial terms of certain comparable business
combinations involving financial services companies;
(vii) Reviewed the historical stock prices and trading volumes of shares of
FCN Common Stock and BANC ONE Common Stock; and
(viii) Conducted such other financial studies, analyses and investigations
as we deemed appropriate.
We have relied upon the accuracy and completeness of the financial and other
information provided by FCN and BANC ONE and reviewed by us for purposes of
this opinion, and have not
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assumed any responsibility for any independent verification of such
information. With respect to financial forecasts, including projected cost
savings and revenue enhancements, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of management of FCN and BANC ONE as to the future financial
performance of FCN, BANC ONE and BANK ONE, and we have assumed that such
forecasts and projections will be realized in the amounts and at the times
contemplated thereby. We assume no responsibility for and express no view as
to such forecasts and projections or the assumptions on which they are based.
We are not experts in the evaluation of loan portfolios or the allowances for
loan losses with respect thereto and have assumed with your consent that such
allowances for FCN and BANC ONE are in the aggregate adequate to cover such
losses. In addition, we have not reviewed individual credit files nor have we
made an independent appraisal of the assets and liabilities of FCN or BANC ONE
or any of their subsidiaries and we have not been furnished with any such
evaluation or appraisal. You have informed us and we have assumed, with your
consent, that the Merger will be recorded as a pooling of interests in
accordance with generally accepted accounting principles.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
In rendering our opinion, we have assumed that the Merger will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by FCN and that obtaining the necessary
regulatory approvals for the Merger will not have an adverse effect on FCN,
BANC ONE or BANK ONE.
Lazard Freres & Co. LLC is acting as investment banker to FCN in connection
with the Merger and will receive fees for our services, a substantial portion
of which are contingent upon the closing of the Merger. Also, as you are
aware, we have from time to time provided investment banking and financial
advisory services to FCN and BANC ONE for which we previously have received
fees.
You have not authorized us to solicit, and we have not solicited, any
indications of interest from any third party with respect to the purchase of
all or part of FCN. Further, our opinion is limited to the fairness, from a
financial point of view, to the holders of FCN Common Stock of the Exchange
Ratio and does not address FCN's underlying business decision to undertake the
Merger and not engage in a sale of control. In addition, our opinion does not
address the future trading value of BANK ONE Common Stock or the future
acquisition value of BANK ONE. Moreover, this letter, and the opinion
expressed herein is directed to the Board of Directors of FCN and does not
constitute a recommendation to any stockholder as to how to vote with respect
to the Merger.
Based on and subject to the foregoing, we are of the opinion that, as of the
date hereof, the Exchange Ratio is fair to the holders of FCN Common Stock
from a financial point of view.
Very truly yours,
Lazard Freres & Co. LLC
/s/ Gary S. Shedlin
By___________________________________
Gary S. Shedlin
Managing Director
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APPENDIX E
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
PERSONAL AND CONFIDENTIAL
July 31, 1998
Board of Directors
First Chicago NBD Corporation
One First National Plaza
Chicago, IL 60670
Re: Proxy Statement of First Chicago NBD Corporation
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of outstanding shares of common stock, $1.00 par value
("FCN Common Stock"), of First Chicago NBD Corporation ("FCN") of the Exchange
Ratio (as defined below) contemplated by the Agreement and Plan of
Reorganization (the "Agreement"), dated as of April 10, 1998, by and among
BANC ONE CORPORATION ("BANC ONE"), BANK ONE CORPORATION ("BANK ONE"), a newly-
formed, wholly-owned subsidiary of BANC ONE, and FCN. The Agreement provides
for the merger of BANC ONE and FCN, respectively, with and into BANK ONE (the
"Merger"), pursuant to which, among other things, each share of common stock,
without par value, of BANC ONE ("BANC ONE Common Stock") will be converted
into one share of common stock, par value $.01 per share, of BANK ONE ("BANK
ONE Common Stock") and each share of FCN Common Stock will be exchanged for
1.620 shares of BANK ONE Common Stock (the "Exchange Ratio").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with FCN, having acted as its financial advisor in
connection with, and having participated in certain of the negotiations
leading to, the Agreement. Goldman, Sachs & Co. provides a full range of
financial advisory and securities services and, in the course of its normal
trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of FCN or BANC ONE for its own
account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
FCN and BANC ONE for the five years ended December 31, 1997; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of FCN and BANC
ONE; certain other communications from FCN and BANC ONE to their respective
stockholders; and certain internal financial analyses and forecasts for FCN
and BANC ONE prepared by their respective managements including forecasts of
certain net cost savings and revenue enhancements (the "Synergies") expected
to be achieved as a result of the Merger. We also have held discussions with
members of the senior management of FCN and BANC ONE regarding the strategic
rationale for, and the potential benefits of, the transaction contemplated by
the Agreement and the past and current business operations, financial
condition and future prospects of their respective companies. In addition, we
have reviewed the reported price and trading activity for FCN Common
APPENDICES
<PAGE>
Stock and BANC ONE Common Stock, compared certain financial and stock market
information for FCN and BANC ONE with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the commercial banking
industry specifically and in other financial services industries generally and
performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed, with your consent, that the financial forecasts, including, without
limitation, the Synergies and projections regarding under-performing and non-
performing assets and net charge-offs have been reasonably prepared on a basis
reflecting the best currently available judgments and estimates of FCN and
BANC ONE and that such forecasts will be realized in the amounts and at the
times contemplated thereby. We are not experts in the evaluation of loan and
lease portfolios for purposes of assessing the adequacy of the allowances for
losses with respect thereto and have assumed, with your consent, that such
allowances for each of FCN and BANC ONE are in the aggregate adequate to cover
all such losses. Similarly, we have assumed, with your consent and without
independent analysis, that the obligations of FCN and BANC ONE pursuant to
derivatives, swaps, foreign exchange, financial instruments and off-balance
sheet lending-related financial instruments will not have an adverse effect
which would be relevant to our analysis. In addition, we have not reviewed
individual credit files nor have we made an independent evaluation or
appraisal of the assets and liabilities of FCN or BANC ONE or any of their
subsidiaries, and we have not been furnished with any such evaluation or
appraisal. Our opinion as to the fairness of the Exchange Ratio addresses the
ownership position in BANK ONE to be received by the holders of FCN Common
Stock pursuant to the Exchange Ratio on the terms set forth in the Agreement
and does not address the future trading or acquisition value for the stock of
BANK ONE. In addition, our opinion does not address the relative merits of the
Merger and alternative business strategies. In that regard, we were not
requested to, and did not, solicit third party indications of interest in
acquiring all or part of FCN or in engaging in a business combination or any
other strategic transaction with FCN. We also have assumed, with your consent,
that the Merger will be accounted for as a pooling of interests under
generally accepted accounting principles and that obtaining any necessary
regulatory approvals and third party consents for the Merger or otherwise will
not have an adverse effect on FCN or BANC ONE or BANK ONE pursuant to the
Merger.
Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of FCN in connection with
its consideration of the transaction contemplated by the Agreement and such
opinion does not constitute a recommendation as to how any holder of FCN
Common Stock should vote with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair from a financial point of
view to the holders of FCN Common Stock.
Very truly yours,
/s/ Goldman, Sachs & Co.
(GOLDMAN, SACHS & CO.)
E-2
APPENDICES
<PAGE>
APPENDIX F
OHIO REVISED CODE
TITLE XVII. CORPORATIONS--PARTNERSHIPS
CHAPTER 1701. GENERAL CORPORATION LAW
MERGER AND CONSOLIDATION
Section 1701.85 Relief For Dissenting Shareholders; Qualification;
Procedures.--(A)(1) A shareholder of a domestic corporation is entitled to
relief as a dissenting shareholder in respect of the proposals described in
sections 1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance
with this section.
(2) If the proposal must be submitted to the shareholders of the corporation
involved, the dissenting shareholder shall be a record holder of the shares of
the corporation as to which he seeks relief as of the date fixed for the
determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after
the date on which the vote on the proposal was taken at the meeting of the
shareholders, the dissenting shareholder shall deliver to the corporation a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief, which demand shall state his address, the number and
class of such shares, and the amount claimed by him as the fair cash value of
the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case
of a merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder
shall deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the
new entity, whether the demand is served before, on, or after the effective
date of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the address
specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting
shareholder, at the option of the corporation, exercised by written notice
sent to the dissenting shareholder within twenty days after the lapse of the
fifteen-day period, unless a court for good cause shown otherwise directs. If
shares represented by a certificate on which such a legend has been endorsed
are transferred, each new certificate issued for them shall bear a similar
legend, together with the name of the original dissenting holder of such
shares. Upon receiving a demand for payment from a dissenting shareholder who
is the record holder of uncertificated securities, the corporation shall make
an appropriate notation of the demand for payment in its shareholder records.
If uncertificated shares for which payment has been demanded are to be
transferred, any new certificate issued for the shares shall bear the legend
required for certificated securities as provided in this paragraph. A
transferee of the shares so endorsed, or of uncertificated securities where
such notation has been made, acquires only such rights in the corporation as
the original dissenting holder of such shares had immediately
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<PAGE>
after the service of a demand for payment of the fair cash value of the
shares. A request under this paragraph, by the corporation is not an admission
by the corporation that the shareholder is entitled to relief under this
section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving
or new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of
the county in which the principal office of the corporation that issued the
shares is located or was located when the proposal was adopted by the
shareholders of the corporation, or, if the proposal was not required to be
submitted to the shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as plaintiffs or may be
joined as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a brief statement
of the facts, including the vote and the facts entitling the dissenting
shareholder to the relief demanded. No answer to such a complaint is required.
Upon the filing of such a complaint, the court, on motion of the petitioner,
shall enter an order fixing a date for a hearing on the complaint and
requiring that a copy of the complaint and a notice of the filing and of the
date for hearing be given to the respondent or defendant in the manner in
which summons is required to be served or substituted service is required to
be made in other cases. On the day fixed for the hearing on the complaint or
any adjournment of it, the court shall determine from the complaint and from
such evidence as is submitted by either party whether the dissenting
shareholder is entitled to be paid the fair cash value of any shares and, if
so, the number and class of such shares. If the court finds that the
dissenting shareholder is so entitled, the court may appoint one or more
persons as appraisers to receive evidence and to recommend a decision on the
amount of the fair cash value. The appraisers have such power and authority as
is specified in the order of their appointment. The court there upon shall
make a finding as to the fair cash value of a share and shall render judgment
against the corporation for the payment of it, with interest at such rate and
from such date as the court considers equitable. The costs of the proceeding,
including reasonable compensation to the appraisers to be fixed by the court,
shall be assessed or apportioned as the court considers equitable. The
proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505. of the
Revised Code. If, during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin or otherwise
to prevent the carrying out of the action as to which the shareholder has
dissented, the proceeding instituted under this section shall be stayed until
the final determination of the other suit or proceeding. Unless any provision
in division (D) of this section is applicable, the fair cash value of the
shares that is agreed upon by the parties or fixed under this section shall be
paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or
the consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the case of
holders of shares represented by certificates, payment shall be made only upon
and simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as
of the day prior to the day on which the vote by the shareholders was taken,
and, in the case of a merger pursuant to section 1701.80 or 1701.801 of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would
be willing to pay, but in no event shall
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APPENDICES
<PAGE>
the fair cash value of a share exceed the amount specified in the demand of
the particular shareholder. In computing such fair cash value, any
appreciation or depreciation in market value resulting from the proposal
submitted to the directors or to the shareholders shall be excluded.
(D) (1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally enjoined
or prevented from carrying it out, or the shareholders rescind their
adoption, of the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent of
the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder
nor the corporation filed or joined in a complaint under division (B) of
this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or
the comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand until
either the termination of the rights and obligations arising from it or the
purchase of the shares by the corporation, all other rights accruing from such
shares, including voting and dividend or distribution rights, are suspended.
If during the suspension, any dividend or distribution is paid in money upon
shares of such class or any dividend, distribution, or interest is paid in
money upon any securities issued in extinguishment of or in substitution for
such shares, an amount equal to the dividend, distribution, or interest which,
except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair
cash value of the shares. If the right to receive fair cash value is
terminated other than by the purchase of the shares by the corporation, all
rights of the holder shall be restored and all distributions which, except for
the suspension, would have been made shall be made to the holder of record of
the shares at the time of termination.
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APPENDICES
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
BANK ONE CORPORATION is a Delaware corporation. Section 145 of the General
Corporation Law of the State of Delaware contains detailed provisions on
indemnification of directors and officers of a Delaware corporation against
expenses, judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with litigation.
Article Seventh of BANK ONE CORPORATION's Certificate of Incorporation will,
at the consummation of the Merger, provide for indemnification of directors
and officers. The provision provides that any person shall to the fullest
extent permitted by the General Corporation Law of the State of Delaware be
indemnified and reimbursed by for expenses and liabilities imposed upon the
person in connection with any action, suit or proceeding, civil or criminal,
or threat thereof, in which the person may be involved by reason of the person
being or having been a director, officer, employee or agent of BANK ONE
CORPORATION, or of any corporation or organization which the person served in
any capacity at the request of BANK ONE CORPORATION. Such Article Seventh, as
permitted by the General Corporation Law of the State of Delaware, also
provides that a director of BANK ONE CORPORATION shall not be personally
liable to BANK ONE CORPORATION or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to BANK ONE CORPORATION or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the General Corporation Law of the State of Delaware or (iv) for any
transaction from which the director derived any improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed herewith except those which are
incorporated herein by reference.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Reorganization, dated as of April 10, 1998, by and
among BANK ONE CORPORATION (formerly Hornet Reorganization Corporation), a
Delaware corporation, BANC ONE CORPORATION, an Ohio corporation, and First
Chicago NBD Corporation, a Delaware corporation (incorporated by reference
to Exhibit 2.1 to BANC ONE CORPORATION's Current Report on Form 8-K dated
April 10, 1998).
2.2 Stock Option Agreement, dated April 10, 1998, by and between First Chicago
NBD Corporation, a Delaware corporation, as issuer, and BANC ONE
CORPORATION, an Ohio corporation, as grantee (incorporated by reference
from Exhibit 99.1 to BANC ONE CORPORATION's Current Report on Form 8-K
dated April 10, 1998).
2.3 Stock Option Agreement, dated April 10, 1998, by and between BANC ONE
CORPORATION, an Ohio corporation, as issuer, and First Chicago NBD
Corporation, a Delaware corporation, as grantee (incorporated by reference
from Exhibit 99.2 to BANC ONE CORPORATION's Current Report on Form 8-K
dated April 10, 1998).
3.1 Form of Certificate of Incorporation of BANK ONE CORPORATION, including
forms of Certificates of Designations for Series B and Series C Preferred
Stock of BANK ONE CORPORATION.
3.2 Form of By-Laws of BANK ONE CORPORATION.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz regarding the legality of
securities being offered, including consent.
8.1 Opinion of Wachtell, Lipton, Rosen & Katz regarding the federal income tax
consequences of the Merger, including consent.
</TABLE>
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<PAGE>
<TABLE>
<C> <S>
23.1 Consent of PricewaterhouseCoopers L.L.P. relating to the audited
financial statements of BANC ONE CORPORATION.
23.2 Consent of Arthur Andersen LLP relating to the audited financial
statements of First Chicago NBD Corporation.
23.3 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1
hereto).
23.4 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.1
hereto).
23.5 Consent of Goldman, Sachs & Co.
23.6 Consent of Lazard Freres & Co. LLC
23.7 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
23.8 Consent of Morgan Stanley & Co. Incorporated
24.1 Powers of Attorney (included on the signature pages to this Registration
Statement).
99.1 Form of Proxy to be used by BANC ONE CORPORATION.
99.2 Form of Proxy to be used by First Chicago NBD Corporation.
99.3 Form of Plan Participant Instruction Card for First Chicago NBD
Corporation.
99.4 Section 1701.85 of the Ohio General Corporation Law (included as Appendix
F to the Joint Proxy Statement-Prospectus included in this Registration
Statement).
99.5 Consent of John B. McCoy.
99.6 Consent of Richard J. Lehmann.
99.7 Consent of Verne G. Istock.
99.8 Consent of David J. Vitale.
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement (notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement); and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange
II-2
<PAGE>
Act of 1934 that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(6) That every prospectus (i) that is filed pursuant to paragraph (5)
above, or (ii) that purports to meet the requirements of Section 10(a)(3)
of the Securities Act of 1933 and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
this registration statement and will not be used until such amendment has
become effective, and that for the purpose of determining liabilities under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(8) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(9) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in this registration statement
when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Columbus, State of Ohio, on July 31,
1998.
Bank One Corporation
By: /s/ Steven Alan Bennett
----------------------------------
Steven Alan Bennett
Vice President, Secretary and
Assistant Treasurer
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<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and directors of BANK ONE CORPORATION, hereby
severally constitute and appoint Steven Alan Bennett, William P. Boardman or
Michael J. McMennamin and each of them our true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for us and in
our stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and all
documents relating thereto, and any subsequent registration statement filed by
BANK ONE CORPORATION pursuant to Rule 462(b) of the Securities Act of 1933,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing necessary or
advisable to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Witness our hands on the dates set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ John B. McCoy Chairman of the July 31, 1998
- ------------------------------------- Board, President,
JOHN B. MCCOY Chief Executive
Officer and
Director (Principal
Executive Officer)
/s/ Michael J. McMennamin Vice President, July 31, 1998
- ------------------------------------- Treasurer and
MICHAEL J. MCMENNAMIN Assistant Secretary
(Principal
Financial and
Accounting Officer)
/s/ William P. Boardman Director July 31, 1998
- -------------------------------------
WILLIAM P. BOARDMAN
/s/ Richard J. Lehmann Director July 31, 1998
- -------------------------------------
RICHARD J. LEHMANN
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
Exhibit 2.1 Agreement and Plan of Reorganization, dated as of April 10,
1998, by and among BANK ONE CORPORATION (formerly Hornet
Reorganization Corporation), a Delaware corporation, BANC ONE
CORPORATION, an Ohio corporation, and First Chicago NBD
Corporation, a Delaware corporation (incorporated by reference
to Exhibit 2.1 to BANC ONE CORPORATION's Current Report on
Form 8-K dated April 10, 1998).
Exhibit 2.2 Stock Option Agreement, dated April 10, 1998, by and between
First Chicago NBD Corporation, a Delaware corporation, as
issuer, and BANC ONE CORPORATION, an Ohio corporation, as
grantee (incorporated by reference from Exhibit 99.1 to BANC
ONE CORPORATION's Current Report on Form 8-K dated April 10,
1998).
Exhibit 2.3 Stock Option Agreement, dated April 10, 1998, by and between
BANC ONE CORPORATION, an Ohio corporation, as issuer, and
First Chicago NBD Corporation, a Delaware corporation, as
grantee (incorporated by reference from Exhibit 99.2 to BANC
ONE CORPORATION's Current Report on Form 8-K dated April 10,
1998).
Exhibit 3.1 Form of Certificate of Incorporation of BANK ONE CORPORATION
including forms of Certificates of Designations for Series B
and Series C Preferred Stock of BANK ONE CORPORATION.
Exhibit 3.2 Form of By-Laws of BANK ONE CORPORATION.
Exhibit 5.1 Opinion of Wachtell, Lipton, Rosen & Katz regarding the
legality of securities being offered, including consent.
Exhibit 8.1 Opinion of Wachtell, Lipton, Rosen & Katz regarding the
federal income tax consequences of the Merger, including
consent.
Exhibit 23.1 Consent of PricewaterhouseCoopers L.L.P. relating to the
audited financial statements of BANC ONE CORPORATION.
Exhibit 23.2 Consent of Arthur Andersen LLP relating to the audited
financial statements of First Chicago NBD Corporation.
Exhibit 23.3 Consent of Steven Alan Bennett, Esq., Vice President,
Secretary and Assistant Treasurer of Hornet Reorganization
Corporation (included in Exhibit 5.1 hereto).
Exhibit 23.4 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit
8.1 hereto).
Exhibit 23.5 Consent of Goldman, Sachs & Co.
Exhibit 23.6 Consent of Lazard Freres & Co. LLC
Exhibit 23.7 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
Exhibit 23.8 Consent of Morgan Stanley & Co. Incorporated
Exhibit 24.1 Powers of Attorney (included on the signature pages to this
Registration Statement).
Exhibit 99.1 Form of Proxy to be used by BANC ONE CORPORATION.
Exhibit 99.2 Form of Proxy to be used by First Chicago NBD Corporation.
Exhibit 99.3 Form of Plan Participant Instruction Card for First Chicago
NBD Corporation.
Exhibit 99.4 Section 1701.85 of the Ohio General Corporation Law (included
as Appendix F to the Joint Proxy Statement-Prospectus included
in this Registration Statement).
Exhibit 99.5 Consent of John B. McCoy.
Exhibit 99.6 Consent of Richard J. Lehmann.
Exhibit 99.7 Consent of Verne G. Istock.
Exhibit 99.8 Consent of David J. Vitale.
</TABLE>
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EXHIBIT 3.1
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FORM OF CERTIFICATE OF INCORPORATION OF
BANK ONE CORPORATION
FIRST. The name of the corporation is
BANK ONE CORPORATION.
SECOND. The address of its registered office in the State of Delaware is
1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. The name
of its registered agent at such address is The Corporation Trust Company.
THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is
two billion five hundred fifty million (2,550,000,000) shares which shall be
divided into two classes as follows:
(a) Two billion five hundred million (2,500,000,000) shares of common
stock, par value $0.01 per share("Common Stock"); and
(b) Fifty million (50,000,000) shares of Preferred Stock, par value $0.01
per share ("Preferred Stock").
The designations, voting powers, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions of the above classes of stock and other general provisions relating
thereto shall be as follows:
PART I
PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series at such
time or times and for such consideration or considerations as the Board of
Directors may determine. All shares of any one series shall be of equal rank
and identical in all respects except that the dates from which dividends accrue
or accumulate with respect thereto may vary.
(b) The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of Preferred Stock in one or
more series, with such voting powers, full or limited, or without voting powers,
and with such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as shall be stated and expressed in the resolution or resolutions providing for
the issue thereof adopted by the Board of
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Directors, and as are not stated and expressed in this Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:
(i) The distinctive designation and number of shares comprising such
series, which number may (except where otherwise provided by the Board of
Directors in creating such series) be increased or decreased (but not below the
number of shares then outstanding) from time to time by action of the Board of
Directors.
(ii) The dividend rate or rates on the shares of such series and the
relation which such dividends shall bear to the dividends payable on any other
class of capital stock or on any other series of Preferred Stock, the terms and
conditions upon which and the periods in respect of which dividends shall be
payable, whether and upon what conditions such dividends shall be cumulative
and, if cumulative, the date or dates from which dividends shall accumulate.
(iii) Whether the shares of such series shall be redeemable, and, if
redeemable, whether redeemable for cash, property or rights, including
securities of any other corporation, at the option of either the holder or the
corporation or upon the happening of a specified event, the limitations and
restrictions with respect to such redemption, the time or times when, the price
or prices or rate or rates at which, the adjustments with which and the manner
in which such shares shall be redeemable, including the manner of selecting
shares of such series for redemption if less than all shares are to be redeemed.
(iv) The rights to which the holders of shares of such series shall be
entitled, and the preferences, if any, over any other series (or of any other
series over such series), upon the voluntary or involuntary liquidation,
dissolution, distribution or winding up of the corporation, which rights may
vary depending on whether such liquidation, dissolution, distribution or winding
up is voluntary or involuntary, and, if voluntary, may vary at different dates.
(v) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund, and, if so, whether and
upon what conditions such purchase, retirement or sinking fund shall be
cumulative or noncumulative, the extent to which and the manner in which such
fund shall be applied to the purchase or redemption of the shares of such series
for retirement or to other corporate purposes and the terms and provisions
relative to the operation thereof.
(vi) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or of any other series of any class
of capital stock of the corporation, and, if so convertible or exchangeable, the
price or prices or the rate or rates of conversion or exchange and
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the method, if any, of adjusting the same, and any other terms and conditions of
such conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of the shares
of such series, and whether and under what conditions the shares of such series
(along or together with the shares of one or more other series having similar
provisions) shall be entitled to vote separately as a single class, for the
election of one or more additional directors of the corporation in case of
dividend arrearages or other specified events, or upon other matters.
(viii) Whether the issuance of any additional shares of such series,
or of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other series.
(ix) Any other preferences, privileges and powers and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions of such series, as the Board of Directors may deem advisable and
as shall not be inconsistent with the provisions of this Certificate of
Incorporation.
(c) Unless and except to the extent otherwise required by law or provided
in the resolution or resolutions of the Board of Directors creating any series
of Preferred Stock pursuant to this Part I, the holders of the Preferred Stock
shall have no voting power with respect to any matter whatsoever. In no event
shall the Preferred Stock be entitled to more than one vote in respect of each
share of stock.
(d) Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the corporation, or which have been issued and
reacquired in any manner, may, upon compliance with any applicable provisions of
the General Corporation Law of the State of Delaware, be given the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
Board of Directors as part of the series of which they were originally a part or
may be reclassified into and reissued as part of a new series or as a part of
any other series, all subject to the protective conditions or restrictions of
any outstanding series of Preferred Stock.
(e) Pursuant to the authority conferred by this Article FOURTH upon the
Board of Directors, the Board of Directors has created two series of Preferred
Stock, in each case par value $.01 per share, of the Corporation and has stated
the designation and number of shares, and has fixed the relative rights,
preferences and limitations thereof, in each case as set forth in a Certificate
of Designations filed in the Office of the Secretary of State of Delaware on
_____________, 1998, as set forth in Exhibit A and Exhibit B, respectively, to
this Certificate of Incorporation.
PART II
COMMON STOCK
(a) Except as otherwise required by law or by any amendment to this
Certificate of Incorporation, each holder of Common Stock shall have one vote
for each share of stock held by him on all matters voted upon by the
stockholders.
(b) Subject to the preferential dividend rights, if any, applicable to
shares of Preferred Stock and subject to applicable requirements, if any, with
respect to the setting aside of sums for purchase, retirement or sinking funds
for
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Preferred Stock, the holders of Common Stock shall be entitled to receive,
to the extent permitted by law, such dividends as may be declared from time to
time by the Board of Directors.
(c) In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of Preferred Stock, holders of Common Stock shall be entitled to receive
all of the remaining assets of the corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively. The Board of Directors may distribute
in kind to the holders of Common Stock such remaining assets of the corporation,
or may sell, transfer, or otherwise dispose of all or any part of such remaining
assets to any corporation, trust or entity, or any combination thereof, and may
sell all or any part of the consideration so received and distribute any balance
thereof in kind to holders of Common Stock. The merger or consolidation of the
corporation into or with any other corporation, or the merger of any other
corporation into it, or any purchase or redemption of shares of stock of the
corporation of any class, shall not be deemed to be a dissolution, liquidation
or winding up of the corporation for the purposes of this paragraph.
(d) Such numbers of shares of Common Stock as may from time to time be
required for such purpose shall be reserved for issuance (i) upon conversion of
any shares of Preferred Stock or any obligation of the corporation convertible
into shares of Common Stock which is at the time outstanding or issuable upon
exercise of any options or warrants at the time outstanding and (ii) upon
exercise of any options or warrants at the time outstanding to purchase shares
of Common Stock.
PART III
GENERAL PROVISIONS
(a) At any meeting of stockholders, the presence in person or by proxy of
the holders of record of a majority of the outstanding shares of stock of the
corporation entitled to be voted at such meeting shall constitute a quorum for
all purposes, except as otherwise provided by this Certificate of Incorporation
or required by applicable law.
(b) Subject to the protective conditions or restrictions of any outstanding
series of Preferred Stock, any amendment to this Certificate of Incorporation
which shall increase or decrease the authorized capital stock of any class or
classes may be adopted by the affirmative vote of the holders of a majority of
the stock of the corporation entitled to vote.
(c) No holder of stock of any class of the corporation shall be entitled as
a matter of right to purchase or subscribe for any part of any unissued stock of
any class, or
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of any additional stock of any class of capital stock of the corporation, or of
any bonds, certificates of indebtedness, debentures, or other securities,
whether or not convertible into stock of the corporation, now or hereafter
authorized, but any such stock or other securities may be issued and disposed of
pursuant to resolution by the Board of Directors to such persons, firms,
corporations or associations and upon such terms and for such consideration (not
less than the par value or stated value thereof) as the Board of Directors in
the exercise of its discretion may determine and may be permitted by law without
action by the stockholders. The Board of Directors may provide for payment
therefor to be received by the corporation in cash, personal property, real
property (or leases thereof) or services. Any and all shares of stock so issued
for which the consideration so fixed has been paid or delivered, shall be deemed
fully paid and not liable to any further call or assessment.
FIFTH. Subject to any provision contained in any resolution of the Board
of Directors adopted pursuant to Part I of Article Fourth of this Certificate of
Incorporation requiring an increase or increases in the number of directors, the
number of directors constituting the Board of Directors shall be that number as
shall be fixed from time to time in the manner provided by Article Tenth of this
Certificate of Incorporation and by By-laws in conformity therewith. Election
of directors need not be by written ballot unless the By-laws of the corporation
shall so provide.
In addition to all of the powers conferred by statute, the Board of
Directors is expressly authorized to make, alter or repeal the By-laws of the
corporation.
Wherever the term "Board of Directors" is used in this Certificate of
Incorporation, such term shall mean the Board of Directors of the corporation;
provided, however, that, to the extent any committee of directors of the
corporation is lawfully entitled to exercise the powers of the Board of
Directors, such committee may exercise any right or authority of the Board of
Directors under this Certificate of Incorporation.
SIXTH. No contract or transaction between the corporation and one or more
of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
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the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
SEVENTH. (a) The corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he is or was a director, officer or
employee of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment) or any other applicable laws as presently or hereinafter in
effect against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
therewith. Without limiting the generality of the foregoing, the corporation may
enter into one or more agreements with any person that provide for
indemnification greater or different than that provided in this Article Seventh.
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(b) Expenses incurred by a director, officer or employee in defending a
civil or criminal action, suit or proceeding shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director, officer or employee to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
(c) The indemnification and advancement of expenses provided by this
Article shall not be deemed exclusive of any other rights to which a person
seeking indemnification and advancement of expenses may be entitled under any
statute, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefits of the
heirs, executors and administrators of such a person.
(d) For the purposes of this Article Seventh, references to "the
corporation" include, in addition to the resulting or surviving corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article Seventh
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
(e) Neither the corporation nor its directors or officers nor any
person acting on its behalf shall be liable to any person for any determination
as to the existence or absence of conduct that would provide a basis for making
or refusing to make any payment under this Article Seventh, in reliance upon the
advice of counsel.
(f) A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholder, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware or (iv) for any transaction from which the director derived
any improper personal benefit. If the General Corporation Law of the State of
Delaware
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is hereafter amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
(g) Neither the amendment nor repeal of this Article Seventh, nor the
adoption of any provision of this Certificate of Incorporation inconsistent with
this Article Seventh, shall eliminate or reduce the effect of this Article
Seventh in respect of any matter occurring, or any cause of action, suit or
claim that would accrue or arise, prior to such amendment, repeal or adoption of
an inconsistent provision.
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EIGHTH. The corporation shall have perpetual existence.
NINTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by the laws of Delaware, and all rights
conferred herein upon stockholders and directors are granted subject to this
reservation.
TENTH. Board of Directors.
(a) Number, Election and Terms of Directors: The business and affairs of
the corporation shall be managed by or under the direction of a Board of
Directors. The number of the directors of the corporation shall be fixed from
time to time by resolution adopted by the affirmative vote of a majority of the
entire Board of Directors of the corporation, except that the minimum number of
directors shall be fixed at no less than eleven (11) and the maximum number of
directors shall be fixed at no more than thirty (30). At each annual meeting of
stockholders, successors of the directors shall be elected for a term expiring
at the annual meeting next following such annual meeting.
(b) Stockholder Nomination of Director Candidates: Nominations for
election to the Board of Directors of the corporation at a meeting of
stockholders may be made by the Board of Directors, on behalf of the Board of
Directors by any nominating committee appointed by the Board of Directors, or by
any stockholder of the corporation entitled to vote for the election of
directors at the meeting. Nominations, other than those made by or on behalf of
the Board of Directors, shall be made by notice in writing delivered to or
mailed, postage prepaid, and received by the Secretary of the corporation at
least 60 days but no more than 90 days prior to the anniversary date of the
immediately preceding Annual Meeting of Stockholders. The notice shall set
forth (i) the name and address of the stockholder who intends to make the
nomination; (ii) the name, age, business address and, if known, residence
address of each nominee; (iii) the principal occupation or employment of each
nominee; (iv) the number of shares of stock of the corporation which are
beneficially owned by each nominee and by the nominating stockholder; (v) any
other information concerning the nominee that must be disclosed of nominees in
proxy solicitation pursuant to Regulation 14A of the Securities Exchange Act of
1934 (or any subsequent provisions replacing such Regulation); and (vi) the
executed consent of each nominee to serve as a director of the corporation, if
elected. The chairman of the meeting of
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stockholders may, if the facts warrant, determine that a nomination was not made
in accordance with the foregoing procedures, and if the chairman should so
determine, the chairman shall so declare to the meeting and the defective
nomination shall be disregarded.
(c) Newly Created Directorships and Vacancies: Newly created directorships
resulting from any increase in the number of directors and any vacancies on the
Board of Directors resulting from death, resignation, disqualification, removal
or other cause shall be filled by the affirmative vote of a majority of the
remaining directors then in office, even though less than a quorum, or by a sole
remaining director. A director, including any director chosen to fill a newly
created directorship or any vacancy, shall hold office until the next annual
meeting following his election or appointment to the Board of Directors, as
applicable, and until such director's successor shall have been elected and
qualified. In no case will a decrease in the number of directors shorten the
term of any incumbent director.
(d) Preferred Stock: Notwithstanding the foregoing paragraphs, whenever
the holders of any one or more classes or series of Preferred Stock issued by
the corporation shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of stockholders, the election,
term of office, filling of vacancies and other features of such directorships
shall be governed by the terms of the Certificate of Incorporation applicable
thereto. The then authorized number of directors of the corporation shall be
increased by the number of additional directors to be elected, and such
directors so elected shall not be divided into classes pursuant to this Article
Tenth unless expressly provided by such terms.
ELEVENTH. Stockholder Action.
Any action required or permitted to be taken by any stockholders of the
corporation must be effected at a duly called annual or special meeting of such
stockholders and may not be effected by any consent in writing by such
stockholders. Except as may be otherwise required by law, special meetings of
stockholders of the corporation may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the Board of Directors.
Notwithstanding anything contained in this Certificate of
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Incorporation or the By-laws of the corporation to the contrary, the affirmative
vote of at least 80% of the voting power of all the shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or adopt any provision
inconsistent with the purpose and intent of this Article Eleventh.
TWELFTH. (a) In addition to any affirmative vote required by law or by or
under this Certificate of Incorporation or the By-laws and except as otherwise
expressly herein provided in this Article Twelfth, the approval or authorization
of a Business Combination (which together with certain other terms used in this
Article, are hereinafter defined) shall require the affirmative vote of a
majority of the voting power of all the shares of Voting Stock held by
stockholders other than an Interested Stockholder, with which or by or on whose
behalf, directly or indirectly, a Business Combination is proposed, voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required or that a lesser
percentage or separate class vote may be otherwise required.
(b) The provisions of paragraph (a) of this Article Twelfth shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote, if any, as is required by law or by or
under any other provision of this Certificate of Incorporation, or the By-laws
of the corporation, or otherwise, if all the conditions specified in either of
the following paragraphs First or Second are met:
First: The Business Combination shall have been approved by a majority
(whether such approval is made prior to or subsequent to the acquisition of
beneficial ownership of the Voting Stock that caused the Interested Stockholder
to become an Interested Stockholder) of the Continuing Directors; or
Second: All of the following conditions shall have been met:
(1) The aggregate amount of the cash, and the Fair Market Value as of the
date of the consummation of the Business Combination of consideration other than
cash, to be received per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest amount determined under
subparagraphs (i) and (ii) below:
(i) The highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by or on behalf on the
Interested Stockholder for any shares of Common Stock in connection with the
acquisition by the Interested Stockholder of beneficial ownership of shares of
Common Stock (a) within the two-year period immediately prior to the first
public announcement of the proposed Business Combination (the "Announcement
Date") or (b) in the transaction in which it became an Interested Stockholder,
whichever is higher; and
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(ii) The Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"), whichever is higher.
All per share prices shall be adjusted to reflect any intervening stock
splits, stock dividends, and reverse stock splits.
(2) The aggregate amount of the cash, and the Fair Market Value as of the
date of the consummation of the Business Combination of consideration other than
cash, to be received per share by holders of shares of any class or series of
outstanding Voting Stock, other than Common Stock, shall be at least equal to
the highest amount determined under clauses (i), (ii), and (iii) below.
(i) The highest per share price (including any brokerage commissions,
transfer taxes, and soliciting dealers' fees) paid by or on behalf of the
Interested Stockholder for any share of such class or series of Voting Stock in
connection with the acquisition by the Interested Stockholder of beneficial
ownership of shares of such class or series of Voting Stock (a) within the two-
year period immediately prior to the Announcement Date or (b) in the transaction
in which it became an Interested Stockholder, whichever is higher.
(ii) The Fair Market Value per share of such class or series of Voting
Stock on the Announcement Date or on the Determination Date, whichever is
higher; and
(iii) The highest preferential amount per share to which the holders
of shares of such class or series of Voting Stock would be entitled, if any, in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the corporation, regardless of whether the Business Combination to be
consummated constitutes such an event.
All per share prices shall be adjusted for intervening stock splits, stock
dividends, and reverse stock splits.
The provisions of this paragraph 2 shall be required to be met with respect
to every class or series of outstanding Voting Stock, whether or not the
Interested Stockholder has previously acquired beneficial ownership of any
shares of a particular class or series of Voting Stock.
(3) After such Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination: (i) except as
approved by a majority of the Continuing Directors, there shall have been no
failure to declare and pay at the regular date therefor any full periodic
dividends (whether or not cumulative) in accordance with the terms of any
outstanding Preferred Stock; (ii) there shall have been (a) no reduction in the
annual rate of dividend paid on the Common Stock (except as necessary to reflect
any stock split, stock dividend or subdivision of the Common Stock), ex-
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cept as approved by a majority of the Continuing Directors, and (b) an increase
in such annual rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization, or any
similar transaction which has the effect of reducing the number of outstanding
shares of Common Stock, unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors, and (iii) such Interested
Stockholder shall have not become the beneficial owner of any additional shares
of Voting Stock except as part of the transaction which results in such
Interested Stockholder becoming an Interested Stockholder and except in a
transaction that, after giving effect thereto, would not result in any increase
in the Interested Stockholder's percentage of beneficial ownership of any class
or series of capital stock.
(4) After such Interested Stockholder has become an Interested Stockholder,
such Interested Stockholder shall not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges, or other financial assistance or any tax credits or other
tax advantages provided by the corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(5) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934 and the rules and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to stockholders of the
corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required to
be mailed pursuant to such Act or subsequent provisions).
(6) Such Interested Stockholder shall not have made any major change in the
corporation's business or equity capital structure without the approval of a
majority of the Continuing Directors.
(c) For the purposes of this Article Twelfth:
(i) The term "Business Combination" shall mean:
(A) any merger or consolidation of the corporation or any Subsidiary
(as hereinafter defined) with (x) any Interested Stockholder or (y) any
other company (whether or not such other company is an Interested
Stockholder) which is, or after such merger or consolidation would be, an
Affiliate or Associate of an Interested Stockholder; or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition or security arrangement, investment, loan, advance, guarantee,
agreement to purchase, agreement to pay, extension of credit, joint venture
participation or other arrangement (in one
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transaction or a series of transactions) with or for the benefit of any
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder involving any Substantial Part of the assets, securities or
commitments of the corporation, any Subsidiary or any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(C) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by or on behalf of any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder; or
(D) any reclassification of securities (including any reverse stock
split), or recapitalization of the corporation or any merger or
consolidation of the corporation with any of its Subsidiaries or any other
transaction (whether or not with or otherwise involving an Interested
Stockholder) that has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class or series of
Voting Stock, or any securities convertible into Voting Stock, or into
equity securities of any Subsidiary, that is beneficially owned by an
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder; or
(E) any agreement, contract, or other arrangement providing for any
one or more of the actions specified in the foregoing clauses (a) through
(d).
(ii) The term "Voting Stock" shall mean all outstanding shares of
capital stock of the corporation of whatever class or series which is entitled
to vote under any circumstances in the election of directors of the corporation.
(iii) A "person" shall mean any individual, firm, corporation,
partnership, trust or other entity and shall include any group comprised of any
person and any other person with whom such person or any Affiliate or Associate
of such person has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting, or disposing of
Voting Stock.
(iv) "Interested Stockholder" shall mean any person (other than the
corporation or any Subsidiary and other than any profit-sharing, employee stock
ownership or other employee benefit plan of the corporation or any Subsidiary or
any trustee of or fiduciary with respect to any such plan when acting in such
capacity) who or which:
(A) is a person who is the beneficial owner, directly or indirectly,
of more than 10% of the voting power of the then outstanding Voting Stock;
or
(B) is an Affiliate or Associate of the corporation and at any time
within the two-year period immediately prior to the date in question was
the beneficial owner of
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<PAGE>
10% or more of the voting power of the then outstanding Voting Stock; or
(C) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period immediately
prior to the date in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall have occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933, as amended.
(v) A person shall be a "beneficial owner" of any
Voting Stock:
(A) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(B) which such person or any of its Affiliates or Associates has (1)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (2) the right to vote pursuant to any
agreement, arrangement or understanding; or
(C) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock. For the
purposes of determining whether a person is an Interested Stockholder
pursuant to paragraph (c)(iv) of this Article, the number of shares of
capital stock deemed to be outstanding shall include shares deemed
beneficially owned by such person through application of paragraph (c)(v)
of this Article but shall not include any other shares of Voting Stock that
may be issuable pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or otherwise.
(vi) An "Affiliate" of, or a person "affiliated" with, a specified
person, is a person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
(vii) "Associate" used to indicate a relationship with any person,
means (1) any corporation or organization (other than the corporation or a
majority-owned subsidiary of the corporation) of which such person is an officer
or partner or is, directly or indirectly, the beneficial owner of 10% or more of
any class of equity securities, (2) any trust or other estate in which such
person has a substantial beneficial interest or as to which such person serves
as trustee or in a similar fiduciary capacity, and (3) any relative or spouse of
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<PAGE>
such person, or any relative of such spouse, who has the same home as such
person.
(viii) "Subsidiary" means any company of which a majority of any
class of equity security is owned, directly or indirectly, by the corporation.
(ix) The term "Substantial Part" shall mean an amount equal to or
greater than an amount equal to fifteen (15) percent of the stockholders' equity
of the corporation as reflected in the most recent fiscal year-end consolidated
balance sheet of the corporation.
(x) "Continuing Director" means any member of the Board of Directors
of the corporation (the "Board") while such person is a member of the Board, who
is not an Affiliate or Associate or representative of the Interested Stockholder
and was a member of the Board prior to the time that the Interested Stockholder
became an Interested Stockholder, and any successor of a Continuing Director,
while such successor is a member of the Board, who is not an Affiliate or
Associate or representative of the Interested Stockholder and is recommended to
succeed the Continuing Director by a majority of Continuing Directors then on
the Board.
(xi) "Fair Market Value" means (a) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape
for the New York Stock Exchange, or if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or if such
stock is not listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or if no such quotations are
available, the Fair Market Value on the date in question of a share of such
stock as determined by a majority of the Continuing Directors in good faith and
(b) in the case of property other than cash or stock, the Fair Market Value of
such property on the date in question as determined in good faith by a majority
of Continuing Directors then on the Board.
(xii) In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash to be received"
as used in paragraphs (b) Second (1) and (2) of this Article shall include the
shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
(d) The Board shall have the power and duty to determine for the purposes
of this Article Twelfth, on the basis of information known to it after
reasonable inquiry (i) whether a person is an Interested Stockholder; (ii) the
number of shares
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<PAGE>
of Voting Stock beneficially owned by any person; (iii) whether a person is an
Affiliate or Associate of another; (iv) whether the requirements of paragraph
(b) Second of this Article have been met with respect to any Business
Combination; and (v) whether any sale, lease, exchange, mortgage, pledge,
transfer or other disposition or security arrangement, investment, loan,
advance, guarantee, agreement to purchase, agreement to pay, extension of
credit, joint venture participation or other arrangement (in one transaction or
a series of transactions) with or for the benefit of any Interested Stockholder
or any Affiliate or Associate of any Interested Stockholder involving any
assets, securities or commitments of the corporation, any Subsidiary, or any
Interested Stockholder, or any Affiliate or Associate of any Interested
Stockholder constitutes a Substantial Part. Any such determination made in good
faith shall be binding and conclusive on all parties.
(e) The Board of Directors shall not approve, adopt or recommend any
proposal to enter into a Business Combination, or any offer of any person, other
than the corporation, to make a tender or exchange offer for any capital stock
of the corporation, unless and until the Board of Directors shall first
establish a procedure for evaluating, and shall have evaluated, the proposal or
offer, and determined that it would be in compliance with all applicable laws
and in the best interests of the corporation and its stockholders. In
connection with its evaluation, the Board of Directors may seek and obtain the
advice of independent investment counsel, may seek and rely upon an opinion of
legal counsel and other independent advisers, and may test such compliance with
laws in any state or federal court or before any state or federal administrative
agency which may have appropriate jurisdiction. In connection with its
evaluation as to the best interests of the corporation and its stockholders, the
Board of Directors shall consider all factors which it deems relevant, or the
stockholders might deem relevant, including without limitation: (i) the
adequacy and fairness of the consideration to be received by the corporation
and/or its stockholders considering the future prospects for the corporation and
its business, historical trading prices of the corporation's capital stock, the
price that might be achieved in a negotiated sale of the corporation as a whole,
and premiums over trading prices which have been proposed or offered with
respect to the securities of other companies in the past in connection with
similar offers; (ii) the business, financial condition and earnings prospects of
the acquiring person or entity and the competence, experience and integrity of
the acquiring person or entity and their or its management, and (iii) the
potential social and economic impact of the offer and its consummation on the
communities in which the corporation and its subsidiaries operate or are located
and upon the corporation, its subsidiaries, and their employees, depositors, and
loan and other customers.
(f) The Board of Directors shall not approve, adopt or recommend any offer
of any person, other than the corporation, to make a tender or exchange offer
for any capital stock of
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<PAGE>
the corporation in which the Fair Market Value per share of the consideration to
be received by one or more stockholders is substantially more than the Fair
Market Value per share of the consideration to be received by other stockholders
holding shares of the same class and series, or any tender or exchange offer the
consummation of which is reasonably likely, in the good faith determination of
the Board of Directors, in one transaction or a series of transactions, to have
that result.
(g) Nothing contained in this Article Twelfth shall be construed to relieve
any Interested Stockholder from any fiduciary obligation imposed by law.
(h) The fact that any Business Combination complies with the provisions of
paragraph (b)(2) of this Article Twelfth shall not be construed to impose any
fiduciary duty, obligation, or responsibility on the Board of Directors, or any
member thereof, to approve such Business Combination or recommend its adoption
or approval to the stockholders of the corporation, nor shall such compliance
limit, prohibit or otherwise restrict in any manner the Board of Directors, or
any member thereof, with respect to evaluations of or actions and responses
taken with respect to such Business Combination.
(i) Notwithstanding any other provisions of this Certificate of
Incorporation or the By-laws of the corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the By-laws of the corporation), the affirmative vote of the
holders of at least 80% of the voting power of all the shares of the Voting
Stock, voting together as a single class, shall be required to alter, amend or
adopt any provisions inconsistent with or to repeal this Article Twelfth;
provided, however, that if such action has been proposed, directly or
indirectly, on behalf of an Interested Stockholder, it must also be approved by
the affirmative vote of a majority of the voting power of all the shares of
Voting Stock held by stockholders other than such Interested Stockholder.
THIRTEENTH. This Certificate of Incorporation shall be effective at the
effective time of the merger of BANC ONE CORPORATION with and into BANK ONE
CORPORATION, as specified in the certificate of merger filed with the
Secretary of State of the State of Delaware with respect thereto.
IN WITNESS WHEREOF, BANK ONE CORPORATION has caused its corporate seal to
be hereunto affixed and this Certificate of Incorporation to be signed by
________________, its [officer's title], and the same to be attested by
_______________, its [officer's title], this ____ day of _________, 1998.
(CORPORATE SEAL)
ATTEST: BANK ONE CORPORATION
BY:________________________ BY:_______________________
(TITLE) (TITLE)
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<PAGE>
Exhibit A
----------
CERTIFICATE OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
RESTATED CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THEREOF, OF THE
PREFERRED STOCK WITH CUMULATIVE AND ADJUSTABLE DIVIDENDS, SERIES B
(Par Value $.01 per share)
OF
BANK ONE CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors of BANK ONE CORPORATION, a Delaware
corporation (hereinafter called the "Corporation"), at a meeting duly convened
and held on ____, __, 1998, at which a quorum was present and acting throughout:
"RESOLVED, that pursuant to authority conferred upon the Board of Directors (the
"Board") of the Corporation by the Certificate of Incorporation (the
"Certificate of Incorporation") of the Corporation, the Board hereby provides
for and authorizes the issuance of a series of Preferred Stock of the
Corporation to consist of ___________ shares, and hereby fixes the voting
powers, designation, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, of
the shares of such series, in addition to those set forth in the Certificate of
Incorporation, as follows:
(a) Designation.
The designation of the series of Preferred Stock created by this resolution
shall be "Preferred Stock with Cumulative and Adjustable Dividends, Series B"
(hereinafter called this "Series") and the number of shares constituting this
Series is ___________. Shares of this Series shall have a stated value of $100
per share. The number of authorized shares of this Series may be reduced by
further resolution duly adopted by the Board and by the filing of a certificate
pursuant to the provisions of the General Corporation Law of the State of
Delaware stating that such reduction has been so authorized, but the number of
authorized shares of this Series shall not be increased.
<PAGE>
(b) Dividend Rate.
(1) Dividend rates on the shares of this Series shall be for each
quarterly dividend period (hereinafter referred to as a "Quarterly Dividend
Period"; and any Quarterly Dividend Period being hereinafter individually
referred to as a "Dividend Period" and collectively referred to as "Dividend
Periods"), which Quarterly Dividend Periods shall commence on March 1, June 1,
September 1 and December 1 in each year and shall end on and include the day
next preceding the first day of the next Quarterly Dividend Period, at a rate
per annum of the stated value thereof 3.75% below the Applicable Rate (as
defined in paragraph (2) of this Section (b)) in respect of such Quarterly
Dividend Period. Anything to the contrary herein notwithstanding, the dividend
rate for any Quarterly Dividend Period shall in no event be less than 6.00% or,
greater than 12.00% per annum. Such dividends shall be cumulative from
_________ __, 1998, and shall be payable, when and as declared by the Board, on
the last day of February, May, August and November of each year, commencing the
last day of ___________, 199_. Each such dividend shall be paid to the holders
of record of shares of this Series as they appear on the stock register of the
Corporation on such record date, not exceeding 30 days preceding the payment
date thereof, as shall be fixed by the Board. Dividends on account of arrears
for any past Dividend Periods may be declared and paid at any time, without
reference to any regular dividend payment date, to holders of record on such
date, not exceeding 45 days preceding the payment date thereof, as may be fixed
by the Board.
(2) Except as provided below in this paragraph, the "Applicable Rate" for
any Quarterly Dividend Period shall be the highest of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate or the Twenty Year Constant Maturity Rate
(each as hereinafter defined) for such Dividend Period. In the event that the
Corporation determines in good faith that for any reason one or more of such
rates cannot be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Dividend Period shall be the higher of whichever of
such rates can be so determined. In the event that the Corporation determines
in good faith that none of such rates can be determined for any Quarterly
Dividend Period, then the Applicable Rate in effect for the preceding Dividend
Period shall be continued for such Dividend Period.
(3) Except as provided below in this paragraph, the "Treasury Bill Rate"
for each Quarterly Dividend Period shall be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the last day of
February, May, August or November, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on this Series is being determined.
In the event that the Federal Reserve Board does not publish such a weekly per
annum market discount rate during such Calendar Period, then the Treasury Bill
Rate for such Dividend Period shall be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly during such Calendar Period by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the Corporation. In the
event that a per annum market discount rate for three-month U.S. Treasury bills
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum market discount rates (or the
one weekly per annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period as provided below) for all of the
U.S. Treasury bills then having maturities of not less than 80 nor more than 100
days, as published during such Calendar Period by the Federal Reserve Board or,
if the Federal Reserve Board shall not publish such rates, by any Federal
Reserve Bank or by any U.S.
<PAGE>
Government department or agency selected by the Corporation. In the event that
the Corporation determines in good faith that for any reason no such U.S.
Treasury Bill Rates are published as provided above during such Calendar Period,
then the Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the per annum market discount rates based upon the closing bids
during such Calendar Period for each of the issues of marketable noninterest-
bearing U.S. Treasury securities with a maturity of not less than 80 nor more
than 100 days from the date of each such quotation, as quoted daily for each
business day in New York City (or less frequently if daily quotations shall not
be generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the Corporation cannot
determine the Treasury Bill Rate for any Quarterly Dividend Period as provided
above in this paragraph, the Treasury Bill Rate for such Dividend Period shall
be the arithmetic average of the per annum market discount rates based upon the
closing bids during such Calendar Period for each of the issues of marketable
interest-bearing U.S. Treasury securities with a maturity of not less than 80
nor more than 100 days from the date of each such quotation, as quoted daily for
each business day in New York City (or less frequently if daily quotations shall
not be generally available) to the Corporation by at least three recognized U.S.
Government securities dealers selected by the Corporation.
(4) Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (or the
one weekly per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the ten calendar days immediately preceding the last day of February, May,
August or November, as the case may be, prior to the Quarterly Dividend Period
for which the dividend rate on this Series is being determined. In the event
that the Federal Reserve Board does not publish such a weekly per annum Ten Year
Average Yield during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (or the one weekly per annum Ten
Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. In the event that a per annum Ten Year
Average Yield shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the two most recent weekly per annum
average yields to maturity (or the one weekly average yield to maturity, if only
one such yield shall be published during the relevant Calendar Period as
provided below) for all of the actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) then having maturities
of not less than eight
<PAGE>
nor more than twelve years, as published during such Calendar Period by the
Federal Reserve Board or, if the Federal Reserve Board shall not publish such
yields, by any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the Corporation determines
in good faith that for any reason the Corporation cannot determine the Ten Year
Constant Maturity Rate for any Quarterly Dividend Period as provided above in
this paragraph, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the per annum average yields to
maturity based upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date not less
than eight nor more than twelve years from the date of each such quotation, as
quoted daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by the Corporation.
(5) Except as provided below in this paragraph, the "Twenty Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Twenty Year Average Yields (or
the one weekly per annum Twenty Year Average Yield, if only one such Yield shall
be published during the relevant Calendar Period as provided below), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the last day of
February, May, August or November, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on this Series is being determined.
In the event that the Federal Reserve Board does not publish such a weekly per
annum Twenty Year Average Yield during such Calendar Period, then the Twenty
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Twenty Year Average Yields (or
the one weekly per annum Twenty Year Average Yield, if only one such Yield shall
be published during the relevant Calendar Period as provided below), as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation. In the
event that a per annum Twenty Year Average Yield shall not be published by any
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Twenty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic average of the
two most recent weekly per annum average yields to maturity (or the average
yield to maturity, if only one such yield shall be published during the relevant
Calendar Period as provided below) for all of the actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special Securities)
then having maturities of not less than eighteen nor more than twenty-two years,
as published during such Calendar Period by the Federal Reserve Board or, if the
Federal Reserve Board shall not publish such yields, by any Federal Reserve Bank
or by any U.S. Government department or agency selected by the Corporation. In
the event that the Corporation determines in good faith that for any reason the
Corporation cannot determine the Twenty Year Constant Maturity Rate for any
Quarterly Dividend Period as provided above in this paragraph, then the Twenty
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the per annum average yields to maturity based upon the closing bids
during such Calendar Period for each of the issues of actively traded marketable
U.S. Treasury fixed interest rate securities (other than Special Securities)
with a final maturity date not less than eighteen nor more than twenty-two years
from the date of each such quotation, as quoted daily for each business day in
<PAGE>
New York City (or less frequently if daily quotations shall not be generally
available) to the Corporation by at least three recognized U.S. Government
securities dealers selected by the Corporation.
(6) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Twenty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percentage point.
(7) The dividend rate with respect to each Quarterly Dividend Period will
be calculated as promptly as practicable by the Corporation according to the
appropriate method described herein. The mathematical accuracy of each such
calculation will be confirmed in writing by independent accountants of
recognized standing. The Corporation will cause each dividend rate to be
published in a newspaper of general circulation in New York City prior to the
commencement of the new Quarterly Dividend Period to which it applies and will
cause notice of such dividend rate to be enclosed with the dividend payment
checks next mailed to the holders of shares of this Series.
(8) For purposes of this Section (b), the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at the
option of the holder, be surrendered at face value in payment of any Federal
estate tax or which provide tax benefits to the holder and are priced to reflect
such tax benefits or which were originally issued at a deep or substantial
discount;
(iii) "Ten Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average yield to
maturity for actively traded marketable U.S. Treasury fixed interest rate
securities (adjusted to constant maturities of 20 years).
(9) No full dividends shall be declared or paid or set apart for payment
on Preferred Stock of any series ranking, as to dividends, on a parity with or
junior to this Series for any period unless 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 this Series for all dividend
payment periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full, as aforesaid, upon
the shares of this Series and any other Preferred Stock ranking on a parity as
to dividends with this Series, all dividends declared upon shares of this Series
and any other Preferred Stock ranking on a parity as to dividends with this
Series shall be declared pro rata so that the amount of dividends declared per
share on this Series and such other Preferred Stock shall in all cases bear to
each other the same ratio that accrued dividends per share on the shares of this
Series and such other Preferred Stock bear to each other. Holders of shares of
this Series shall not be entitled to any dividend, whether payable in cash,
property or stocks, in excess of full cumulative dividends, as herein provided,
on this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series which may
be in arrears.
<PAGE>
(10) So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior to
this Series as to dividends and upon liquidation and other than as provided in
paragraph (9) of this Section (b)) shall be declared or paid or set aside for
payment or other distribution declared or made upon the Common Stock or upon any
other stock ranking junior to or on a parity with this Series as to dividends or
upon liquidation, nor shall any Common Stock or any other stock of the
Corporation ranking junior to or on a parity with this Series as to dividends or
upon liquidation be redeemed, purchased or otherwise acquired for any
consideration (or any moneys paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation ranking junior to this
Series as to dividends and upon liquidation) unless, in each case, the full
cumulative dividends on all outstanding shares of this Series shall have been
paid for all past dividend payment periods.
(11) Dividends payable on each share of this Series for each full
Quarterly Dividend Period shall be computed by dividing the dividend rate for
such Quarterly Dividend Period by four and applying such rate against the stated
value per share of this Series. Dividends payable on this Series for any period
less than a full Quarterly Dividend Period shall be computed on the basis of a
360 day year consisting of 30 day months.
(c) Redemption.
(1) The Corporation, at its option, may redeem shares of this Series, as a
whole or in part, at any time or from time to time, at a redemption price of
$100 per share, plus, in each case, accrued and unpaid dividends thereon to the
date fixed for redemption.
(2) In the event that fewer than all the outstanding shares of this Series
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board and the shares to be redeemed shall be determined by lot or pro rata
as may be determined by the Board or by any other method as may be determined by
the Board in its sole discretion to be equitable.
(3) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the redemption date, to
each holder of record of the shares to be redeemed, at such holder's address as
the same appears on the stock register of the Corporation. Each such notice
shall state: (i) the redemption date; (ii) the number of shares of this Series
to be redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(4) Notice having been mailed as aforesaid, from and after the redemption
date (unless default shall be made by the Corporation in providing money for the
payment of the redemption price) dividends on the shares of this Series so
called for redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender in accordance with said notice of
the certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price aforesaid.
In case fewer than all the shares represented by any such certificate are
redeemed, a
<PAGE>
new certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(5) Any shares of this Series which shall at any time have been redeemed
shall, after such redemption, have the status of authorized but unissued shares
of Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board.
(6) Notwithstanding the foregoing provisions of this Section (c), if any
dividends on this Series are in arrears, no shares of this Series shall be
redeemed unless all outstanding shares of this Series are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any shares
of this Series; provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of this Series pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
this Series.
(d) Conversion or Exchange.
The holders of shares of this Series shall not have any rights herein to
convert such shares into or exchange such shares for shares of any other class
or classes or of any other series of any class or classes of capital stock of
the Corporation.
(e) Voting.
The shares of this Series shall not have any voting powers either general or
special, except that
(1) Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the consent of the holders of at least 66-2/3% of
all of the shares of this Series at the time outstanding, given in person or by
proxy, either in writing or by a vote at a meeting called for the purpose at
which the holders of shares of this Series shall vote together as a separate
class, shall be necessary for authorizing, effecting or validating the
amendment, alteration, or repeal of any of the provisions of the Certificate of
Incorporation or of any certificate amendatory thereof or supplemental thereto
(including any Certificate of Designation, Preferences and Rights or any similar
document relating to any series of Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the consent of the holders of at least 66- 2/3%
of all of the shares of this Series and all other series of Preferred Stock
ranking on a parity with shares of this Series, either as to dividends or upon
liquidation, at the time outstanding, given in person or by proxy, either in
writing or by a vote at a meeting called for the purpose at which the holders of
shares of this Series and such other series of Preferred Stock shall vote
together as a single class without regard to series, shall be necessary for
authorizing, effecting or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the shares of
this Series as to dividends or upon liquidation, or the reclassification of any
authorized stock of the Corporation 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;
(3) If at any time a default in preference dividends on the Preferred Stock
shall exist, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two, and the holders of the Preferred Stock of
all series shall have the right at an annual or special
<PAGE>
meeting of stockholders, voting together as a single class without regard to
series, to the exclusion of the holders of Common Stock, to elect two directors
of the Corporation to fill such newly created directorships. Such right shall
continue until there are no dividends in arrears upon the Preferred Stock. Each
director elected by the holders of shares of Preferred Stock (herein called a
"Preferred Director") shall continue to serve as such director until the next
annual meeting, notwithstanding that prior to such time a default in preference
dividends shall cease to exist. Any Preferred Director may be removed by, and
shall not be removed except by, the vote of the holders of record of the
outstanding shares of Preferred Stock, voting together as a single class without
regard to series, at a meeting of the stockholders, or of the holders of shares
of Preferred Stock, called for that purpose. So long as a default in any
preference dividends on the Preferred Stock shall exist, (A) any vacancy in the
office of a Preferred Director may be filled (except as provided in the
following clause (B)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (B) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote of the
holders of the outstanding shares of Preferred Stock, voting together as a
single class without regard to series, at the same meeting at which such removal
shall be voted. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and a default
in preference dividends shall no longer exist, the number of directors
constituting the Board of Directors of the Corporation shall be reduced by two.
For the purposes hereof, a "default in preference dividends" on the Preferred
Stock shall be deemed to have occurred whenever the amount of accrued dividends
upon any series of the Preferred Stock shall be equivalent to six full quarter-
yearly dividends or more, and, having so occurred, such default shall be deemed
to exist thereafter until, but only until, all accrued dividends on all shares
of Preferred Stock of each and every series then outstanding shall have been
paid to the end of the last preceding quarterly dividend period.
(f) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of the shares of this Series shall be entitled to receive out of the
assets of the Corporation, before any payment or distribution shall be made on
the Common Stock or on any other class of stock ranking junior to the Preferred
Stock upon liquidation, the amount of $100 per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares accrued and unpaid
thereon to the date of final distribution.
(2) Neither the sale of all or substantially all the property or business
of the Corporation, nor the merger or consolidation of the Corporation into or
with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section (f).
(3) After the payment to the holders of the shares of this Series of the
full preferential amounts provided for in this Section (f), the holders of this
Series as such shall have no right or claim to any of the remaining assets of
the Corporation.
(4) In the event the assets of the Corporation available for distribution
to the holders of shares of this Series upon any dissolution, liquidation or
winding up of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full all amounts to which such holders are
<PAGE>
entitled pursuant to paragraph (1) of this Section (f), no such distribution
shall be made on account of any shares of any other class or series of Preferred
Stock ranking on a parity with the shares of this Series upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of this Series, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
(5) Upon the dissolution, liquidation or winding up of the Corporation,
the holders of shares of this Series then outstanding shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
stockholders all amounts to which such holders are entitled pursuant to
paragraph (1) of this Section (f) before any payment shall be made to the
holders of any class of capital stock of the Corporation ranking junior upon
liquidation to this Series.
(g) For purposes of this resolution, any stock of any class or classes of
the Corporation shall be deemed to rank:
(1) prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
be different from those of this Series, if such stock is the Corporation's
Preferred Stock with Cumulative and Adjustable Dividends, Series C (Without Par
Value), the Corporation's 5 3/4% Cumulative Convertible Preferred Stock, Series
B (Stated Value $5,000 per share), or if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of this Series; and
(3) junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of shares of
this Series shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes."
The foregoing Certificate of Voting Powers, Designation, Preferences and
Relative, Participating, Optional and Other Special Rights and the
Qualifications, Limitations or Restrictions relating to this Series shall be
effective at 12:01 a.m. Eastern Standard Time on _________ __, 1998 in
accordance with the provisions of Sections 103 and 151(g) of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, BANK ONE CORPORATION has caused this certificate to be
signed by John B. McCoy, its President and Chief Executive Officer, and the same
to be attested by _________, its Secretary, this ___ day of _________, 1998.
<PAGE>
BANK ONE CORPORATION
By:
----------------------
Name: John B. McCoy
Title: President and
Chief Executive Officer
ATTEST:
By:
----------------------
Name:
Title:
<PAGE>
Exhibit B
---------
CERTIFICATE OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
RESTATED CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THEREOF, OF THE
PREFERRED STOCK WITH CUMULATIVE AND ADJUSTABLE DIVIDENDS, SERIES C
(Par Value $.01 per share)
OF
BANK ONE CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors of BANK ONE CORPORATION, a Delaware
corporation (hereinafter called the "Corporation"), at a meeting duly convened
and held on ____, __, 1998, at which a quorum was present and acting throughout:
"RESOLVED, that pursuant to authority conferred upon the Board of Directors
(the "Board") of the Corporation by the Certificate of Incorporation (the
"Certificate of Incorporation") of the Corporation, the Board hereby provides
for and authorizes the issuance of a series of Preferred Stock of the
Corporation to consist of _______ shares, and hereby fixes the voting powers,
designation, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof, of the
shares of such series, in addition to those set forth in the Certificate of
Incorporation, as follows:
(a) Designation.
The designation of the series of Preferred Stock created by this resolution
shall be "Preferred Stock with Cumulative and Adjustable Dividends, Series C"
(hereinafter called this "Series") and the number of shares constituting this
Series is _______. Shares of this Series shall have a stated value of $100 per
share. The number of authorized shares of this Series may be reduced by further
resolution duly adopted by the Board and by the filing of a certificate pursuant
to the provisions of the General Corporation Law of the State of Delaware
stating that such reduction has been so authorized, but the number of authorized
shares of this Series shall not be increased.
(b) Dividend Rate.
(1) Dividend rates on the shares of this Series shall be for each quarterly
dividend period (hereinafter referred to as a "Quarterly Dividend Period"; and
any Quarterly Dividend Period being hereinafter individually referred to as a
"Dividend Period" and collectively referred to as
<PAGE>
"Dividend Periods"), which Quarterly Dividend Periods shall commence on, March
1, June 1, September 1 and December 1 in each year and shall end on and include
the day next preceding the first day of the next Quarterly Dividend Period, at a
rate per annum of the stated value thereof 1.80% below the Applicable Rate (as
defined in paragraph (2) of this Section (b)) in respect of such Quarterly
Dividend Period. Anything to the contrary herein notwithstanding, the dividend
rate for any Quarterly Dividend Period shall in no event be less than 6.50% or
greater than 12.50% per annum. Such dividends shall be cumulative from ________
__ , 1998 and shall be payable, when and as declared by the Board, on the last
day of February, May, August and November of each year, commencing the last day
of ______, 199_. Each such dividend shall be paid to the holders of record of
shares of this Series as they appear on the stock register of the Corporation on
such record date, not exceeding 30 days preceding the payment date thereof, as
shall be fixed by the Board. Dividends on account of arrears for any past
Dividend Periods may be declared and paid at any time, without reference to any
regular dividend payment date, to holders of record on such date, not exceeding
45 days preceding the payment date thereof, as may be fixed by the Board.
(2) Except as provided below in this paragraph, the "Applicable Rate" for
any Quarterly Dividend Period shall be the highest of the Treasury Bill Rate,
the Ten Year Constant Maturity Rate or the Twenty Year Constant Maturity Rate
(each as hereinafter defined) for such Dividend Period. In the event that the
Corporation determines in good faith that for any reason one or more of such
rates cannot be determined for any Quarterly Dividend Period, then the
Applicable Rate for such Dividend Period shall be the higher of whichever of
such rates can be so determined. In the event that the Corporation determines
in good faith that none of such rates can be determined for any Quarterly
Dividend Period, then the Applicable Rate in effect for the preceding Dividend
Period shall be continued for such Dividend Period.
(3) Except as provided below in this paragraph, the "Treasury Bill Rate"
for each Quarterly Dividend Period shall be the arithmetic average of the two
most recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the last day of
February, May, August or November, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on this Series is being determined.
In the event that the Federal Reserve Board does not publish such a weekly per
annum market discount rate during such Calendar Period, then the Treasury Bill
Rate for such Dividend Period shall be the arithmetic average of the two most
recent weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate shall be published during the
relevant Calendar Period as provided below) for three-month U.S. Treasury bills,
as published weekly during such Calendar Period by any Federal Reserve Bank or
by any U.S. Government department or agency selected by the Corporation. In the
event that a per annum market discount rate for three-month U.S. Treasury bills
shall not be published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such Calendar Period,
then the Treasury Bill Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum market discount rates (or the
one weekly per annum market discount rate, if only one such rate shall be
published during the relevant Calendar Period as provided below) for all of the
U.S.
<PAGE>
Treasury bills then having maturities of not less than 80 nor more than 100
days, as published during such Calendar Period by the Federal Reserve Board or,
if the Federal Reserve Board shall not publish such rates, by any Federal
Reserve Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good faith that
for any reason no such U.S. Treasury Bill Rates are published as provided above
during such Calendar Period, then the Treasury Bill Rate for such Dividend
Period shall be the arithmetic average of the per annum market discount rates
based upon the closing bids during such Calendar Period for each of the issues
of marketable noninterest-bearing U.S. Treasury securities with a maturity of
not less than 80 nor more than 100 days from the date of each such quotation, as
quoted daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by the Corporation.
In the event that the Corporation determines in good faith that for any reason
the Corporation cannot determine the Treasury Bill Rate for any Quarterly
Dividend Period as provided above in this paragraph, the Treasury Bill Rate for
such Dividend Period shall be the arithmetic average of the per annum market
discount rates based upon the closing bids during such Calendar Period for each
of the issues of marketable interest-bearing U.S. Treasury securities with a
maturity of not less than 80 nor more than 100 days from the date of each such
quotation, as quoted daily for each business day in New York City (or less
frequently if daily quotations shall not be generally available) to the
Corporation by at least three recognized U.S. Government securities dealers
selected by the Corporation.
(4) Except as provided below in this paragraph, the "Ten Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Ten Year Average Yields (or the
one weekly per annum Ten Year Average Yield, if only one such Yield shall be
published during the relevant Calendar Period as provided below), as published
weekly by the Federal Reserve Board during the Calendar Period immediately prior
to the ten calendar days immediately preceding the last day of February, May,
August or November, as the case may be, prior to the Quarterly Dividend Period
for which the dividend rate on this Series is being determined. In the event
that the Federal Reserve Board does not publish such a weekly per annum Ten Year
Average Yield during such Calendar Period, then the Ten Year Constant Maturity
Rate for such Dividend Period shall be the arithmetic average of the two most
recent weekly per annum Ten Year Average Yields (or the one weekly per annum Ten
Year Average Yield, if only one such Yield shall be published during the
relevant Calendar Period as provided below), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government department
or agency selected by the Corporation. In the event that a per annum Ten Year
Average Yield shall not be published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such Dividend
Period shall be the arithmetic average of the two most recent weekly per annum
average yields to maturity (or the one weekly average yield to maturity, if only
one such yield shall be published during the relevant Calendar Period as
provided below) for all of the actively traded marketable U.S. Treasury fixed
interest rate securities (other than Special Securities) then having maturities
of not less than eight nor more than twelve years, as published during such
Calendar Period by the Federal Reserve Board or, if the Federal Reserve Board
shall not publish such yields, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the event that
the Corporation determines in good faith that for any reason the Corporation
cannot determine
<PAGE>
the Ten Year Constant Maturity Rate for any Quarterly Dividend Period as
provided above in this paragraph, then the Ten Year Constant Maturity Rate for
such Dividend Period shall be the arithmetic average of the per annum average
yields to maturity based upon the closing bids during such Calendar Period for
each of the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity date not
less than eight nor more than twelve years from the date of each such quotation,
as quoted daily for each business day in New York City (or less frequently if
daily quotations shall not be generally available) to the Corporation by at
least three recognized U.S. Government securities dealers selected by the
Corporation.
(5) Except as provided below in this paragraph, the "Twenty Year Constant
Maturity Rate" for each Quarterly Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Twenty Year Average Yields (or
the one weekly per annum Twenty Year Average Yield, if only one such Yield shall
be published during the relevant Calendar Period as provided below), as
published weekly by the Federal Reserve Board during the Calendar Period
immediately prior to the ten calendar days immediately preceding the last day of
February, May, August or November, as the case may be, prior to the Quarterly
Dividend Period for which the dividend rate on this Series is being determined.
In the event that the Federal Reserve Board does not publish such a weekly per
annum Twenty Year Average Yield during such Calendar Period, then the Twenty
Year Constant Maturity Rate for such Dividend Period shall be the arithmetic
average of the two most recent weekly per annum Twenty Year Average Yields (or
the one weekly per annum Twenty Year Average Yield, if only one such Yield shall
be published during the relevant Calendar Period as provided below), as
published weekly during such Calendar Period by any Federal Reserve Bank or by
any U.S. Government department or agency selected by the Corporation. In the
event that a per annum Twenty Year Average Yield shall not be published by any
Federal Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Twenty Year Constant
Maturity Rate for such Dividend Period shall be the arithmetic average of the
two most recent weekly per annum average yields to maturity (or the one weekly
average yield to maturity, if only one such yield shall be published during the
relevant Calendar Period as provided below) for all of the actively traded
marketable U.S. Treasury fixed interest rate securities (other than Special
Securities) then having maturities of not less than eighteen nor more than
twenty-two years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board shall not publish such yields, by
any Federal Reserve Bank or by any U.S. Government department or agency selected
by the Corporation. In the event that the Corporation determines in good faith
that for any reason the Corporation cannot determine the Twenty Year Constant
Maturity Rate for any Quarterly Dividend Period as provided above in this
paragraph, then the Twenty Year Constant Maturity Rate for such Dividend Period
shall be the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of the issues
of actively traded marketable U.S. Treasury fixed interest rate securities
(other than Special Securities) with a final maturity date not less than
eighteen nor more than twenty-two years from the date of each such quotation, as
quoted daily for each business day in New York City (or less frequently if daily
quotations shall not be generally available) to the Corporation by at least
three recognized U.S. Government securities dealers selected by the Corporation.
<PAGE>
(6) The Treasury Bill Rate, the Ten Year Constant Maturity Rate and the
Twenty Year Constant Maturity Rate shall each be rounded to the nearest five
hundredths of a percentage point.
(7) The dividend rate with respect to each Quarterly Dividend Period will
be calculated as promptly as practicable by the Corporation according to the
appropriate method described herein. The mathematical accuracy of each such
calculation will be confirmed in writing by independent accountants of
recognized standing. The Corporation will cause each dividend rate to be
published in a newspaper of general circulation in New York City prior to the
commencement of the new Quarterly Dividend Period to which it applies and will
cause notice of such dividend rate to be enclosed with the dividend payment
checks next mailed to the holders of shares of this Series.
(8) For purposes of this Section (b), the term
(i) "Calendar Period" shall mean 14 calendar days;
(ii) "Special Securities" shall mean securities which can, at the option
of the holder, be surrendered at face value in payment of any Federal estate tax
or which provide tax benefits to the holder and are priced to reflect such tax
benefits or which were originally issued at a deep or substantial discount;
(iii) "Ten Year Average Yield" shall mean the average yield to maturity
for actively traded marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of ten years); and
(iv) "Twenty Year Average Yield" shall mean the average yield to maturity
for actively traded marketable U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of 20 years).
(9) No full dividends shall be declared or paid or set apart for payment on
Preferred Stock of any series ranking, as to dividends, on a parity with or
junior to this Series for any period unless 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 this Series for all dividend
payment periods terminating on or prior to the date of payment of such full
cumulative dividends. When dividends are not paid in full, as aforesaid, upon
the shares of this Series and any other Preferred Stock ranking on a parity as
to dividends with this Series, all dividends declared upon shares of this Series
and any other Preferred Stock ranking on a parity as to dividends with this
Series shall be declared pro rata so that the amount of dividends declared per
share on this Series and such other Preferred Stock shall in all cases bear to
each other the same ratio that accrued dividends per share on the shares of this
Series and such other Preferred Stock bear to each other. Holders of shares of
this Series shall not be entitled to any dividend, whether payable in cash,
property or stocks, in excess of full cumulative dividends, as herein provided,
on this Series. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series which may
be in arrears.
(10) So long as any shares of this Series are outstanding, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior to
this Series as to dividends and upon liquidation and other than as provided in
paragraph (9) of this Section (b)) shall be declared or paid or set aside for
payment or other distribution declared or made upon the Common Stock
<PAGE>
or upon any other stock ranking junior to or on a parity with this series as to
dividends or upon liquidation, nor shall any Common Stock or any other stock of
the Corporation ranking junior to or on a parity with this Series as to
dividends or upon liquidation be redeemed, purchased or otherwise acquired for
any consideration (or any moneys paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Corporation (except
by conversion into or exchange for stock of the Corporation ranking junior to
this Series as to dividends and upon liquidation) unless, in each case, the full
cumulative dividends on all outstanding shares of this Series shall have been
paid for all past dividend payment periods.
(11) Dividends payable on each share of this Series for each full
Quarterly Dividend Period shall be computed by dividing the dividend rate for
such Quarterly Dividend Period by four and applying such rate against the stated
value per share of this Series. Dividends payable on this Series for any period
less than a full Quarterly Dividend Period shall be computed on the basis of a
360 day year consisting of 30 day months.
(c) Redemption.
(1) The Corporation, at its option, may redeem shares of this Series, as a
whole or in part, at any time or from time to time, at a redemption price of
$100 per share, plus, in each case, accrued and unpaid dividends thereon to the
date fixed for redemption.
(2) In the event that fewer than all the outstanding shares of this Series
are to be redeemed, the number of shares to be redeemed shall be determined by
the Board and the shares to be redeemed shall be determined by lot or pro rata
as may be determined by the Board or by any other method as may be determined by
the Board in its sole discretion to be equitable.
(3) In the event the Corporation shall redeem shares of this Series, notice
of such redemption shall be given by first class mail, postage prepaid, mailed
not less than 30 nor more than 60 days prior to the redemption date, to each
holder of record of the shares to be redeemed, at such holder's address as the
same appears on the stock register of the Corporation. Each such notice shall
state: (i) the redemption date; (ii) the number of shares of this Series to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(4) Notice having been mailed as aforesaid, from and after the redemption
date (unless default shall be made by the Corporation in providing money for the
payment of the redemption price) dividends on the shares of this Series so
called for redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from the Corporation the
redemption price) shall cease. Upon surrender in accordance with said notice of
the certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation at the redemption price aforesaid.
In case 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.
<PAGE>
(5) Any shares of this Series which shall at any time have been redeemed
shall, after such redemption, have the status of authorized but unissued shares
of Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board.
(6) Notwithstanding the foregoing provisions of this Section (c), if any
dividends on this Series are in arrears, no shares of this Series shall be
redeemed unless all outstanding shares of this Series are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any shares
of this Series; provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of this Series pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
this Series.
(d) Conversion or Exchange.
The holders of shares of this Series shall not have any rights herein to
convert such shares into or exchange such shares for shares of any other class
or classes or of any other series of any class or classes of capital stock of
the Corporation.
(e) Voting.
The shares of this Series shall not have any voting powers either general
or special, except that
(1) Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the consent of the holders of at least 66-2/3%
of all of the shares of this Series at the time outstanding, given in person or
by proxy, either in writing or by a vote at a meeting called for the purpose at
which the holders of shares of this Series shall vote together as a separate
class, shall be necessary for authorizing, effecting or validating the
amendment, alteration or repeal of any of the provisions of the Certificate of
Incorporation or of any certificate amendatory thereof or supplemental thereto
(including any Certificate of Designation, Preferences and Rights or any similar
document relating to any series of Preferred Stock) which would adversely affect
the preferences, rights, powers or privileges of this Series;
(2) Unless the vote or consent of the holders of a greater number of shares
shall then be required by law, the consent of the holders of at least 66-2/3% of
all of the shares of this Series and all other series of Preferred Stock ranking
on a parity with shares of this Series, either as to dividends or upon
liquidation, at the time outstanding, given in person or by proxy, either in
writing or by a vote at a meeting called for the purpose at which the holders of
shares of this Series and such other series of Preferred Stock shall vote
together as a single class without regard to series, shall be necessary for
authorizing, effecting or validating the creation, authorization or issue of any
shares of any class of stock of the Corporation ranking prior to the shares of
this Series as to dividends or upon liquidation, or the reclassification of any
authorized stock of the Corporation 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;
(3) If at any time a default in preference dividends on the Preferred Stock
shall exist, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two, and the holders of the Preferred Stock of
all series shall have the right at an annual or special meeting of stockholders,
voting together as a single class without regard to series, to the exclusion of
the holders of Common Stock, to elect two directors of the Corporation to fill
such
<PAGE>
newly created directorships. Such right shall continue until there are no
dividends in arrears upon the Preferred Stock. Each director elected by the
holders of shares of Preferred Stock (herein called a "Preferred Director")
shall continue to serve as such director until the next annual meeting,
notwithstanding that prior to such time a default in preference dividends shall
cease to exist. Each director elected by the holders of shares of Preferred
Stock (herein called a "Preferred Director") shall continue to serve as such
director until the next annual meeting, notwithstanding that prior to such time
a default in preference dividends shall cease to exist. Any Preferred Director
may be removed by, and shall not be removed except by, the vote of the holders
of record of the outstanding shares of Preferred Stock, voting together as a
single class without regard to series, at a meeting of the stockholders, or of
the holders of shares of Preferred Stock, called for that purpose. So long as a
default in any preference dividends on the Preferred Stock shall exist, (A) any
vacancy in the office of a Preferred Director may be filled (except as provided
in the following clause (B)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (B) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote of the
holders of the outstanding shares of Preferred Stock, voting together as a
single class without regard to series, at the same meeting at which such removal
shall be voted. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a Preferred Director.
Whenever the term of office of the Preferred Directors shall end and a default
in preference dividends shall no longer exist, the number of directors
constituting the Board of Directors of the Corporation shall be reduced by two.
For the purposes hereof, a "default in preference dividends" on the Preferred
Stock shall be deemed to have occurred whenever the amount of accrued dividends
upon any series of the Preferred Stock shall be equivalent to six full quarter-
yearly dividends or more, and, having so occurred, such default shall be deemed
to exist thereafter until, but only until, all accrued dividends on all shares
of Preferred Stock of each and every series then outstanding shall have been
paid to the end of the last preceding quarterly dividend period.
(f) Liquidation Rights.
(1) Upon the dissolution, liquidation or winding up of the Corporation, the
holders of the shares of this Series shall be entitled to receive out of the
assets of the Corporation, before any payment or distribution shall be made on
the Common Stock or on any other class of stock ranking junior to the Preferred
Stock upon liquidation, the amount of $100 per share, plus a sum equal to all
dividends (whether or not earned or declared) on such shares accrued and unpaid
thereon to the date of final distribution.
(2) Neither the sale of all or substantially all the property or business
of the Corporation, nor the merger or consolidation of the Corporation into or
with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Section (f).
(3) After the payment to the holders of the shares of this Series of the
full preferential amounts provided for in this Section (f), the holders of this
Series as such shall have no right or claim to any of the remaining assets of
the Corporation.
(4) In the event the assets of the Corporation available for distribution
to the holders of shares of this Series upon any dissolution, liquidation or
winding up of the Corporation, whether
<PAGE>
voluntary or involuntary, shall be insufficient to pay in full all amounts to
which such holders are entitled pursuant to paragraph (1) of this Section (f),
no such distribution shall be made on account of any shares of any other class
or series of Preferred Stock ranking on a parity with the shares of this Series
upon such dissolution, liquidation or winding up unless proportionate
distributive amounts shall be paid on account of the shares of this Series,
ratably, in proportion to the full distributable amounts for which holders of
all such parity shares are respectively entitled upon such dissolution,
liquidation or winding up.
(5) Upon the dissolution, liquidation or winding up of the Corporation, the
holders of shares of this Series then outstanding shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
stockholders all amounts to which such holders are entitled pursuant to
paragraph (1) of this Section (f) before any payment shall be made to the
holders of any class of capital stock of the Corporation ranking junior upon
liquidation to this Series.
(g) For purposes of this resolution, any stock of any class or classes of
the Corporation shall be deemed to rank:
(1) prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of this Series;
(2) on a parity with shares of this Series, either as to dividends or upon
liquidation, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share or sinking fund provisions, if any,
be different from those of this Series, if such stock is the Corporation's
Preferred Stock with Cumulative and Adjustable Dividends, Series B (Without Par
Value), or if the holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preference or priority, one over
the other, as between the holders of such stock and the holders of shares of
this Series; and
(3) junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of shares of
this Series shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes."
The foregoing Certificate of Voting Powers, Designation, Preferences and
Relative, Participating, Optional and Other Special Rights and the
Qualifications, Limitations or Restrictions relating to this Series shall be
effective at 12:01 a.m. Eastern Standard Time on _________ __, 1998 in
accordance with the provisions of Sections 103 and 151(g) of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, BANK ONE CORPORATION has caused this certificate to be
signed by John B. McCoy, its President and Chief Executive Officer, and the same
to be attested by _________, its Secretary, this ___ day of _________, 1998.
<PAGE>
BANK ONE CORPORATION
By:
---------------------------
Name: John B. McCoy
Title: President and
Chief Executive Officer
ATTEST:
By:
----------------------
Name:
Title:
<PAGE>
EXHIBIT 3.2
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FORM OF BY-LAWS
BANK ONE CORPORATION
(A Delaware Corporation)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the Corporation is
located at 1209 Orange Street, Wilmington, Delaware 19801. The Corporation
may, by resolution of the Board of Directors, change the location to any
other place in Delaware.
Section 2. Other Offices. The Corporation may have such other offices, within
or without the State of Delaware, as the Board of Directors may from time to
time establish.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meetings. The annual meeting of the stockholders for the
election of directors and for the transaction of any other business as may
properly come before the meeting shall be held on the second Friday in May of
each year or on such other date as from time to time may be designated by the
Board of Directors.
Section 2. Special Meetings. A special meeting of the stockholders may be
called at any time only by the Board of Directors pursuant to a resolution
approved by a majority of the Board of Directors.
Section 3. Place of Meetings. The Board of Directors may designate any place,
either within or without the State of Delaware, as the place of meeting for
any annual meeting or for any special meeting of stockholders.
Section 4. Notice of Meetings. Written notice stating the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by or under the
direction of the Secretary, to each stockholder of record entitled to vote at
such meeting. Except as otherwise required by statute, the written notice
shall be given not less than ten nor more than sixty days before the date of
the meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Only such business shall be conducted at a special meeting of stockholders as
shall have been brought before the meeting pursuant to the
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Corporation's notice of meeting. Attendance of a person at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Any previously scheduled meeting
of the stockholders may be postponed, and (unless the Certificate of
Incorporation otherwise provides) any special meeting of the stockholders may
be cancelled, by resolution of the Board of Directors upon public notice
given prior to the date previously scheduled for such meeting of
stockholders.
Section 5. Quorum. Except as otherwise required by statute, the presence at
any meeting, in person or by proxy, of a majority of the shares then issued
and outstanding and entitled to vote shall be necessary and sufficient to
constitute a quorum for the transaction of business. The Chairman of the
meeting or a majority of the shares so represented may adjourn the meeting
from time to time, whether or not there is such a quorum. The stockholders
present at a duly called meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 6. Voting Lists. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders of record
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the
name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of record who is present.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken.
At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given
to each stockholder of record entitled to vote at the meeting.
Section 8. Proxies. Each stockholder of record entitled to vote at a meeting
of stockholders may authorize another person or persons (but no more than
two) to act for him by
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proxy, but no such proxy shall be voted or acted upon other than at the
meeting specified in the proxy or any adjournment of such meeting.
Section 9. Voting Rights. Except as otherwise provided by statute or by the
Certificate of Incorporation, and subject to the provisions of Article VI of
these By-Laws, each stockholder of record shall at every meeting of the
stockholders be entitled to one vote for each share of the capital stock
having voting power held by such stockholder.
Section 10. Notice of Stockholder Business and Nominations.
A. Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board of Directors
of the Corporation may be made at an annual meeting of
stockholders pursuant to the procedures set forth in the
Certificate of Incorporation. Proposals of other business to be
considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors
or (c) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of notice provided
for in this By-Law, who is entitled to vote at the meeting and
who complies with the notice procedures set forth in this By-
Law.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of
paragraph (A)(1) of this By-Law, the stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation and such business must otherwise be a proper matter
for stockholder action. To be timely, a stockholder's notice
shall be delivered to or mailed, postage prepaid, and received
by the Secretary at the principal executive offices of the
Corporation at least 60 days but no more than 90 days prior to
the anniversary date of the immediately preceding annual
meeting of stockholders; provided, however, that in the event
that the date of the annual meeting is more than 30 days before
or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than
the close of business on the 90th day prior to such annual
meeting and not later than the close of business on the later
of the 60th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of
such meeting is first made by the Corporation. In no event
shall the public announcement of an adjournment of an annual
meeting commence a new time period
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for the giving of a stockholder's notice as described above.
Such stockholder's notice shall set forth (a) as to director
nominations, that information which is required by the
Certificate of Incorporation; (b) as to any business, other
than the nomination of director candidates, that the
stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the
meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (c) as to the stockholder giving the
notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares
of the Corporation which are owned beneficially and of record
by such stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this By-Law to the contrary, in the event that the
number of directors to be elected to the Board of Directors of
the Corporation is increased and there is no public
announcement by the Corporation naming all of the nominees for
director or specifying the size of the increased Board of
Directors at least 70 days prior to the first anniversary of
the preceding year's annual meeting, a stockholder's notice
required by this By-Law shall also be considered timely, but
only with respect to nominees for any new positions created by
such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than
the close of business on the 10th day following the day on
which such public announcement is first made by the
Corporation.
B. Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant
to the Corporation's notice of meeting. Nominations of persons for
election to the Board of Directors of the Corporation may be made
at a special meeting of stockholders (a) by the Board of Directors,
on behalf of the Board of Directors by any nominating committee
appointed by the Board of Directors, or (b) provided that the
Board of Directors has determined that directors shall be elected
at such meeting, by any stockholder of the Corporation entitled to
vote for the election of directors at
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<PAGE>
the meeting. In the event the Corporation calls a special meeting
of stockholders for the purpose of electing one or more directors
to the Board of Directors, any such stockholder may nominate a
person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if
the stockholder's notice required by paragraph (A)(2) of this By-
Law shall be delivered to the Secretary at the principal executive
offices of the Corporation at least 60 days but no more than 90
days prior to such special meeting or the 10th day following the
day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the
public announcement of an adjournment of a special meeting commence
a new time period for the giving of a stockholder's notice as
described above.
C. General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in the Certificate of Incorporation and this
By-Law shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the
procedures set forth in this By-Law. Whenever the language of a
proposed resolution is included in a written notice of a meeting
of stockholders the resolution may be adopted at such meeting
with only such clarifying or other amendments as do not enlarge
its original purpose without further notice to stockholders not
present in person or by proxy. Except as otherwise provided by
law, the Certificate of Incorporation or these By-Laws, the
Chairman of the meeting shall have the power and duty to
determine whether any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance
with the procedures set forth in this By-Law and, if any proposed
nomination or business is not in compliance with the Certificate
of Incorporation or this By-Law, to declare that such defective
proposal or nomination shall be disregarded.
(2) For purposes of this By-Law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or
in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14
or 15(d) of the Exchange Act.
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<PAGE>
(3) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this By-Law. Nothing in this
By-Law shall be deemed to affect any rights (i) of stockholders to
request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of
the holders of any series of Preferred Stock to elect directors
under specified circumstances.
Section 11. Required Vote. Except as otherwise required by statute or by the
Certificate of Incorporation, in all matters other than the election of
directors, the affirmative vote of the majority of shares present in person
or represented by proxy at the meeting and entitled to vote on the subject
matter shall decide any question brought before a meeting of the stockholders
at which a quorum is present.
Section 12. Elections of Directors. Elections of directors shall be by
ballot, and, subject to the rights of the holders of any series of Preferred
Stock to elect directors under specified circumstances, a plurality of the
votes cast thereat shall elect directors.
Section 13. Inspectors of Elections; Opening and Closing the Polls. The Board
of Directors by resolution shall appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees,
agents or representatives, to act at the meetings of stockholders and make a
written report thereof. One or more persons may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate has been appointed to act or is able to act at a meeting of
stockholders, the Chairman of the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before discharging his or
her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall have the duties prescribed by law.
The Chairman of the meeting shall fix and announce at the meeting the date
and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at a meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. The business of the Corporation shall be managed
by the Board of Directors, except as otherwise provided by statute or by the
Certificate of Incorporation.
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Section 2. Number. The number of the Directors of the Corporation shall be
fixed from time to time by resolution adopted by the affirmative vote of a
majority of the entire Board of Directors of the Corporation, except that the
minimum number of directors shall be fixed at no less than eleven (11) and
the maximum number of directors shall be fixed at no more than thirty (30).
At each annual meeting of stockholders, successors of the directors shall be
elected for a term expiring at the annual meeting next following such annual
meeting.
Section 3. Election and Term of Office. Except as otherwise provided in these
By-laws, directors shall be elected at the annual meeting of stockholders.
Newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum, or by a sole remaining director. A director,
including any director chosen to fill a newly created directorship or any
vacancy, shall hold office until the next annual meeting following his
election or appointment to the Board of Directors, as applicable, and until
such director's successor shall have been elected and qualified. In no case
will a decrease in the number of directors shorten the term of any incumbent
director.
Section 4. First Meetings. The first meeting of each newly elected Board of
Directors shall be held without notice immediately after the annual meeting
of the stockholders for the purpose of the organization of the Board, the
election of officers, and the transaction of such other business as may
properly come before the meeting.
Section 5. Regular Meetings. Regular meetings of the Board of Directors may
be held without notice at such times and at such places, within or without
the State of Delaware, as shall from time to time be determined by the Board.
Section 6. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board or the President. Such meetings shall
be held at such times and at such places, within or without the State of
Delaware, as shall be determined by the officer calling the meeting. Notice
of any special meeting of directors shall be given to each director at his
business or residence in writing by hand delivery, first-class or overnight
mail or courier service, telegram or facsimile transmission, or orally by
telephone. If mailed by first-class mail, such notice shall be deemed
adequately delivered when deposited in the United States mails so addressed,
with postage thereon prepaid, at least two (2) days before such meeting. If
by telegram, overnight mail or courier service, such notice shall be deemed
adequately delivered when the telegram is delivered to the telegraph company
or the notice is delivered to the overnight mail or courier service company
at least twenty-four (24) hours before such meeting. If by facsimile
transmission, such notice shall be deemed adequately delivered when the
notice is transmitted at twelve (12) hours before such meeting. Such notice
need not state the purposes of the meeting. Any or all directors may waive
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<PAGE>
notice of any meeting, either before or after the meeting. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except when the director attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 7. Quorum, Required Vote, and Adjournment. The presence, at any
meeting, of a majority of the whole Board shall be necessary and sufficient
to constitute a quorum for the transaction of business. Except as otherwise
required by statute or by the Certificate of Incorporation, the vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum, a
majority of the directors present at the time and place of any meeting may
adjourn such meeting from time to time until a quorum be present.
Section 8. Consent of Directors in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all the members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee.
Section 9. Participation in Meetings by Telephone. A member of the Board or
any committee thereof may participate in a meeting of such Board or committee
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence
in person at such meeting.
Section 10. Compensation. The Board of Directors may authorize the payment
to directors of a fixed fee and expenses for attendance at meetings of the
Board or any committee thereof, and annual fees for service as directors. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
ARTICLE IV
Board Committees
Section 1. Designation and Membership. The Board of Directors may designate
one or more regular and special committees, consisting of directors, officers
or other persons, which shall have and may exercise such powers and functions
as the Board may prescribe in the management of the business and affairs of
the Corporation; provided, however, that no committee shall have power or
authority in reference to the following matters: (a) approving or adopting,
or recommending to the stockholders, any action or matter expressly required
by the Delaware General Corporation Law to be submitted to stockholders for
approval or (b) adopting, amending or repealing any By-Law of the
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Corporation. Such committees shall keep regular minutes of their proceedings
and report the same to the Board of Directors when required. The Board of
Directors may from time to time suspend, alter, continue or terminate any
such committee or the powers and functions thereof. The Board of Directors
may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitutes a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Section 2.
Executive Committee. There shall be an Executive Committee, which, during
intervals between regular meetings of the Board of Directors and to the
extent permitted by law, the Certificate of Incorporation and these By-Laws,
shall have and may exercise all the powers of the Board of Directors in the
management of the business and affairs of the Corporation.
ARTICLE V
Officers
Section 1. Number, Election, Term of Office and Qualification. The number,
titles and duties of the officers shall be determined by the Board of
Directors from time to time, subject to the provisions of applicable law, the
Certificate of Incorporation, and these By-Laws. Each officer shall be
elected in the manner prescribed by the Board of Directors and shall hold
office until such officer's successor is elected and qualified or until such
officer's death, resignation or removal. The election of officers shall be
held annually at the first meeting of the Board of Directors held after each
annual meeting of stockholders, subject to the power of the Board of
Directors to designate any office at any time and elect any person thereto.
The officers shall include a Chairman of the Board and a President, and may
include one or more Vice Chairmen of the Board, one or more Vice Presidents,
a Secretary, a Treasurer, and such other officers as the Board of Directors
may determine. The same person may hold any two or more offices, and in any
such case, these By-Laws shall be construed and understood accordingly;
provided that the same person may not hold the offices of Chairman of the
Board and Secretary or President and Secretary. No officer other than the
Chairman of the Board, President or Vice Chairman of the Board need be a
director of the Corporation.
Section 2. Removal. Any officer or agent may be removed at any time, with
or without cause, by the Board of Directors.
Section 3. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled for the unexpired term in the manner prescribed by
these By-Laws for the regular election to such office.
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Section 4. Chief Executive Officer. The Board of Directors shall designate
one of the officers to be the Chief Executive Officer. Subject to the
direction and under the supervision of the Board of Directors, the Chief
Executive Officer shall have general charge of the business, affairs and
property of the Corporation, and control over its officers, agents and
employees.
Section 5. The Secretary. The Secretary shall keep the minutes of the
proceedings of the stockholders and of the Board of Directors in one or more
books to be kept for that purpose. The Secretary shall have custody of the
seal of the Corporation, and the Secretary, and any Assistant Secretary,
shall have authority to cause such seal to be affixed to any instrument
requiring it and when so affixed, it may be attested by the signature of the
Secretary or Assistant Secretary. The Secretary shall, in general, perform
all duties and have all powers incident to the office of Secretary and shall
perform such other duties and have such other powers as may from time to time
be assigned to the Secretary by these By-Laws, by the Board of Directors or
by the Chief Executive Officer.
Section 6. Treasurer. The Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Corporation. The Treasurer shall
cause all moneys and other valuable effects to be deposited in the name and
to the credit of the Corporation in such depositories as may be designated by
the Board of Directors. The Treasurer shall cause the funds of the
Corporation to be disbursed when such disbursements have been duly
authorized, taking proper vouchers for such disbursements, and shall render
to the Chief Executive Officer and the Board of Directors, whenever
requested, an account of all transactions conducted by the Treasurer for the
Corporation and of the financial condition of the Corporation. The Treasurer
shall, in general, perform all duties and have all powers incident to the
office of Treasurer and shall perform such other duties and have such other
powers as may from time to time be assigned to the Treasurer by these By-
Laws, by the Board of Directors or by the Chief Executive Officer.
ARTICLE VI
Fixing Record Date
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the
date of such meeting, nor more than sixty days prior to
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<PAGE>
any other action. If no record date is fixed, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held and
the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at
a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
ARTICLE VII
Execution of Documents and Instruments
Section 1. Execution of Documents and Instruments Generally. Any officer of
the Corporation and such other persons as may be authorized by the Chairman
of the Board, the President, or any Vice Chairman of the Board from time to
time are severally and respectively authorized to execute documents and to
take actions in the Corporation's name in connection with transactions
conducted in the ordinary course of the Corporation's business. With respect
to all other transactions, all documents, instruments or writings of any
nature shall be signed, executed, verified, acknowledged and delivered by
such officer or officers or such agent or agents of the Corporation and in
such manner as the Board of Directors from time to time may determine.
Section 2. Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and all evidence of indebtedness of the Corporation whatsoever,
shall be signed by such officer or officers or such agent or agents of the
Corporation and in such manner as the Board of Directors from time to time
may determine. Endorsements for deposit to the credit of the Corporation in
any of its duly authorized depositories shall be made in such manner as the
Board of Directors from time to time may determine.
Section 3. Proxies and Consents. Proxies to vote and written consent with
respect to shares of stock of other corporations owned by or standing in the
name of the Corporation may be executed and delivered from time to time on
behalf of the Corporation by the Chairman, the President, any Vice Chairman,
any Vice President, the Secretary or the Treasurer of the Corporation, or by
any other person or persons duly authorized by the Board of Directors.
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<PAGE>
ARTICLE VIII
Capital Stock
Section 1. Stock Certificates. The interest of every holder of stock in the
Corporation shall be evidenced by a certificate or certificates signed by, or
in the name of the Corporation by the Chairman, President, Vice Chairman or a
Vice President, and by the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the Corporation
and in such form not inconsistent with the Certificate of Incorporation or
applicable law as the Board of Directors may from time to time prescribe. If
such certificate is countersigned (1) by a transfer agent, whether or not a
subsidiary of the Corporation, other than the Corporation or its employee, or
(2) by a registrar, whether or not a subsidiary of the Corporation, other
than the Corporation or its employee, the signatures of the officers of the
Corporation may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of
issue.
Section 2. Transfer of Stock. Shares of stock of the Corporation shall be
transferred on the books of the Corporation only by the holder of record
thereof or by his attorney duly authorized in writing, upon surrender to the
Corporation of the certificates for such shares endorsed by the appropriate
person or persons, with such evidence of the authenticity of such
endorsement, transfer, authorization and other matters as the Corporation may
reasonably require, and accompanied by all necessary stock transfer tax
stamps. In that event it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction on its books.
Section 3. Rights of Corporation with Respect to Registered Owners. Prior to
the surrender to the Corporation of the certificates for shares of stock with
a request to record the transfer of such shares, the Corporation may treat
the registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of
an owner.
Section 4. Transfer Agents and Registrars. The Board of Directors may make
such rules and regulations as it may deem expedient concerning the issuance
and transfer of certificates for shares of the stock of the Corporation and
may appoint transfer agents or registrars or both, and may require all
certificates of stock to bear the signature of either or both. Nothing herein
shall be construed to prohibit the Corporation or any subsidiary of it from
acting as its own transfer agent or registrar at any of its offices.
Section 5. Lost, Destroyed and Stolen Certificates. Where the owner of a
certificate for shares claims that such certificate has been lost, destroyed
or wrongfully taken, the Corporation shall issue a new certificate in place
of the original certificate if the owner satisfies such reasonable
requirements, including evidence of such loss, destruction,
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<PAGE>
or wrongful taking, as may be imposed by the Corporation, including but
without limitation, the delivery to the Corporation of an indemnity bond
satisfactory to it.
ARTICLE IX
INDEMNIFICATION
Section 1. Contract Right. The right to indemnification conferred in the
Certificate of Incorporation and this By-Law shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition, such
advances to be paid by the Corporation within 20 days after the receipt by
the Corporation of a statement or statements from the claimant requesting
such advance or advances from time to time; provided, however, that the
payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking by or on behalf of such
director or officer, to repay all amounts so advanced unless it shall
ultimately be determined that such director or officer is entitled to be
indemnified under this By-Law or otherwise.
Section 2. Submission of Claim. To obtain indemnification under this By-Law,
a claimant shall submit to the Corporation a written request, including
therein or therewith such documentation and information as is reasonably
available to the claimant and is reasonably necessary to determine whether
and to what extent the claimant is entitled to indemnification. In the event
the determination of entitlement to indemnification is to be made by
Independent Counsel (as hereinafter defined) as set forth in the Certificate
of Incorporation, the Independent Counsel shall be selected by the Board of
Directors unless there shall have occurred within two years prior to the date
of the commencement of the action, suit or proceeding for which
indemnification is claimed a "Change of Control" as defined in the
Corporation's Stock Performance Plan, in which case the Independent Counsel
shall be selected by the claimant unless the claimant shall request that such
selection be made by the Board of Directors. If it is so determined that the
claimant is entitled to indemnification, payment to the claimant shall be
made within 10 days after such determination.
Section 3. Unpaid Claim. If a claim under Section 1 of this By-Law is not
paid in full by the Corporation within thirty days after a written claim
pursuant to Section 2 of this By-Law has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such
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<PAGE>
claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that
the claimant has not met the standard of conduct which makes it permissible
under the General Corporation Law of the State of Delaware for the
Corporation to indemnify the claimant for the amount claimed. It shall also
be a defense if indemnification is not permissible under applicable banking
statutes or regulations. The burden of proving any such defense shall be on
the Corporation. Neither the failure of the Corporation (including its Board
of Directors, Independent Counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification
of the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of
the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, Independent Counsel or stockholders) that
the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met
the applicable standard of conduct.
Section 4. Binding Determination. If a determination shall have been made
pursuant to Section 2 of this By-Law that the claimant is entitled to
indemnification, the Corporation shall be bound by such determination in any
judicial proceeding commenced pursuant to Section 3 of this By-Law.
Section 5. Binding Effect on Corporation. The Corporation shall be precluded
from asserting in any judicial proceeding commenced pursuant to Section 3 of
this By-Law that the procedures and presumptions of this By-Law are not
valid, binding and enforceable and shall stipulate in such proceeding that
the Corporation is bound by all the provisions of this By-Law.
Section 6. Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition conferred in this By-Law shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-Laws, agreement, vote of
stockholders or Disinterested Directors or otherwise. No repeal or
modification of this By-Law shall in any way diminish or adversely affect the
rights of any director, officer, employee or agent of the Corporation
hereunder in respect of any occurrence or matter arising prior to any such
repeal or modification. Section 7. Employees and Agents. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
grant rights to indemnification, and rights to be paid by the Corporation the
expenses incurred in defending any proceeding in advance of its final
disposition, to any employee or agent of the Corporation to the fullest
extent of the provisions of this By-Law with respect to the indemnification
and advancement of expenses of directors and officers of the Corporation.
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<PAGE>
Section 8. Validity. If any provision or provisions of this By-Law shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (1)
the validity, legality and enforceability of the remaining provisions of this
By-Law (including, without limitation, each portion of any Section of this
By-Law containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (2)
to the fullest extent possible, the provisions of this By-Law (including,
without limitation, each such portion of any Section of this By-Law
containing any such provision held to be invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
Section 9. Definitions. For purposes of this By-Law:
A. "Disinterested Director" means a director of the Corporation who is
not and was not a party to the matter in respect of which
indemnification is sought by the claimant.
B. "Independent Counsel" means a law firm, a member of a law firm, or an
independent practitioner, that is experienced in matters of
corporation law and shall include any person who, under the
applicable standards of professional conduct then prevailing, would
not have a conflict of interest in representing either the
Corporation or the claimant in an action to determine the claimant's
rights under this By-Law.
Section 10. Notice. Any notice, request or other communication required or
permitted to be given to the Corporation under this By-Law shall be in
writing and either delivered in person or sent by telecopy, telex, telegram,
overnight mail or courier service, or certified or registered mail, postage
prepaid, return receipt requested, to the Secretary of the Corporation and
shall be effective only upon receipt by the Secretary.
ARTICLE X
Seal
The corporate seal, subject to alteration by the Board of Directors, shall be
in the form of a circle and shall bear the name of the Corporation and the
year of its incorporation and shall indicate its formation under the laws of
the State of Delaware. Such seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE XI
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<PAGE>
Fiscal Year
The fiscal year of the Corporation shall be the calendar year except as
otherwise provided by the Board of Directors.
ARTICLE XII
Amendments
The By-Laws of the Corporation may be amended or repealed, or new By-Laws not
inconsistent with law or any provision of the Certificate of Incorporation, as
amended, may be made and adopted by a majority vote of the whole Board of
Directors at any regular or special meeting of the Board.
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<PAGE>
Exhibit 5.1
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
July 31, 1998
BANK ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
RE: Registration Statement on Form S-4 Related to the Merger with BANC ONE
CORPORATION and First Chicago NBD
Ladies and Gentlemen:
We have acted as special counsel to BANK ONE CORPORATION, a Delaware
corporation (the "Company"), in connection with the preparation and filing of
a Registration Statement on Form S-4 (the "Registration Statement") relating
to the up to 547,000,000 shares of the Company's common stock, par value $0.01
per share (the "Shares") to be issued by the Company in connection with the
merger of First Chicago NBD Corporation, a Delaware corporation, with and into
the Company.
In rendering this opinion, we have examined such corporate records and other
documents, and have reviewed such matters of law, as we have deemed necessary
or appropriate. Based on the foregoing, we are of the opinion that the Shares
are legally authorized and, when the Registration Statement has been declared
effective by order of the Securities and Exchange Commission and the Shares
have been issued and paid for upon the terms and conditions set forth in the
Registration Statement, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to be named in the Registration Statement and in the Joint
Proxy Statement-Prospectus that forms a portion thereof as the attorneys who
passed upon the legality of the Shares and to the filing of a copy of this
opinion as Exhibit 5.1 to the Registration Statement. In giving such consent,
we do not thereby admit that we are in the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
_____________________________________
<PAGE>
Exhibit 8.1
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
July 31, 1998
First Chicago NBD Corporation
One First National Plaza
Chicago, Illinois 60670
BANC ONE CORPORATION
100 East Broad Street
Columbus, OH 43271
Ladies/Gentlemen:
We have acted as special counsel to First Chicago NBD Corporation, a
Delaware corporation ("FCN"), in connection with the proposed merger (the
"First Step Merger") of BANC ONE CORPORATION, an Ohio corporation ("BANC
ONE"), with and into BANK ONE CORPORATION, a Delaware corporation and a direct
wholly owned subsidiary of BANC ONE ("BANK ONE"), and the proposed merger (the
"Second Step Merger" and, together with the First Step Merger, the "Merger")
of FCN with and into BANK ONE, each step of the Merger pursuant to the
Agreement and Plan of Reorganization (the "Agreement") dated as of April 10,
1998, by and among BANC ONE, FCN and BANK ONE. At your request, in connection
with the filing of the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), we are rendering our opinion pursuant to Item
601(b)(8) of Regulation S-K.
For purposes of the opinion set forth below, we have relied, with the
consent of FCN and the consent of BANC ONE, upon the accuracy and completeness
of the statements and representations (which statements and representations we
have neither investigated nor verified) contained, respectively, in the
certificates of the officers of FCN and BANC ONE dated the date hereof, and
have assumed that such statements and representations will be complete and
accurate as of the Effective Time and that all representations made to the
knowledge of any person or entity or with similar qualification are and will
be true and correct as if made without such qualification. We have also relied
upon the accuracy of the Registration Statement and the joint proxy
statement/prospectus of FCN and BANC ONE (the "Joint Proxy Statement-
Prospectus") included therein. Any capitalized term used and not defined
herein has the meaning given to it in the Joint Proxy Statement-Prospectus or
the appendices thereto (including the Agreement).
We have also assumed that the transactions contemplated by the Agreement
will be consummated in accordance therewith and as described in the Joint
Proxy Statement-Prospectus (and no transaction or condition stated therein and
material to this opinion will be waived by any party) and that the Merger will
be reported by FCN, BANC ONE and BANK ONE on their respective federal income
tax returns in a manner consistent with the opinion set forth below.
Based upon and subject to the foregoing, it is our opinion, under currently
applicable United States federal income tax law, that: (i) each of the First
Step Merger and the Second Step Merger will constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code, BANC ONE and BANK
ONE will each be a party to the reorganization in respect of the First Step
Merger, and BANK ONE and FCN will each be a party to the reorganization in
respect of the Second Step Merger; (ii) no gain or loss will be recognized by
BANC ONE or BANK ONE as a result of the First Step Merger or by BANK ONE or
FCN as a result of
<PAGE>
the Second Step Merger; (iii) no gain or loss will be recognized by the
stockholders of BANC ONE who receive solely BANK ONE Capital Stock for their
BANC ONE Capital Stock pursuant to the First Step Merger; and (iv) no gain or
loss will be recognized by the stockholders of FCN who exchange their FCN
Capital Stock solely for BANK ONE Capital Stock pursuant to the Second Step
Merger (except with respect to cash received in lieu of a fractional share
interest in BANK ONE Capital Stock).
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement, and to the
reference to us under the captions "SUMMARY--The Merger--Certain Federal
Income Tax Consequences" and "THE MERGER--Certain Federal Income Tax
Consequences." In giving such consent, we do not thereby admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended.
This opinion relates solely to certain federal income tax consequences of
the Merger and no opinion is expressed as to the tax consequences under any
foreign, state or local tax law.
We are furnishing this opinion in connection with the Registration Statement
and this opinion is not to be relied upon, circulated, quoted or otherwise
referred to for any other purpose.
Very truly yours,
/s/ Wachtell, Lipton, Rosen & Katz
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-4 of our report dated February 12, 1998 on our audits of the
consolidated financial statements of BANC ONE CORPORATION as of December 31,
1997 and 1996, and for each of the three years in the period ended December
31, 1997, included in BANC ONE CORPORATION's Annual Report on Form 10-K for
the year ended December 31, 1997.
We also consent to the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
July 31, 1998
<PAGE>
EXHIBIT 23.2
To First Chicago NBD Corporation:
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated January 15, 1998,
on the consolidated financial statements of First Chicago NBD Corporation
included in the Form 10-K for the year ended December 31, 1997 and to the
reference to our Firm under the caption "Experts" included in this
Registration Statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Chicago, Illinois,
July 27, 1998
<PAGE>
EXHIBIT 23.5
PERSONAL AND CONFIDENTIAL
July 31, 1998
Board of Directors
First Chicago NBD Corporation
One First National Plaza
Chicago, IL 60670
Re: Joint Proxy Statement of First Chicago NBD Corporation and BANC ONE
CORPORATION
Ladies and Gentlemen:
Reference is made to our opinion letter dated July 31, 1998 as to the
fairness from a financial point of view to the holders of outstanding shares
of common stock, $1.00 par value ("FCN Common Stock"), of First Chicago NBD
Corporation ("FCN") of the Exchange Ratio (as defined below) contemplated by
the Agreement and Plan of Reorganization (the "Agreement"), dated as of April
10, 1998, by and among BANC ONE CORPORATION ("BANC ONE"), BANK ONE CORPORATION
("BANK ONE"), a newly-formed, wholly-owned subsidiary of BANC ONE, and FCN.
The Agreement provides for the merger of BANC ONE and FCN, respectively, with
and into BANK ONE (the "Merger"), pursuant to which, among other things, each
share of common stock, without par value, of BANC ONE ("BANC ONE Common
Stock") will be converted into one share of common stock, par value $.01 per
share, of BANK ONE ("BANK ONE Common Stock") and each share of FCN Common
Stock will be exchanged for 1.620 shares of BANK ONE Common Stock (the
"Exchange Ratio").
The foregoing opinion letter is provided for the information and assistance
of the Board of Directors of FCN in connection with its consideration of the
transaction contemplated therein and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that FCN has determined to include our opinion
in the above-referenced Proxy Statement.
In that regard, we hereby consent to the reference to the opinion of our
Firm under the captions "SUMMARY--Opinions of Financial Advisors," "THE
MERGER--Background of the Merger," "THE MERGER--Recommendations of the FCN
Board and Reasons for the Merger" and "THE MERGER--Opinions of FCN's Financial
Advisors" and to the inclusion of the foregoing opinion as Appendix E in the
above-mentioned Proxy Statement. In giving such consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Goldman, Sachs & Co.
- -----------------------
(GOLDMAN, SACHS & CO.)
<PAGE>
EXHIBIT 23.6
July 31, 1998
First Chicago NBD Corporation
One First National Plaza
Chicago, Illinois 60670
Gentlemen:
We hereby consent (i) to the use of our opinion letter to the Board of
Directors of First Chicago NBD Corporation ("FCN") dated July 31, 1998
included as Appendix D to the Joint Proxy Statement-Prospectus that forms a
part of the Registration Statement on Form S-4 relating to the proposed merger
of BANC ONE CORPORATION ("BANC ONE") with and into BANK ONE CORPORATION ("BANK
ONE"), a wholly-owned subsidiary of BANC ONE, to be immediately followed by
the merger of FCN with and into BANK ONE, and (ii) to the references to such
opinion in such Joint Proxy Statement-Prospectus. In giving such consent, we
do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder, nor do we
thereby admit that we are experts with respect to any part of such
Registration Statement within the meaning of the term "experts" as used in the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
LAZARD FRERES & CO. LLC
/s/ Gary S. Shedlin
By
--------------------------------------
GARY S. SHEDLIN
MANAGING DIRECTOR
<PAGE>
EXHIBIT 23.7
July 31, 1998
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
Members of the Board:
We hereby consent to the use of our opinion letter to the Board of Directors
of BANC ONE CORPORATION ("BANC ONE"), included as Appendix B to the Joint
Proxy Statement-Prospectus that forms a part of the Registration Statement on
Form S-4 relating to the proposed merger of BANC ONE with and into BANK ONE
CORPORATION ("BANK ONE"), a wholly-owned subsidiary of BANC ONE, to be
immediately followed by the merger of First Chicago NBD Corporation with and
into BANK ONE, and to the references to such opinion in such Joint Proxy
Statement-Prospectus under the captions "Summary," "The Merger--Background of
the Merger", "--Recommendation of BANC ONE and Reasons of BANC ONE for the
Merger" and "--Opinions of BANC ONE's Financial Advisors." In giving such
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder, nor do we thereby admit that we are experts with respect to any
part of such Registration Statement within the meaning of the term "experts"
as used in the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Merrill Lynch, Pierce,
Fenner & Smith Incorporated
<PAGE>
EXHIBIT 23.8
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
July 31, 1998
BANC ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement on Form S-4
relating to the proposed merger of BANC ONE CORPORATION ("BANC ONE") with and
into BANK ONE CORPORATION ("BANK ONE"), a wholly-owned subsidiary of BANC ONE,
to be immediately followed by the merger of First Chicago NBD Corporation with
and into BANK ONE, of our opinion letter to the Board of Directors of BANC ONE
included as Appendix C to the Joint Proxy Statement-Prospectus that is a part
of the Registration Statement, and to the references to such letter and our
firm name in such Joint Proxy Statement-Prospectus. In giving such consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations adopted by the Securities and Exchange Commission
thereunder, nor do we admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "experts" as used
in the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William M. Weiant
------------------------------------------
<PAGE>
Exhibit 99.1
PROXY BANC ONE CORPORATION PROXY
This Proxy is solicited on behalf of the Board of Directors
SPECIAL MEETING OF SHAREHOLDERS, September 15, 1998
The undersigned shareholder of BANC ONE CORPORATION hereby appoints Richard R.
Murphey, Karl E. Case and Roman J. Gerber and each of them Proxies, with power
of substitution to each, for and in the name of the undersigned to vote, as
designated on the reverse side hereof, all the shares of BANC ONE CORPORATION
Common Stock held of record by the undersigned as of July 22, 1998 at the
Special Meeting of Shareholders to be held on September 15, 1998 or any
adjournment thereof. This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned shareholder. If no direction is made,
this Proxy will be voted FOR Proposal 1 and according to the judgment of the
proxies with respect to any other business that may come before the meeting or
any adjournment thereof.
PLEASE VOTE, SIGN AND DATE, AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
BANC ONE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
(This Proxy is continued from other side)
1. Approval and adoption of the Agreement and Plan of Reorganization, dated as
of April 10, 1998, as amended, by and among BANC ONE CORPORATION, First Chicago
NED Corporation, a Delaware corporation, and BANK ONE CORPORATION, a Delaware
corporation ("Newco"), and the transactions contemplated thereby, including the
mergers of BANC ONE CORPORATION and First Chicago NBD Corporation with and into
Newco.
For Against Abstain
/ / / / / /
The undersigned hereby authorizes the proxies to vote in their discretion on
any other business that may properly be brought before the meeting or any
adjournment thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting
and the Joint Proxy Statement-Prospectus, each dated July 31, 1998.
Please mark, date and sign exactly as your name appears above and return in the
enclosed envelope. Joint owners should each sign personally. Where applicable,
indicate your official position or representation capacity. If acting as
executor, administrator, trustee, guardian, etc., you should so indicate when
signing. If the signer is a corporation, please sign in full corporate name by
duly authorized officer.
Dated:___________________________________________________________________, 1998
________________________________________________________________________________
Signature
________________________________________________________________________________
Signature
<PAGE>
Exhibit 99.2
FIRST CHICAGO NBD CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS, SEPTEMBER 15, 1998
PROXY
The undersigned hereby appoints Timothy P. Moen and Susan S. Moody and each of
them, as proxies, with full power of substitution, to represent the undersigned
and to vote all shares of stock of First Chicago NBD Corporation that the
undersigned is entitled to vote at the Special Meeting of Stockholders of the
Corporation to be held on September 15, 1998, and any adjournments thereof, upon
all matters that may properly come before the Meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR the approval
of the Agreement and Plan of Reorganization, dated as of April 10, 1998, as
amended (the "Merger Agreement"), by and among the Corporation, BANC ONE
CORPORATION, an Ohio corporation, and BANK ONE CORPORATION, a Delaware
corporation, which provides for the mergers of BANC ONE CORPORATION and the
Corporation with and into BANK ONE CORPORATION.
This card also provides voting instructions for any shares held in the
Corporation's dividend reinvestment and stock purchase plan.
Please date and sign on the reverse side and return promptly in the enclosed
business reply envelope.
If you do not sign and return a proxy, or vote your shares over the telephone or
the Internet, or attend the meeting and vote by ballot, your shares cannot be
voted. This will have the same effect as a vote AGAINST the Merger Agreement.
SEE REVERSE SIDE
<PAGE>
--------------------------------
[FOLD AND DETACH HERE]
[X] Please mark your
vote as in this
example.
This proxy when properly executed, will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR the adoption and
approval of the Merger Agreement.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 1.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Approval and adoption of the [_] [_] [_]
Merger Agreement.
The undersigned hereby authorizes the proxies to vote in their discretion
on any other business that may properly be brought before the meeting or
any adjournment thereof.
- --------------------------------------------------------------------------------
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof. Please sign exactly as name appears
hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
----------------------------------------
----------------------------------------
SIGNATURE(S)
DATE ____________________
<PAGE>
- --------------------------------------------------------------------------------
[FOLD AND DETACH HERE]
IMPORTANT: PLEASE VOTE AND SIGN YOUR
PROXY AND RETURN IT IN THE ENVELOPE PROVIDED
FIRST CHICAGO NBD CORPORATION
Special Meeting of Stockholders
September 15, 1998
9:30 A.M. (local time)
First Chicago Center
One First National Plaza
Chicago, Illinois
First Chicago NBD common stockholders can now vote their shares either over the
telephone or the Internet. This eliminates the need to return the proxy card.
To vote your shares over the telephone or the Internet you must have your proxy
card and SSN available. The series of numbers that appear in the box above must
be used to access the system.
1. To vote over the telephone:
On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683) 24 hours
a day, 7 days a week.
2. To vote over the Internet:
Log on to the Internet and go to the web site http://www.vote-by-net.com
Your vote over the telephone or the Internet authorizes the named proxies in the
same manner as if you marked, signed, dated and returned your proxy card.
If you choose to vote your shares over the telephone or the Internet, there is
no need for you to mail back your proxy card.
<PAGE>
Exhibit 99.3
FIRST CHICAGO NBD CORPORATION
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS, SEPTEMBER 15, 1998
To: The First National Bank of Chicago, Trustee for the Savings and Investment
Plan
The undersigned hereby instructs the Trustee to vote, in person or by proxy, the
shares of stock of First Chicago NBD Corporation held by it and credited to my
account in the Plan at the Special Meeting of Stockholders of the Corporation to
be held on September 15, 1998, and any adjournments thereof, upon all matters
that may properly come before the Meeting. These instructions when properly
executed will be voted in the manner directed herein by the undersigned plan
participant. If no direction is made, these instructions will be voted FOR the
approval of the Agreement and Plan of Reorganization, dated as of April 10, as
amended 1998 (the "Merger Agreement"), by and among the Corporation, BANC ONE
CORPORATION, an Ohio corporation, and BANK ONE CORPORATION, a Delaware
corporation, which provides for the mergers of BANC ONE CORPORATION and the
Corporation with and into BANK ONE CORPORATION.
Please date and sign on the reverse side and return promptly in the enclosed
business reply envelope by September 11, 1998. The Trustee will vote stock for
which it has not received timely voting instructions as directed by an
unaffiliated, independent adviser to institutional investors.
SEE REVERSE SIDE
<PAGE>
-------------------------------------------
[FOLD AND DETACH HERE]
[X] Please mark your
vote as in this
example.
These instructions when properly executed, will be voted in the manner
directed herein. If no direction is made, these instructions will be voted
FOR the adoption and approval of the Merger Agreement.
- ------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposal 1.
- ------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Approval and adoption of the [_] [_] [_]
Merger Agreement.
The undersigned hereby authorizes the Trustee to vote in its discretion on
any other business that may properly be brought before the meeting or any
adjournment thereof.
- -------------------------------------------------------------------------------
The signer hereby revokes all instructions heretofore given by the signer to
vote at said meeting or any adjournments thereof. Please sign exactly as name
appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
----------------------------------------
----------------------------------------
SIGNATURE(S)
DATE_________________
<PAGE>
Exhibit 99.5
July 22, 1998
BANK ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271-0158
To the Board of Directors:
I hereby consent to being named as a person about to become a director of
BANK ONE CORPORATION, a Delaware corporation ("BANK ONE"), in connection with
the consummation of the merger (the "Merger") of each of BANC ONE CORPORATION,
an Ohio corporation ("BANC ONE") and First Chicago NBD Corporation ("FCN"),
with and into BANK ONE pursuant to the Agreement and Plan of Reorganization,
dated as of April 10, 1998, as amended, by and among BANK ONE, BANC ONE and
FCN, in the Registration Statement on Form S-4 filed by BANK ONE with the
Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), and to the filing of this consent as an exhibit to
the Registration Statement.
Sincerely,
/s/ John B. McCoy
John B. McCoy
<PAGE>
Exhibit 99.6
July 22, 1998
BANK ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271-0158
To the Board of Directors:
I hereby consent to being named as a person about to become a director of
BANK ONE CORPORATION, a Delaware corporation ("BANK ONE"), in connection with
the consummation of the merger (the "Merger") of each of BANC ONE CORPORATION,
an Ohio corporation ("BANC ONE") and First Chicago NBD Corporation ("FCN"),
with and into BANK ONE pursuant to the Agreement and Plan of Reorganization,
dated as of April 10, 1998, as amended, by and among BANK ONE, BANC ONE and
FCN, in the Registration Statement on Form S-4 filed by BANK ONE with the
Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), and to the filing of this consent as an exhibit to
the Registration Statement.
Sincerely,
/s/ Richard J. Lehmann
Richard J. Lehmann
<PAGE>
Exhibit 99.7
July 22, 1998
BANK ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271-0158
To the Board of Directors:
I hereby consent to being named as a person about to become a director of
BANK ONE CORPORATION, a Delaware corporation ("BANK ONE"), in connection with
the consummation of the merger (the "Merger") of each of BANC ONE CORPORATION,
an Ohio corporation ("BANC ONE") and First Chicago NBD Corporation ("FCN"),
with and into BANK ONE pursuant to the Agreement and Plan of Reorganization,
dated as of April 10, 1998, as amended, by and among BANK ONE, BANC ONE and
FCN, in the Registration Statement on Form S-4 filed by BANK ONE with the
Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), and to the filing of this consent as an exhibit to
the Registration Statement.
Sincerely,
/s/ Verne G. Istock
Verne G. Istock
<PAGE>
Exhibit 99.8
July 22, 1998
BANK ONE CORPORATION
100 East Broad Street
Columbus, Ohio 43271-0158
To the Board of Directors:
I hereby consent to being named as a person about to become a director of
BANK ONE CORPORATION, a Delaware corporation ("BANK ONE"), in connection with
the consummation of the merger (the "Merger") of each of BANC ONE CORPORATION,
an Ohio corporation ("BANC ONE") and First Chicago NBD Corporation ("FCN"),
with and into BANK ONE pursuant to the Agreement and Plan of Reorganization,
dated as of April 10, 1998, as amended, by and among BANK ONE, BANC ONE and
FCN, in the Registration Statement on Form S-4 filed by BANK ONE with the
Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"), and to the filing of this consent as an exhibit to
the Registration Statement.
Sincerely,
/s/ David J. Vitale
David J. Vitale
